This article uncovers and explores a fairly subtle issue at a first glance, namely compounding and noncompounding contexts in the problem of finding the rate of return for investment portfolios. In reality this is a very important factor that should be considered as an essential characterstic of any method for calculating rate of return. The IRR equation represents a pure compounding context of the application. The appropriate equation for noncompounding context has been derived. It turned out to be a flavor of the Modified Dietz equation.