Shareholders' funds is the balance sheet value of the shareholders' interest in a company. For company (as opposed to group) accounts it is simply all assets less all liabilities. For consolidated group accounts the the value of minority interests should also be excluded.
The addition of minority interests gives us “shareholders' fund including minority interests”. Further adjustments gives us total equity.
The balance sheet value of assets does have some significance for valuation (see NAV). However, changes in shareholders' funds are also important. The most obvious reason for shareholders' funds to change is that profits have been made and retained, however changes can also be caused by gains or losses that do not go through the P & L, such as revaluations.
This is why both the statement of total recognised gains and losses (STRGL) and the note to the accounts reconciling beginning and ending shareholders' funds are important, the more so because looking at changes that have not gone through the P & L can alert investors to some manipulations of the accounts. For example, a consistent accumulation of unrealised losses on investments may be a cause for concern.
The items within shareholders' funds (share capital, reserves and retained profit) are usually of little importance, although the amount of distributable reserves might matter to shareholders if it is too low, and (even more rarely) to creditors if it is too high.