How Do You Understand An Annual Mutual Fund Statement?
Investing in mutual funds is an excellent way to participate in the gains of the stock and bond markets, while limiting your risk. Investing in individual stocks and bonds means putting all of your eggs in one basket, but with a mutual fund your investments are spread out among many different stocks and bonds. But it is not enough to simply choose a mutual fund and forget it. All mutual fund companies send out performance information periodically to their shareholders, and it is important for investors to read that information carefully. Turn to the beginning of the annual statement and look for the performance information. Most mutual fund companies will list the performance of the fund for the previous 12 months, as well as for other time periods. Depending on how long the fund has been in operation, you may see figures for five years, 10 years, and even 15 years or more. Compare the performance of the fund to the relevant stock and bond indexes. In many cases the mutual fund company
