The total return on a portfolio of investments takes into account not only the capital appreciation on the portfolio, but also the income received on the portfolio. The income typically consists of interest, dividends, and securities lending fees. This contrasts with the price return, which takes into account only the capital gain on an investment.
Stock and bond funds provide annual Total Return values summarizing the last ten years of operation. Total Return assumes that dividends are reinvested in the funds. A reasonably accurate equation for the percent Total Return in a year of any security is the sum of the percent gain (or loss, a negative percent) over the year in the security value, plus the annual dividend yield expressed as a percent (100 × annual dividends divided by the security price at the beginning of the year). This slightly understates the Total Return because it ignores the reinvestment of dividends, as soon as they are paid, for purchasing more of the security.
Famous quotes containing the words total and/or return:
“For youth is a frail thing, not unafraid.
Firstly inclined to take what it is told.
Firstly inclined to lean. Greedy to give
Faith tidy and total. To a total God.”
—Gwendolyn Brooks (b. 1917)
“East and west on fields forgotten
Bleach the bones of comrades slain,
Lovely lads and dead and rotten;
None that go return again.”
—A.E. (Alfred Edward)