Each year under full disclosure rules (investment law in most industrial countries), if you own a mutual fund, you will receive the fund company's annual report.

I'd be willing to be that most people never look at these.

If they do, there is so much superbole (or should that be hyperbole?) that wading through the pages of information is a chore most prefer to abhor. So, into the waste basket it goes and another couple of trees bite the dust.

Actually, one can learn a great deal by sifting through these reports.

Walking through the maze, we will use the April 4, 2004 report of the MFS Utilities Fund, a small United States mutual fund holding that my family has owned long before moving back home to Bermuda. Utility stocks are suggested for growth and income, remember. There's my disclosure for you on interested parties.

MFS Investment Management, if you even care to recall, is one of the mutual fund companies that New York Attorney General Elliot Spitzer cited in the ongoing mutual fund late trading scandal.

MFS subsequently settled, neither admitting nor denying any wrongdoing or responsibility in the matter, for $$1.00 in disgorgement and $50 million in penalties. The dictionary defines disgorgement as "To surrender unwillingly."

They also had to agree to an independent compliance consultant review as well as establishing a $225 million dollar pool for distribution to wronged shareholders.

Mutual fund reports list investment styles, financial statements, all weighted asset holdings as of that date in the portfolio, performance summaries, those responsible for oversight – the Board of directors, the portfolio managers expertise, and the explicit total costs to manage the fund that are deducted from profits (and losses) of the fund.

Investment Policy The MFS Utility fund seeks capital growth and current income.

A Letter from the CEO – the CEO starts with what else, lauding their success in his words, people (employees) are our most valuable resource; process, embellishments on bottom-up approach to researching securities, enhanced mentoring process, etc. strengthening our investment team, increasing peripheral vision of our investment personnel, running a strong quantitative team under a female industry veteran; Process, teamwork is at the heart of our ability to deliver consistent and competitive investment performance over time; each member of the team is involved; we have no superstars. We hold all of our portfolio managers accountable for their performance. And lastly, we have dismissed some members of our team who did not meet MFS's high standards.

After three and a half pages of positive media spin, one can only wonder if it is all industry smooth delivery or hope that this a sincere attempt to 'stick to the knitting' and a new page in shareholder service.

Total return Performance Summary

Total return means capital appreciation and dividend income

Ten years – 9.66% annually

5 Years – 0.37 of 1 %

3 years – (7.64%)

1 year 26.73%, all annualized returns. End result, if you held the fund for ten years, it gained an average of 9.66% per year as well as outperforming its benchmarks. Maybe it was a good thing I didn't sell out three years ago when it was awful, would you agree? Truth is, Holding for the long-term counts.

Portfolio of Investments – 88% stocks, Bonds 7.9%, and the rest Collateral for Securities Loaned, repurchase agreements, etc. Based upon the investment policy you might wonder why these derivative type instruments are here, but that's an in depth article itself.

The stocks and bonds range across a broad utility spectrum from United States to Chile to Netherlands to New Zealand to South Korea and more. The fund may hold anywhere from 120-150 positions at any one time, real diversification in action.

Financial statements are listed for each class in the fund, since purchasing A shares can show considerable differences than B shares on the overall portfolio cash flow. A shares have the sales commission deducted up front, B shares, deduct the sales commission each year for 5-6 years from the fund itself. A shares consistently have outperformed better than B shares and are a better buy.

Fees and costs After a tedious review of the administrative fees, which even as an accountant I find hard to decipher, we see the tougher stuff below.

Notes to Financial Statements Legal Proceedings – in this section the fund is legally obligated to spell its settlement terms with the US Securities and Exchange commission. Long, jargoned, interesting and insightful reading.

Trustees and Officers of the Board – all 22 responsible parties are listed (only four women) with their backgrounds and experience, but no disclosure (as yet) on personal amounts invested (or not invested) in the fund or other related party business affiliations with the fund.

The report totals 54 pages, and at the very end, there is a one-pager on asset allocation in relation to your goals.

You are advised to take four easy steps:

1. Define your financial situation

2. Establish your goals and timeline.

3. Find out what your risk tolerance is

4. Choose your investments.

Ah, if it were that easy. Very, very generic advice for a mutual fund that holds $ 1.2 billion in assets. I'd have expected something a little better.

Martha Harris Myron CPA/PFS CFP? is a Bermudian, and VP, Investment Centre, Bank of Bermuda member HSBC Group, providing investment advisory services and planning. She is a NASD Series 7 license holder, formerly owning a US financial services practice of individual and corporate clients. She can be reached at 299-5578, or confidential email can be directed to marthamyronnorthrock.bm

The article expresses the opinion of the author alone, and not necessarily that of Bank of Bermuda. Under no circumstances is the content of this article to be taken as specific individual investment advice, nor as a recommendation to buy or sell investment products, nor as a promotion for financial plans. The Editor of the Royal Gazette has final right of approval over headlines, content, and length/brevity of article.