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Some Funds Serve Big Capital Gains This Holiday

Legg Mason Value, Evergreen Funds and Fidelity offer estimates.

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'Tis the season for capital-gains distributions and a host of fund families are predicting some fairly large and, in some cases, surprising payouts that could lead to big tax bills for investors who own the funds in taxable accounts.

Legg Mason Value (LMVTX) has a 10-year average tax-efficiency ratio of 95%, but this year manager Bill Miller said some of the fund's long-term holdings started looking like their best returns were behind them. He trimmed America Online (AOL) and Dell Computer (DELL) earlier in the year, leading to a sizable mid-year capital-gains distribution, said senior analyst Chris Traulsen.

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Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.