The two dangers an investor faces is the way one calculates fund returns and who earned them

So far the year has been one of flat returns, but Jim Lowell, Fidelity investor, has a warning.

Don't be taken in by fund advertisements that announce the returns through the end of 2005's third quarter. Lowell promises that these numbers will be extremely misleading, and confusing at the same time because they are centered on single-period returns.

The bear market almost hit rock bottom three years ago, at the end of September 2002, actually hitting its lowest point in mid-October before bouncing back to positive returns that month. When the three-year returns ending September 2005 are tallied up, things will be looking great.

In contrast, the five-year outcomes may appear better or worse??? than they should, considering where they started. In the end of September 2000 the stock market was 6% under its March record high. These "annualized" returns should not be used to completely read fund performance because, in reality they can "mask the real story," said Lowell.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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