This chapter contains the following topics:
Mutual Fund Industry Associations
Year-End Tax Processes
Open end mutual fund companies must comply with a wide variety of securities Acts. Most of these acts were passed in the 1930’s, a period of aggressive reform in the financial services arena. The primary purposes of these Acts were to reduce investment company selling abuses and they have evolved to assure investors of adequate and truthful information.
The NASD is a self-regulatory organization with authority over firms that distribute mutual funds as well as other securities. It reviews and approves mutual fund sales literature on behalf of the SEC.
The NASD also sponsors NASDAQ, a pricing communication system used by much of the industry. NASDAQ gathers pricing and dividend data and forwards the information to the wire services.
Dividends are normally considered “ordinary income”, and taxed at the shareholder’s regular income tax rate.