Mutual funds that earn dividends and cap gains from the stocks they own will pass that income thru to the shareholders even if no funds are distributed. So if you are issued a 1099-DIV you must report those on your personal tax return.
Now what the other answers alluded to was the buying & selling that the mutual funds do inside the fund ... those are not reported on your personal tax return "directly". The mutual fund nets the gains and losses that happen during the year and if there is an overall gain that is put on the 1099-DIV box 2a. If there is an overall loss it is retained by the fund for use in the future.
Then, when you sell your shares in the mutual fund, you may have a gain or loss from that sale which you also need to report on your return ... it will be on a 1099-B from the broker.
