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Subject: making Money In The Mutuals
Date: Tue, 3 Nov 92 12:44:32 EST
Message-ID: <7.1992Nov3.124433@AmeriCast.com>

11/3/92


TITLE making Money In The Mutuals

Taxable Event Doesn't Change Value Of Investment

Doug Rogers Investors either love or hate capital-gain payouts
from mutual funds.  Capital gains are paid out by funds at least
once a year, as required by law. They are gains that portfolio
managers realize on the sale of securities in their fund and are
distributed to investors.

The funds divide the total gain by the number of shares in the
fund, then apply that amount to each shareholder account.  The
amount that is paid out to shareholders is subtracted from the
fund's total assets. Therefore, the fund's net asset value will
decline by the per-share amount of the payout.  The decline in
NAV doesn't mean the shareholder lost money. Rather, part of
investors' money is returned as result of normal trading activi-
ties of the manager.  Many investors automatically reinvest their
dividends and capital-gain payouts in additional fund shares. But
even though they never see the money, the payout is recorded and
is taxable.

In addition, their fund's NAV will fall when the payout is made.
But their investment value remains the same. It's just divided
into more shares.  The only time gains aren't taxable is when
they occur in a retirement accotcrFy such as an IRA or 401(k)
plan. These gains are allowed to accrue on a tax-deferred basis.
The accompanying chart shows how much selected funds expect to
pay out and when. They are only estimates and could change sub-
stantially depending on market activity and fluctuations in the
number of shares outstanding. Some were unwilling to estimate the
gain.  Unrealized gains or losses are the value of the securities
in the fund minus their costs. They give shareholders an idea of
possible future payouts.  For exA%ple, Alger Small Capitalization
Fund expects to have no payout this year. But it has an unreal-
ized gain of`-2.70 a share, or about 13% of the fund's NAV.
That's how much shareholders would get back if the fund sold all
the shares in which it had a gain.  Some J investors plan pur-
chases and sales of funds based on the gain they expect from ei-
ther the fund they own or are considering buying. If their fund
has a loss so far this year, they might consider selling enough
shares to offset any expected payout. That way, they avoid paying
tax on the {gain.  Remember, the payout may be made on gains
stretching*ack to last year and beyond, so it's possible to be
down for the year, yet have gains paid out.  Shareholders think-
ing of buying a fund may want to hold off if they are concerned
that a large gain will be distributed. Otherwise, they may pay
tax on a gain that they didn't participate in.  va4>Capital-Gain
Estimates What top growth funds expect to pay out


{ Date Of Amount Per Share Unrealized {Fund Payout qCurrent Esti-
mate Gain Per Share { Twentieth Century Ultra Dec. 19 None

Alger Small Cap. Late Dec.  None $2.70 Berger 100 Nov. 8 None
0.99 Janus Twenty Dec. 31

Fidelity Contra Dec.


Fidelity Adv Eq Port Gr Dec.


Robertson Stephens Emrg Gr Late Nov./early Dec.  0.25 Loss Kauf-
mann None 0.45 Pacific Hor Agr Gr July


Twentieth Century Giftrust Dec. 19 1.70

CGM Cap Develop End of Dec.


Oberweis Emerg Gr Dec. 31 Not Likely

Twentieth Century Growth 1st wk Dec.


ABT Em Gr Dec. 20 0.25-0.30

AIM Constellation Dec. 31

2.63 IDEX Dec. 31

Idex II Dec. 31

Idex III Dec. 31

Special Portfolio Stock Dec. 15


MIM Stock Apprec Dec. 29 0.49

Westcore Midco Growth Dec.  0.33

Skyline Special Equities Dec. 29 0.821.65 G.T. Global America
Growth Dec. 15


WoodStruth Winthrop Agg Dec. 31


Fidelity Contrafund Dec.


Thomson Opportunity Dec. 17

2.77

or early December.

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