WASHINGTON - A Securities and Exchange Commission proposal to require mutual fund companies to disclose after-tax performance to investors is being hailed by some individual investors in public comments on the proposed rule.
"This is a change that is long overdue," said Richard Bonofiglio of Algonquin, Ill., in a one-paragraph comment letter to the SEC. "Too many people fall for the slick advertising of mutual funds. Many simply do not realize what the tax consequences can be for [a] fund touting high returns."
Friday was the deadline for public comments on the SEC's rule proposal to require funds to disclose after-tax returns in their prospectuses and annual reports, though not in advertisements. Funds would have to display one-, five- and 10-year after-tax returns in a standardized table designed to let investors compare the returns of different funds.
"Two funds with identical before-tax returns can have significantly different after-tax returns," SEC Chairman Arthur Levitt said on March 15 when the agency proposed the rule. "Investors are entitled to be told that difference."