How do distributions affect the net asset value per unit?
When an National Bank Mutual Fund makes a distribution, the net asset value of units decreases by an amount equivalent to the distribution per unit, yet the total value of the investment remains unchanged. When distributions are automatically reinvested, they are used to acquires additional Fund units. Therefore, the value of the investment is the same before and after the reinvestment (when multiplying the new total number of units by the reduced asset value per unit following a distribution, the total value remains unchanged). If distributions are paid out in cash, the new value of your investment plus the distribution amount received equals the value of the investment before the distribution. Here is an example to illustrate how this works.
When a National Bank mutual fund makes a distribution, the net asset value of each unit decreases by an amount equivalent to the distribution per unit. However, the total value of the investment remains unchanged. When a distribution is automatically reinvested, it is used to acquire additional fund units. The total value remains unchanged because the new asset value per unit is multiplied by the higher number of units. If the distribution is paid out to the unitholder, the value of the investment is decreased by the amount of the distribution. Here is an example to illustrate how this works.
