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To: Dave Kahn who wrote (3214)	2/4/1998 9:14:00 PM
From: David Bogdanoff	Read Replies (1) \| Respond to of 42834

DK: I agree that the current 12 vs 18 m. rules would apply. I should have made my real concern a little clearer. If a fund bought some shares years ago, when the stock was relatively cheap, say in 1995 @100 just to be specific, and an investor bought it in 1998 @ 200, and then gets to see a market decline and money flow out in 1999 so that the fund is forced to sell said stock @175, say, then the fund and its shareholders must pay capital gains tax on $75 profit, even though our loyal but unlucky investor has a paper loss and did not sell any of his shares! The fund has a profit in this stock and sold it and so the present shareholders must pay the realized profit at whatever rate applies. This is injury on top of insult that, it seems to me, is especially dangerous to ones financial health in an index fund because it has not been selling stocks over the years as have actively managed funds. Thus, there is a large amount of capital gains locks up in the currently successful index funds which will be paid by shareholders of the fund at the time of realization of profits no matter if they have a profit or not or even sell their shares or not!!!! This is my main concern. David