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pretty much run-of-the-mill. But they do deserve a look - you may be able to spot a few unusual ones as well.

Performance - One of the items any investor would be interested in when evaluating a fund is its past performance. We all have heard the expression, "past performance is not a guarantee of future results." True, but past performance may at least provide the investor with a small clue of how the fund is managed. A fund that has been losing money year after year for 10 years is probably not a good fund to invest in. Here's your chance to study the fund's historical performance. Usually the prospectus gives the fund's annual performance, known as the annual total return, for the past ten years. It also provides a chart showing the average annual returns for the past year, past 5 years, past 10 years, and sometimes the annual return since the fund's inception. There may also be similar period comparisons to popular benchmarks such as the S&P 500 or NASDAQ 100 as a reference.

The historical performance numbers usually do not include sales charges; however, they do include a fee known as the operating expense (covered later on). Let's take a look at an example. Suppose our fund has had a five-year average return of 10% (meaning 10% per year for the past five years). This means that if you had invested $2,000 in this fund one year ago, you would have had $2,200 at the end of year (excluding possible sales charges). If you had bought into the fund five years ago with the same $2,000, your compounded asset value after five years would have been $3,221.02, and so on. Again, remember that just because a fund has done well or poorly in the past, there is no indication that it will continue performing the same way in the future. Past performance must be considered together with other data from a fund. …