All mutual funds must periodically distribute any profits they’ve earned to investors. The law requires a fund to pass substantially all of the net gains from the sale of securities, as well as earned dividends and interest from securities, to its shareholders. These distributions cause a taxable event for investors holding their shares in a taxable account. Those investing through tax-deferred retirement accounts do not experience a taxable event as a result of a fund’s distributions.

When a fund makes a distribution, the amount is deducted from the fund's Net Asset Value (NAV), so its listed price falls by the amount of the distribution on the Ex-Dividend date. However, it's important to realize that an investor does not lose anything from the distribution. While the fund’s price is reduced as a result of the distribution, the shareholder receives an equal amount of either cash or additional shares (if the distribution is reinvested) when the distribution takes place (Pay Date)..

The SMI Funds are "funds of funds" which makes their distributions more difficult to estimate than most funds. In addition to capital gains earned from the sale of its own underlying funds throughout the year, the SMI Funds have to distribute as income any Income or Short-Term Capital Gains received in distributions from the underlying funds held in the portfolios. Estimates have been obtained from most of the underlying funds held in the portfolios, but these estimates are subject to change. As a result, the estimated income distribution below is presented as a projected range.