capital gains distribution



Per share distribution of capital gains by a mutual fund (unit trust). Shareholders (unit holders) of the fund are taxed on this profit not on the basis of their participation in the fund, but for how long the securities (on the sale of which capital gain was realized) were held prior to their sale. Investors who join a fund just before a capital gains distribution was made (usually once or twice a year) are usually liable for tax on a profit they never made.

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