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Union Calendar No. 297
106th CONGRESS
2d Session
H. R. 1089
[Report No. 106-547]
To require the Securities and Exchange Commission to require the
improved disclosure of after-tax returns regarding mutual fund
performance, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 11, 1999
Mr. Gillmor (for himself, Mr. Oxley, Mr. Markey, Mr. Towns, Mr.
Whitfield, Mr. Largent, Mr. Waxman, Mr. Deal of Georgia, Mr. Burr of
North Carolina, Mr. Tauzin, and Mr. Hall of Texas) introduced the
following bill; which was referred to the Committee on Commerce
March 27, 2000
Additional sponsors: Mr. Cox and Mr. Barrett of Wisconsin
March 27, 2000
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in italic]
_______________________________________________________________________
A BILL
To require the Securities and Exchange Commission to require the
improved disclosure of after-tax returns regarding mutual fund
performance, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
<DELETED>SECTION 1. SHORT TITLE.</DELETED>
<DELETED> This Act may be cited as the ``Mutual Fund Tax Awareness
Act of 1999''.</DELETED>
<DELETED>SEC. 2. FINDINGS.</DELETED>
<DELETED> The Congress finds the following:</DELETED>
<DELETED> (1) Taxes can be the single biggest cost
associated with mutual funds. The average stock fund investor
has lost up to 3 percentage points of return every year to
taxes.</DELETED>
<DELETED> (2) The average portfolio turnover rate for an
actively managed (nonindex) fund has increased from 30 percent
20 years ago to almost 90 percent today, and average capital
gains distributions of growth funds, per share, have more than
doubled in the last 10 years.</DELETED>
<DELETED> (3) If a fund's performance is based mostly on
short-term gains, investors can lose a significant part of
their return to taxes.</DELETED>
<DELETED> (4) Performance figures that investment companies
generally disclose to their shareholders are net of fees and
expenses, but not taxes, and therefore do not represent the
impact taxes have on an investor's return.</DELETED>
<DELETED> (5) This disclosure focuses on how much money
investors made before taxes, and not on how much money
investors actually got to keep.</DELETED>
<DELETED> (6) Improved disclosure of tax efficiency would
allow shareholders to compare after-tax returns to raw
performance, and would permit the investors to determine
whether the fund manager tries to minimize tax consequences for
shareholders.</DELETED>
<DELETED> (7) While the investment company prospectus
details the average annual portfolio turnover rate, the
prospectus may not expressly inform shareholders about the
impact the portfolio turnover rate has on total
returns.</DELETED>
<DELETED>SEC. 3. IMPROVEMENTS IN DISCLOSURE REQUIREMENTS.</DELETED>
<DELETED> Within 1 year after the date of enactment of this Act, the
Securities and Exchange Commission shall revise regulations under the
Investment Company Act of 1940 to require, consistent with the
protection of investors and the public interest, improved methods of
disclosing in investment company prospectuses and annual reports the
after-tax effects of portfolio turnover on investment company returns
to investors.</DELETED>
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Mutual Fund Tax Awareness Act of
2000''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Taxes can be the single biggest cost associated with
mutual funds. The average stock fund investor has lost up to 3
percentage points of return every year to taxes.
(2) The average portfolio turnover rate for an actively
managed (nonindex) fund has increased from 30 percent 20 years
ago to almost 90 percent today, and average capital gains
distributions of growth funds, per share, have more than
doubled in the last 10 years.
(3) If a fund's performance is based mostly on short-term
gains, investors can lose a significant part of their return to
taxes.
(4) Performance figures that mutual funds generally
disclose to their shareholders are net of fees and expenses,
but not taxes, and therefore do not represent the impact taxes
have on an investor's return.
(5) This disclosure focuses on how much money investors
made before taxes, and not on how much money investors actually
got to keep.
(6) Improved disclosure of the effect of taxes on mutual
fund performance would allow shareholders to compare after-tax
returns to raw performance, and would permit the investors to
determine whether the fund manager tries to minimize tax
consequences for shareholders.
(7) While the mutual fund prospectus details the average
annual portfolio turnover rate, the prospectus may not
expressly inform shareholders about the impact the portfolio
turnover rate has on total returns.
SEC. 3. IMPROVEMENTS IN DISCLOSURE REQUIREMENTS.
Within 18 months after the date of enactment of this Act, the
Securities and Exchange Commission shall revise regulations under the
Securities Act of 1933 and the Investment Company Act of 1940 to
require, consistent with the protection of investors and the public
interest, improved disclosure in investment company prospectuses or
annual reports of after-tax returns to investors.
Union Calendar No. 297
106th CONGRESS
2d Session
H. R. 1089
[Report No. 106-547]
_______________________________________________________________________
A BILL
To require the Securities and Exchange Commission to require the
improved disclosure of after-tax returns regarding mutual fund
performance, and for other purposes.
_______________________________________________________________________
March 27, 2000
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
Pages: 1 Other Popular 106th Congressional Bills Documents:
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