[Federal Register Volume 66, Number 191 (Tuesday, October 2, 2001)]
[Rules and Regulations]
[Page 50102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-24542]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 230, 239, 270, and 274

[Release Nos. 33-8010; 34-44850; IC-25175; File No. S7-09-00]
RIN 3235-AH77


Disclosure of Mutual Fund After-Tax Returns; Extension of 
Compliance Date

AGENCY: Securities and Exchange Commission.

ACTION: Final rule; extension of compliance date.

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SUMMARY: The Commission is extending the compliance date for amendments 
to rule 482 under the Securities Act of 1933 and rule 34b-1 under the 
Investment Company Act of 1940 which require certain funds to include 
standardized after-tax returns in advertisements and other sales 
material, and which were published on February 5, 2001 (66 FR 9002).

DATES: Effective Date: The effective date of the amendments to Parts 
230, 239, 270 and 274 published on February 5, 2001, remains April 16, 
2001.
    Compliance Dates: The compliance date for the amendments to rule 
482 (17 CFR 230.482) under the Securities Act of 1933 and rule 34b-1 
(17 CFR 270.34b-1) under the Investment Company Act of 1940 is extended 
to December 1, 2001. The compliance date for the amendments to Form N-
1A (17 CFR 239.15A and 274.11A) remains February 15, 2002.

FOR FURTHER INFORMATION CONTACT: Katy Mobedshahi, Attorney, or Paul G. 
Cellupica, Assistant Director, (202) 942-0721, Office of Disclosure 
Regulation, Division of Investment Management, Securities and Exchange 
Commission, 450 Fifth Street, NW., Washington, DC 20549-0506.

SUPPLEMENTARY INFORMATION: The Commission is extending the compliance 
date for certain amendments to rule 482 (17 CFR 230.482) under the 
Securities Act of 1933 and rule 34b-1 (17 CFR 270.34b-1) under the 
Investment Company Act of 1940, which the Commission adopted on January 
18, 2001 (``Rule Amendments'').\1\ The Rule Amendments require that 
fund advertisements and sales literature include standardized after-tax 
returns if the sales material either (i) includes after-tax performance 
information; or (ii) includes any performance information together with 
representations that the fund is managed to limit taxes. The Commission 
had designated October 1, 2001, as the compliance date for the Rule 
Amendments.
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    \1\ See Disclosure of Mutual Fund After-Tax Returns, Securities 
Act Release No. 7941 (Jan. 18, 2001) (66 FR 9002) (Feb. 5, 2001).
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    On September 20, 2001, representatives of four major fund groups 
requested that the Commission extend the October 1, 2001 compliance 
date for the Rule Amendments.\2\ In their request, these fund groups 
argued that an extension is necessary to allow funds and third-party 
providers of performance information to request and obtain 
clarification from the Commission staff on a number of technical issues 
about the methodology for calculating after-tax returns, and to program 
their systems accordingly. The fund groups stated that they only 
recently became aware of a lack of agreement within the fund industry, 
as well as with the third-party providers, on several components of the 
after-tax return calculation. In addition, the fund groups argued that 
the October 1, 2001 compliance date is particularly problematic for 
fund supermarkets, which must rely upon third-party providers for the 
after-tax returns they publish for non-proprietary funds.\3\ Because 
the fund supermarkets' websites are in most cases deemed to be sales 
literature, the after-tax numbers that they post on their websites must 
comply with the after-tax return rule by October 1, 2001.
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    \2\ See Letter to Paul F. Roye, Director, Division of Investment 
Management, from Eric Roiter, Sr. Vice President & General Counsel, 
Fidelity Management & Research Company, on behalf of Henry H. 
Hopkins, Chief Legal Counsel, T. Rowe Price Associates, Inc.; 
Marguerite E.H. Morrison, Chief Legal Officer-Mutual Funds, 
Prudential Financial; and Heidi Stam, Principal, The Vanguard Group, 
Inc., dated September 20, 2001 (placed in File No. S7-09-00).
    \3\ A fund supermarket is a program offered by a broker-dealer 
or other financial institution through which its customers may 
purchase and redeem a variety of funds from different providers.
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    The Commission therefore is extending until December 1, 2001, the 
compliance date for the Rule Amendments. This extension will give funds 
and third-party providers sufficient time to resolve outstanding 
technical issues regarding the appropriate methodology to be used in 
calculating standardized after-tax returns and perform any necessary 
systems changes. The extension will also allow third-party providers to 
collect the historical tax data that they need to compute after-tax 
returns according to the Commission's rules.
    The Commission, for good cause, finds that, based on the reasons 
cited above, notice and solicitation of comment regarding the extension 
of the compliance date for the Rule Amendments is impracticable, 
unnecessary, and contrary to the public interest.\4\ The Commission 
notes that the October 1, 2001 compliance date is imminent, and that a 
limited extension will give funds and third-party providers sufficient 
time to seek clarification from the Commission staff about the 
appropriate methodology to be used in computing after-tax returns and 
to modify their systems accordingly.
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    \4\ See section 553(b)(3)(B) of the Administrative Procedure Act 
(5 U.S.C. 553(b)(3)B)) (an agency may dispense with prior notice and 
comment when it finds, for good cause, that notice and comment are 
``impracticable, unnecessary, or contrary to the public interest'').

    Dated: September 26, 2001.
    By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-24542 Filed 10-1-01; 8:45 am]
BILLING CODE 8010-01-U