Tear Sheets

A tear sheet can refer to a fund company's fact sheet or another one-page piece of marketing collateral. The slang term is derived from pre-internet days when Standard & Poor used to produce one-page summary sheets for public companies. The summary page gives an overview of business segments, recent operating results and key fundamental analysis metrics. Pages for specific companies could be torn out of the larger book.

Tear sheets go back to the old days when stockbrokers would rip individual pages out of the S&P summary book and send them to current or potential clients. These days, most information is extracted online, so any concise representation of a company's business fundamentals could be considered a tear sheet. Fund companies or brokers often provide "tear sheets" to prospective investors to provide insight into possible investments. They can be presented one by one, or put together in a folder and left with the client.

A tear sheet varies from a prospectus in that the tear sheet is usually only one or two pages and will usually contain a summary of the investment, the investment manager's benchmark, a graph showing historical performance, a few statistics such as 3- or 5-year alpha and standard deviation, and some information about the fund company managing the investment. A prospectus is a much longer document and is required to be provided to an investor at or before the time of investment in a fund. Although many brokers or fund companies use tear sheets to market their products, it is not required by law that one be provided to a prospective investor.