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I have a question about the total return of mutual funds. I know this might seem like a very basic question, but it is a little confusing to me.
Suppose I had put $10,000 into a no-load mutual fund on Jan 1, 2007. Also assume I did not add to that investment or withdraw any money from it. Also, I had all the distributions (dividends and capital gains) reinvested back into the fund. Now, to make the math easy, suppose the fund had a total return for 2007 of exactly 10%. Does that mean that the market value of my initial investment on Dec 31 would be $11,000? (10% more than $10,000). It has always been my impression that my value would be $11,000. If not, what other factors are at play that determines the value of my investment?
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