Investment Companies - Performance

Total Return
When measuring performance, the actual rate of return of an investment or a pool of investments over a given evaluation period. Total return includes interest, capital gains, dividends and distributions realized over a given period of time. Total return accounts for two categories of return: income and capital appreciation. Income includes interest paid by fixed-income investments, distributions or dividends.

Capital appreciation represents the change in the market price of an asset.

Annual Income. or Current Yield

For investors who are interested in generating current income or who have income as a secondary objective comparing the income or current yields of two funds may be an important point to review to determine the best overall performance.

Expense Ratio
The percentage of total fund assets that is used to cover expenses associated with the operation of a mutual fund. This amount is taken out of the fund's assets and lowers the return that fund holders achieve. These expenses include management fees and operating expenses. The management fee is the fee that is charged to the fund by the portfolio manager, and it is often a fixed percentage. The operating expenses are the expenses that the fund incurs through operation and this can include brokerage fees, taxes, investor services, and interest expenses.

Also known as the "management expense ratio" (MER).

The amount of the MER is usually dependent on how active the portfolio manager is in the trading of the fund; an actively managed fund will have a higher ratio than an index fund, for instance. It is important for investors to be aware of the MER as it affects the rate of return that an investor in the fund achieves. The amount of the MER must be stated in the fund's prospectus.

Quantitative Risk Management
A form of analysis that uses financial information derived from a security's issuing company's annual reports and income statements to evaluate the security's investment risk.

Tracking Investment Company Securities Performance
Mutual fund quotations are available in daily publications such as the Wall Street Journal or the business section of your local newspaper. Financial sites such as, and Yahoo! Finance offer free mutual fund quotes and allow you to search by the fund's five-letter symbol.

These websites also have a symbol look-up feature, in case you do not know the fund's trading symbol. Moreover, most investment companies now have their own websites where you can download prospectuses, fact sheets and detailed information on fund holdings and investment objectives.

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