Annual reports of companies seem to always include multiple sections before the financial statements. For example, "financial highlights", "chairman's letter", "CEO's report", "corporate social responsibility", etc. From my understanding, the meat of an annual report is in the financial statements (and the associated notes), and not in all the parts filled by colorful pie charts, pictures of shiny new equipment, and pictures of smiling people. How important are the sections that are not part of the financial statements? Can I skip them completely?


Knowing what the chairman/CEO etc are planning to do in the next year is important to adjust your expectations of future financial performance. So reading the Chairman's letter, will let you know if a freight logistics company is buying more trucks or opening new regions vs closing regions. Or if an oil company plans to build solar infrastructure, which is important if you think that's a good or bad idea for future performance.

Knowing plans, to the extent that they're being disclosed publicly, can be valuable.

Though, I'll say, in the several years following the financial crisis it got very old to listen to every CEO/Chairman complain about the economy in all of those letters. That economy-wide pity party was not valuable. The same is happening now with Covid disclosures and explanations. How many quarters are we going to have decks about Covid closures as though your company was the only one impacted? etc. Make no mistake, there is a lot of useless fluff in those letters.


It depends on what you want from the report. Nothing will happen if you don't read it. So if nothing happening is an acceptable outcome for you, then don't bother reading it.

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