Go to Jeff Salisbury LWGate Home Page.From: Rich Carreiro <rlcarr@animato.arlington.ma.us>
Subject: Re: Sell Mutual funds before or after distributions?
Date: Sat, 18 Dec 1999 16:11:29 -0500
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>I've been invested in a mutual fund for about 3 years, making monthly >contributions. The performance has been average at best so I decided >to liquidate the account and invest in something else. They were >scheduled to make distributions on 12/16, so I sold everything on >12/15, since they were going to make significant dividend and short-term >capital gains distributions. When I called the company, they were >very emphatic on stating that I would not receive the coming >distributions, almost making it sound like I was going to lose out on >a great windfall. You did the right thing, IMHO. Remember that the distribution amount was built into the NAV of the fund. Since you were holding the shares long-term, you got long-term rates on it. If you had sold after the distribution, the NAV would have fallen by the amount of the distribution and you would have received some of that chunk of NAV in the form of dividends (and the rest in long-term gains). In other words, selling after the distribution would have turned some of your long-term gains into ordinary income. So your logic was fine and you were right on the ball. Rich Carreiro rlcarr@animato.arlington.ma.us - -
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