NEW YORK - A rule proposal outlining how mutual funds should report their after-tax returns should be revised to make it less confusing to investors, said Joel M. Dickson, a principal with The Vanguard Group of Malvern, Pa.

The proposed rule would require funds to report one-, five- and 10-year pre- and post-liquidation tax returns in their prospectuses and annual reports. When calculating after-tax returns, funds would be required to assume that taxes are charged at the maximum income-tax rate and taxes on fund distributions are charged at the time the distributions are made, said Susan Nash, a senior assistant director in the SEC's division of investment management. Money market funds, 401(k) plans, variable annuities and other tax-deferred funds are exempt from providing after-tax performance figures in the proposal, she said.

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