how are they calculating my ROR below?
One of my RBC holdings stmts (Canadian Equity Funds) as of Dec 2011 states: Total amount in 3,741.20. Change in Value: 746.59. Current value is 4,487.79. It states my personal rate of return (annualized since 2003) is 5.65%.
How is that possible?
ROR = profit/cost, therefore 746.59/3741.20 = 20%/9 years = 2.2% per year.
Where am I going wrong in my calculations?
Assuming entire amount was contributed on 1/1/2003, your IRR until 12/31/2011 is 2.04%.
Also, assuming no distributions were withdrawn etc.
I have no idea how they are getting 5.65% either.
Well, math errors aside (ie. RoR is not measured by simple division) , you're probably overlooking reinvested distributions. They matter because every reinvested distribution is a new purchase.
For example, if you originally put ~$2736 into this fund on December 31, 2002, and if you received ~$1005 in distributions (all reinvested) over the years, then RBC would (should) report a book value of ~3741, and if the value was $4488 on Dec 31 2011, your personal RoR as of that date would be ~5.65%.