Important Information About Mutual Fund Capital Gains and Dividends Distributions
Mutual funds realize gains and losses throughout the year as securities in the portfolio are bought or sold at a gain or loss. The fund is required by law to distribute net gains from such transactions to shareholders before the end of the year.
Dividend distributions will vary on a per share basis based upon expenses of the underlying share class. Form 1099-DIV will be mailed to shareholders in late January, detailing the amount of dividend distributions that qualify for lower tax rates.
The fund's net asset value (NAV) drops in direct relationship to the distribution paid, plus or minus market movement.
For example, if a fund has a $10.00 NAV and pays a 25 cent distribution, the stated NAV will be $9.75 if there is no market movement. (Any market movement would be added or subtracted to the $9.75 NAV.) Because the shareholder will either receive more shares of the fund (reinvestment) or take the distribution in cash, the value of the shareholder's investment has not changed. In our example, it is still $10.00/share ($9.75/share NAV plus $0.25/share in cash or additional shares).
For additional information, please contact Investor Services at 1-800-988-8380
. For specific tax advice, consult your professional tax advisor.