Perhaps you saw the 329% return the Warburg Pincus Japan Small Company Fund posted in 1999 and decided back in January to jump on board. Big mistake: Since then, the fund's value has fallen by nearly 50%. And in August, it dropped the other shoe—right on your wallet. Like some other Japan funds, this one recently sold many of its winning stocks for big gains—gains for which you'll owe taxes next April even though you were not around to enjoy them. The result: For every $1,000 you invested, you got hit with $280 in short-term capital gains, and depending on your tax bracket, you could owe as much as $110 in taxes.
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