DEFINITION of 'Ex-Distribution'

A security or investment that is trading without the rights to a specific distribution. When an investment such as a mutual fund or income trust commences trading on an ex-distribution basis, the seller (or the previous owner) rather than the buyer is entitled to receive the distribution. On the ex-distribution date, the security will generally fall by an amount equal to the dollar amount of the distribution.

BREAKING DOWN 'Ex-Distribution'

For example, assume a mutual fund with a net asset value per share (NAVPS) of $10 declares a distribution of 50 cents. On the ex-distribution date, the NAVPS of the fund will be $9.50, since the fund units are now trading without the rights to the distribution. This is similar to the decline in a stock when it commences trading on an ex-dividend basis.

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  1. If I sell my shares before the ex-dividend date will I still get the dividend?

    If you sell before the ex-dividend date you will not receive a dividend from the company. The ex-dividend date is the date ... Read Full Answer >>
  2. Why don't investors buy stock just before the dividend date and sell right afterwards?

    Many years ago, unscrupulous brokers would use the same logic on their clients as a sleazy sales tactic. These brokers would ... Read Full Answer >>
  3. Can mutual funds only hold stocks?

    There are some types of mutual funds, called stock funds or equity funds, which hold only stocks. However, there are a number ... Read Full Answer >>
  4. How do mutual funds compound interest?

    The magic of compound interest can be summed up as the concept of interest making interest. On the other hand, simple interest ... Read Full Answer >>
  5. Do mutual funds pay interest?

    Some mutual funds pay interest, though it depends on the types of assets held in the funds' portfolios. Specifically, bond ... Read Full Answer >>
  6. Why have mutual funds become so popular?

    Mutual funds have become an incredibly popular option for a wide variety of investors. This is primarily due to the automatic ... Read Full Answer >>

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