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Fat Prophets Pty Ltd
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This Financial Services Guide (FSG) is dated 16th June, 2015. It is provided to you by Fat Prophets Pty Ltd (Fat Prophets, we, our, us) to inform you of the financial services provided by us and to comply with our obligations as the holder of an Australian Financial Services Licence (AFSL No 229183).
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Fat Prophets is a locally and internationally recognised brand. Fat Prophets has been providing financial services to investors since 2001 and remains one of Australia's Premier Equity Research and Wealth Management companies. Fat Prophets holds a current Australian Financial Services Licence (AFSL) No 229183, which authorises us to provide certain financial services. We act on our own behalf and under our own AFSL when we provide services to you. We can offer our services to both wholesale and retail clients. The financial services we are able to provide and financial products in which we are able to provide such services under this licence are listed in the table below:
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Payments to directors, employees, representatives, authorised representatives, referral agents and third parties will only be paid if they are authorised by you.
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Fat Prophets Complaints Procedure
We will acknowledge your complaint promptly.2. We will investigate your complaint and endeavour to send a final response to you within four weeks. If we are unable to provide you with a final response within this time, we will send you an update.
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The Nickel stock that could prove electrifying
There has been plenty going on in financial markets lately, and not least of which has been the precious metals markets with gold prices hitting new highs in Australian dollar terms, and rallying almost 20% in the last few months to above US$1500. Other precious metals have also been similarly strong.
However, another metal that has been going gangbusters is nickel, with prices recently surging to five-year highs, and coming to within striking distance of US$19000 a tonne for the first time since 2014.
Against this backdrop there is a nickel stock we think you should consider owning…..
Nickel has broken above a major downward trend in recent weeks after a ten-year bear market.
What's been happening, and why the surge?
Supply has been delivered a major shock, with Indonesia, which accounts for almost a quarter of global output, saying it will ban exports from December. This is set to create a major supply deficit next year, against the backdrop of strong demand due to the rising demand for electric vehicles.
Falling nickel stocks in LME-registered warehouses at 109,950 tonnes, down 20% so far this year, have fuelled supply concerns. This can be seen in the premium for the LME's cash nickel over the three-month contract, which has risen above US$100 a tonne – its highest in more than a decade. The global nickel market is estimated at 14 million tonnes, and has been in deficit for some years now, and expectations were for a more balanced market next year. So prices could go a lot, lot higher.
It is estimated that the average EV could contain up to 70 kilograms of nickel per vehicle (the following image shows the commodity content of new model EVs by battery type). Nickel is also used in the steel industry, and this traditional market could also assert pressure on the nickel price over the next few years. Source: Reuters
On the other side there are these clear supply constraints, which will see nickel move toward a supply deficit in 2020, with recent draws on the London Metal Exchange inventories a telltale sign. The move by the Indonesian Government to ban exports two years ahead of the original timetable is significant – Indonesia produced 560 million tonnes of nickel ore in 2018 and accounts for around a quarter of global supply.
Source: McKinsey
One correlation that not often discussed, is the one that exists between nickel and platinum. As can be seen on the chart below, both nickel (purple line) and platinum (orange line) have moved together in recent years – right up to the point where "both staged major multiyear decade long breakouts" within a week of each other!
How to play the bull market in nickel???
So, if you are a believer that the demand for electric vehicles will only increase, one way to play it is by having exposure to a high-class nickel miner, and one that is going to make money, the same of which might not be said of Tesla!
We have identified a strong play on the sector. The company is a high quality, pure play, nickel miner, with a strong operational track record, which was further evidenced by recent FY19 results. Brokers are also sitting up and taking notice and raising their price targets.
The company in 2019 produced nearly 18,000 tonnes of nickel at a cash price of A$2.98 per pound. With nickel currently trading at over US$5 per pound (circa A$7.50 per pound), operating margins will be significant. Any weakness in the A$ will add to the positive mix.
Robust margins are set to persist (and grow) for some time to come, based on our long-term view on the nickel market and developments in the auto industry.
This company is guiding for 2020 nickel output in the range of 21,000 to 22,000 tonnes and the unit cash cost of production to be in the range of A$2.90 to $3.30 per pound. The company has also recently delivered a very positive update on the exploration front.
What to know the name of this stock, and a way to benefit from the surging demand for electric vehicles and nickel?
Register to get the name of the stock
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Fat Prophets goes bullish Gold at US$260 an ounce
Fresh out of the bursting of the dotcom bubble, one of Fat Prophets' early calls was to buy gold at around US$262 an ounce. This was on the basis that the ensuing monetary easing by the Fed would erode the intrinsic value of the US$. Such was to prove correct, with the precious metals sector surging, as gold surged in the ensuing years to reach a peak of almost $1900 in 2011.
Fat Prophets goes bullish Oil at US$35 a barrel
Fat Prophets says to avoid financials, just prior to the GFC
While not predicting the full extent of the Global Financial crisis, Fat Prophets' was very vocal that the level of housing market write-offs was set to accelerate for the US banking sector. We said that the banking sector globally should be avoided and was a 'no-go.' The sub-prime disaster was of course what ultimately brought down a number of banks, and also ushered in the GFC.
Fat Prophets calls an inflection point for the airline sector, and put a buy on Qantas at $1.31
Going back to 2014, and Qantas was the stock that the market loved to 'hate' with intense price competition, rising costs, and overcapacity. Fat Prophets however believed that a number of tailwinds were emerging with an ending of the domestic price war, and with a credible turnaround program under CEO Alan Joyce. After the airline turned a billion-dollar loss into a billion-dollar profit, the market started to agree. Brokers have subsequently started putting buys on QAN around the $6 mark. Fat Prophets has taken the exit for a gain of over 300%.
Fat Prophets predicts a Trump election victory
Not many were giving Donald Trump much of a chance of securing the Republican nomination let alone the US Presidency. Fat Prophets believed that a backlash against the establishment would see Donald Trump go onto be the 45th President of the United States. We all know what happened next.
Fat Prophets calls the bottom of the iron ore market
In late 2014, early 2015, the majority of the investment community were bearish on iron ore, with a wide expectation that China was about to implode, and iron ore was going to US$20. Fat Prophets' was on the contrarian side, calling a bottom around US$60, on the basis of a still strong Chinese economy, supported by stimulus, urbanisation, and with supply constraints emerging. Iron prices ultimately bottomed around US$50 and went onto surge past the US$120 mark.
Fat Prophets calls a bottom in oil around US$50 a barrel
With the trade war raging on and concerns over a global recession, oil prices plummeted in the fourth quarter of 2018. Fat Prophets took the view that OPEC would act to stabilise pricing by agreeing an output cut. Such was to prove the case, and with the cartel extending, and complying, with supply curbs well into 2019.
Fat Prophets calls a turnaround in sentiment after a traumatic sell-off in Q4 2018
The fourth quarter of 2018 saw a traumatic sell-off, the likes of which had not been seen before, even in the GFC. An ongoing trade war and the prospect of Fed rate rises, had the markets fearing the worst. Fat Prophets took the opposing view and believed that investors would recalibrate their pessimistic expectations as 2019 got underway. The S&P500 did indeed stage a powerful rally in the first half of the year.
