Dividends and Capital Gains Activity

Question 1

What are Dividends ?

Answer 1

Dividends are the portion of the company’s profit paid out to its participants (Shareholders)

Question 2

What are capital Gains?

Answer 2

are the profit from selling stocks or bonds at a higher price than what was paid to purchase

Question 3

What funds do dividends and capital gains affect?

Answer 3

Mutual funds, institutional mutual funds , separate accounts, collective trust. and variable annuities realize dividends capital gains or capital loss. are reflected in the daily unit value of the fund. If the investments is a mutual fund , the gains are generally distributed to the share holder in the form of a dividend and or capital gain.

Question 4

What happens to the account when dividends and capital gains are paid?

Answer 4

When a dividend or capital gain is declared , shareholders receive a set payment /share. The payment when dealing with mutual funds is automatically reinvested in the shareholders account . The net result of this transaction is that the ppt receives a “contribution “to his / her account, which automatically purchases more shares of that fund while at the same time the unit value decreases.

Question 5

Why did the share price of my fund decrease?

Answer 5

The share price or unit value decreases by the amount of the distribution that is declared plus any gains or losses for the fund that day.

Question 6

will my account have short-term capital gains?

Answer 6

No, short -term capital gains and long-term capital gains are separated due to tax differences between retail and pension plans. Retail accounts have short-term capital gains and pension plans only have long-term capital gains