Your online account value may appear lower than reality because of accrued (earned) but unpaid distributions. This does not affect values on your monthly statements because accrued but unpaid distributions are accounted for on them.
Tis the start of the holiday season and along with Thanksgiving, Chanukah and Christmas comes year end Closed-End Fund distributions. Towards the end of each year Closed-End Funds (CEFs) must distribute realized capital gains. These distributions can be quite large. Between now and the payment date, which may not be until the end of December, it will give the impression that online account values are lower than they actually are. If you look at your monthly Charles Schwab statements, they will show accrued interest under these positions.
Why? CEFs pay these distributions to existing shareholders as of a certain date, the ex- dividend date. Shareholders that own the CEF the day prior to the ex-dividend date will receive the year end distribution however investors that purchase the CEF on or after the ex-dividend date do not receive the distribution. The confusion lies in the fact that there may be long-periods of time between the ex-dividend date and the payable date, in some cases close to two months.
Please provide an example? A recent example is the CEF General American Investors (GAM) which went ex-dividend today (Friday 11/10/2017). Shareholders as of Thursday (11/09/2017) will receive the distribution. It is significant because the distribution is so large, in this case $3.09 per share which represents a distribution of 8.5% based on Thursday’s closing value of $36.48. The confusion arises from the fact that the distribution will not be paid until December 29th of this year. Between Friday November 10th and December 29th, this 8.5% distribution will not be accounted for in your total online account value since the price of GAM will be adjusted down by $3.09 per share to account for the distribution. For example, you owned 1,000 shares of GAM, the $3.09 per share distribution would equal $3,090, which is yours but will not be accounted for anywhere online until it is paid to you on December 29th.