Net Investment Income
What it is:
How it works (Example):
The formula for net investment income is:
For example, let's assume Fund ABC is reporting its performance results for the year. It has invested in a portfolio of growth stocks, income stocks and corporate bonds. The growth stocks realized a capital gain of $100,000, the income stocks realized a capital loss of $50,000 but also paid out $10,000 in dividends, and the corporate bonds maintained their value and paid out $20,000 in interest. Fund ABC paid $5,000 in administrative fees.
Using the formula, Fund ABC's net investment income is:
Net Investment Income = ($100,000 - $50,000) + ($10,000) + ($20,000) - ($5,000) = $75,000