Capital gains (and losses) are based on transactions that occur during the year. The value of the fund reported at the end of the year is the market value at the time. You didn't give us the details of what the mutual fund is (and I couldn't tell you the details about the ones I have), but an example could be that the fund sold a stock bought way back when for a 10K (capital gains) profit and replaced it with another stock that has since gone down in value by 10K. Since the second stock is still in your portfolio there is no capital gains loss but the end-of-year value of the fund is the same as at the start of the year. (CPAs in the room feel free to jump in.)
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