Definition: Income of mutual funds

National accounts

Units classified within General Government sector may hold shares issued by Mutual Funds.  The income received by the Mutual Fund is recorded according to ESA rules, i.e.  on an accrual basis for interest and "at the time they are due to be paid" (in practice close to the effective payment date) for dividends.  As a reminder, holding gains or losses are not recorded as property income in the system.  The income assigned to shareholders is considered reinvested.  It is the income received by Mutual Funds, after deduction of management fees, considered in the system not as a distributive transaction but as financial services.  This income must be recorded on an accrual basis, in the same conditions as for other debt instruments, regardless of whether this income is distributed regularly or capitalised and, so, automatically included in the value of the share.
Source:
Eurostat, "ESA 95 manual on government deficit and debt, 2002 Edition", Office for Official Publications of the European Communities, Luxembourg, 2002, Chapter III.1
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