Originally Posted by inquisitive
Have been reading about mutual funds recently, the number to track is apparently the NAV. If I look at historical performance, it's probably the NAV I am looking at, but I heard that mutual funds frequently give additional shares back to the owner which is not reflected in the NAV. Is this true and does this mean that I am actually seeing worse historical performances on mutual funds than are actually occurring?
the NAV at the close of the day (less expenses) is what you get if you redeem your shares
when the fund does a distribution ... the NAV will drop by the amount of the distribution as these funds are being paid out (most investors select the reinvestment option and additional shares are purchased with the money)
your total return calculation would need to include the distribution for an accurate return amount ... the particular funds web site will certainly take this into account
if you are using a third party chart or return calculation ... you need to check to see if the chart takes into account the distribution