Fat Prophets calls a period of outperformance for Asian markets
With the trade war weighing on sentiment, the Chinese stock market had a tough time in 2018. Fat Prophets however believed that both sides (the US/China) were motivated to 'do a deal' and saw the selling in China as excessive, given the market (CSI300 above) was trading on a PE of around 7 times. With China appearing to seize the upper hand in negotiations, the Chinese stock market has since gone onto perform strongly.
The Daily FatChat
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Our Daily Note comes straight from the desk of our CEO Angus Geddes each morning. Members can join for on monthly basis, or a discounted rate for longer term options.
Categories: Bundles AUS, Daily FatChat
Do you want to know what all the market movements and latest developments mean for your investment portfolio? Our CEO Angus Geddes will make sense of it all, and provide his take, in his Daily Note each morning.
The Daily Note has been a cornerstone of Fat Prophets communication with Members and clients for the past nine years. In the note Angus looks to cut through all the 'noise' and outlines what the daily stream of economic data, market news, political developments, stock and sector moves, means for the way he is positioning client portfolios, and what the outlook is going forward. And what it means for you as an investor.
Subscribe as a Fat Daily Member to receive access to Angus' daily note each morning.
The report was launched in 2019 and combines our research capabilities across the US, Asian and European markets. We scour all three regions for blue-chip, mid-cap and smaller stocks that represent value.
As contrarian investors, we examine company fundamentals to find those rare opportunities so often overlooked by other investors. We then use technical analysis to sharpen our timing. Specific macro themes also drive our stock selections.
If you are looking for advice to assist you with the creation of a stable portfolio providing exposure internationally, the Global Equities report could be for you.
Subscribe as a Global Equities Member to receive weekly reports including our very latest buy recommendations, and a host of other benefits.
The report was launched back in 2003 as investors were still recovering from one of the most savage bear markets ever witnessed. The report has gone on to comfortably outperform the broader market over the past 16 years.
We scour the market for blue chip, mid cap and smaller stocks that represent real value in an otherwise overpriced market.
As contrarian investors, we examine company fundamentals to find those rare opportunities so often overlooked by other investors. We then use technical analysis to sharpen our timing.
Whilst you will receive recommendations across the industrial sector and also select financial stocks, key macro themes driving our stock selections include bullish views on both gold and energy stocks.
If you are looking for advice to assist you with either a self managed super fund, margin loan or simply the creation of a stable, outperforming portfolio, the UK Equities report could be for you.
Subscribe as a UK Equities Member to receive weekly reports including our very latest buy recommendations, and a host of other benefits.
Fat Prophets has been providing dedicated coverage of the resource sector since the launch of the Mining & Resources Report in 2005. Since that time, the resource space has continued to develop into a global behemoth with an increasing number of companies operating mines and developing projects across the globe.
With the large number of global resource companies available to investors, our Global Mining Report is designed to sort the "wheat from the chaff". With our extensive resource expertise, Fat Prophets has made it our absolute mission to seek out the best exposure to base metals, precious metals and energy companies from the global pool of resource companies.
Our Global Mining Report has a firm capital growth focus and utilises our on the ground knowledge of resource companies globally to present opportunities across both the majors and minnows of the resource markets.
To generate superior returns, one must understand the inherent volatility in the global resources sector; an understanding that Fat Prophets has an expertise in. We would encourage you to take a look at our Global Mining Report.
The report was launched back in 2000 in the middle of what was at the time one of the most savage bear markets ever witnessed. The report has gone on to comfortably outperform the broader market over the past 19 years.
We explain our thinking regularly in Market Comment pieces and demonstrate how exposure to our favoured sectors can add longer term stability and growth to your portfolio.
Subscribe as an Australasian Equities Member to receive weekly reports including our very latest buy recommendations, and a host of other benefits.
Please select report differently for each report section.
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About Angus
Angus Geddes
He has a wealth of experience acquired over more than two decades in both domestic and international financial markets. Aside from running the Fat Prophets group. Angus has broad investment responsibilities within the Funds Management division, which manages close to $100 million.
Angus's investment track record began in 1982 at the young age of 13. In 1986 he received a "highly commended" award from the New Zealand Chamber of Commerce for increasing an initial investment of $200 to $35,000 on the world stock markets.
During his career, Angus has worked as a money market dealer in New Zealand, a financial consultant in the United Kingdom and the United States. Moving to Australia in 1996, Angus worked for five years as a stockbroker at Bankers Trust and JB Were before co-founding Fat Prophets in June 2000.
Majoring in Economics, Angus completed a Bachelor of Commerce degree at Otago University, New Zealand in1990. He is also a member of the Securities Institute of Australia having qualified for a Graduate Diploma in Applied Finance and Investment in 1999.
Fat Prophets has made every effort to ensure the reliability of the views and recommendations expressed in the reports published on its websites. Fat Prophets research is based upon information known to us or which was obtained from sources which we believed to be reliable and accurate at time of publication. However, like the markets, we are not perfect.
This report is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore discuss, with their financial planner or advisor, the merits of each recommendation for their own specific circumstances and realise that not all investments will be appropriate for all subscribers.
To the extent permitted by law, Fat Prophets and its employees, agents and authorised representatives exclude all liability for any loss or damage (including indirect, special or consequential loss or damage) arising from the use of, or reliance on, any information within the report whether or not caused by any negligent act or omission. If the law prohibits the exclusion of such liability, Fat Prophets hereby limits its liability, to the extent permitted by law, to the resupply of the said information or the cost of the said resupply.
As at the date at the top of this page, Directors and/or associates of the Fat Prophets Group of Companies currently hold positions in: ASX-listed Australian stocks: ASX-listed Australian stocks: AAC, AAD, AGO, AJA, AMP, ANZ, APA, APG, AVG, BCI, BHP, BKN, BOQ, BRL, BRU, BTR, BWP, CBA, CCL, CDD, CFE, CGL, CKF, CNQ, CVO, CWN, DLS, DNX, DUE, ELD, ENV, EVN, FID, FMG, FXJ, GJT, GMG, GNS, GOR, GPT, GXL, HUB, IAU, IFL, ILU, IMF, JHX, MFG, MGR, MML, MMS, MND, MNF, MPL, MTR, MTU, NAB, NCM, NMG, NUF, OBS, ORE, OSH, OVH, POS, PPS, PRG, PRT, PXG, QAN,QBE, RIO, RXL, RRS, S32,SDG, SFR, SGP, SIV, SLR, SPK, STO, SUN, SYD, TAM, TEN, TLS, TME, TTN, WBC, WFD, WES, WHC, WOW, WPL, WSA. International stocks 3i Group, Acacia Mining, Amec Foster Wheeler, Anglo American, Archipelago Resources, Arian Silver Corp, Aviva, Avocet Mining, Bank of China, Barratt Developments, BMW, Berkeley Energy, BG Group, BOLSAS Y MERCADOS ESPANOLES,SOCIEDAD, Bovis Homes, BP, Braemar Shipping Group, British American Tobacco, BT Group, Cairn Energy, Centamin Egypt, China Life Insurance, China Mobile, China Overseas, China Taiping, China Vanke, Country Garden, Daejan Holdings, Development Securities, Dragon, Enquest, Esure, Euronext, FedEx, Fresnillo, Ibiden, Infosys, Glaxosmithkline, Glencore International, Goldbridges Global Resources, Google (Alphabet), Grainger, Gulf Keystone Petroleum, Highland Gold Mining, HSBC,ICICI Bank, Ironveld, iShares Physical Metals, J Sainsbury, JKX Oil & Gas, John Wood Group, Kazakhmys, Legal & General, Lloyds, Low and Bonar, Market Vectors Junior Gold Miners, Market Vectors Oil Services, Market Vectors Vietnam, Marstons, Medusa Mining, Mitchells & Butlers, Mitsubishi Tokyo Financial, Mitsubishi UFJ, National Grid, Nippon Telegraph and Telephone, Panasonic, Paragon Group of Companies, Petra Diamonds, Petrofac, Petropavlovsk, PICC Property & Casualty, PPHE Hotel Group, Randgold Resources, Rank Group, Reckitt Benckiser, Royal Dutch Shell, Solgold, Sony Corporation, Standard Chartered, STV Group, Sylvania Platinum, Tata Motors, Tencent, Tertiary Minerals, Teva Pharamaceutical, Toyota Motor, Tullow Oil, Unilever, Vedanta Resources, Vodafone, Walt Disney, Zillow. These may change without notice and should not be taken as recommendations.
