Fund investors to face taxes as stocks thrive

They're baack! This year's rebounding stock market means manyinvestors once again must be on the lookout for tax-inefficientmutual funds.

The tax issue largely went into hibernation during 2002's severebear market. Relatively few stock funds generated capital gains thatyear, meaning few funds made capital-gain payments on whichshareholders had to pay taxes.

Dividends and capital-gain distributions last year were the lowestsince 1995, reports Lipper Inc. It was one minor consolation amid theinvestment slump.

But this year's improving investment climate could see more fundspaying taxable distributions, and that means shareholders shouldreview the key tax lessons …