 The investor received a total of $4.06 in dividends over the year, all of which were reinvested, so the cost basis increased by $4.06.For U.S. income tax purposes therefore, dividends were $4.06, the cost basis of the investment was $104.06 and if the shares were sold at the end of the year, the sale value would be $103.02, and the capital loss would be $1.04.Mutual funds, exchange-traded funds (ETFs), and other equitized investments (such as unit investment trusts or UITs, insurance separate accounts and related variable products such as variable universal life insurance policies and variable annuity contracts, and bank-sponsored commingled funds, collective benefit funds or common trust funds) are essentially portfolios of various investment securities such as stocks, bonds and money market instruments which are equitized by selling shares or units to investors.