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NISM-Series-V-A: Mutual Fund Distributors · Mutual Fund Scheme Performance

NAV Based Return and Dividend Adjusted Returns for NISM Series V-A

Updated 11 October 2026 · Fact-checked

NAV based return is the percentage change in a scheme's NAV over a period. Dividend adjusted (total) return adds the dividend paid, and if it is reinvested, the units bought with it. Formula without reinvestment: (Ending NAV − Beginning NAV + Dividend) ÷ Beginning NAV × 100.

Understand NAV Based Return and Dividend Adjusted Returns

A mutual fund unit is priced at its NAV (Net Asset Value per unit). If the NAV rises from ₹20 to ₹25, your unit has gained ₹5. The return is that gain divided by what you started with. This is the point-to-point NAV return.

NAV alone can mislead when the scheme pays out money. When a scheme under the dividend (IDCW) option pays a dividend, the NAV falls by about the amount paid. The money has moved from the scheme to your bank account. If you ignore the dividend, the return looks too low. So you add the dividend back. This gives the dividend adjusted return, also called total return.

There are two ways to treat the dividend. In the simple method, you add the dividend received to the NAV gain and divide by the beginning NAV. In the reinvestment method, the dividend buys new units at the ex-dividend NAV. You then compare the final value of all units with the starting value. Reinvestment gives a slightly different figure, because the reinvested units also earn the later NAV gain.

Bonus units work like a split in your holding. You get extra units free, and the NAV falls in proportion. Your total value does not change at the moment of the bonus. To find the return, count all units you hold at the end, multiply by the ending NAV, and compare with the initial investment.

The growth option pays no dividend. Its NAV return already is the total return. Returns for a period of more than one year are usually quoted as annualised (CAGR), and for one year or less they are absolute. Keep this in mind when you read the question.

Key formulas to remember

Absolute NAV return
(Ending NAV − Beginning NAV) ÷ Beginning NAV × 100
Use for growth option, or when no dividend is paid.
Dividend adjusted return (no reinvestment)
(Ending NAV − Beginning NAV + Dividend per unit) ÷ Beginning NAV × 100
Dividend is added back as cash received. Use when the question says dividend was not reinvested.
Units bought on reinvestment
Dividend per unit × Units held ÷ Ex-dividend NAV
Use the NAV after the dividend, not the NAV before.
Total return with reinvestment
(Total units at end × Ending NAV − Initial investment) ÷ Initial investment × 100
Total units = original units + reinvested units + bonus units.
Bonus units
Units after bonus = Units before × (1 + bonus ratio)
For a 1:1 bonus, units double and NAV roughly halves.
CAGR (for periods over 1 year)
[(Ending value ÷ Beginning value)^(1 ÷ years) − 1] × 100
Annualises a multi-year return.

How to solve NAV Based Return and Dividend Adjusted Returns questions

Use this order for any NAV return question. It handles dividends, reinvestment and bonus units in one flow.

  1. 1Read the option: growth or dividend (IDCW). Note whether dividends are paid out or reinvested.
  2. 2Write down the beginning NAV, ending NAV, units held, dividend per unit and the ex-dividend NAV.
  3. 3Check the period. If it is more than one year, see whether the question asks for an annualised return.
  4. 4If no dividend or bonus applies, apply the simple NAV return formula.
  5. 5If a dividend is paid and not reinvested, add it to the NAV gain and divide by the beginning NAV.
  6. 6If reinvested, compute new units as dividend amount ÷ ex-dividend NAV and add them to your units. Add bonus units if any.
  7. 7Find the final value as total units × ending NAV, and compare it with the starting investment.
  8. 8Match your answer to the options. Check the sign, the percent and the rounding.

Quickest way: Per-unit shortcut for total return

When to use it: Use when the question gives per-unit figures and says dividends were not reinvested, or when you only have seconds to rule out options.

  1. Compute the NAV gain: Ending NAV − Beginning NAV.
  2. Add the dividend per unit to the gain.
  3. Divide by the Beginning NAV and multiply by 100.
  4. If the question has reinvestment, the answer will be a little higher than this figure when the NAV rises after the dividend. Use that to reject options.
  5. With a bonus, do not use the NAV change. Use units × NAV instead.

Common mistakes in NAV Based Return and Dividend Adjusted Returns

  • Ignoring the dividend and using only the NAV change.

    Students see NAV falling after a payout and treat it as a loss.

    Fix: Always check for a dividend in the question. If one is paid, add it back.

  • Dividing by the ending NAV instead of the beginning NAV.

    The ending figure is the one in front of you after the gain.

    Fix: The base of any return is the amount you started with, which is the beginning NAV.

  • Reinvesting the dividend at the pre-dividend NAV.

    Students use the NAV that was quoted first.

    Fix: Reinvestment happens at the ex-dividend NAV, which is the lower NAV after the payout.

  • Comparing NAVs directly after a bonus issue.

    The NAV drops, so it looks like a loss.

    Fix: Count the extra units. Compare total value, units × NAV, with the original investment.

  • Applying the dividend per unit to the amount invested instead of the units held.

    Dividend is declared per unit, but the question gives rupees invested.

    Fix: First find the units: Amount ÷ NAV. Then multiply by the dividend per unit.

  • Treating dividend as a percentage of NAV when it is a rupee amount, or the reverse.

    Questions sometimes say dividend of 10% on face value.

    Fix: Dividend % is applied to the face value, usually ₹10, so 10% means ₹1 per unit unless stated otherwise.

Worked examples

Example 1

You bought units at a NAV of ₹40. After one year the NAV is ₹44. During the year the scheme paid a dividend of ₹3 per unit, which you did not reinvest. What is the dividend adjusted return?

Show the solution
  1. Beginning NAV = ₹40. Ending NAV = ₹44. Dividend = ₹3.
  2. NAV gain = 44 − 40 = ₹4.
  3. Gain plus dividend = 4 + 3 = ₹7.
  4. Return = 7 ÷ 40 × 100 = 17.5%.

Answer: 17.5%

Example 2

You invest ₹1,00,000 in a dividend option at a NAV of ₹20. The NAV rises from ₹20 to ₹24 before the dividend. The scheme then pays a dividend of ₹2 per unit, so the NAV falls to ₹22 ex-dividend. You reinvest the dividend at ₹22. At the end, the NAV is ₹24.2. What is the total return?

Show the solution
  1. NAV path: ₹20 (your purchase) → ₹24 (cum-dividend) → ₹22 (ex-dividend, since 24 − 2 = 22) → ₹24.2 (end).
  2. Initial units = 1,00,000 ÷ 20 = 5,000 units.
  3. Dividend received = 5,000 × 2 = ₹10,000.
  4. Units bought = 10,000 ÷ 22 = 454.545 units, at the ex-dividend NAV of ₹22.
  5. Total units = 5,000 + 454.545 = 5,454.545.
  6. Final value = 5,454.545 × 24.2 = ₹1,32,000.
  7. Return = (1,32,000 − 1,00,000) ÷ 1,00,000 × 100 = 32%.

Answer: 32%

Exam tips

  • Look first at the option name. Growth means no dividend adjustment is needed.
  • Reinvestment questions use the ex-dividend NAV. Wrong options are often built with the cum-dividend NAV.
  • After a bonus issue, compare value (units × NAV), not NAV.
  • V-A has no negative marking, so attempt every question; if unsure, eliminate options using the steps above.
  • Do the arithmetic per unit when you can. It is faster than working with the full investment.

Practice questions from Mutual Fund Scheme Performance

NAV Based Return and Dividend Adjusted Returns in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

NAV Based Return and Dividend Adjusted Returns: frequently asked questions