How to read your mutual fund shareholder report— and why you should.

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Benchmark—A standard against which the performance of a security or a mutual fund can be measured. For example, many equity mutual funds are benchmarked to the S&P 500 index.

The information needed to get more out of your investments is at your fingertips. Mutual funds and exchange traded funds are required to prepare and deliver fund reports to their shareholders twice a year. These reports provide helpful insights into your investments, which can help you make more informed decisions. While reports might seem long and complex, we’ve broken out the key components to help you better understand them. Even a quick scan can help you understand a lot about the funds in your portfolio. What’s the investment performance? How does that compare with the fund’s benchmark? What are some of the top holdings in the fund? Setting aside a few minutes to assess the key elements of a fund report can help you feel confident your investments are on track. We’ll show you what to look for in this easy-to-follow guide.

The Condensed Financial Information (or Financial Highlights) includes a summary table that covers key financial information during the past five years (or since inception if shorter).

This table breaks down any change in the fund’s net asset value from one year to the next. It also delves into more in-depth financial data, such as share-class- specific total returns, distributions (dividend and capital gains) and portfolio turnover.

A fund’s holdings may include various stocks, bonds and other investments. Those holdings are selected by fund managers to achieve a certain level of risk and reward based on the fund’s objective. Your fund report is required to include a list of holdings and market value of each grouped by asset category.

Funds are permitted to include a summary of holdings but are required to provide a full list of holdings upon request.

Fund performance begins with the gains, losses and income earned. Fees and expenses are then deducted to create a net gain or loss, which affects your bottom line. Given this importance, the SEC requires funds to disclose all expenses associated with managing your money.

The performance section of your fund report will include two components.

The Shareholder letter is an opportunity for fund management to provide commentary on a fund’s performance during the past fiscal year. You can usually find this near the front of your annual report.

Here, fund management shares their thoughts on performance in light of market conditions. For annual reports, they are also required to touch on key factors that influenced the year’s return, such as which holdings contributed or detracted from performance. In addition to past performance, fund management can also offer insight into future investment direction.

Here we’ll cover important aspects including: • Management Discussion • Performance Data • Fund Expenses • Holdings Information • Financial Highlights

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Financial Highlights

Holdings Information

Fund Expenses

Performance Data

Management Discussion

Overview

Stay informed

This section contains a great deal of in-depth financial information that can seem overwhelming. Here are two things to consider. Note if the fund has a high portfolio turnover rate with frequent investment trades. Portfolio turnover may vary based on a fund’sinvestment strategy. However, a higher portfolio turnover rate can generate higher transaction expenses and/or generate capital gains distributions.

Also check if the fund has distributed capital gains or dividends to shareholders. If your focus is on current income, you may prefer higher dividends and distributions generally associated with bond and other income funds. Or, you may prefer lower dividends and capital gains as these distributions will likely impact your taxable income (unless your account is held in an IRA or other tax-free/tax-deferred account). If you are unsure of these implications, discuss them with your tax advisor.

Evercap Funds Condensed Financial Information chart that showing five years of detailed financial data. The Total Distributions and the Portfolio Turnover Rate have been highlighted in yellow.

Distribution*— A fund’s payment of dividends and capital gains to shareholders.

Total return—A measure of a fund’s performance that encompasses all elements of return: dividends, capital gains distributions, and changes in net asset value (NAV). Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gains distributions, expressed as a percentage of the initial investment.

Net asset value (NAV)—The per-share value of an investment company, calculated by subtracting the fund’s liabilities from the current market value of its assets and dividing by the number of shares outstanding. Mutual funds calculate their NAVs at least once daily on each day the financial markets are open.

Orange ruled box outlines the Evercap Condensed Financial Information chart that breaks down any changes in the fund’s net asset value and other in-depth financial data.

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Financial Highlights

Fund reports will generally also include a table, a chart or a graph showing the fund’s holdings by category. Categories may include geographical region, type of security, credit quality or industry sector. These high-level summaries are often more informative than narrowly assessing each individual holding in a fund.

Here you’ll see assets held, the number of shares owned per asset and the total market value for each. Holdings information will vary based on asset class and fund type.

Orange ruled box outlines the Evercap Funds Statement of Investments chart that delineates the assets held, number of shares per asset and the total market value of each.

Holdings Information

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Chart displaying a standardized table showing actual expenses compared to a hypothetical $1,000 investment over the course of one year from January 1 through December 31 and shows three share classes. Exhibited are the beginning account value, ending account value and expenses paid during the period, ending with the net annualized expense ratio.

In this example, you can see that an investor in ABC shares paid $1.23 in expenses for every $1,000 invested and the share class with lowest expenses (institutional shares) had the highest ending account value.

