A.I.M. Users Bulletin Board

[OldAIMGuy]

Hi Conrad and Toof, Re: Mutual Fund Pass-Through Gains.......

Yes, sadly this is true. Those who've owned the fund a long time can be happier about the distribution than the latest purchaser of the fund.

We see this sort of thing during years with very large gains and losses in the market place. It can be a double whammie if the fund has taken a lot of gains early in the year and then the fund sells off near the end of the year. The Fund distributes the cap gains and the owner of the fund pays Uncle Sam.

This is one reason that taking distributions from mutual funds as Shares can be painful. You might have to sell shares to cover the taxes! Taking the distributions in Cash at least gives you the ability to pay the tax on the gains.

It's always been my opinion that AIM does a better job of reinvesting distributions over time than does Dollar Cost Averaging. The Tax Whammie is just another good reason to take cash instead of shares.

Best regards,