Investment firms are required to provide annually to each client information about the performance of the investments they hold. These requirements result in greater transparency about your investments and help you understand whether you are on track to meet your goals.
Where to find your performance information
Investment firms can choose how they provide this information to you. Depending upon the investment firm you use, information about your accountAccount An agreement you make with a financial institution to handle your money. You can set up an account for depositing and withdrawing, earning interest, borrowing, investing, etc.+ read full definition performance may be provided separately from your investment statements – for example, in a document called Report on Your Account Performance, or Performance Report, or something similar. Or the information may be included in your year-end account statements.
Your performance information will be provided by mail or online, depending how you have chosen to receive statements from your firm. The way the information is presented will also vary from firm to firm.
Not all Performance Reports contain the same information either. For example, some firms provide more detail than others and may use different terminology. While this may make line-by-line comparisons difficult, it should be straightforward to make overall comparisons.
Your performance information is usually provided separately for each of your investment accounts. However, it is possible to receive consolidated reporting of different accounts. If you have more than one account with your firm and would like to see the performance of all your accounts reported together, ask your advisor if this option is available.
The information about the performance of your investments is provided in two ways: (1) change in value of your investments, and (2) percentage rates of return.
1. Change in value of your investments
This information includes the change in value of the investments in your account, in dollar terms. It sets out for each account:
- the opening market valueMarket value The value of an investment on the statement date. The market value tells you what your investment is worth as at a certain date. Example: If you had 100 units and the price was $2 on the statement date, their market value would be $200.+ read full definition,
- what you’ve put in and taken out,
- the change in value, and
- the closing market value.
The market value tells you the value of your investments on the stock marketStock market The collection of markets and exchanges where stocks, bonds and other securities are issued or traded.+ read full definition on a particular day. The change in value tells you how much your investments have gone up or down over the period. This information is provided for the previous year, as well as since opening of the account.
2. Percentage rates of return
The information you receive also includes percentage rates of return for the past one, three, five and 10 years (if your account is open that long), and since account opening.
These rates of return are personal to you, and reflect what you’ve put in and taken out of the account. They are calculated after all fees have been deducted.
It’s useful to compare these returns to your financial planFinancial plan Your financial plan should cover every aspect of your finances: saving and investing, paying down debt, insurance, taxes, retirement planning and estate planning.+ read full definition or target rate of return.
If you opened your account recently, it’s likely that the information provided will include data since the date you opened your account. However, if you opened your account some time ago, it’s possible that your firm will be unable to provide data going back to the date you opened your account. Talk to your advisor about how to get a longer-termTerm The period of time that a contract covers. Also, the period of time that an investment pays a set rate of interest.+ read full definition view of how your investments have performed.
Other information you receive
In addition to information about the performance of your investments, your investment firm is required to send you information about the fees paid for their services and advice. In general, you will find that information in the same document as your performance information, or together with your performance report.
- Performance information helps you see how your investments are doing over time, and to assess whether you are on track to meet your financial goals.
- Use the percentage rates of return to assess how you are doing compared to a target rate of return for that account.
- If you don’t understand the performance information, be sure to ask your advisor for an explanation.