News & Announcements - Enhanced participant statements include personal rate of return | American Funds

News & Announcements

Enhanced participant statements include personal rate of return

November 10, 2011

Plan participant quarterly account statements feature a number of enhancements, including:

  • Personal rate of return for the lifetime of the account and year to date
  • A graph illustrating how the account value has changed over time
  • Full-color and double-sided printing

In November, personal rates of return will be made available on the participant and plan sponsor websites, along with an explanation of how personal returns are calculated. To help you and your participants understand the calculation, here’s a preview of what will appear on the sites.

Personal rate of return calculation

American Funds uses the Modified Dietz method to calculate personal rates of return. This time-weighted analysis takes into account not only the returns of the specific funds owned, but also when and how much was contributed or withdrawn. Previously owned funds, and expenses and fees paid by participants or the plan are also factored into the formula.

The Modified Dietz method can be expressed as follows:

Return = 100 X Ending Value - Beginning Value - (Contributions - Withdrawals)
Beginning Value + Day-Weighted Flows

For more information, talk to your plan’s financial professional.