Are Funds Worth The Yearly Tax Bite?

The way most stock funds have gone up over the past few years, they've been awfully hard to hate. Except right now. Not only have most of my funds started the new year on a downer but my mailman keeps bringing me 1099-DIV forms heralding taxes I'll soon owe on my funds' capital-gains distributions. These taxes shouldn't shock me, but they do, every year. And I know I've got plenty of company. Bob Santoro, Charles Schwab's Vero Beach (Fla.) branch manager, told me he soon expects to see upset fundholders with 1099s "lining up out the door."

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