as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.
system
if a fund holds stocks paying dividends and doesn't give a payout, is it necessarily re investing those dividends?
user
it is not necessary that the mutual fund pays out the dividend. the money would be used to buy more shares of the same stock or of some other stock depending on overall policy goal of the fund and current allocation of funds. this would increase the nav of the mutual fund and hence its indirectly comes to you once you sell the mutual fund.  the dividend would not be taxable as its not directly paid out.
assistant