when analyzing mutual fund performance investors should analyze their average annual total returns for different periods comparing returns to a benchmark indicates how the fund has performed relative to an index when analyzing average annual total returns it s important to remember 
example of total returnan investor buys 100 shares of stock a at 20 per share for an initial value of 2 000 stock a pays a 5 dividend the investor reinvests buying five additional shares after one year the share price rises to 22 to calculate the investment s total return the investor divides the total investment gains 105 shares x 22 per share 2 310 current value 2 000 initial value 310 total gains by the initial value of the investment 2 000 and multiplies by 100 to convert the answer to a percentage 310 2 000 x 100 15 5 the investor s total return is 15 5 