NAV

One measure of a fund's performance is whether the total value of the investments in its portfolio increase or decrease.

A fund's net asset value (NAV) increases when the value of its holdings increase and declines when they decline. For example, if a share of a stock fund that cost $9 a year ago costs $15 today, there's been a gain, or increase, of $6 a share (or about 66 percent) before expenses.

Yield

Yield measures the amount of income a fund provides as a percentage of its current price, or NAV.

Comparing the yield, or income, of a mutual fund with the yield on comparable investments can help you decide which is a stronger investment. For example, a long-term bond fund with a NAV of 10 dollars paying a 58 cent dividend per share provides a 5.8 percent yield, which you could compare to the performance of an individual 30-year bond.

Return

"Total return" tells you how much you've made or lost, based on the amount you invested.

You figure total return by dividing the current value of an investment, including reinvested distributions, by the cost of the initial investment. (The current value is the number of shares times the NAV.) For example, an investment worth $85,000 that cost $5,000 has a return of 1700 percent.

Making Comparisons

You can compare your fund investments to other ones you might have made as part of a performance evaluation.

You can compare a fund's yield or total return to the performance of similar funds offered by different companies, or to funds with different goals. You can also evaluate a fund in relation to other ways the money could have been invested - in stocks or bonds, for example. Because return is figured differently for each type of investment, there isn't a simple formula for comparing stock funds to individual stocks or bond funds to individual bonds.

Using Benchmarks

One way to compare investment performance is to measure an individual mutual fund against a benchmark, or standard, for similar investments.

Lipper Analytical Services provides daily performance indexes for nine categories of mutual funds. The gain (+) or loss (-) a particular fund has shown over the last week and since the end of last year can be compared with the performance of all the funds in that group.

In this example, Capital Appreciation Funds have moved up 1.06 percent since last week and 3.88 percent since December 31. Growth Funds are doing better for the year, up 5.28 percent. All the individual funds in those categories will have done better, the same, or worse.

More Benchmarks

Another measure of a fund's performance is how it stacks up against the movement of a major market index that reports on the same kind of investments the fund makes.

For example, a gain or loss in a general stock fund could be compared with the direction of the Standard & Poor's 500 Stock Index, while a bond fund could be compared with a Government/Corporate Bond Index.

All that these benchmarks provide, however, is a general sense of performance, not an actual comparison. That's because index figures don't include reinvested dividends or interest, or the costs of buying and selling, so they can't be compared directly with total return figures.

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