what is the average annual return aar 
the average annual return aar is a percentage used when reporting the historical return such as the three five and 10 year average returns of a mutual fund the average annual return is stated net of a fund s operating expense ratio additionally it does not include sales charges if applicable or portfolio transaction brokerage commissions in its simplest terms the average annual return aar measures the money made or lost by a mutual fund over a given period investors considering a mutual fund investment will often review the aar and compare it with other similar mutual funds as part of their mutual fund investment strategy understanding the average annual return aar 