♦ Fat Prophets was founded in Australia by Angus Geddes, Chief Executive Officer Headquarters in Sydney, Australia ♦ Employees 2
♦ Flagship Fat Prophets Australasian research commences ♦ Subscribers exceed 1,000 for first time
♦ Greg Smith UK Managing Director joins ♦ Patrick Ganley, Chief Operating Officer joins ♦ Fat Prophets Mining launches ♦ Subscribers exceed 2000 ♦ Employees 5
♦ UK office opens at Fleet Street, London – Greg Smith appointed managing director ♦ Patrick Ganley, Chief Operating Officer joins ♦ Subscribers exceed 3000 ♦ Employees 7
♦ UK Equities research launched ♦ Subscribers exceed 5000 ♦ Employees 9
♦ Fat Prophets Funds Management Ltd launches with a $33m float of on the ASX ♦ Subscribers exceed 6000 ♦ Employees 18
♦ Australasian Investment Review (AIR) an online business magazine launched in Australia ♦ US website launched ♦ Subscribers exceed 10,000 for the first time ♦ Funds under management & advice…
♦ Euro Mining research commences ♦ Separately Managed Accounts funds management business launched ♦ Company reorganised and restructured into one holding company, Fat Prophets Pty Ltd ♦ 50% of Marcus…
♦ US office opens ♦ Global Trading report commences ♦ Funds under management & advice exceed $85m ♦ Employees 35
♦ UK Funds Management opens doors ♦ Funds under management & advice exceed $100m ♦ Employees 40
♦ British Investment Digest (BID) online business magazine launches ♦ Subscribers exceed 16,000 for the first time ♦ Funds under management & advice exceed $150m ♦ Employees 50
♦ Wealth Management launches in Australia ♦ Managed Discretionary Accounts offered for the first time on Australian equities ♦ AFSL License varied and stockbroking service launched in Australia ♦ Fat…
♦ Office opened in Auckland, New Zealand ♦ The 'Daily Fat Chat' email launched ♦ Weekly Fat Wrap launched ♦ Income Portfolio initiated by Australian research team ♦ Subscribers exceed…
♦ Global Opportunities Model launched by wealth management in Australia ♦ Fat Prophets Member area upgraded ♦ Subscribers exceed 20,000 ♦ Income Portfolio initiated by UK research team ♦ Subscribers…
♦ Weekly research webinars introduced for Australasian and UK Members ♦ Wealth Management offering launched in New Zealand ♦ Subscribers exceed 22,000 ♦ Employees 70
♦ Fat Prophets Global Funds product launched ♦ Fat Prophets Asia research product launched ♦ Global Mining product created with the merger of Australasian and European Mining ♦ Subscribers exceed…
♦ Fat Prophets European Equities report launched
♦ Fat Prophets Global Contrarian Fund (ASX: FPC) launched on the Australian Securities Exchange having raised $48m.
♦ Fat Prophets Public website updated ♦ Fat Prophets videoUPDATE series is launched ♦ Fat Prophets webCAST series gets rebranded
Fat Prophets holds their 2019 roadshow
Fat Prophets was founded in Australia by Angus Geddes, Chief Executive Officer Headquarters in Sydney, Australia
Flagship Fat Prophets Australasian research commences
Subscribers exceed 1,000 for first time
Greg Smith UK Managing Director joins
Patrick Ganley, Chief Operating Officer joins
Fat Prophets Mining launches
Subscribers exceed 2000
UK office opens at Fleet Street, London – Greg Smith appointed managing director
UK Equities research launched
Fat Prophets Funds Management Ltd launches with a $33m float of on the ASX
Australasian Investment Review (AIR) an online business magazine launched in Australia
US website launched
Subscribers exceed 10,000 for the first time
Funds under management & advice $50m
Euro Mining research commences
Separately Managed Accounts funds management business launched
Company reorganised and restructured into one holding company, Fat Prophets Pty Ltd
50% of Marcus Today acquired
Funds under management & advice exceed $70m
US office opens
Global Trading report commences
UK Funds Management opens doors
Funds under management & advice exceed $100m
British Investment Digest (BID) online business magazine launches
Wealth Management launches in Australia
Managed Discretionary Accounts offered for the first time on Australian equities
AFSL License varied and stockbroking service launched in Australia
Fat Prophets website rebranded
Research office opened in Jakarta, Indonesia
Subscribers exceed 17,000
Office opened in Auckland, New Zealand
The 'Daily Fat Chat' email launched
Weekly Fat Wrap launched
ncome Portfolio initiated by Australian research team
Global Opportunities Model launched by wealth management in Australia
Fat Prophets Member area upgraded
Income Portfolio initiated by UK research team
Weekly research webinars introduced for Australasian and UK Members
Wealth Management offering launched in New Zealand
Fat Prophets Global Funds product launched
Fat Prophets Asia research product launched
Global Mining product created with the merger of Australasian and European Mining
Super Prophets investment platform launched
Fat Prophets European Equities report launched
Fat Prophets Global Contrarian Fund (ASX: FPC) launched on the Australian Securities Exchange having raised $48m.
Fat Prophets Public website updated
Fat Prophets videoUPDATE format is launched
Fat Prophets webCAST series gets rebranded
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Our latest cover girl had to pose in an unconventional studio, plus deal with her restless foal.
Despite a needy foal, Holly did well posing for the latest Western Horseman cover.
It was one of the most unlikely locations for a Western Horseman photo shoot—a old, narrow garage with tools, dim light and a concrete floor.
I traveled to a small ranch north of Merced, California, to meet Dustin Kaiser and get photos for my May 2016 article, "Buckaroos & Cowpunchers," which contrasts the trappings of cowboys in the West against those in the Southwest.
