Bill Woessner wrote:

- quote -

When I take your numbers, I get 7.92% and 9.89% a bit higher than you
show. S&P during that time was up 8.03% (all are annualized numbers) so
the difference from 8.03 to 7.92 makes sense, I'd think. But you are
right, adding in the dividends and 9.55% looks right. If your expense
ratio is .60, that's just .42 so you should be seeing 9.1% or greater
total return. .35% is quite a bit to just fall through the cracks.
Their original explanation didn't bother me, but numbers speak for
themselves, there should be a web site where you can download past few
years annual total returns. I'd suggest you do that.
JOE

On May 10, 9:30 am, Bill Woessner <woess...[at]gmail.com> wrote:
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The adjusted close number is calculated by Yahoo. Yahoo calculates it
by assuming the value today is 100% and stepping back through time and
continually reducing past share prices before distributions. For the
obvious reason of not being able to change history, fund companies
cannot report this way -- instead they must reduce share prices after
distributions and give you more shares.

This is also the reason why people constantly make mistakes when doing
analysis of past data. Time and time again, I see people write
something like "DOW in 1980 was X, DOW now is Y, return is Y/X-1".
NO!!! Stock indexes show the blended share price of the underlying
stocks. Hence dividends will reduce the total stock index number.
Where did it go? Up into thin air -- it simply is not tracked by at
the stock exchange price level.

"Bill Woessner" <woessner[at]gmail.com> wrote in message
news:1178814627.348714.110200[at]u30g2000hsc.googlegroups.com...

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is that it is reinvesting them, which seems pretty standard to me.

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Well sure -- the adjusted close is what you'd get if you reinvest
dividends--which is what you're doing.


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Indeed. So they're reinvesting the dividends for you. Doesn't seem like
there's anything wrong there--although 0.6% expense ratio for an S&P 500
fund seems out of line.

"Bill Woessner" <woessner[at]gmail.com> wrote in message
news:1178814627.348714.110200[at]u30g2000hsc.googlegroups.com...
- quote -

have shares of the mutual fund, she has units of a sort of umbrella fund.
The values of these units include the re-invested dividends and capital
gains. She isn't being stiffed at all, and yes, this is a common practice.

Elizabeth Richardson

This is sort of a tangent from the other thread about dividends and
expense ratios. My wife's 401k (through New England Financial [NEF])
doesn't pay dividends or capital gains. Is this a standard practice?
I went to their web page and got the following explaination:

<quoteWhere are my dividends and capital gains?

Dividends and capital gains are automatically reinvested in additional
shares of mutual funds or, in the case of annuity options, the
underlying funds. These distributions cause the net asset values of
the mutual fund or the underlying fund to decline. However, since
distributions purchase additional shares, unit values are maintained
at their previous levels.
</quote
To me, this is a pretty bogus explaination. As others have pointed
out, if you go over to Yahoo and chart a fund's close and "adjusted
close" (adjusted for dividends and splits) over time, it's easy to see
that the adjusted close has a higher return than the unadjusted close;

So what gives? Is NEF stiffing us out of our dividends? This is, of
course, on top of the $6.25 per quarter "contract fee". Even if their
explaination is valid, I would feel much better about receiving those
dividends and purchasing additional shares. At least then, I wouldn't
have this nagging feeling that they're cheating us.

To do a rudimentary comparison, I pulled up the fund performance sheet
for my wife's 401k. For the 3-year period ending 3/30/07, their S&P
500 index fund had a return of 8.85%. So I went over to Yahoo and
pulled up the following data:

Date Close Adj. Close
3/30/07 130.83 130.83
3/30/04 104.08 98.60

Assuming 4 compounding periods per year, this corresponds to a return
of 7.7% and 9.55%, respectively.

I'm going to go out on a limb and guess that NEF's S&P 500 index fund
did NOT beat VFINX by 1.15%. Instead, it looks like they're lumping
the dividends in with the NAV, but then taking a pretty big slice.
The 0.7% difference can be explained by the higher expense ratio (0.6%
vs. 0.18%) and different compounding.

Anyway, that's my $0.02 worth.

--Bill