Total Return Approach

When funds are invested in several classes of assets, there are two components that bring about an increase in value: income generated by dividends and interest and capital gains resulting from the increase in the value of the underlying assets. For a long-term investment to take advantage of both sources, the Pennsylvania legislature passed Act 141 (often referred to as the Total Return Act).

Under the Total Return Act, an account that invests endowments, trusts, and other long-term funds establishes an annual rate-of-return to be paid out in the next twelve-month period. This rate-of-return is expressed as a percentage of the average quarterly value of the investments over the previous twelve calendar-quarters. The benefits of this approach are that it provides a more consistent flow of income over a period of years and also allows the beneficiary to know in advance what the income will be in the next twelve-month period.

The 2022 total return distribution rate is 4.00-4.25%.