Q: I noticed that the chart for HWP on your site shows HWP dipping below 100 almost to 90 in late May 2000. Charts for HWP on other websites, and daily price data on another site, do not show HWP dropping below 100 during that period.

Q: I discovered that there was a difference in the fund charts, compared to both another site and the fund's home website. The problem: there were lower lows in May 00 from Jan 00 on both the other sites, while StockCharts.com showed higher lows for this time period. Please explain how you got this info and if you think this info is correct. Thanks.

Q: I'm concerned about the accuracy of your charts, especially when I'm relying on the charts for investment decisions. In particular, I'm referring to a 3-year weekly chart for VIVAX. The chart appears to have major errors concerning the NAV's. I compared it with a similar chart on Big Charts and the charts are completely different. Can you explain the difference to me? Thanks.

A: These questions are all specific instances of a general question: How should dividends and fund distributions be accounted for on charts?

The charts on StockCharts.com are adjusted downwards to account for dividends and fund distributions. Other sites may or may not make similar adjustments. By adjusting our historic data downwards whenever a dividend or distribution occurs, we feel we are giving you a truer picture of how the security actually performed over time.

An very similar situation occurs when a stock splits. You buy a stock in July at $50 and it rises to $100 by December and splits. If the chart showed a huge drop in price you would know something was wrong. What happens is the chart data gets adjusted for the split, and now it looks like you bought twice as many shares in July for $25 each and they are now worth $50.

The same has to happen with mutual fund distributions, dividends and other payouts. Let's say you buy a fund at $10 a share, and it rises to $11, then pays a distribution of $1. If the chart shows a sharp 10% drop at year end and lists the NAV at $10, you are looking at raw data. You either received a check for $1 or you now have more shares than you did before. But the chart should adjust the share prices back in time to reflect the fact that the fund rose 10%. An adjusted data chart would show the correct price after the distribution of $10, and the earlier price would be an equivalent $9, with no sharp drop in the chart.

Adjusted data charts reflect the equivalent value of the stock or fund with respect to the present pricing. Just as you could not have bought the stock at $25 in July, your fund chart should show what the equivalent value of the fund share was in the past, to account for distributions.

Charts that do not reflect distributions should not be used to perform any technical analysis. The reason is simple -- if you had bought VFIIX six months ago, you would have paid about $9.70 a share. If you sold it all today at $9.90, you would still need to add in the $0.30 dividend or distribution received during that period to calculate your gain. StockCharts.com's adjusted data charts do that for you, and show the equivalent NAV of $9.40 six months ago.

Adjusted data for stocks is a different beast. When Ford spun off Visteon, holders of Ford stock received shares in Visteon -- and the value of each Visteon share was equal to the drop in Ford share price on the day of the spinoff. If you invested in Ford, you still would have the same amount of capital. If you were going to buy shares that day - you would pay the listed price. The chart should reflect that new lower price for stocks, but it should not for mutual funds.

For more about adjustments and the HWP situation specifically, check out Arthur Hill's MailBag reply right after the adjustment occurred.

Hope this helps
Scott McCormick