Get your questions answered (Q&A)

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You’ll find this information displayed in a standardized table format, where you’ll find expenses displayed based on a hypothetical $1,000 investment.

Fund Expenses

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Learn more about a fund’s total return.

A fund’s total return is affected by both the underlying performance of fund investments and its fees. Performance begins with the gains, losses and income your fund earns from its investments during a given period. Fees and expenses are then deducted to create a net gain or loss. Keep in mind that your individual performance may vary based on the timing of your investment in the fund and other transactions.

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This table makes it easy to understand fund returns for one, five and ten-year periods or the life of the fund.

The average annual return (AAR) represents money earned or lost by a mutual fund during a specified period. This is shown as a percentage and takes into account three components: share price appreciation, capital gains and dividends. While averages can’t reveal trends, the AAR is a standardized metric that you can use to easily understand and compare funds side by side.

This chart offers a glimpse into performance over time—and is always based on a hypothetical $10,000 investment. To provide context, your chart will compare fund performance alongside an appropriate benchmark index, such as the S&P 500.

Consider if you’re comfortable with the overall performance and volatility. Compare how well it aligns with the movement of the index. Keep in mind that volatility is generally tied to asset class. For example, bond funds will generally fluctuate less than stock funds. So, if you are comparing performance charts for different investments, always compare similar funds to get the most relevant reading.

Fund performance chart image: Mountain chart showing the performance of a $10,000 investment in the Evercap Value Fund compared to a $10,000 investment in the Russell 1000 Value Index over ten years between January 2012 and December 2021. The Evercap fund investment totaled $22,607 and the Russel 1000 fund investment totaled $33,178 as of December 2021.

Learn more about a fund’s total return

The fund’s average annual total returns for one, five and ten-years (or over its lifetime if shorter).

A mountain chart of the fund’s performance during the past 10 years (or over its lifetime if shorter) based on a hypothetical $10,000 initial investment alongside an appropriate index.

Mountain chart showing the performance of a $10,000 investment in the Evercap Value Fund compared to a $10,000 investment in the Russell 1000 Value Index over ten years between January 2012 and December 2021. The Evercap fund investment totaled $22,607 and the Russel 1000 fund investment totaled $33,178 as of December 2021.

Performance Data

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Note the report period. The information discussed pertains to the fiscal year or semi-annual period identified on the cover of the report.

Blue ruled box outlines one paragraph in the letter to the shareholders stating the report period.

Shareholder letter from the Evercap Annual Report

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As you read through management’s discussion, assess the rationale and perspective of fund management to ensure it aligns with your views and expectations.

Blue ruled box outlines one paragraph in the letter to the shareholders about the rationales and perspectives of fund managers.

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Keep in mind that this section represents the thoughts and opinions of management that influence investment decisions. It is meant to provide context to the data contained in the report.

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Management Discussion

The fund report is one way to keep up with investment performance, holdings, fees, financial conditions and fund operations. But reports are only created twice per year. A fund’s website will contain much of the same information with more current updates.

Keep informed all year round.

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The Securities and Exchange Commission is the governing federal agency that determines fund reporting requirements across fund families. But each fund has some flexibility in report design and in their own reporting approach. So you may notice some minor variations in sections, section headings, language and the overall depth of information included in a report.

All reports are not the same.

Individual fund reports (or a notice stating where to find them on the fund’s website) must be mailed or emailed to all shareholders. A briefer semi-annual report must also be provided six months into the fiscal year.

Fund reporting requirements

Keep informed all year round

All reports are not the same

Fund reporting requirements

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Overview

Dividend—Money that a fund or company pays to its shareholders, typically from its investment income, after expenses. The amount is usually expressed on a per-share basis. A dividend is a type of distribution.

Capital gains distributions—A distribution to mutual fund shareholders resulting from the fund’s sale of securities held in itsportfolio at a profit.

Can fees be waived?

Fund management will sometimes waive certain fees. Should this occur, details will be disclosed in your fund report, including how long a particular fee will be waived.

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Do fees change over time?

They can. Since fees are calculated based on the operations of the fund, there may be some fluctuations. However, if you notice large deviations in expenses over time— or if fees increase relative to comparable funds— you should consider the impact to your investment.

What’s the right fee?

It depends. Expenses will vary based on many elements including the complexity of the fund’s investment strategy. For instance, an index fund will naturally come with lower expenses than would a global fund due to differences in the resources used to manage the fund. So a fee comparison is more useful when comparing similar or peer funds.

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What expenses are included?

