Mutual funds are
different. When you buy and hold
mutual fund shares, you will owe income tax on any ordinary dividends in the year you receive or reinvest them.
And, in addition to owing taxes on any personal capital gains when you sell your shares, you may also have
to pay taxes each year on the fund's capital gains. That's because the law requires mutual funds to
distribute capital gains to shareholders if they sell securities for a profit that can't be offset by a
you invest in a tax-exempt fund — such as a municipal bond fund — some or all of your
dividends will be exempt from federal (and sometimes state and local) income tax. You
will, however, owe taxes on any capital gains.
Bear in mind that if you receive
a capital gains distribution, you will likely owe taxes — even if the fund has had a negative return from the point
during the year when you purchased your shares. For this reason, you should call the fund to find out when it makes
distributions so you won't pay more than your fair share of taxes. Some funds post that information on their
websites. SEC rules require mutual funds to disclose in their prospectuses after-tax returns. In calculating
after-tax returns, mutual funds must use standardized formulas similar to the ones used to calculate before-tax
average annual total returns. You'll find a fund's after-tax returns in the "Risk/Return Summary" section of the
prospectus. When comparing funds, be sure to take taxes into account.
If you decide to invest in mutual
funds, be sure to obtain as much information about the fund before you invest. And don't make assumptions
about the soundness of the fund based solely on its past performance or its name.
When you purchase shares of a
mutual fund, the fund must provide you with a prospectus. But you can — and should — request and read a
fund's prospectus before you invest. The prospectus is the fund's selling document and contains valuable
information, such as the fund's investment objectives or goals, principal strategies for achieving those goals,
principal risks of investing in the fund, fees and expenses, and past performance. The prospectus also identifies
the fund's managers and advisers and describes how to purchase and redeem fund shares.
While they may seem daunting at
first, mutual fund prospectuses contain a treasure trove of valuable information. The SEC requires funds to include
specific categories of information in their prospectuses and to present key data (such as fees and past
performance) in a standard format so that investors can more easily compare different funds.
Here's some of what you'll find
in mutual fund prospectuses:
Issue— The date of the
prospectus should appear on the front cover. Mutual funds must update their prospectuses at least once a
year, so always check to make sure you're looking at the most recent version.
Risk/Return Bar Chart and
Table— Near the front of the
prospectus, right after the fund's narrative description of its investment objectives or goals, strategies, and
risks, you'll find a bar chart showing the fund's annual total returns for each of the last 10
years (or for the life of the fund if it is less than 10 years old). All funds that have had annual returns for
at least one calendar year must include this chart.
Except in limited circumstances, funds also must include a table that sets forth returns — both
before and after taxes — for the past 1-, 5-, and 10-year periods. The table will also include the returns of
an appropriate broad-based index for comparison purposes. Here's what the table will look like:
GAFM International Board of Standards is ESQ
European Accredited and ISO Certified for Quality and ISO 21001
Certified for Training Standards
Join our Linkedin Group
The GAFM ® Board is the 1st Graduate
Certification Body to Become Accredited and Certified for: ISO 9001 Quality and
ISO 21001 Training in the World. GAFM ® owns the former AAFM
®Certifications and Programs
www.GAFM.us * www.GAFM.org *
www.AAFM.us * www.CertifiedProjectManager.org * www.CertifiedProjectManager.us * www.AAFM.org * www.icecc.comIn alliance with the Unincorported Non-Profit - Association of
Finance and Management USAA financial analyst securities analyst, research analyst, equity
analyst, or investment analyst is a person who performs financial analysis for external or internal clients
as a core part of the job. Financial analysis (also referred to as financial statement analysis or
accounting analysis or Analysis of finance) refers to an assessment of the viability, stability and
profitability of a business, sub-business or project. It is performed by professionals who prepare reports
using ratios that make use of information taken from financial statements and other reports. These reports
are usually presented to top management as one of their bases in making business decisions. Certification
as a financial analyst requires accredited education in financeManagement consulting is the practice of helping organizations to improve their
performance, primarily through the analysis of existing organizational problems and development of plans
for improvement. Organizations may draw upon the services of management consultants for a number of
reasons, including gaining external (and presumably objective) advice and access to the consultants'
specialized expertise. Becoming certified in management consulting requires proper education experience and
credentials.Management accounting or managerial accounting is
concerned with the provisions and use of accounting information to managers within organizations, to
provide them with the basis to make informed business decisions that will allow them to be better equipped
in their management and control functions. Cost accounting is a process of collecting, analyzing,
summarizing and evaluating various alternative courses of action. Its goal is to advise the management on
the most appropriate course of action based on the cost efficiency and capability. Cost accounting provides
the detailed cost information that management needs to control current operations and plan for the future.
Certification in management or cost accounting requires education and expertise in accounting.