Mutual Fund Year-end Distributions

As we entered the final weeks of 2006, mutual fund companies start to make year-end distributions. Yesterday, another fund in my mutual fund portfolio, Oakmark Equity and Income Fund (OAKBX), paid out annual dividend and capital gain. So far, two of my mutual funds distributed dividend and capital gain (CSVFX distributed on September 20th):

Symbol Date Dividend Short-term
capital gain
capital gain
CSVFX 09/20/06/ $0.12 $0.13 $2.51 $2.76
OAKBX 12/14/06/ $0.5013 $0 $1.3081 $1.8094

For OAKBX, the total payout amount is $641.20 and this will be part of my 2006 passive incomes, which are subjective to income taxes. The good thing is that there’s no short-term capital gain which is taxed at my ordinary income rate. For qualified dividend and long-term capital gain, the maximum tax rate is 15% (click here for my previous post on mutual fund distributions and how they are taxed and here’s a related article on

If you plan to make some mutual fund purchases at the end of the year, you should check with your fund company for the exact dividend pay out date to avoid buying-the-dividend, i.e., buying mutual fund shares right before its dividend/capital gain distribution, especially if you are making a large lump sum investment as buying-the-dividend will incur immediate taxes at your ordinary income tax level. If, however, you are dollar-cost-averaging a small amount, the tax consequence is not that severe.

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