Like other asset classes, Mutual Funds returns are calculated by computing appreciation in the value of your investment over a period as compared to the initial investment made. Net Asset Value of Mutual Fund indicates its price and is used in calculating returns from your Mutual Fund investments. Return over a period is calculated as the difference in sale date NAV and purchase date NAV upon purchase date NAV and converted to percentage by multiplying the result by 100 . Any net dividend* or other income distribution by the fund during the holding period is also added to the capital appreciation while computing total returns.
Capital appreciation in Mutual Funds is reflected by increase in NAV over time. This happens because NAV of a fund is derived from stock prices of companies included in the portfolio of the fund, and the prices fluctuate every day. Change in NAV of a fund over time contributes to the capital appreciation or loss in your holding. View the return performance of your investments in the account statement provided to you by the fund house. This statement captures both your transactions and the return on your investments.
Note: *NAV of a Fund falls to the extent of dividend payout and statutory levy, if any.