Pre K
Grades 1-2
Grades 3-6
Grades 7-9
Kids Teens Parents
UNDERSTANDING DISTRIBUTIONS

At the end of the year, many growth-oriented mutual funds will distribute two forms of income to shareholders: (1) a share of the dividends the fund receives from the companies in which it is invested and (2) capital gains received from its investments during the year. On the day that a mutual fund distributes income from dividends or capital gains, the fund's share price will go down. But that doesn't mean you've lost money.

If you reinvest the distribution, you will have more fund shares at the lower share price but still have the same account balance. If you take the distribution in cash, you will have the same number of shares you started with and money in your pocket. The following example shows how it works. We imagined two shareholders in ABC Capital Growth Fund, Jack who has signed up for reinvestment of distributions and Jill who has chosen to receive distributions in cash.

 
 

Both Jack and Jill have $2,000 after the distribution. It's just that Jack has it all in his mutual fund account, while Jill has $1,900 in her account and $100 in cash.

Distributions from mutual funds are reported to the Internal Revenue Service (IRS) as income for federal tax purposes. IRS publication 929 explains federal tax reporting requirements as they relate to kids. You can get a copy of this publication online from the IRS at www.irs.gov .


Past performance is no guarantee of future investment results. The example above is for illustrative purposes only and does not reflect the performance of any mutual fund.



 
 
Please consider the objectives, risks, charges and expenses of any Columbia fund carefully before investing. Contact your financial advisor for a prospectus, which contains this and other important information about the fund. You should read it carefully before investing.