Keep copies of all your mutual fund statements that list purchases, sales, dividends, and capital gains. Once you receive your annual summary statement, following the end of each calendar year, you can shred the quarterly statements for that year because all the information is contained on the annual statement. If you sell mutual fund shares during the year, you will receive an additional statement from the mutual fund with the information necessary to compute your capital gain or loss for federal and state income tax purposes. Some fund statements even provide data on the average cost basis of shares and the taxable amount resulting from the sale.
If no annual statements have been kept, ask the company or broker for back copies; a fee may be charged for this service. These records will be valuable to you in assessing a fund's performance over time and helpful at the time of sale.
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