Does your mutual fund reveal the whole story?

NEW YORK — New York -- You say you know how your investments are doing? You say you check up on your mutual funds after every quarterly per formance report?

Sorry, that doesn't give you the answer. These reports show only how the fund itself is doing. Your own investment may not have earned the same amount.


Third-quarter mutual-fund results, as reported by Morningstar, showed U.S. stock funds up an average of 5.6 percent. International stock funds did even better, climbing 8.7 percent.

To find your return, however, you have to account for other factors, like when you bought your shares and whether you paid a sales load. If you don't know how to make these adjustments, you're probably overestimating how much you've actually earned.


Take the question of timing. Your fund's official performance results assume a fixed investment with dividends used to buy more shares. But that doesn't describe the way most investors handle their money. You might buy shares monthly, through a 401(k) retirement plan, or add cash to your fund whenever you have the extra money, or sell some shares, or use your dividends to live on. These choices modify your gains. The average stock fund has risen more than 11 percent this year, with dividends reinvested, but only about 9 percent with the dividends cashed out.

You can figure your return if you're quick with a calculator. But you shouldn't have to bother. Your mutual fund should compute it for you, showing you both the fund's and your return.

To most funds, this idea is as welcome as a squirt in the eye. "A logistical nightmare," objects Malin Jennings of the Investment Company Institute.

But individualized returns are common elsewhere in the money world. They're computed by investment advisers who run individual accounts, and by many of the financial planners who invest clients' money in mutual funds. Funds could offer this service themselves, if they built up a data base, adopted well-established accounting conventions and developed software.

Many industry honchos argue that you don't want or need a personal performance statement. But you might rethink your investment approach if you saw that you were earning less than you thought. You might try harder to leave your retirement fund intact. Above all, you would know the truth.

As far as I know, only one mutual-fund group calculates personal investment results: IDS Financial Services, based in Minneapolis. These statements, available only through the company's financial planners, disclose the history of your account: cash in and cash out, current dividend yields and total returns over one, five and 10 years.

An even tougher nut to crack is the statement sent by your stockbroker. It's a disgrace. Your securities are listed, your income shown and transactions recorded.

But you don't see total commissions paid or your gross investment returns, so there's no way to calculate how you or your stockbroker has performed.


"If brokers started showing performance, investors may see they could be doing better with a mutual fund," says Mary Calhoun of Watertown, Mass., a securities arbitration specialist.