Securities and Exchange Commission.
Final rule; extension of compliance date.
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).
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.Start Further Info
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.End Further Info End Preamble Start Supplemental 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”). 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.
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. 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. 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.
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. 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.Start Signature
Dated: September 26, 2001.By the Commission.
Margaret H. McFarland,
1. See Disclosure of Mutual Fund After-Tax Returns, Securities Act Release No. 7941 (Jan. 18, 2001) (66 FR 9002) (Feb. 5, 2001).Back to Citation
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).Back to Citation
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.Back to Citation
[FR Doc. 01-24542 Filed 10-1-01; 8:45 am]
BILLING CODE 8010-01-U