How long do you need to be in a Mutual fund to be eligible for dividends at the the end of the year?

I have 2 mutual funds and they both pay dividends in Dec. How long do I need to be in the fund to collect the dividend...is it prorated or is there a minimum amount of time required? Also, do I need to be holding the fund on the distribtion date to get the dividend....ie if I had the fund for 9 months then decided to sell it would i still get any dividends for the 9 months I did have it? Thanks in advance your help is appreciated

I don't understand why people answer questions if they don't know what they're talking about. That first answer is wrong.

You only have to own a mutual fund for 1 day in order to receive dividend and/or capital gains distributions. Now, here's the real news. YOU DON'T WANT TO DO THAT.

Why? Let's say you invest $1000 in a mutual fund (just for this example we'll assume you only got one share for your $1000 but even if you got 100 shares at $10 each it works out the same) on Dec. 1 and dividends of $15 per share are paid to holders as of Dec. 2. You might think "hey, I've just made $15" but you haven't. The price of the fund will drop by $15 on Dec. 2 and assuming the market doesn't move your share will be worth $985 at the close on Dec. 2. So you haven't made any money. But wait, it gets worse. Taxes.

Even though you only owned that fund for 1 day you have to pay taxes on the dividend distribution. The fund will report the distribution to the IRS as dividend income to you and you're stuck. I believe holding period requirements exist for you to be able to receive the dividend tax break (qualified dividends) so you may end up paying your marginal tax rate which could be as high (depends on your federal marginal tax rate as well as that of your state and/or municipality) as 40%.

So you pay 40% of the $15 (or $6) as taxes.

You invested $1000 on Dec. 1, the market didn't even move, yet on Dec. 2 your investment, after taxes, is only worth $994. That may not seem like much but what if you'd invested $50,000? Then you'd be out $300.

You get dividends based on the date dividends are declared. Your dividends will be prorated from the date you bought them to the date of declaration. If you sell the fund after that date, you get the dividend.

Dividends are not prorated for stock funds. They are for money market funds.

You need to understand what dividends are. The best explanation will be in investing books. The short answer is the dividend is built into the NAV. At distribution the NAV is reduced by the dividends and either paid or re-invested (your choice).

If the dividends were paid once a year & you got into the fund one day before they were declared... You'd get the full years dividend (not good from a tax point of view).

I don't have the time to fully explain this... but your concept of dividends in Mutual Funds is wrong and you have a bit to research. Getting dividends doesn't mean you have more money!

The second post is accurate. Whoever owns the fund at the time of the dividend gets the dividend. There is a market premium that an "efficient" market will build into the going price for a fund and this premium goes up the closer you get to the dividend payment.