How can you monitor the performance of your mutual funds? Mutual fund shares, like individual securities, are quoted daily in the Wall Street Journal, the New York Times and in most major metropolitan newspapers.
The price at which a fund share is purchased is based on the net asset value (NAV) per share. To determine the NAV per share, the fund's NAV is divided by the number of shares outstanding. The NAV can change daily because of changes in the market value of the fund's portfolio. If the number of shares remains constant while the portfolio value increases, then the NAV will also increase.
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Check the prospectus
Your primary source of performance information is found in the mutual fund prospectus. Near the front of the prospectus you'll find a financial table that lists the fund's per-share results over various periods. The financial table also provides the following information:
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Costs: Note whether the annual expense ratio has declined, suggesting that fund has achieved economies of scale as its assets have increased.
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Tax efficiency: The fund's turnover rate measures its trading activity. The more frequently a fund buys and sells securities, the greater your potential tax burden.
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Fees: Check to see the fund's operating expenses and sales loads or fees. These expenses affect your returns.
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Read the commentary
To help you interpret performance data, the fund reports usually include commentary from the investment manager. These messages to shareholders can shed important insights into the fund's performance.
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Read independent fund reports
Your local library is another great source of information on mutual funds. Here you'll find one or more of several standard mutual fund reference works, including the Morningstar Mutual Fund Sourcebook, the Wiesenberger Investment Company Service, and Lipper Mutual Fund Profiles. These publications condense essential information about thousands of mutual funds, summarizing investment objectives, fees, and performance over various time periods. You'll also find similar information on the web sites sponsored by these companies.
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| Past performance does not guarantee future results. The principal value of an investment and investment return will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. |
