Personal Finance

Help- Clarifications on distributions/dividends on mutual fund and how much ive made?

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Jr. Member
Jan 7, 2013
117 posts
16 upvotes

Help- Clarifications on distributions/dividends on mutual fund and how much ive made?

hi there, sorry if silly question but in a TFSA I just purchased a mutual fund. I dont have to worry about ACB because I am sheltered from tax but today I look at my book value/market value and I see my book value went up 100 dollars but I didnt contribute 100 dollars into the mutual fund.

I see a recent transaction of a reinvested mutual fund and that must have increased the book value, but my understand is the market value remains the same as the reinvested money is purchased at the new mutual fund which has been decreased the same amount of the dividend meaning that the market value has stayed the same correct?

So by that logic everytime a dividend/distribution is given to me fro the mutual fund that means my book value is increasing but market value is staying the same (if all things equal of course).

So this means I just cant take book value - market value to see how much I have truly made in the mutual fund from the time I purchased it to its market value today??????

thank you for clarification
5 replies
Deal Addict
Apr 12, 2005
1425 posts
180 upvotes
FSUBall23 wrote: hi there, sorry if silly question but in a TFSA I just purchased a mutual fund. I dont have to worry about ACB because I am sheltered from tax but today I look at my book value/market value and I see my book value went up 100 dollars but I didnt contribute 100 dollars into the mutual fund.

I see a recent transaction of a reinvested mutual fund and that must have increased the book value, but my understand is the market value remains the same as the reinvested money is purchased at the new mutual fund which has been decreased the same amount of the dividend meaning that the market value has stayed the same correct?

So by that logic everytime a dividend/distribution is given to me fro the mutual fund that means my book value is increasing but market value is staying the same (if all things equal of course).

So this means I just cant take book value - market value to see how much I have truly made in the mutual fund from the time I purchased it to its market value today??????

thank you for clarification
profit = market value - (initial investment + additional investment). Book value is for non registered accts to calculate capital gain when selling.
Deal Expert
Feb 29, 2008
27906 posts
4203 upvotes
Montreal
a_1_a wrote: profit = market value - (initial investment + additional investment). Book value is for non registered accts to calculate capital gain when selling.
The only hitch is that with mutual funds, sometimes the turnover of underllying securities generates a distribution. This is often returned to the fund hodler as return of capital which reduces your adjusted cost, i.e. it has the net effect of lower your initial investment. Tracking this can be a bitch if your brokerage doesn't do it for you.
Deal Addict
Apr 12, 2005
1425 posts
180 upvotes
mr_raider wrote: The only hitch is that with mutual funds, sometimes the turnover of underllying securities generates a distribution. This is often returned to the fund hodler as return of capital which reduces your adjusted cost, i.e. it has the net effect of lower your initial investment. Tracking this can be a bitch if your brokerage doesn't do it for you.
Since it is in a TFSA, ACB is irrelevant.
Deal Addict
User avatar
Oct 9, 2005
1094 posts
331 upvotes
Toronto
If you are interested in a rate of return as well, consider using XIRR. The benefit of setting up the spreadsheet in the manner the article describes makes calculating (annual/cumulative) profit as defined by a_1_a above a trivial consequence.
Intricated

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