# The 'Unit Value' Method of calculating returns This file demonstrates how to calculate portfolio returns when there

are cash inflows and outflows.

Original Portfolio with 100 "shares" Stock ABC XYZ XXX Cash Price Total Shares Investment 22 75 1650 41 37 1517 47 40 1880 20 Total 5067 Shares 100 NAV 50.67

Portfolio one month later Stock ABC XYZ XXX Cash Price Total Shares Investment 25 75 1875 37 37 1369 48 40 1920 20 Total 5184 Shares 100 NAV 51.84 Total Return 2.31%

Now, same day, you add \$1,000 cash and use it to buy new "shares" Total Shares Investment 25 75 1875 37 37 1369 48 40 1920 1020 Total 6184 Shares 119.29 You can buy 19.29 shares with you \$1000 at a NAV of \$51.84 NAV 51.84 Note that the NAV doesn't change Total Return 2.31% And neither does your return Portfolio one month later Stock ABC XYZ XXX Cash Price

Stock ABC XYZ XXX Cash

Price

Total Shares Investment 26 75 1950 35 37 1295 51 40 2040 1020 Total 6305 Shares 119.29 NAV 52.85 Total Return 4.31% Note that it looks like you got a return of 24.43% if you use the total value of th

Now, after the close, ABC pays a \$1 per share dividend Stock ABC XYZ XXX Cash Price Total Shares Investment 25 75 1875 Note: Price goes down by the dividend amount 35 37 1295 51 40 2040 1095 The dividend goes into cash Total 6305 Total is unchanged Shares 119.29 NAV 52.85 Total Return 4.31%

Portfolio one month later Stock ABC XYZ XXX Cash Price Total Shares Investment 27 75 2025 38 37 1406 49 40 1960 1095 Total 6486 Shares 119.29 NAV 54.37 Total Return 7.31%

Now, same day, you withdraw all of your cash Stock ABC XYZ XXX Cash Price Total Shares Investment 27 75 2025 38 37 1406 49 40 1960 0

Total Shares NAV Total Return

5391 99.15 You "sell" 20.14 shares with to get the \$1095 in cash 54.37 NAV is unchanged 7.31% Return is unchanged

at a NAV of \$51.84

4.43% if you use the total value of the portfolio instead of the NAV