Purchasing mutual funds near year-end can result in an unexpected taxliability.
Many mutual funds make annual year-end distributions that mayinclude taxable income or capital gains accumulated over the year,which are already recognized in the value of the fund.
You receive nobenefit from this distribution, yet you still have to pay taxes on it.If it makes sense from an investment standpoint, consider waiting untilJanuary to make your mutual fund purchases to avoid this premature taxliability.