I think Dustin thought I was crazy when I suggested we set up the photo of him, his mare and his authentic buckaroo gear in the garage. All around us were pretty trees, open spaces and green grass for a nice photo. But I wanted all the photos in this story—whether shot in California or West Texas—to have the same lighting and backdrop.
So Dustin, his girlfriend, April, her son, Colton, and I began moving machinery and sweeping the floor of the garage. We strung a taut rope and hung the canvas from my bedroll to create a backdrop. While I set up my camera and plugged in my flash, Dustin saddled up his bay mare, Holly, and April kept track of the mare's foal.
Holly, Dustin, Colton and April were key figures in the May 2016 cover image.
That's right. We even brought the little colt into the garage so Momma wouldn't get too worried. I climbed up on a ladder with my camera, and Dustin posed for some photos and simply held his mare for other shots. April and Colton had the difficult job of getting the mare to perk her ears and also keeping the foal out of the shot. The colt sniffed around in the garage, wandered behind the backdrop, nursed his mother—I guess he didn't realize that he was disrupting an important photo shoot.
Meanwhile, Dustin was trying not to wince from pain. He had broken his leg a few months earlier, recently got out of a walking boot, and this was the first time he'd pulled on his cowboy boots. He never said anything, but at one point when photographing his spurs I could see his entire right leg shaking in pain. I worked to finish our shoot as quickly as possible so Dustin could get back in his barn shoes.
Despite the distractions, pain, and Holly's anxiety over her foal, we happened to get several nice photos, including a head shot that showed off Dustin's two-rein rig. That photo wound up on the cover of the May 2016 issue.
I certainly couldn't have done it without a gritty buckaroo, his helpful girlfriend and her son, nice gear and a good-looking mare.
I probably could have done okay without the foal.


text:
First VivaTech, now Biotech!
Sanofi Spotlight On Trispecific Antibodies
Sanofi is taking part in the Biotechnology Innovation Organization (BIO) International Convention in Boston, United States, close to Sanofi's Specialty Care global headquarters (Sanofi Genzyme) and the company's North America R&D Hub, which are both in Cambridge. BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the US and in more than 30 other nations.
Sanofi will be participating in talks across digital health, leadership, gender balance, ROI in R&D and other key focus areas. BIO is occurring in Boston,
Adam Keeney, Sanofi's Global Head of External Innovation & R&D Strategy discusses our partnership approach in biotechnology.
AK: Many innovations in biotechnology today have their origins in small, entrepreneurial companies launched by individuals with expertise and a vision for improving patient lives and outcomes.
Making them available to patients, though, takes more than a just great idea. To create a new cancer therapy, change how clinical trials are conducted, or streamline vaccine manufacturing takes capital, established market access, and an ability to scale.
While some entrepreneurs are able to do build these critical things on their own, for most of them the solution is to seek out a partner that can connect them to this larger ecosystem. Often that's an established global biopharma company like Sanofi, one that has those resources and recognizes the synergies those partnerships offer to them and to patients.
Because of the value these new entrants can offer, Sanofi has made partnership an essential component of it strategy for growth across every part of the company. The goal is to engage with companies in ways that work for both them and for Sanofi and have the best chance of driving those ideas to market in order to deliver the best, most innovative solutions for patients.
This partnership approach extends beyond drug discovery to the idea of "drugs plus," where digital solutions are combined with drugs to improve outcomes. That can range from using Artificial Intelligence to identify biomarkers to employing advances in mHealth and mobile devices to support siteless clinical trials or increase access to care in under-resourced areas. It also extends to development of products with wide application in the emerging markets where Sanofi has an extensive footprint.
This dedication to partnerships is more than an adjunct to the company's own internal R&D advances: It is central to how the company operates and plans for its future.
"Everyone at Sanofi has a deep commitment to have us be one of the best pharmaceutical companies in the industry and bring important healthcare solutions to people in need, all over the world," said Muzammil Mansuri, Executive Vice President of Strategy & Business Development. "We recognize that, while we have exceptional talent inside the company, there are also exceptionally talented and dedicated people and great ideas outside our walls that can advance our mission. Working with these people and ideas as a partner is core to what we do and think about."
AK: Because there are such a wide range of ideas, company structures and developmental challenges involved with collaborations, Sanofi has developed three different partnering models. Together, they offer a flexible approach that can be responsive and customized to the specific needs of potential partners.
For opportunities that could reshape the portfolio and support R&D innovation across its strategic priorities, Sanofi focuses on a corporate partnering approach. The company's Business Development & Licensing has global scope, across all business units and therapeutic areas. It has the flexibility to pursue a broad range of deal structures, including in- and out-licensing, R&D collaborations and M&A (asset/company acquisitions and divestitures) to models such as joint ventures, commercial collaborations and other types of strategic alliances.
The company also operates a venture capital arm, Sanofi Ventures, that acquires equity stakes in early stage healthcare companies, typically seed or series A level financing. These are typically aligned with Sanofi's areas of strategic focus, notably rare diseases, vaccines, potential cures in other core areas of Sanofi's business footprint, and digital health solutions. In recognition of the speed at which innovation is happening in the industry, Sanofi Ventures has an expedited decision-making process enabling flexible, rapid and clear investment decisions.
Finally, Sanofi Sunrise invests in innovations that are best developed through focused efforts by entrepreneurs in new start-up biotech companies. It is a company co-creation and incubation vehicle with a primary goal of accelerating the delivery of transformative treatments to patients while adding innovative products to the Sanofi pipeline. Sanofi Sunrise seeks programs based on novel biological insights across all therapeutic areas. Typically, Sanofi Sunrise seeks out product opportunities with a two-to-four year timeline to an IND filingn at the time of its initial investment.
Sanofi is always looking for opportunities to collaborate with innovative thinkers and researchers with the potential to create value for patients as well as the partners.
Ashleigh Koss
Email : mr@sanofi.com
Anna Robinson

redpajama_set_name: RedPajamaCommonCrawl


text:
Glenville, PA (View All Cities)
Eastern (4:38am)
Glenville, PA
Acceptable:
Brodbecks
Unacceptable:
ZIP code 17329 is located in southern Pennsylvania and covers a slightly less than average land area compared to other ZIP codes in the United States. It also has a slightly less than average population density.
The people living in ZIP code 17329 are primarily white. The number of middle aged adults is extremely large while the number of people in their late 20s to early 40s is large. There are also an extremely large number of families and an extremely small number of single adults. The percentage of children under 18 living in the 17329 ZIP code is slightly less than average compared to other areas of the country.
152 people per sq mi
16.36 sq mi
Male 50 70 80 110 75 47 54 74 90 131 127 100 100 73 28 30 13 8
Female 56 70 66 83 58 51 51 81 95 136 116 103 113 59 32 29 18 17
Total 106 140 146 193 133 98 105 155 185 267 243 203 213 132 60 59 31 25
Under 5 50 56 106
5-9 70 70 140
Owner 7 50 143 258 211 113 52 13
Renter 5 21 15 11 12 3 3 2
Total 12 71 158 269 223 116 55 15
65-74 113 3 116
75-84 52 3 55
85 Plus 13 2 15
Male 8 11 7 12 7 22 6 13 22 15 15 20 7 23 25 20 26 27 12 24
Female 15 12 7 12 12 17 13 16 12 7 16 12 15 16 10 24 18 14 17 16
Total 23 23 14 24 19 39 19 29 34 22 31 32 22 39 35 44 44 41 29 40
ZIP code 17329 has a small percentage of vacancies.
