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Mutual Funds/Interpreting Mutual Funds

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Question
Hello,

Thanks for your service.  I am a non-math person, so I am setting the proper context.  I would like to know what the following terms mean.  Perhaps it could best be explained if you used $100 as an example.

On web page 1 you will see YTD, 1 yr, 3 yrs, 5 yrs, 10 yrs for Select Biotechnology Portfolio (FBIOX).  I would like to know what the year designations mean if the money were left in, and how to figure it out.  For example, does 3 years mean that the percentage shown is applied 3 times, once for each year, or is it applied 1 time to represent the full three years.

Also, on web page 2 it mentions trailing returns: YTD, 1 yr 3yrs annualized.  Is this calculation the same as above, or does it have a different meaning. (annualized)

Thank you very much

Here is web page 1: https://www.fidelity.com/fund-screener/evaluator.shtml#!&ntf=Y&msrV=advanced&msrA=4%2C5&fdPks=Y&mgdBy=F

Here is  web page 2: http://money.usnews.com/funds/mutual-funds/large-blend/weitz-series-fund-value-p

Answer
Hi Kee,

For web page 1, the YTD, 1, 3, 5 and 10 years reflects the performance of the fund from, for example, 3 years ago until today (today might be today or last month end, etc.) Yes, you could describe it as you leaving the money in for the entire period.  These returns are called time weighted returns.  For web page 2, annualized generally means the average annual return over the period.  For example, if a cumulative return over a 3 year period is 75%, the annualized return is approximately 25% (75/3). The actual annualized return would be close but not exactly 25%. For the Weits Fund, the 3 year return is suggesting that it returned on average 15.7% per year for each of the three years.  This would translate into a cumulative return of about 47%.  

To use $100 as a starting point.  The Weitz Fund's 15.7% annualized return would generate about $15.7 in each of the 3 years for a total gain of $47.

I hope this helps

Michael Weiss
http://www.series7examtutor.com
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Michael Weiss, CFA

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