Total return

Total return adds together the two ways an investment pays off: the change in its price and the income it produces. For a share that income is dividends; for a bond, interest. Total return is normally expressed as a percentage of the starting value and usually assumes income is reinvested as it arrives, which lets returns compound. Many indices are published in both price-return and total-return versions, and fund performance tables generally show total return after fund charges. A net total return index deducts withholding tax on dividends; a gross version does not.

Looking only at price changes can badly understate what investors earned, especially for high-dividend shares and bonds and over long periods, where reinvested income makes up a large part of the result. Total return also allows a fair comparison between investments that pay income and those that do not. Two refinements matter in practice. First, the return you actually keep is after your own costs and taxes, which headline figures may ignore. Second, total return is usually quoted in nominal terms, not adjusted for inflation; to see the change in purchasing power, you need the real return.