Third Avenue Focused Credit Fund Distributions (TFCIX,TFCVX)

There are two main ways that bond funds distribute income dividends.

Method #1: Most of the large GNMA and high yield bond funds accrue interest in a separate account where they keep track of how many days each investor held the fund. Dividends are paid out monthly to each investor, but investors who only held the fund for part of the month receive a lower dividend. Using method#1, the NAV does not drop at the end of the month when the fund pays the dividend and there is no ex-dividend feature.

Method #2 is  used by TFCIX/TFCVX and closed-end funds. TFCIX /TFCVX will pay out quarterly income dividends. They have declared an ordinary income payout of 0.13  and a short-term capital gains payout of 0.01. The funds will go ex-dividend on December 22 and the NAV of the funds will drop about 0.14 (plus or minus the market movement) that day.


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