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To: marc ultra who wrote (4321)	3/22/1998 9:57:00 PM
From: Kirk	Read Replies (2) \| Respond to of 42834

someone care to compare S&P500 funds with SPYders for tax efficiency and whether there's a significant difference between them in this way. Yes, the difference shows up when the market goes down, you decide to ride it out while others in your fund decide to sell. The index fund has to sell stock to cover and the stock has appreciated greatly so they pass on the gains to you at the end of the year. You could see a major reduction in principal and a substantial capital gains that you will owe taxes on. There are two easy ways to avoid the above scenario: #1 is sell before the market drops so you pay a capital gains tax but see no reduction in principal. or if you are a "buy and hold" type and/or don't trust Marketiming (or just don't want to worry about this issue) => #2 Buy SPYders. These are just like stocks so you only take a gain or a loss when you want to, not when others decide to bail out on a downturn or bear market. Hope this helps regards Kirk out