TOTAL RETURN AND YIELD

Returns on the money you invest in a mutual fund are not guaranteed. The value of a fund changes on a daily basis.

A fund's performance is an historical account of its past results.

Remember that past performance is no guarantee of future results.

Total return tells you how much a fund has gained or lost based on the amount invested, including any distributions.

It is not generally used to evaluate overall fund performance, but can be used to show you your straight returns. To figure your total return, multiply the number of shares you own by the net asset value, add all distributions, and then subtract the money you invested (including reinvested distributions) into the fund. For example, suppose you invested $1,000 into XYZ Fund and purchased 100 shares. It paid you $200 in dividends, of which you reinvested $100 to buy 10 more shares. You see that the NAV is now $9 per share. Your total return is

The most common tool for measuring a fund's past performance is average annual total return. This is the percentage of change in a fund's net asset value plus all distributions over time. Average annual total return is most often calculated for one-, five-, and ten-year periods. It assumes that all distributions are reinvested back into the fund. It is equivalent to the compounded return one would have had to get on an interest-bearing investment to achieve the same result. Yield is the amount of income you earn on a fund. A fund's yield is calculated by dividing the amount of income you earn on a fund by the price you paid for it. For example, if you invested $1,000 into a mutual fund and earned $100 in dividends, the yield on your mutual fund would be 10 percent. The current yield is the total of dividends from the last twelve months expressed as a percentage of current share price.

To get an even better sense of how your fund is performing, you can combine the elements of fund risk and reward. Let's see how in the next tutorial section.