Dividend cover, management outlooks, volatility control and quality of debt are all aspects investors should be looking out for when a closed-ended fund releases its annual report. 
With investment company reporting season in full swing it can be confusing for investors to know what they are looking for in the large statements with a lot of numbers being bandied about.
Below, FE Trustnet asks the experts what they look for when an investment company’s annual and half-year results are released.
The first and most obvious place to start is performance, as it give investors a full year’s worth of data to digest.
The Henderson Investment Trust team said: “The annual report provides investors with comparative year-on-year data for measuring performance.
“Additionally, the annual report often gives performance over much longer periods so investors can see overall trends and total returns.”
“This long-term indication of performance is better aligned to the close-ended nature of investment trusts and indicates just how well these vehicles do perform in the long-term.”
However, this is not the only information an investor needs to keep an eye on as alongside this is an outline of the business model, the company’s governance arrangements as well as the full financial statement, the team said.
One area of keen interest for investors away from past performance is the future plans for the company, with the chairman’s statement and fund manager commentary the first port of call for many experts.
“[Look for] anything from managers or the chairman. You are obviously getting a lot more information in the investment manager’s report and the chairman’s statement than you would do otherwise,” Kepler Trust Intelligence’s Alex Paget said.
This is usually coupled with any new market research, which GCP Student Living says is key for them to keep investors up-to-date on any market and industry changes.
Tom Ward, director of the fund, said: “There’s a lot about the marketplace that you wouldn’t know otherwise.”
“What we announce normally each quarter is just our net asset value and our dividend so the half-yearly provides a much more thorough [outlook],” fellow director Nick Barker added.
“Property valuations are updated as is the direction of travel. If you read our statements from the manager and the chairman you can see what we’ve been up to but also where we are going and what we see on the horizon.”
Performance of GCP Student Living since launch
Source: FE Analytics
As well as outlook, portfolio construction and changes made throughout the year give investors an insight into how their investment has changed over the last 12 months.
“It is always good if you are a shareholder in those companies to see exactly what the manager has been doing as they explain the drivers of performance and how the portfolio has changed over time – well the good annual reports will do this,” Kepler’s Paget said.
“The amount of information you get in terms of what has driven performance most managers now, particularly at the bigger firms, will give that information in their updates and you can see how the portfolio has changed over time as that is not necessarily easy data to get hold of.”
While many investors will scroll immediately to the statements, the numbers cannot be ignored either and GCP’s Barker says debt is something to keep an eye on.
He explained: “You may not pick up whether or not there is good debt or bad debt (for example cheap debt that is long-term or what the refinancing potential is) just from looking at our net asset value and dividend whereas if you read the results you can.”
This can be important to learn, particularly with the gearing figures which are also updated in the half-year and annual reports and can give an overview of what the company liabilities are and how leveraged it is.
To most investors, particularly those relying on a high income stream, dividend cover is one of the most important figures to look at in an annual report.
Kepler’s Paget said: “There’s a lot of stuff in there that is just accountancy that the average investor isn’t really going to read through but you can check how much dividend cover these investment trusts have if they are generating an income.” 
He says that while this information can be found by a cursory search online, the figures are not fully reliable as they show the dividend cover for what is believed to be the actual figure but does not take into account the final dividend to be paid after the report.
“We’ve got a machine that calculates the underlying dividend cover so it is not an easy thing to do but it’s good to find out whether or not the dividend cover that is being stated is correct.”
He adds that another figure to be aware of is how active the board has been in buying back or issuing stock to limit discount volatility.
“If they [the board] have a stated level [of volatility] and one of their stated objectives is to limit discount volatility and keep a lid on how far it can go out you can find that information pretty easily on how much they’ve bought back or issued which is always a useful thing.”
The final area which is close to a lot of investor’s hearts is charges – a bug-bear of many.
The team at Henderson said: “The ongoing charge is a key factor in understanding the actual costs of operating the investment trust.”
Paget added: “You can find out if there are any changes to the annual management fee or performance fee but the OCF [ongoing charge figure] will also change over time depending on various factors and you can find that out in the annual report – the chairman will have a bit on those sections.”
This figure is always based off the previous financial year so is only updated annually, he said.