Why does a Fund pay capital gain distributions?
Capital gain distributions in a mutual fund are distributions of the net profits derived from sales of stocks and bonds within the Fund. As a result, they can occur in a Fund even in a period when the Fund’s total return is low or negative. To comply with IRS requirements, the Dodge & Cox Funds distribute net capital gains annually. (When a Fund sells an individual security, the Fund tracks the difference between the selling price and the original purchase price of that security to determine the gain or loss produced by the sale. At the end of each tax year, the Fund accumulates the gains and losses for all securities sold by the Fund during the year. If the net amount is positive, the Fund will make a capital gain distribution to shareholders.
Capital gain distributions in a mutual fund are distributions of the net profits derived from sales of stocks and bonds within the Fund. As a result, they can occur in a Fund even in a period when the Fund’s total return is low or negative. To comply with IRS requirements, the Dodge & Cox Funds normally distribute net capital gains annually. (When a Fund sells an individual security, the Fund tracks the difference between the selling price and the original purchase price of that security to determine the gain or loss produced by the sale. At the end of each tax year, the Fund accumulates the gains and losses for all securities sold by the Fund during the year.
