Date:    06/11/2000  3:59 PM

Subject: File No. S7-09-00

Dear Secretary Katz:
     
I agree whole-heartedly with the S.E.C.'s proposal to require disclosure 
of annualized, after-tax returns by mutual fund companies. There are a 
few points I wish to address:
     
II.A.Paragraph 1.  I believe that funds should be required to include 
post-tax returns, calculated by the standard method, in any published 
materials in which pre-tax returns are displayed, especially in 
marketing materials and advertising. (Some of those 12(b)-1 fees could 
easily cover the added expense.)
     
II.A.Paragraph 3.  I would prefer to require that funds less than 10 
years old must report both pre- and post-tax returns for the trailing 
1-, 3-, and 5-year periods. All too often, data regarding a young fund's 
history are unavailable to the investor because they have not been 
compiled for a period long enough to be included in such tables. In 
fact, I would like to see 3-year data additionally required for all 
funds, as they can often provide insight as to the consequences of 
recent managerial changes, recent fund strategic changes, recent tax law 
changes, etc.
     
II.B. (See above comment for II.A.Para1)
     
II.C. (See above comment for II.A.Para3)
     
II.E. (See above comment for II.A.Para1)
     
II.F.1 Using the highest income tax bracket for the purposes of 
calculating after-tax returns is the only method to use that will not 
lead to investor confusion. Short of making a different calculation for 
every fund-owning taxpayer, there seems to be no other valid method. A 
comparison of pre-tax with "worst-case" returns certainly provides the 
investor with enough information to decide whether or not a fund is 
relatively tax-efficient. Reporting tax-efficiency with more precision, 
i.e., for lower brackets, would be no more useful, as the amount of  a 
fund's distribution taxed at any given marginal tax rate varies. For a 
taxpayer at the lower end of a marginal bracket, perhaps only a fraction 
of his distribution would be taxed at a given rate. Furthermore, use of 
the highest bracket for calculation would magnify differences between 
funds whose distributions vary with regard to their proportions of 
long-term capital gains vs. dividends/short-term gains. The calculations 
would more clearly distinguish the relative tax-inefficiency of funds 
distributing high dividends and low long-term gains.
     
II.F.3  I have never understood why funds may report any results 
anywhere on a fiscal-year basis. Perhaps the stockholders of the fund 
family are interested, but I doubt that fund shareholders are. It is 
very confusing to compare data from two funds with different fiscal 
years.
     
Respectfully submitted,
Steven K. Vernon