An Investor invests $1 million into Mutual Fund A on December 31.

On August 15 of
the following year, their portfolio is valued at $1,162,484. At that point (August 15),
they add $100,000 to Mutual Fund A, bringing the total value to $1,262,484.
By the end of the year, the portfolio has decreased in value to $1,192,328.

The holding-period return for the first period, from December 31 to August 15, would
be calculated as:

 Return = ($1,162,484 - $1,000,000) / $1,000,000 = 16.25%

The holding-period return for the second period, from August 15 to December 31,
would be calculated as:

 Return = ($1,192,328 - ($1,162,484 + $100,000)) / ($1,162,484 + $100,000)

= -5.56%

The second sub-period is created following the $100,000 deposit so that the rate of
return is calculated reflecting that deposit with its new starting balance of
$1,262,484 or ($1,162,484 + $100,000).

The time-weighted return for the two time periods is calculated by multiplying each
subperiod's rate of return by each other. The first period is the period leading up to
the deposit, and the second period is after the $100,000 deposit.

 Time-weighted return = (1 + 16.25%) x (1 + (-5.56%)) - 1 = 9.79%