TRI vs price index: which Nifty

A friend forwarded me a fund factsheet last night. The pitch line was right at the top. Beat the Nifty by a full point a year, ten years running.

I asked him one question before the congratulations. Which Nifty.

Here is the part most people miss. The Nifty you see on TV is a price index. It tracks what the 50 stocks trade at and nothing else. Every dividend those companies have ever paid, and they pay a lot, simply vanishes from that chart. But if you actually own the stocks, or an index fund holding them, those dividends land in your account and compound. The honest bar is the TRI, the total return index, which reinvests every payout. It runs roughly 1.3 percentage points a year hotter than the TV number.

So I ran my friend's factsheet through both bars. Rs 10 lakh for ten years. The price index at 12 percent grows to about Rs 31.06 lakh. His fund at 13 percent grows to about Rs 33.95 lakh. The TRI at 13.3 percent grows to about Rs 34.86 lakh. Against the TV chart the fund is a hero, ahead by Rs 2.89 lakh. Against the bar that includes the dividends, it is Rs 0.91 lakh short. Same fund, same decade, two completely different verdicts.

The dividends alone are Rs 3.80 lakh on that cheque. Thirty eight percent of the original investment, quietly dropped on the floor by the wrong chart.

SEBI saw the trick and forced funds to benchmark against the TRI from February 2018. Which means any proud long-term comparison that starts before that date collected the dividend gap as free alpha for years.

The read is simple. Open the factsheet, find the benchmark name, look for three letters. TRI. If they are missing, add 1.3 points back and see if the applause survives.

Where the 1.3 points come from

A price index moves only with the prices of its stocks. When a company pays a dividend, its share price usually drops by about the dividend on the ex date, and the price index drops with it. The money did not disappear. It went to the shareholders. The price index just stopped counting it.

The Total Return Index adds that money back as if it were reinvested in the index on the same day. So over a year the gap between the two is roughly the dividend yield of the index.

On 30 Sep 2026, NSE data showed the Nifty 50 with a dividend yield of 1.22 percent. On Rs 10,00,000 held in the 50 stocks, that is about Rs 12,200 a year in dividends at that yield, before tax. The yield moves with prices and payouts, which is why the gap is never one fixed number. The 1.3 points in my friend's example is a round figure in that neighbourhood.

The friend's factsheet, redone

Here is the same Rs 10 lakh for ten years, against both bars. You can check each line with a calculator that has a power key.

Price index at 12 percent: Rs 10,00,000 x 1.12 ^ 10 = about Rs 31.06 lakh.

The fund at 13 percent: Rs 10,00,000 x 1.13 ^ 10 = about Rs 33.95 lakh.

TRI at 12 plus 1.3, so 13.3 percent: Rs 10,00,000 x 1.133 ^ 10 = about Rs 34.86 lakh.

Run your own fund through the same test. Put in the fund's CAGR, the price index CAGR over the same dates, and a dividend yield.

What SEBI changed in 2018

SEBI's circular of 4 Jan 2018 told mutual funds to benchmark scheme performance against the Total Return Index version of their benchmark, from 1 Feb 2018. The reason was simple: a fund collects the dividends of the stocks it holds, so comparing it with an index that drops them flatters the fund by roughly the dividend yield every year.

So when you read a factsheet today, the benchmark line should say TRI. When you read an older brochure, a blog post or a comparison chart from anywhere, it may not. That is where the 1.3 points still hide.

1. Find the benchmarkIt is named in the scheme details on the factsheet.
2. Look for TRINifty 50 TRI, Nifty 500 TRI. No TRI means a price index.
3. Match the datesFund and index over the same start and end.
4. Add the yield backIf the chart uses a price line, add roughly the dividend yield each year and look again.

We use the Nifty 50 TRI as the reference line beside our model strategies for the same reason. The free Learn module on indices and benchmarks explains how NSE builds price and total return indices and which benchmark fits which portfolio. Two related posts: average return against CAGR and what a fixed deposit really earns.