Leftover Losses May Offset Fund Gains; Data-Filled Statements; Fund dividends could be higher, but capital-gain distributions likely won't.(MUTUAL FUNDS)(INVESTMENT TRENDS)

Byline: PAUL KATZEFF

Distributions season is approaching. Mutual funds traditionally make a big part of their dividend and capital-gain payouts in December or the weeks before that.

This year, shareholders expect to get hit by a double whammy. They foresee complex distribution data on their funds' annual statements. And with the market run-up, they're bracing for a bigger tax bite on high cap gains.

They may be only half right. Statements will indeed throw more information at them. But fund payouts of capital gains likely won't be bigger than last year.

"Thanks to the bear market, many funds have large capital loss carry-forwards," said Linda Duessel, market strategist for Federated Funds. "They can be used to offset gains for eight years from the date the capital loss was recognized by the fund."

There are enough capital losses to offset gains for years, says Duessel, who also co-manages $2.7 billion Federated Capital Appreciation and $1.3 billion Equity Income funds.

Other fund groups concur. Just two of 22 actively run Vanguard Group stock funds have net gains this year, says a Vanguard spokesman. The rest have net losses.