Ex-Distribution

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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