by Scott Ronalds

The year-end distributions for all our funds (with the exception of the Savings Fund) will be declared on December 16th and paid on December 17th. The Savings Fund will pay its regularly-scheduled monthly distribution on December 31st.

As a reminder, distributions represent the mechanism whereby mutual funds transfer to unitholders any interest income, dividend income and realized capital gains they have accrued over the course of the year. Most investors choose to re-invest distributions into additional fund units, but clients can also opt to receive them in cash.

Remember that immediately following a distribution, the price of a fund drops by an amount equivalent to the payment. However, you will receive additional units in the fund which are equivalent in value to the amount of the distribution. The end result is that the value of your investment doesn’t change, but you own more units in the fund at a lower unit price.

For example, assume you own 100 units in a fund that is valued at $10.00/unit (your investment is worth $1,000). If the fund pays a distribution of $0.10/unit, its price will drop to $9.90 following the distribution. However, if you follow the common practice of re-investing your distributions, you will receive an additional 1.01 units in the fund ($10.00/$9.90), so the value of your investment remains unchanged (101.01 units x $9.90/unit = $1,000).

The estimated distributions for our funds (to be declared on December 16th) are as follows:

  • Income Fund: $0.26/unit (bringing the year-to-date total to $0.40/unit)
  • Founders Fund: $0.24/unit (bringing the year-to-date total to $0.38/unit)
  • Equity Fund: $0.63/unit
  • Global Equity Fund: $0.15/unit
  • Small-Cap Equity Fund: $0.40/unit
  • Global Small-Cap Equity Fund: $0.12/unit
  • Builders Fund: $0.25/unit

Please note that these are only estimates and are subject to change.

Two important things to note:

1). Investors considering purchasing units in the funds in non-registered accounts may wish to defer any purchases until after the distributions have been declared. Fund units purchased on December 17th or later will not receive distributions.

2). Distributions don’t always reflect a fund’s short-term performance. Capital gains can be triggered on certain holdings and distributed to unitholders, even though the fund’s overall performance may be modest or even negative in any given year.

If you have any questions about distributions, feel free to give us a call at 1-888-888-3147.