How to reconcile performance with dividends?
You didn't identify the fund but here is the most obvious way: Some of the stocks they owned could had dividends. Therefore they would have had to pass them on to the investors. If the fund sold shares of stocks, they could have capital gains. They would have sold stocks to pay investors who sold shares. They also could have sold shares of stock to lock in gains, or to get out of positions they no longer wanted.  Therefore a fund could have dividends, and capital gains, but not have an increase in value for the year. Some investors look at how tax efficient a fund is, before investing. The same as you would for an individual stock. A stock starts the year at $100, and has $4 in dividends over the year, why would the fact the the stock ends the year at say $90, confuse you?  You pay tax on the dividend at the favored rate, if held in a taxable account, obviously, and that's about it. Just look at the published annualized returns, which are inclusive of distributions and fees. From the Vanguard website: Average annual returns include changes in share price and reinvestment of dividends and capital gains.
"It's easy for me to look at an IRA, no deposits or withdrawal in a year, and compare the return to some index. Once you start adding transactions, not so easy. Here's a method that answers your goal as closely as I can offer: SPY goes back to 1993. It's the most quoted EFT that replicates the S&P 500, and you specifically asked to compare how the investment would have gone if you were in such a fund. This is an important distinction, as I don't have to adjust for its .09% expense, as you would have been subject to it in this fund. Simply go to Yahoo, and start with the historical prices. Easy to do this on a spreadsheet. I'll assume you can find all your purchases inc dates & dollars invested. Look these up and treat those dollars as purchases of SPY. Once the list is done, go back and look up the dividends, issues quarterly, and on the dividend date, add the shares it would purchase based on that day's price. Of course, any withdrawals get accounted for the same way, take out the number of SPY shares it would have bought. Remember to include the commission on SPY, whatever your broker charges.  If I've missed something, I'm sure we'll see someone point that out, I'd be happy to edit that in, to make this wiki-worthy.  Edit - due to the nature of comments and the inability to edit, I'm adding this here. Perhaps I'm reading the question too pedantically, perhaps not. I'm reading it as ""if instead of doing whatever I did, I invested in an S&P index fund, how would I have performed?"" To measure one's return against a benchmark, the mechanics of the benchmarks calculation are not needed. In a comment I offer an example - if there were an ETF based on some type of black-box investing for which the investments were not disclosed at all, only day's end pricing, my answer above still applies exactly. The validity of such comparisons is a different question, but the fact that the formulation of the EFT doesn't come into play remains. In my comment below which I removed I hypothesized an ETF name, not intending it to come off as sarcastic. For the record, if one wishes to start JoesETF, I'm ok with it." True blue preferred shares are considered loose hybrids of credit and equity.  They are more senior than common equity in bankruptcy liquidation but pay out a dividend which is not mandatory. Financial institutions issue the bulk of genuine preferred shares because of their need for more flexibility than a bond but not so much that they can afford the cost to shareholders by diluting common equity. Since it is a credit-like security that receives none of the income from operations but merely pays out a potentially unpredictable yet fixed amount of income, it will perform much more like a bond, rising when interest rates fall and vice versa, and since interest rates do not move to the extent of common equity valuations, preferreds' price variances will correspond much more to bonds than common equities.  If the company stops paying the preferred dividend or looks to become in financial trouble, the price of the preferred share should be expected to fall. There are more modern preferred however.  It has now become popular to fund intermediate startups with convertible preferred shares.  Because these are derivatives based upon the common equity, they can be expected to be much more variant. While there are many very good and detailed answers to this question, there is one key term from finance that none of them used and that is Net Present Value. While this is a term generally associate with debt and assets, it also can be applied to the valuation models of a company's share price. The price of the share of a stock in a company represents the Net Present Value of all future cash flows of that company divided by the total number of shares outstanding. This is also the reason behind why the payment of dividends will cause the share price valuation to be less than its valuation if the company did not pay a dividend. That/those future outflows are factored into the NPV calculation, actually performed or implied, and results in a current valuation that is less than it would have been had that capital been retained. Unlike with a fixed income security, or even a variable rate debenture, it is difficult to predict what the future cashflows of a company will be, and how investors chose to value things as intangible as brand recognition, market penetration, and executive competence are often far more subjective that using 10 year libor rates to plug into a present value calculation for a floating rate bond of similar tenor. Opinion enters into the calculus and this is why you end up having a greater degree of price variance than you see in the fixed income markets. You have had situations where companies such as Amazon.com, Google, and Facebook had highly valued shares before they they ever posted a profit. That is because the analysis of the value of their intellectual properties or business models would, overtime provide a future value that was equivalent to their stock price at that time. "A dividend is a cash disbursement from the company.  The value of the company goes down the same amount of the dividend, so it is analogous to having money in a savings account and taking a withdrawal every month.  Obviously you are going to have less in the end than if you just kept the money in the account. suppose that I own 10 different stocks, and don't reinvest dividends, but keep them on account, and each month or two, as I add more money to invest, either in one of my existing stocks, or perhaps something new, I add whichever dividend amount is currently available in cash to my new purchase, would this strategy provide the same results? Roughly, yes.  Reinvesting dividends is essentially buying more stock at the lower price, which is a net zero effect in total balance.  So if you invested in the same stocks, yes you'd be in the same place.  If you invested in different stocks, then you would have a performance difference depending on what you invested in. The risk is the temptation to take the cash dividend and not reinvest it, but take it in cash, thereby reducing your earning power. That is, is there some particular reason that the brokers are recommending automatically reinvesting dividends as opposed to reinvesting them manually, perhaps not always in the same item? I'd like to think that they're looking after your best interest (and they might be), but the cynical part of me thinks that they're either trying to keep your business by increasing your returns, or there's some UK regulation I'm not aware of that requires them to disclose the effect of reinvesting dividends.    £100 invested in the UK stock market since 1899 would have grown into just £177 after adjusting for inflation. This figure seems ludicrous to me.  I haven't actually measured what the historical returns on the ""UK market"" are, but that would mean an annualized return (adjusted for inflation) of just 0.5%.  Either UK stocks pay a ridiculous amount of dividends or there's something wrong with the math. EDIT I still have not found a definitive source for the real UK market return, but according to this inflation calculator, £100 in 1899 would equate to almost £12,000 today, for an average inflation rate of 4.14 percent, which would put the CAGR of the UK market at about 4.9%, which seems reasonable.  The CAGR with dividend reinvestment would then be about 9.1%, making dividend reinvestment a no-brainer in the UK market at least." I wouldn't get too caught up with this. Doesn't sound like this is even stock reconciliation, more ensuring the cash you've received for dividends &amp; other corporate actions agrees to your expected entitlements and if not raising claims etc. Numerous studies have actually shown that companies who pay dividends are much more reckless financially with returning capital to shareholders because they want to save face and maintain/grow the dividend.  Buybacks are much more flexible and probably lead to better capital allocation decisions, in my opinion. DRiPs come to mind as something that may be worth examining. If you take the Microsoft example, consider what would happen if you bought additional shares each year by re-investing the dividends and the stock also went up over the years. A combination of capital appreciation in the share price plus the additional shares purchased over time can produce a good income stream over time. The key is to consider how long are you contributing, how much are you contributing and what end result are you expecting as some companies can have larger dividends if you look at REITs for example. A DRIP plan with the ETF does just that. It provides cash (the dividends you are paid) back to the fund manager who will accumulate all such reinvested dividends and proportionally buy more shares of stock in the ETF. Most ETFs will not do this without your approval, as the dividends are taxed to you (you must include them as income for that year if this is in a taxable account) and therefore you should have the say on where the dividends go.