The majority of household are owned or have a mortgage. Homes in ZIP code 17329 were primarily built in the 1980s or the 1990s. Looking at 17329 real estate data, the median home value of $245,400 is high compared to the rest of the country. It is also slightly higher than average compared to nearby ZIP codes. So you are less likely to find inexpensive homes in 17329. Rentals in 17329 are most commonly 3+ bedrooms. The rent for 3+ bedrooms is normally $750-$999/month including utilities. Prices for rental property include ZIP code 17329 apartments, townhouses, and homes that are primary residences.
2,494 100%
The median household income of $82,474 is compared to the rest of the country. It is also compared to nearby ZIP codes. So 17329 is likely to be one of the nicer parts of town with a more affluent demographic.
As with most parts of the country, vehicles are the most common form of transportation to places of employment. In most parts of the country, the majority of commuters get to work in under half an hour. However, that is not the case in 17329. It has a much lower than average number of people that make it to work in under half an hour. The area has an extremely high percentage of people that most travel over 45 minutes to their place of employment. People that commute should be aware of the potentially long commute times.
Compared to other ZIPs, a much higher percentage of the population has received a college degree.
ZIP Code 17329 is in the South Western School District. There are 1 different elementary schools and high schools with mailing addresses in ZIP code 17329.
Manheim Elementary School
5778 Blooming Grove Road
Glenville, PA 17329
District: South Western School District
Glen Rock, PA
Spring Grove, PA
Manchester, MD


The Vanguard Group1 is pleased to have the opportunity to comment on the Securities and Exchange Commission's proposed rule on disclosure of mutual fund after-tax returns. Given Vanguard's long-standing efforts to inform investors about how fund managers' discretionary actions affect returns, we enthusiastically support the spirit of the proposal to require after-tax return disclosure. Vanguard is a recognized leader within the mutual fund industry in educating shareholders on the importance of after-tax returns. Beginning with fiscal year 1998, we began reporting after-tax returns in the annual reports for our tax-managed funds. We extended our after-tax return reporting to all equity and balanced funds in fiscal year 1999 so that our existing shareholders could assess the tax cost of their investments. Our experience demonstrates that after-tax returns can be presented in a way that investors understand and that is not burdensome to the fund sponsor.
The issue of after-tax return disclosure is an important one. For the taxable investor, a fund's pre-tax return is not the return that is actually received by the shareholder. Even with the rise of tax-deferred vehicles (e.g., IRAs and 401(k) plans) over the past two decades, the majority of equity mutual fund assets are still held in traditional, retail accounts.2 For these investors, standardized SEC performance, which is pre-tax performance, does not represent the most appropriate performance measure because it assumes that no tax is due on a fund's dividend and capital gain distributions. Yet it is these performance numbers that are used in mutual fund prospectuses and advertising materials aimed predominantly at the retail mutual fund investor.
Our specific comments are presented in two parts. The first section of our response highlights the four key areas that Vanguard would stress to meet the objective of providing relevant, clear, and concise information to shareholders regarding how their fund manager affects the return of the portfolio for taxable investors. The second section presents responses to some of the other specific questions for which the Commission sought comment.
After-tax returns should be required in both prospectuses and annual reports.
. After-tax returns should be required any place where performance information is presented, including advertising and supplemental sales literature.
After-tax returns based on shareholder-specific actions (i.e., post-liquidation returns) should not be required disclosure because (a) they depend upon so many assumptions that their relevance to shareholders is highly attenuated; (b) the accompanying disclosure is extremely complex; and (c) they do not help shareholders assess how a fund manager's actions affect a fund's return.
After-tax returns should not be required for bond funds (both taxable and tax-exempt) because the use of any single tax rate could be misleading for investors comparing after-tax returns of taxable versus tax-exempt bond funds.
Is the disclosure of after-tax returns a performance issue or a tax issue? The Commission's answer to this question will determine the scope and direction of any requirements for funds to provide after-tax returns. Vanguard firmly believes that after-tax return disclosure is essential to an understanding of mutual fund performance. Fund sponsors and fund managers, through discretionary actions, have the ability to affect a fund's return. Setting fees, adopting accounting practices, and making decisions on which securities to buy or sell within the portfolio all can affect a fund's pre-tax and after-tax total return. More importantly, these decisions affect funds differently, leading to variations in returns that shareholders should assess in evaluating fund or manager performance.
after-tax returns have shown some persistence over time (i.e., past tax efficiency has been an indicator of future tax efficiency).
Others in the industry appear to view the disclosure of after-tax returns solely as a tax issue. They generally would propose burying these returns in a tax section-if they are disclosed at all-separate from other (pre-tax) returns. In addition, those that support this view might suggest "simplifying" assumptions to make any calculations easier even though they may have no basis in current tax law.
Vanguard strongly disagrees with the position that after-tax return disclosure is simply a tax issue. Taxable shareholders receiving pre-tax return information should be able to assess the amount of their return lost to taxes. Taxes have as real an impact on performance for taxable shareholders as the fees presently reflected in return calculations. This proposal is more than merely providing after-tax "numbers." Simply put, after-tax returns are the most appropriate performance figure for shareholders holding a fund in a taxable account.
Requiring after-tax returns in performance-related advertisements is arguably even more important than presenting the information in prospectuses and annual reports. Both anecdotal evidence and rigorous academic study show investors' propensity to chase past performance even though past (pre-tax) performance is generally not predictive of future performance.6 That said, many prospective investors believe that past performance is an indicator of manager skill. The industry recognizes this fact and, frankly, many firms use performance advertising to lure investors into considering "hot" funds over other funds that might be more appropriate for their investment goals.7 In addition, performance ads are disproportionately targeted to the retail, taxable investor where there is more discretion to choose among myriad mutual fund options.8 The Commissioners and SEC staff members have frequently urged the mutual fund industry to act responsibly in promoting mutual fund performance.9 It is evident that responsible performance advertising should include the most relevant performance numbers-namely, after-tax returns.
While others may argue that including after-tax returns in advertisements would be especially burdensome from a disclosure perspective, we do not believe this argument has merit. Such disclosure would be no greater than other standardized statistics that are used in advertisements. In these cases (e.g., standardized performance, SEC yield, tax-equivalent yield), much of the detail about the many assumptions used in the calculation is relegated to the Statement of Additional Information (SAI) with little disclosure contained explicitly in the advertisement. The only disclosure that we feel would be necessary in advertisements would be the same footnote we propose for the risk/return section of the prospectus (discussed below).
The Commission proposes to require two sets of after-tax returns: a pre-liquidation return and a post-liquidation calculation. The pre-liquidation return, referred to as the after-tax return "if you continue to hold your shares at end of period" in the Commission's proposed rule, identifies how the adviser's actions affected all shareholders in the fund. This calculation taxes distributions of dividends and capital gains that are distributed to every shareholder based on their pro-rata ownership of fund shares. The post-liquidation figure, referred to in the proposed rule as the after-tax return "if you sell your shares at end of period," takes the pre-liquidation return and then assumes a shareholder redemption, which may or may not actually occur, at the end of the period. Any additional tax liability resulting from the redemption is incorporated into the calculation. In addition, any back-end loads or other non-recurring redemption fees would be incorporated into the post-liquidation calculation.
