Measure a Funds Annual Return

When you're choosing mutual funds, one of the key things you're probably looking for is how well the fund is doing. The annual return tells you how much money the fund has made or lost over the last year. It also tells you the average annual return over the last 3, 5 and 10 years. To measure your fund's annual return, you need to learn to read a mutual fund bar chart. The fund chart tells you general information about the fund, its ranking relative to other funds in its category and its past performance.

How to Read a Mutual Fund Chart

Open your prospectus to the annual returns chart (generally found in the first few pages).

Find the name of the mutual fund you are interested in along the left-hand side of the chart.

Look at the first column in your mutual fund annual return chart to find the assets. These are the total assets belonging to the mutual fund. They are made up of all the money invested by all the shareholders.

Understand that if the first column of your chart does not show total assets, it shows the year-to-date returns for the fund. If the first column shows assets, the year-to-date return is the second column.

Move to the next columns (in order from left to right) to find the 1-year, 3-year, 5-year and 10-year returns.

Realize that if your mutual fund is less than 10 years old, it may include a final column that shows the returns since the mutual fund developed.

Follow along the columns from left to right along the same line where you found the mutual fund's name.

Understand that if your mutual fund report includes its relative ranking, the rank will follow the period of time it is for.

Tips & Warnings

• To measure mutual funds, check out their long-term performances, not just the past year.
• A mutual fund chart is a picture generally found in the first few pages of your prospectus or annual report.
• The numbers reported in your annual return report are percentages.
• Mutual funds are ranked comparatively to others of their same type and size.
• You should never assume that past performance is indicative of future performance. When you measure annual returns, you should just be looking at how the fund has done generally over the past years.
• Not all mutual fund charts are exactly the same, so look carefully to see what yours is telling you.