A fund's past performance is based on its historical returns. While not a guarantee of future results, understanding how the fund has reacted to economic conditions over time can help you gauge the effectiveness of its management and how it will likely perform going forward.
Past performance also shows you how the fund has done in comparison to appropriate benchmarks and whether returns have been consistent year-to-year or if they've fluctuated wildly. Generally, professionals recommend observing a fund's performance over a period of five to ten years.
Investors should consider the investment objectives, risks, charges, and expenses of a mutual fund carefully before investing. A prospectus contains this and other information. A mutual fund prospectus is available through www.scottrade.com or through a Scottrade branch office. The prospectus should be read carefully before investing.