We believe that the pre-liquidation return is the appropriate after-tax return for taxable fund shareholders. By taxing the fund's resulting distributions, this figure incorporates all of the discretionary fund management techniques that could result in higher or lower after-tax returns, including, but not limited to, the effects of turnover, accounting practices, tax-management policies, portfolio dividend yields, expense ratios, and capital gain realization patterns. As such, the pre-liquidation return explicitly meets the goals of after-tax return disclosure; namely, to provide a straightforward method to assess how fund management practices have affected the fund's after-tax return and to compare these effects across funds. On the other hand, post-liquidation numbers do not further the goal of helping shareholders assess the after-tax performance of the fund adviser and introduce complexities that undermine the clarity of the disclosure.
Vanguard Windsor Fund's one-year post-liquidation figure is higher than its pre-liquidation return because the deemed redemption in the post-liquidation context would have resulted in a capital loss from which the shareholder would receive a tax benefit. However, the five and ten-year post-liquidation numbers are less than their pre-liquidation counterparts. This apparent discrepancy would require significant explanation in disclosure documents but would not enhance a shareholder's understanding of how the fund is managed on an after-tax basis. The added explanation is needed only because of a hypothetical shareholder-specific redemption that did not affect the management of the fund. While it is important that shareholders understand that there may be tax effects resulting from a decision to redeem and how to get information about these tax effects specific to their circumstances, the hypothetical presentation of post-liquidation returns are too attenuated to be particularly helpful.
For the sake of simplicity, clarity, and comparability, Vanguard proposes that only one after-tax return-a pre-liquidation figure-should be required.12 In addition, our proposed format for return disclosure (presented below) would allow investors to see clearly how a fund's return is composed of investment return, fees, and taxes.
Allows investors, by including this table in the risk/return summary of the prospectus, to relate the returns in the bar chart (which do not reflect sales charges and other non-recurring fees) to average annual returns over that period.
After-tax performance is calculated using the highest individual federal tax rate and assumes the investment is not sold at the end of the period. Your decision to sell shares may result in additional tax liability.
One of the Commission's stated purposes for requiring after-tax returns is to allow investors to compare after-tax returns across funds. Vanguard concurs with many others in the industry that after-tax returns should not be required for bond funds (both taxable and tax-exempt) because shareholders choosing among fixed-income investment options already have the ability to take their own tax situation into account by choosing between taxable and tax-exempt bond funds.18 In fact, the industry recognizes that this choice is largely dependent upon the tax bracket of the investor, and the SEC has developed a standard tax-equivalent yield calculation that funds may report to assist shareholders in their evaluation of fixed-income funds. After-tax return disclosure for bond funds based on a single tax rate could run counter to the tax-equivalent yield calculations by misleading investors who may not be in the tax rate used in the calculations.
The table below demonstrates the different conclusions that may result from using a specific tax rate assumption in the calculation methodology. The after-tax returns for an existing taxable bond fund and an analogous tax-exempt bond fund are compared, using tax rates that correspond to today's federal rates of 39.6% and 28%.19 In both cases presented, the 28% tax bracket investor would have had a higher return with the taxable bond fund. However, if this investor were evaluating these alternatives using the calculation methodology in the Commission's proposed rule, the tax-exempt bond fund would appear to have been the better option.
"Is this information useful to, and understandable by, investors?"
Yes. Vanguard began publishing after-tax returns with accompanying disclosure-with all of the disclosure items required in the Commission's proposed rule for pre-liquidation returns-beginning with the fiscal-year 1998 annual reports for our Tax-Managed Funds. This disclosure was extended to all our balanced and equity funds (with the exception of our REIT Index fund) for fiscal year 1999. Our shareholders have responded favorably to our voluntary disclosure. This information has raised their awareness of how taxes affect their returns, and we have seen greater concern about funds' tax efficiency as a result of our disclosure. To the extent shareholders are thinking about taxes in the context of their overall investment program, we view our efforts to present after-tax returns as very successful. Moreover, we have had very few inquiries requesting clarification of the pre-liquidation returns included in our annual reports, so we believe our shareholders understand the information as presented. We should note, however, that there has been some confusion about the differences between pre-liquidation and post-liquidation returns for shareholders using our web-based calculator. Specifically, shareholders do not seem to understand how the after-tax, post-liquidation figure could be higher than the fund's pre-tax return.
"Should disclosure be mandatory only for funds that hold themselves out as "tax-managed" or otherwise managed with a view toward shareholder tax consequences?"
No. Vanguard believes that disclosure should be mandatory for all funds (except those specifically excluded by the proposed rule and bond funds as discussed previously). Our view is that mutual fund managers have meaningful control over the tax burdens they place upon their shareholders, which directly affect investors' returns. Because we view after-tax returns as a performance issue, and not simply a tax issue, disclosure of after-tax returns should be required in conjunction with other required return calculations so that investors can better evaluate the impact of taxes on mutual fund returns. The goal of any shareholder's investment program should be to maximize after-tax return. If a shareholder believes that a particular manager will generate a high enough return relative to other investments (including "tax-managed" funds) to offset any negative tax impact to fund performance, then that investment may be an appropriate choice. Without after-tax return information, however, shareholders may find it difficult to compare after-tax returns across broad groups of funds.
Vanguard also believes that certain other investment vehicles subject to registration under the Investment Company Act of 1940 that are not currently included in the proposed rule should also be subject to the disclosure requirements. The proposed rule seems to indicate that only open-end mutual funds would be required to publish after-tax returns. Unit investment trusts, including certain exchange-traded funds, and closed-end funds have similar investment structures to open-end mutual funds and appeal to a similar investor base. Therefore, we see no reason to exclude them from the regulations.
"Should this information be included in the prospectus, annual report, profile, or elsewhere?"
As stated earlier in our letter, Vanguard believes that after-tax returns should be required whenever return data are presented. This would include the prospectus, profile, annual report, and advertisements and supplemental sales literature that include performance information. Regardless of where the Commission ultimately decides to require after-tax return information, we feel strongly that after-tax returns should not be separated from their pre-tax return counterparts. Separating pre-tax and after-tax returns would obscure the stated goals of the rule to allow investors to assess how the management of their fund affects their after-tax return.
"Does the proposed table present before-tax and after-tax return information in a clear and understandable way? Do the proposed captions adequately describe the information presented? Will investors be able to understand the presentation for funds with multiple share classes and multiple portfolios? Is there a more effective way to present after-tax returns for these funds?"
As proposed, Vanguard thinks that two returns labeled "Before-Tax Return" and two returns labeled "After-Tax Return" will be confusing to investors and especially burdensome for multiple share classes because the set of four returns would need to be shown for each share class. We believe our alternative-where funds would show two pre-tax returns and one after-tax return-is more straightforward. In addition, our proposed presentation offers a further benefit of clarifying the sources of fund performance by separately identifying the breakdown of a fund's return to fees, taxes, and investment performance.
