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:
“I have often thought that if photography were difficult in the true sense of the term—meaning that the creation of a simple photograph would entail as much time and effort as the production of a good watercolor or etching—there would be a vast improvement in total output. The sheer ease with which we can produce a superficial image often leads to creative disaster.”
—Ansel Adams (1902–1984)
“Then came the Lord Chamberlain with his white staff,
And all the people began to laugh;
And then the Queen began to speak,
‘You’re welcome home, Sir Francis Drake.’”
—Unknown. Upon Sir Francis Drake’s Return from His Voyage about the World, and the Queen’s Meeting Him (l. 5–8)