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Currency movements and your portfolio
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Currency fluctuations don't only affect tourists vacationing overseas. If your mutual fund includes investments in companies outside the U.S., the shifting of currencies plays a role that is often overlooked.
There is something called the "translation effect", which means basically if you invest in an overseas company, you are using dollars to purchase shares denominated in that countries currency. If the dollar is strong relative to that currency, it takes fewer dollars to make the purchase, and if the dollar is weak, it takes more dollars to make the purchase.
When it comes to selling, if the dollar is strong, you get fewer dollars back when you sell, and if it is weak, you get more dollars back.
Basically what all this means for you is if the dollar falls relative to the other countries currency after you purchased is great for people who invest in overseas companies because when you actually sell, you get more dollars back, you not only gain (hopefully) from the mutual funds performance, but also from the currency transaction which took place when you sold.
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