Accumulation dividend and equalization
The accumulation dividend and equalization corporate action is used by open-ended investment companies (OEIC) to distribute income fairly among investors. It includes:
Accumulation dividend. The fund reinvests the income it earns, which increases the unit price instead of distributing cash to investors.
Equalization payment. Investors who join partway through the distribution period (group 2) receive a refund for the portion of income they didn’t earn.
Accumulation dividend and equalization logic
The equalization adjustment ensures fair distribution between two groups of investments:
Group 1 – Full-period holdings (owned before the previous ex-date and kept until the current ex-date). Corporate action results in:
Accumulation dividend transactions for reporting and taxation purposes. These transactions have no effect on the investors' portfolios.
Group 2 – Partial-period holdings (bought on or after previous ex-date and kept to the current ex-date). Corporate action results in:
Accumulation dividend transactions for reporting and taxation purposes. These transactions have no effect on the investors' portfolios. The transaction amount is: full accumulation dividend reduced by the equalization. Example: If the total accumulation dividend is 0,1 per unit and the equalization is 0,02 per unit, Group 2 investors only receive 0,08 per unit as accumulation dividend.
Equalization transactions that adjust the purchase price of the position.
Decimals in accumulation dividend transactions
When calculating accumulation dividend amounts, the system uses the number of decimals specified in the security's Block size field. If the block size is 0 or isn't filled in, the system uses the number of decimals specified for the security type in preferences (Decimal count field).
Run accumulation dividend and equalization
Accumulation dividend and equalization corporate action is run for all investors who own the fund (Group 1 and Group 2) at the same time, creating both accumulation dividend and equalization transactions in the same run. To run accumulation dividend and equalization:
Create a corporate action (New → Corporate action → Accumulation dividend and equalization).
Fill in the fields: see Accumulation dividend and equalization fields.
Review the corporate action result:
Summary – Reconcile the amounts calculated in FA Back with the amounts you received from the custodian (optional).
Transactions – Transactions created with the corporate action. Each transaction is assigned with a unique reference (UUID) to identify it and ensure no two actions ever share the same identifier.
To export transactions in XLSX file, click
.
Click Accept and run.
Accumulation dividend and equalization fields
- Security*
The fund security to apply the corporate action to.
- Previous ex-date*
The ex-date of the previous accumulation dividend and equalization. Auto-filled from the last run for this fund. You can adjust if needed.
Previous and current ex-dates are used to define the distribution period. Fund units bought before this period and held throughout this period qualify for Group 1. Fund units bought during this period and held throughout the rest of the period qualify for Group 2. Units that were sold before the end of the period don't receive any dividends or equalization. The buy and sell dates are determined by the transaction date.
- Current ex-date*
The ex-date of this accumulation dividend and equalization. Must be later than the previous ex-date.
Previous and current ex-dates are used to define the distribution period. Fund units bought before this period and held throughout this period qualify for Group 1. Fund units bought during this period and held throughout the rest of the period qualify for Group 2. Units that were sold before the end of the period don't receive any dividends or equalization. The buy and sell dates are determined by the transaction date.
- Record date*
The date to check the records to to see who owns fund on what dates. Must be on or later than the current ex-date.
- Payment date*
Transaction date of the transactions to be created. Must be on or later than the current ex-date.
- Dividend per unit (full period)*
The dividend per unit for Group 1 investors.
- Equalization per unit*
Equalization per unit for Group 2 investors.
- Dividend per unit (partial period)*
The dividend per unit for Group 2 investors. Auto-filled using the formula: .
- Dividend amount type*
Dividend amount type:
Gross – Investors declare income and pay tax if applicable.
Net – Tax is calculated on top of the distribution amount and recorded in the Tax field of the Accumulation dividend transaction.
- Tax rate*
Tax rate if the dividend amount type is "Net".
- Transaction type for dividend group 1*
Transaction type to use for accumulation dividend for group 1. Transaction types specified for dividend group 1, dividend group 2 and equalization must be different.
- Transaction type for dividend group 2*
Transaction type to use for accumulation dividend for group 2. Transaction types specified for dividend group 1, dividend group 2 and equalization must be different.
- Transaction type for equalization*
Transaction type to use for equalization. Transaction types specified for dividend group 1, dividend group 2 and equalization must be different.