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:
“Parenthood always comes as a shock. Postpartum blues? Postpartum panic is more like it. We set out to have a baby; what we get is a total take-over of our lives.”
—Polly Berrien Berends (20th century)
“At twelve, the disintegration of afternoon
Began, the return to phantomerei, if not
To phantoms. Till then, it had been the other way:
One imagined the violet trees but the trees stood green,
At twelve, as green as ever they would be.
The sky was blue beyond the vaultiest phrase.”
—Wallace Stevens (1879–1955)