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| Capital Gains Distribution |
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Distributions that are paid to a mutual fund's shareholders out of the capital gains of the company's investment portfolio.
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Mutual fund capital gains distributions typically occur near the end of the calendar year and are taxable to the fund's shareholders.
This poses a problem for some mutual fund investors who make initial purchases of mutual funds near the end of a calendar year. Because they receive a capital gains distribution, they immediately receive taxable income and face a mutual fund NAV that is reduced from the distribution.
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