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What Is a Fund Buying? Investors Want to Know

Readers say they have legitimate reasons for wanting more timely disclosure of funds' holdings.

In this space, I usually avoid expressing my own opinion. But this time is going to be different.


Monday's column, I talked about how frequently fund companies deliver holding information to shareholders.

Fund companies are only required to reveal their funds' complete holdings twice a year. Sure, some fund firms will update their lists of top-10 holdings more frequently, maybe at the end of every quarter. But I don't see any harm in at least giving shareholders top-10 lists dating back to the end of the previous month.

It's a way of informing shareholders and basically letting them know that you are not hiding anything. And if a fund experiences an unexpected pop or drop in value, the shareholders will have a place to look for a possible explanation.



readers offered some additional sound reasons for wanting timelier access to these data.

"I do believe it would be valuable if mutual funds updated their holdings more frequently. Increasingly, the best-performing funds are 'concentrating' their holdings," writes

Mike Riley

. "Also, I want to know if the reason a fund appreciated 20% in the month of January was its holdings in

America Online





. If my fund is going to own the Internet, I want to know it so I can anticipate the volatility that is sure to follow. When one position can make a fund's performance, it matters to the shareholder."

"When choosing a fund, it would be nice to know the most recent holdings to help inform my decision," says

Eric Gerber

. "And don't downplay the curiosity factor. Sometimes I just want to know what my fund manager is doing!"

Carol LeKashman

writes, "It helps with diversification and also lets me see if the manager is on the ball and fast on his or her feet."

"While I understand the primary arguments that funds present for not providing timely holdings information, I do believe that having that information serves important purposes," says

Tunga Kiyak


"The mutual fund is a tool that lets us buy a portfolio of stocks rather than each stock separately. Given this fact, don't you think that we would like to know what we are buying into?" he asks. "On the other hand, being forced to make decisions using two- to six-month-old information is simply absurd, especially considering the importance of timely information for this particular activity -- investing."

Kiyak continues, "Similarly, there are cases where you would want to avoid certain stocks. For example, with the Internet craze out there, I would surely want to closely follow my mutual-fund investments to ensure that none of them are buying bunches of


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with the hopes of putting some impressive returns on their next magazine ad."

Still, some investors are satisfied with the status quo.

"I am happy with current regulations that require biannual postings of fund holdings. It works to the disadvantage of everyone, including the individual investor, if funds were to show every trade they make. All that matters is the end result," writes

Matthew Wright


"I realized the point of investing in a mutual fund is to take some of the pressure off the individual investor. Do your homework, look at the manager, expense ratio and his or her goals and philosophy. If the profile works for you, have faith and invest with them. If you are not comfortable with this concept, don't. Go ahead and make your trades on your own," Wright says.

"I personally use a fund's top-10 holdings to help watch what the fund manager is increasing or decreasing, especially in sector funds. Also, I use that info as an added check in my purchasing and selling decisions," writes

Gary Johnsen

. "Fidelity does a great job in its Mutual Fund Guide. The January 1999 issue that I received in the mail about the 8th or 10th of the month has updated top-10 holdings dated Dec. 31, 1998."

Send your questions to, and please include your full name.

TSC Fund Forum aims to provide general fund information. Under no circumstances does the information in this column represent a recommendation to buy or sell funds or other securities.