How will dividend payments and capital gains distributions affect my account?
With share accounting, dividends and capital gains are posted directly to your account. When dividends and capital gains are declared and announced by a mutual fund, the fund designates a record date. If your account is invested in the fund on the record date, you will receive a portion of the dividend or capital gain. The amount you receive will be based on the number of shares of the fund that are in your account on the record date. The share price of the mutual fund will decrease on the Ex-Dividend Date, which is the date the mutual fund distributes the dividend or capital gain. When the dividend or capital gain is paid by the mutual fund, your portion will be used to purchase more shares of the fund, called reinvested shares. When the reinvested shares are posted to your account, the market value of your account will increase by the same amount of the market value decrease on the Ex-Dividend Date. The net result is that the total value of your account is unaffected by the dividend