[11812]
April 13, 2000
TO: BOARD OF GOVERNORS No. 23-00
FEDERAL LEGISLATION MEMBERS No. 5-00
PRIMARY CONTACTS - MEMBER COMPLEX No. 26-00
PUBLIC INFORMATION COMMITTEE No. 14-00
RE: HOUSE PASSES AFTER-TAX DISCLOSURE BILL; SEC PROPOSES RULE
ON SAME
______________________________________________________________________________
In early April, the House passed H.R. 1089, the “Mutual Fund Tax Awareness Act of 2000,” by
a 358-2 vote. The bill directs the SEC to adopt a rule within 18 months of enactment to require
improved disclosure in investment company prospectuses or annual reports of after-tax returns to
investors. H.R. 1089 defers to the SEC about whether to list such returns on a pre- or post-liquidation
basis, or both.
On March 15, the SEC favorably voted to propose a rule requiring mutual funds to disclose the
effects of taxes on performance. The rule would require mutual funds to disclose pre- and post-
liquidation returns for one-, five- and 10-year periods in prospectuses and annual reports. The comment
period on the proposed rule ends June 30.
In his April 3 floor statement, House Commerce Committee Chairman Tom Bliley
(R-VA) said that despite the recent SEC action, H.R. 1089 is necessary to ensure that these regulations
go into effect. Congressman Gillmor (R-OH), the lead sponsor of the bill, noted “the responsible
efforts of the mutual fund industry to improve after-tax disclosure” and commended the industry and
the SEC for their forward-looking approach.
We will keep you informed of further developments.
Matthew P. Fink
President
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