Expenses may include management fees, distribution & service (also called 12b-1) fees, investment advisory fees, transfer agent fees, and administrative costs among others. The combined fees are the best foundation for comparison—those are represented in a fund’s total operating expense ratio or percentage.

Can fees be waived?

Do fees change over time?

What’s the right fee?

What expenses are included?

Share classes—Some mutual funds offer investors different types of shares known as classes (e.g., Class A, institutional shares). Each class will invest in the same portfolio of securities and will have the same investment objectives and policies, but each class will have different shareholder services and/ or distribution arrangements with different fees and expenses and, therefore, different performance results. A multiclass structure offers investors the ability to select a fee and expense structure that is most appropriate for their investment goals (including the time that they expect to remain invested in the fund).

Asset class—A group of securities or investments that have similar characteristics and behave similarly in the marketplace. Three common asset classes are equities (e.g., stocks), fixed income (e.g., bonds), and cash equivalents (e.g., money market funds).

12b-1 fee—A mutual fund fee, named for the SEC rule that permits it, used to pay distribution costs such as compensation to financialadvisers for initial and ongoing assistance. If a fund has a 12b-1 fee, it will be disclosed in the fee table of a fund’s prospectus.

Management fee—The amount paid by a mutual fund to the investment adviser for its services.

How does fund management view this year’s performance?

Fund performance data

Fund’s average annual total returns

How much are you paying funds to manage your money?

Total fund expenses

Portfolio Allocations

Know your share class

Know your share class.

It is very common for companies to issue shares with different classes. Be sure you understand differences in fees and expenses for share classes and evaluate the report data for the share class you own.

*Distributions are either reinvested to buy more shares or sent to shareholders based on shareholder preferences.

: Evercap Funds Annual Report showing cover and opened to the Shareholder letter page

: Evercap Funds Annual Report showing cover and opened to the Your Funds Expenses page

Evercap Funds Annual Report showing cover and opened to the Condensed Financial Information chart

Portfolio turnover rate—A measure of how frequently securities are bought and sold within a fund during a year. The portfolio turnover rate usually is expressed as a percentage of the value of a fund.

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Each report provides an overview of a fund, so you can stay up to date on its performance. An annual report is issued at the close of each fiscal year and a semi-annual report is created after the fund’s 2nd quarter.

Evercap Funds Annual Report showing cover and opened to the Statement of Investments page

Evercap Funds Statement of Investments chart that delineates the assets held, number of shares per asset and the total market value of each.

Chart showing the average annual total returns of a $10,000 investment in Evercap Value fund at one year (1.08%), five years (0.31%) and ten years (3.84%) with a final total of $14,575.00. These figures are compared to Benchmark/Index whose figures were 1.08% at one year, 0.29% at five years and 3.87% at ten years with a final total of $14,616.00.

Chart showing the average annual total returns of a $10,000 investment in XYZ Funds at one year (1.08%), five years (0.31%) and ten years (3.84%) with a final total of $14,575.00. These figures are compared to Benchmark/Index whose figures were 1.08% at one year, 0.29% at five years and 3.87% at ten years with a final total of $14,616.00.

Consider if you’re comfortable with the overall performance and volatility. Compare how well it aligns with the movement of the index. Keep in mind that volatility is generally tied to asset class. For example, bond funds will generally fluctuate less than stock funds. So, if you are comparing performance charts for differentinvestments, always compare similar funds to get the most relevant reading.

Expenses may include management fees, distribution and service (also called 12b-1) fees, investment advisory fees, transfer agent fees, and administrative costs among others. The combined fees are the best foundation for comparison—those are represented in a fund’s total operating expense ratio or percentage.

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Share classes—Some mutual funds offer investors different types of shares known as classes (e.g., Class A, institutional shares). Each class will invest in the same portfolio of securities and will have the same investment objectives and policies, but each class will have different shareholder services and/or distribution arrangements with different fees and expenses and, therefore, different performance results. A multiclass structure offers investors the ability to select a fee and expense structure that is most appropriate for their investment goals (including the time that they expect to remain invested in the fund).

*Distributions are either reinvested to buy more shares or sent to shareholders based on shareholder preferences.

Management fee—The amount paid by a mutual fund to the investment adviser for its services.

Benchmark—A standard against which the performance of a security or a mutual fund can be measured. For example, many equity mutual funds are benchmarked to the S&P 500 index.

Management fee—The amount paid by a mutual fund to the investment adviser for its services.

They can. Since fees are calculated based on the operations of the fund, there may be some fluctuations. However, if you notice large deviations in expenses over time—or if fees increase relative to comparable funds—you should consider the impact to your investment.

*Distributions are either reinvested to buy more shares or sent to shareholders based on shareholder preferences.