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How is the return calculated on mutual funds for different term?

The returns from mutual fund is compounded

If a fund's return is at 12 % in 1 year and another fund gives 15% in 3 years. Assuming 10,000 is the investment in both funds, what will be my returns in 1 year and 3 years respectively.
-Sankar Narayanen

he fund with 12% return will generate a profit of Rs 1200 after one year, and the second fund with 15% annualized return will generate a profit of Rs 5209 in 3 years. This is because the profits that you earn in the first and second year stays invested for the balance period along with the principal amount.

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