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Subject:  Long&Short Term Cap Gain Reinvestment Date:  12/14/2005  11:07 PM
Author:  chicagocubs Number:  13559 of 18062

I only dabble in mutual funds holding most of my portfolio in common stocks. I have 3 T.Rowe Price Funds, and today there were some reinvestments showing on the account that I don't understand.

There was a dividend reinvestment (I get this), but there were also 2 reinvestments into the stock listed as Long Term Capital Gains Reinvestment and Short Term Capital Gains reinvestment. I don't really know what those are.

The website also lists my average price per share but today, after these reinvestments, it shows the average price per share I have paid with the total dollar amount but next to it there is the total number of shares which represents the additional shares purchased with these reinvestments.

Can someone explain what these transactions were?

The only think I can think of is that the funds sold holdings for a gain and then distribute those gains to the funds shareholders proportionally based on the number of shares you hold. Then they automatically reinvest those funds into you account as additional shares. Am I on the right track?

Thank for any help you can provide in understaning this.


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