Only one return series-the currently required standardized performance that includes sales loads and non-recurring purchase and redemption fees-would need to be shown for each share class, allowing investors to distinguish fee differences among share classes. This requirement comports with current regulation. The additional returns we propose-a pre-tax return ("Investment Return") computed without respect to loads or other non-recurring fees and an after-tax return based on the "Investment Return" but that taxes fund distributions-would show the difference in tax burden due to the fund's management practices. With the exception of expense ratio differences, which affect the level of dividend distributions, the tax burden of other share classes will be similar.20 Hence, investors can obtain information about how taxes have affected the fund's performance by illustrating just one share class.
Vanguard's experience in reporting after-tax returns in our annual reports suggests that it can be done clearly and effectively. Our current disclosure takes up less than one page while meeting all of the requirements of the proposed rule for pre-liquidation returns. If final regulations containing a standardized after-tax return formula are issued, much of the explanation would be unnecessary because the details of the performance calculation and assumptions could be presented in the Statement of Additional Information (SAI), as is currently done with other standardized calculations that funds may report.
Vanguard supports the Commission's proposal to use the highest federal marginal tax rate in the calculation for after-tax returns because it does represent the "worst-case" scenario under federal guidelines and it is easy to track through time. However, we do have some suggestions for simplifying the tax bracket discussion. We propose that the final rule include references to the Internal Revenue Code (IRC) section (Section 1) where the federal marginal tax rates are published. Under this approach, no annual updates or clarification from the Commission would be needed if the highest marginal tax rate changes in the future because the rule would be updated automatically with changes to the IRC. Secondly, we would also suggest incorporating clarifying language into the final rule that marginal tax rates on other forms of taxable income (e.g., long-term capital gains) correspond to the rates that would be applicable for a taxpayer subject to the highest marginal income tax rate. This could also be accomplished by reference to Section 1 of the IRC.
Although we support the use of the highest federal marginal tax rate in after-tax return calculations, Vanguard is not opposed to using an alternative rate. We are sensitive to the argument that using the highest tax bracket would not reflect the experience of the "average" investor. However, the use of another rate could be more complicated to communicate and monitor over time. If another tax rate is used, we feel it is important that the methodology automatically adjusts for inflation and does not place any undue burden on the Commission to revisit the issue periodically.
We support the use of historical tax rates and would strongly oppose the use of current tax rates in historical after-tax return calculations. Mutual fund managers may react to changes in the tax code, and shareholders could not assess these decisions if current tax rates are used. For example, it was known in the latter part of 1986 that the highest individual federal marginal tax rate on long-term capital gains was going to increase from 20% to 28% as of January 1, 1987, as a result of passage of the Tax Reform Act of 1986. A mutual fund manager could use this information to sell his/her position in a stock (and distribute those proceeds to shareholders) before January 1, 1987, thereby providing a potential tax savings to the fund's shareholders. If this fund were computing its after-tax returns in 1987 and forced to use current tax rates, this benefit would not be apparent because all prior distributions of long-term gain would be taxed at 28%. The use of current tax rates would negate the ability of existing and prospective shareholders to assess how tax considerations have been incorporated in the management of the fund.
Given Vanguard's support for requiring disclosure in both the prospectus and MDFP, we feel that separate calendar and fiscal year calculations should be made in order to correspond with the pre-tax returns presented in these locations. Because funds have some discretion over when to make dividend and capital gain distributions, some timing issues could result from the new rule. In particular, if equity markets generally rise over time, then funds would want to distribute taxable income to shareholders as late in the reporting period as possible in order to minimize the opportunity cost associated with deducting taxes due at the time of the distribution. Also, funds might want to defer distributions of taxable income into future reporting periods, whenever possible.
Although funds could theoretically change their distribution policies to try to improve after-tax returns within the context of the proposed rule, we think that such attempts to manipulate the calculation would be unlikely because the benefits of making such changes would not outweigh the costs and communications burdens. In addition, certain features of existing tax law and the SEC's proposed rule mitigate the risks associated with funds trying to time their distributions in a potentially misleading way. For example, funds generally must declare capital gain distributions based on an October 31st fiscal-year end by the end of each calendar year or be subject to a nondeductible 4% excise tax.21 This has the effect of not deferring significant capital gain distributions past the end of the calendar year.22 In addition, the proposed rule would require fiscal and calendar year calculations, thereby reducing the ability to time distributions to the extent a fund's fiscal year differs from the calendar year. In these cases, trying to time distributions on a calendar year basis could potentially accelerate taxes in a fiscal year calculation.
One potential area of abuse would be the calculation of after-tax returns for periods of less than one year (e.g., year-to-date returns or since inception returns for a new fund). Without some anti-abuse provisions, funds could report year-to-date after-tax returns just before a large distribution, suggesting to shareholders that their approach had been tax efficient when, in fact, a taxable distribution is just about to be made. This problem would be most likely associated with advertising, where funds must present returns as of the most recent calendar quarter.23 To remedy this possibility, Vanguard recommends that non-standardized after-tax returns not be permitted for periods of less than one year.
We concur that state and local taxes should not be considered in the calculation of after-tax returns. Any attempt to incorporate state and local taxes would be complicated and could potentially require significantly more disclosure, without much additional information being presented to shareholders unless it were done for each state and municipal taxing authority. Obviously, incorporating all of the different state and local tax rates would be a significant reporting burden and require continuous monitoring to adapt to any state and/or local tax changes. Also, we would argue that simply incorporating a state and local marginal tax rate (even if it were a single "average" rate) would not be sufficient to incorporate state and local taxes because of the significant differences in federal versus state and local tax treatment of mutual funds.
We concur that after-tax return formulas should not reflect the impact of the alternative minimum tax (AMT), current phaseouts, or other taxes or adjustments not reflected in the proposed formulas. That said, the proposed rule is written from the perspective of today's tax laws and does not adequately address how the proposed calculations would change with future tax law changes affecting mutual funds and their shareholders. This omission could place an unwanted burden on the Commission to revise its proposed rule any time there is a change to the tax law in order to interpret its applicability to the after-tax return formulas.
The current 2000 IRS Form 1099-DIV requires the following types of mutual fund distributions to be reported: ordinary dividends (the sum of dividend and short-term capital gain distributions), total capital gain distributions (i.e., long-term capital gain distributions), and nontaxable distributions. In addition, some components of the total capital gain distributions are also separately reported: 28% rate gain, unrecaptured section 1250 gain, and section 1202 gain. Using the 1099-DIV, funds would be required to incorporate the tax treatment of these distributions-dividends, short-term capital gain, 28% rate gain, unrecaptured section 1250 gain, section 1202 gain, and other long-term capital gain (total capital gain distributions less the separately reported components reported on Form 1099-DIV)-in the computation of the fund's after-tax return. Using Form 1099-DIV as a basis for setting up the components to be used in the after-tax return calculation is consistent with the proposed rule's exclusion of AMT, current phaseouts, or other adjustments because this form does not include any of these adjustments.
