Joe: See my answers to your points below

I have separately calculated the individual quarterly XIRRs as:
Q1: -.70
Q2: 5.41
Q3: 3.01
Q4: 8.34

What are those figures: percentages or something else? If something
else, what are the units?

Those are percentages. A loss of .70 in q1, a gain of 5.41 in q2, etc.


I used this formula for the first quarter, where the dates are in column A
and the amounts are in column B:
=((1+XIRR(B7:B14,A7:A14,0))^((A14-A7)/365)-1)*100

Huh!? Values and dates of what?

The dates are the dates of each interim addition to the account during that
particular quarter. The values are the account values on those dates, as
reported by my broker. For instance, on Feb 24, I might have added $400 to
the account and the broker reports an account value on that date of
$11.099.87. (those are just examples, not the actual figures)



No matter, that is overkill or simply wrong. The quarterly rate can
be computed simply by:

=(endBalance / startBalance) - 1

where startBalance is the ending balance of the previous quarter (or
your initial investment), and endBalance is the ending balance of the
current quarter.


Here are some real numbers:

12/31/06 beginning balance: 7930.78

3/31/07 balance 11820.65

6/30/07 balance 15993.99

9/30/07 balance 19208.92

12/31/07 ending balance 39158.28

using your method of quarterly rate = (endBalance / startBalance) - 1

q1: 49.05%

q2: 35.31%

q3: 20.10%

q4: 103.85%

What this method ignores is that there were several additions to the account
each quarter on the specified dates. That is: 10000 x 1.4915 x 1.3531 x
1.2010 x 203.85 = 49409. This is clearly way high. We know from XIRR that
the return for the account for the year was 20.11%. That is, the year end
value of a hypothetical 10000 beginning investment must be 12011, not 49409.
The question is, what are the quarterly returns? I guess you would refer to
these as "average quarterly returns"?

I need a method that is comparable to what Vanguard has done as per the
example I mentioned for the Wellington fund, namely:


Wellington 2007 total return: 8.34
hypothetical 10000 x 1.0834 = 10834 final value
2007 individual quarterly returns: 1.14, 4.91, 3.01, -.88.
10000 x 1.0114 x 1.0491 x 1.0301 x .9912 = 10834 final value

My account XIRR for 2007: 20.11

hypothetical 10000 x 1.0211 = 12011 final value

2007 individual average quarterly returns: ?, ?, ?, ?

10000 x ? x ? x ? x ? = 12011 final value

I know from the RATE or POWER functions that quarterly returns of 4.69 will
result in a final value of 12011, but in the real world my rates of return
vary from quarter to quarter and are not a constant 4.69.

For all I know, I don't need XIRR to compute the quarterly rate. However, it
is a given that in my case the XIRR for the entire year is 20.11%.

What I DO need is a method that mirrors the Vanguard example such that a
hypothetical 10k beginning balance x q1 x q2 x q3 x q4 gives the same result
as a hypothetical 10k beginning balance x XIRR annual rate (20.11 in this
particular case). The quarterly and annual calculations must yield the same
final value of 12011, just as both methods yielded 10834 in the Vanguard
example.

Again, how do I calculate average quarterly returns that can replace the
question marks in the equation below?

10000 x ? x ? x ? x ? = 12011 final value

Thanks for any further help.