The Report on InvestmentInvestment An item of value you buy to get income or to grow in value.+ read full definition Performance is 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-based. Securities reported in an additional statement must be included in the investment performance report for the account through which they were traded. If you have a number of accounts with one dealer or adviser, you may want to discuss optionsOptions An investment that gives you the right to buy or sell it at a set price by a set date. The buy right is termed a “call” option, and the sell right is termed a “put” option. You buy options on a stock exchange.+ read full definition for a consolidated report.
Changes effective July 2016
While all registered dealers and advisers are required to implement these changes as of July 15, 2016, you may not receive the new report on investment performance until 2017. Talk to your dealer or adviser to find out when you’ll get yours.
Three ways performance is reported
1. Opening market value, deposits and withdrawals
Dealers and advisers are required to disclose 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 of the account, the market value of deposits and transfers of cash and securities into your account, and the market value of withdrawals and transfers of cash and securities out of your account, for the latest 12-month period and since the account was opened.
The market value tells you the value of the investment on any given day – this would be the date on the investment performance report. For example, if you had 100 units of a stockStock An investment that gives you part ownership or shares in a company. Often provides voting rights in some business decisions.+ read full definition at a shareShare A piece of ownership in a company. A share does not give you direct control over the company’s daily operations. But it does let you get a share of profits if the company pays dividends.+ read full definition price of $2 on the statement date, the market value of the shares would be $200.
2. Change in market value
Your dealer or adviser will use a standard formula for the calculation of annual change in market value and change in market value since you opened your account. Your dealer or adviser may provide more detail about what has caused the change. Talk to your firm if you need more information.
Determining market value
Market value of an investment may be noted as “not determinable” or zero if, for example, the security is illiquid – meaning that it can’t easily be sold at a fair market priceMarket price The amount you must pay to buy one unit or one share of an investment. The market price can change from day to day or even minute to minute.+ read full definition, or you may not be able to sell it at all.
3. Personal rates of return
Dealers and advisers are required to provide an annualized total percentage return for your account or portfolioPortfolio All the different investments that an individual or organization holds. May include stocks, bonds and mutual funds.+ read full definition. This is your personal rate of return after charges have been deducted. Your rate of return will be provided for the previous year, since you opened your account, and up to the previous three, five and ten years where data is available.
For consistency from one dealer or adviser to another, all are required to use the money-weighted method of calculating return (also known as dollar-weighted return). The money-weighted rate of return was chosen as the standard method because it is your personal rate of return, factoring in the impact of deposits and withdrawals from your account – and the dates of these transactions. This method of return is ideal for helping you determine whether you are progressing toward your goals.
The new Report on Investment Performance, and the new Report on Charges and Other Compensation must include information for the same 12-month period and the reports must be delivered together. These reports may be combined with other account statements or they may accompany other account statements, however they should not be delivered more than 10 days after any other account statements for the period.
See a sample report
A number of companies and organizations have sample reports available. For one example, see the Investment Funds Institute of Canada (IFIC)Investment Funds Institute of Canada (IFIC) An association of the mutual fund industry. Its role is to serve its member firms, work together with regulatory bodies, and protect the interests of mutual fund investors.+ read full definition’s sample Report on Investment Performance. You may also want to ask your advisor for a sample of what your report will look like before you receive it.
Ask questions if you don’t understand how your investment performance is determined.
New transparent reporting on investment performance will allow you to see how your investments are doing over time.