Tax Hit Looming for Fund Holders

If the returns on your mutual fund are flat and dismal, you're not alone. With the S&P down 1.65% so far this year, everything's looking pretty drab.

But if holding a stagnant fund wasn't bad enough, you might actually get hit with a distribution before year-end on which you'll owe tax in April.

Many mutual funds will be making taxable distributions to shareholders this year, and some of them may be meaty. "We have seen some sizable estimates from companies," says Greg Carlson, a fund analyst at Morningstar. Of course, all things are subject to change between now and the time your fund actually pays that distribution at year's end, but fund companies are sending out warnings. ...