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Re: International Asset Allocation - Importance?
Old 05-01-2006, 11:41 PM   #41
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Re: International Asset Allocation - Importance?

Veritasophia,

Don't want to think to hard late a might, but I think that dollar weighted average time is the correct metric. If your average dollar is in the fund for a longer time than the average dollar then you should benefit from the fees.

For example the way I interpret it, for example, is if someone invested $10B tomorrow and then pulled it out the next day this would lower the residence time for the average dollar and the other share holders would benefit from the purchase and redemption fees since the fees are "paid to the fund."

I think that I'm interpreting the language on the Vanguard web site correctly? It says something like: "The fees are paid to the fund and therefore it is not considered a load."

Nevertheless I must admit that I hate seeing the purchase fee when ever I invest in it.

MB
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Re: International Asset Allocation - Importance?
Old 05-01-2006, 11:57 PM   #42
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Re: International Asset Allocation - Importance?

Quote:
Foriegn as in McDonald's Budweisor, Coke, Citigroup, etc
is about as international as I plan to get.
You ol' redbone--as foreign as Hagen Daz, Nintendo, Tim Horten's and Molson (Coors now, babies!)?

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Re: International Asset Allocation - Importance?
Old 05-02-2006, 10:07 AM   #43
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Re: International Asset Allocation - Importance?

I've got a slug of Pacific Index too (probably a much smaller slug than Wab though ).

The dividend that is reported on the 1099 is the actual cash dividend paid out, net of all foreign taxes. There is a section on the 1099 that says how much foreign tax was paid. You get to take all (or almost all, can't remember) of this as a tax credit.

I think the total international fund only receives the cash dividend payout from its constituent funds. The same cash dividend payout that individual shareholders receive. The "foreign tax paid" isn't reported on the 1099, and as a result can't be deducted as a tax credit on your 1040. Can anyone who has a 1099 from the total international fund verify/dispute that?
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Re: International Asset Allocation - Importance?
Old 05-02-2006, 12:26 PM   #44
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Re: International Asset Allocation - Importance?

Quote:
Originally Posted by justin
The dividend that is reported on the 1099 is the actual cash dividend paid out, net of all foreign taxes.
How did you determine that? I determined that it was gross of taxes paid by looking at my statement. The distribution made to my account was exactly equal to the dividend on the 1099 - the foreign taxes paid on the 1099.
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Re: International Asset Allocation - Importance?
Old 05-02-2006, 01:27 PM   #45
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Re: International Asset Allocation - Importance?

Quote:
Originally Posted by wab
How did you determine that? I determined that it was gross of taxes paid by looking at my statement. The distribution made to my account was exactly equal to the dividend on the 1099 - the foreign taxes paid on the 1099.
I had the $10 account maintenance fee for balances less than $10,000 thrown in there. It screwed my calculations. What you are saying is correct. That is, the 1099 box 1a "Total ordinary dividends" distribution = cash dividend actually received + foreign taxes paid. In my case, it was $110.68 = $105.75 + $4.93.

$110.68 = 1099 box 1a "Total ordinary dividends"
$105.75 = cash dividend actually received
$4.93 = foreign tax paid, as reported on 1099

My hunch is that had I owned the same amount of Pacific index through the total intl fund, my 1099 box 1a "total ordinary dividends" would have been $105.75 and foreign tax paid would have been $0.

In other words, I'd pay tax on a smaller distribution, but I wouldn't get the tax credit for the foreign tax paid.



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Re: International Asset Allocation - Importance?
Old 05-02-2006, 03:46 PM   #46
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Re: International Asset Allocation - Importance?

In my experience, as I recall, the 1099 for foreign funds shows a dividend amount which is the same as my actual dividend received plus the foreign taxes paid. For VG and other funds.
I've read the explanation that this is like your W2 showing income before taxes.

So far, I've always been able to get 100% of the foreign tax credit, but it may depend on your circumstances.

It sure doesn't seem like a wash to me, as bpp demonstrated earlier with example numbers.
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