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I am a beginner investor and I've been out of school at this point having saved enough to seriously look at where I am investing my money.

I have decided to start off with a portfolio that is invested in 65% TD e-Series Canadian Index Fund and 35% TD e-Series Canadian Bond Index Fund.

The Canadian market is relatively stable and I feel like the financial system is a little more sound that the United States, for instance. Both of these funds have fairly done well over the long term.

I've purchased these e-Series funds through TD Canada Trust's online banking portal EasyWeb. The funds came out of a savings account and went in to a Mutual Fund TFSA (Tax Free Savings Account).

I am now looking to understand the tangible returns I will be able to receive with these.

Canadian Index Fund (distributions annually in December):

  • Potential increase per unit of the fund (realized upon liquidation)
  • Equity dividends?

Canadian Bond Index Fund (distributions each month end):

  • Potential increase per unit of the fund (realized upon liquidation)
  • Interest income?
  • Dividend income?

Will these distributions be put in to my savings account (where the funds originally came out of)? Or will they be automatically re-invested?

Note: I need to bring these questions here as these funds are low cost funds and the bank isn't making as much money out of money as they'd like, they are not very open to sitting with me to discuss all of these potentially silly questions.

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    Whether distributions will be put into your savings account or re-invested in the fund is typically a choice that you would have made when you first invested, and this can be changed "at any time" by you. So you should look at your paperwork or e-files of acknowledgments from the funds to see what choice(s) you have made. – Dilip Sarwate Nov 16 '14 at 15:33
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If you have already begun investing, you should have received a number of fund materials including a prospectus. These materials will include information about how the fund manages its proceeds, both from investment returns as well as asset sales. As a matter of due diligence, I'd suggest reading these materials, and acquiring them if you haven't already begun to invest.

While I can't speak to your specific fund, most low cost index funds automatically reinvest your gains, and minimize their asset turnover for tax management purposes.

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I am now able to answer my own question as I've held these funds for a while which allows me to see what I've gotten in return.

In the case of both funds, dividends are re-invested to purchase fund units. For the bond fund, this is taking place at the end of every month. For the index fund, this takes place once a year at the end of the year.

Apart from the re-invested dividend, there is the fund unit price that could appreciate which would be realized at the time of liquidation.

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