Sell Mutual funds before or after distributions?

From: juanb@vnet.ibm.com
Subject: Sell Mutual funds before or after distributions?
Date: Fri, 17 Dec 99 10:22:55 EST

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I've been invested in a mutual fund for about 3 years, making monthly
contributions.  The performance has been average at best so I decided
to liquidate the account and invest in something else.  They were
scheduled to make distributions on 12/16, so I sold everything on
12/15, since they were going to make significant dividend and short-term
capital gains distributions.  When I called the company, they were
very emphatic on stating that I would not receive the coming
distributions, almost making it sound like I was going to lose out on
a great windfall.

My logic is that since I've held the fund for over a year, all my gains
will be long-term (20%) and since when distributions are made, the NAV
falls by that amount, the money I would have received after the sale
may have been less, with the remainder being made up of the div/st-g,
with all the money taxed accordingly.

Should I have sold after the date, or is this a wash either way?

Thanks,
Juan


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