3 important documents when investing in US stocks

by Vested Team
March 16, 2022
3 min read
3 important documents when investing in US stocks

For the last few years, investing in US stocks from India has become easier and more convenient. However, when investing in a stock, it is important to do due diligence on the company. Knowledge about the company and its financials will help you make better informed investing decisions. In this blog, we take a look at three documents you should read when picking US stocks.


This is one of the most important documents that publicly traded companies are required to file with the Securities and Exchange Commission (SEC). The 10-K is a comprehensive annual report which gives investors a detailed picture of the company’s business and financial situation. 

The 10-K is different from an annual report which a company needs to send its shareholders before an annual meeting. It is organized such that it is easy to find relevant information. It has four distinct parts. 

Part I:  This section provides an overview of the company’s business including a description of the company’s business, its main products, the markets it operates in, and its subsidiaries.  Next, information is provided on the risk factors, this includes significant risks that the company or its security may be facing. Information about any significant pending lawsuits or legal proceedings against the company and a list of the properties held by the company is also covered in this section. 

Part II: This section is one of the most important sections as it lists all financial data pertaining to the company, including audited financial statements such as the auditor’s report, a consolidated balance sheet, a consolidated statement of operations, and so on. Previously, such data had to be reported for a period of five years, which is now no longer a requirement.

This section also includes the Management Discussion and Analysis section where the company’s management explains the company’s performance in that period from their perspective. The Management Discussion section is an important section. It helps understand how the company’s leaders are thinking about the business.

Part III: This part provides information on the senior executive team. It provides detailed information on their background, experience, compensation, and shareholdings in the company (if any). Companies are also required to disclose the fees paid to their accounting firm for any services rendered. If the information is too extensive, companies can provide it in the form of a proxy statement, which is filed a month or two after the 10-K. 

Part IV: This section lists the financial statements, schedules, and exhibits that are filed under part II. The company’s bylaws, copies of material contracts, and a list of the company’s subsidiaries also need to be published. Also, the company’s CEO and CFO must certify that the information provided is complete and accurate.


The10-Q is a report that the SEC requires all public companies to file on a quarterly basis. It is similar to the 10-K, but contains fewer details and the financial statements included are unaudited. Three 10-Q reports need to be filed every year, the final report for the fiscal year is included in Form 10-K. The idea of the 10-Q is to provide a continuous view of a company’s financial position during a certain year. It helps investors compare the company’s performance across two quarters and get an idea of the financial health of the company they may wish to invest in.

Letter to the shareholder

Warren Buffet’s letters to his shareholders have become a required read for everyone in the investing world. As the name suggests, a shareholder letter is a letter which is written by a company’s top executives to its shareholders. The purpose of the letter is to provide the shareholders an overview of the company operations during the year. The letter normally talks about the financial results, events that occurred during the year, and also plans for the coming year. The shareholder letter gives an opportunity to top company executives to speak directly to their shareholders and makes for an interesting read.. 

When investing in stocks, there is a lot of information out there, which could sometimes be overwhelming. Start with the key documents outlined above to understand more about a company and whether it makes a good investment. Read here to know more about how to invest in US stocks from India

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