An investment can pay you money while also changing in value. Income describes payments such as interest or dividends. Total return brings those payments together with the investment’s gain or loss in value over the same period. Moneysmart explains dividends and capital growth as different ways shares can produce a return.

A simple example

Imagine a hypothetical investment worth $10,000 at the start of a year. It pays $500 in cash during that year, and the investment itself is worth $9,100 at the end.

• Cash received: $500.
• Change in investment value: a fall of $900.
• Combined result: a loss of $400, or 4% of the starting value.

The cash payment was 5% of the opening value, but the total return was negative. If the ending investment value had instead been $10,300, the combined gain would have been $800, or 8%.

These examples assume no extra deposits or withdrawals, no reinvestment of the payments, and no fees or tax. They illustrate arithmetic, not an expected outcome.

Read the return label

A fund’s published performance figure may already include distributions and assume that they were reinvested. Adding the cash payment again would count it twice. The same applies to fees that have already been deducted. Moneysmart’s investment-tracking guide explains why checking these inclusions matters.

Two figures are easier to compare when they cover the same dates and use the same treatment of income, fees and tax. A price-change chart and a total-return chart answer different questions.

Income tells you about payments. Total return gives a broader view of the financial result. Neither figure, by itself, describes all the risks or predicts what will happen next.

Educational information only. It does not take account of your objectives, financial situation or needs.