We concur with the treatment suggested in the proposed rule that taxes are paid at the time of the distribution. However, this treatment can lead to timing differences across funds. For example, a fund that pays distributions earlier in the measurement period is penalized if asset prices subsequently rise relative to a fund that pays the same percentage distribution later in the same measurement period because of the lost opportunity cost of the taxes paid. However, having taxes paid at the time of the distribution greatly simplifies the calculation and is more realistic in terms of linking taxable events and their associated tax burden.
You may include an adjustment for foreign taxes paid by "grossing up" the amount of ordinary income (not including short-term gains) by the amount of the foreign taxes paid over the measurement period. The tax liability is calculated by multiplying the appropriate tax rate by the grossed up amount and subtracting the value of foreign taxes paid. This liability is then subtracted from the original distribution amount (not grossed up) in computing the after-tax reinvested distribution amount.27 When there are multiple distributions within a reporting period, allocate the foreign tax paid ratably with respect to the fund's dividend distributions.
For purposes of the fiscal year calculation that would appear in the annual report, a fund would need to calculate the foreign tax paid over the course of the fiscal year. The fiscal year foreign tax paid amount will likely differ from the calendar year figure, leading to different gross-up amounts (and, hence, different tax liabilities) for the same distribution, depending on the measurement period.
As we have stated, Vanguard opposes a requirement to publish post-liquidation after-tax returns. However, we do believe a standardized formula is necessary for those who choose to publish post-liquidation after-tax returns. Because this is meant to be a return calculation, we believe it is important to track actual holding periods of each investment (i.e., initial investments and each reinvested distribution) and to apply the appropriate tax treatment (e.g., long-term or short-term) at the time of the deemed redemption.
Calculate the gain or loss for each lot sold, identifying lots by their appropriate holding periods (e.g., short-term or long-term under current tax law).
Compute net long-term gain or loss by adding long-term gains and long-term losses.
Compute net short-term gain or loss by adding short-term gains and short-term losses.
Tax net long-term gain at long-term rate; Tax net short-term gain at short-term (ordinary income) rate. Add net short-term gain and net long-term loss. If result is greater than zero, tax amount at short-term (ordinary income) rate. If amount is less than zero, compute deduction from tax using the long-term rate.
Less than or equal to 0 Add net short-term loss and net long-term gain. If result is greater than zero, tax amount at long-term rate. If amount is less than zero, compute deduction from tax using the short-term (ordinary income) rate. Compute deduction from tax on net long-term loss using long-term rate; Compute deduction from tax on net short-term loss using short-term (ordinary income) rate.
"Comment is requested on the proposed narrative disclosure"
Past performance is not an indicator of future results. After-tax returns are calculated using the highest individual federal tax rate and assume the investment is not sold at the end of the period. Your decision to sell shares may result in additional tax liability.
To the extent that the Commission feels that further narrative disclosure is required, we do think it could be placed separately from the return calculations (e.g., in the tax section of the prospectus or in the SAI).
"Should the prospectus be required to describe the potential tax consequences to an investor of...purchasing shares in a fund that has significant amounts of unrealized gain in its portfolio securities?"
No. A portfolio's unrealized capital gain position is simply a snapshot of the portfolio's holdings at a point in time and is currently required to be disclosed in the financial statements contained in a fund's annual and semi-annual reports. All this number indicates is the amount of the capital gain that would be realized if the portfolio were to be completely liquidated at that particular point in time. To the extent that only a portion of the portfolio is liquidated or that financial markets fluctuate over time, the amount of capital gain actually realized may have little relationship to the published unrealized capital gain figure.
Furthermore, unrealized capital gain is just one of many variables that could influence a fund's tax efficiency. Granted, academic studies have demonstrated that higher net unrealized gain is an indicator of higher future tax realizations.29 However, it is also recognized that this figure is just one predictor of after-tax returns. There are other predictors (e.g., strong past tax efficiency and low turnover rates) of lower future tax realizations.30 Given these results, how would one describe the after-tax performance factors of a fund that has relatively high unrealized gains, low turnover, and strong past tax efficiency? Highlighting the effect of any single variable as a potential "risk" factor is extremely misleading because tax efficiency is a result of different market conditions as well as portfolio management decisions and characteristics.
The Vanguard Group appreciates the opportunity to present its views on the Commission's proposals, and we look forward to the final rules on after-tax return disclosure. We would reiterate that we believe after-tax return disclosure provides useful, relevant information to shareholders about how discretionary actions by fund managers affect investors' returns. Although we have suggested changes to the Commission's proposed rule that we think will improve the presentation and relevance of after-tax return disclosure to shareholders, we commend the Commission for raising awareness on this issue. We are confident that the final regulations will benefit investors trying to assess fund performance. If you would like additional information, please contact the undersigned at (610) 669-5846 or Heidi Stam, Principal, Securities Regulation, at (610) 503-4016.
1 The Vanguard Group, headquartered in Valley Forge, Pennsylvania, is the nation's second largest mutual fund firm. Vanguard serves 14 million shareholder accounts and manages more than $560 billion in U.S. mutual fund assets. Vanguard offers 109 funds to U.S. investors and 33 additional funds in foreign markets.
2 Source: Investment Company Institute calculations. Figures exclude variable annuity sub-account assets.
3 Data derived from Morningstar® Principia® Pro database for 574 funds in existence for at least ten years as of May 31, 2000. After-tax returns are computed using a methodology similar to that proposed by the Commission; specifically, the returns assume distributions are taxed at the highest individual federal marginal tax rate in effect at the time of the distribution.
4 See, for example, Joel M. Dickson and John B. Shoven, "Taxation and Mutual Funds: An Investor Perspective," in James M. Poterba (ed.) Tax Policy and the Economy, vol. 9 (1995), Cambridge: MIT Press, pp. 151-181. Also, Daniel Bergstresser and James Poterba, "Do After-Tax Returns Affect Mutual Fund Inflows?," National Bureau of Economic Research working paper #7595, March 2000 (available at http://papers.nber.org/papers/W7595).
5 We would exclude any advertisements or sales literature targeted solely to tax-deferred shareholders or for tax-deferred investment vehicles.
6 On the relationship between money flows, past performance, and future performance see Erik Sirri and Peter Tufano, "Costly Search and Mutual Fund Flows" Journal of Finance 53 (1998), pp. 1589-1662, and Prem C. Jain and Joanna Shuang Wu, "Truth in Mutual Fund Advertising: Evidence on Future Performance and Fund Flows," Journal of Finance 55 (2000), pp. 937-958. For a comprehensive study on the persistence of past (pre-tax) performance, see Mark M. Carhart, "On Persistence in Mutual Fund Performance," Journal of Finance 52 (1997), pp. 57-82.
7 See, e.g., "Look Beyond Returns, Says SEC's Levitt," The Wall Street Journal, May 22, 2000, page C35; "Fund Ads' Disclosures Fuel Controversy," The Wall Street Journal, Jan. 13, 2000, page C1; NASD Notice to Members 00-21, NASD Regulation Reminds Members of Their Responsibilities When Advertising Recent Mutual Fund Performance, (available at http://www.nasdr.com/pdf-text/0021ntm.txt).
8 Performance ads targeted to tax-deferred, employer-sponsored plan participants (e.g., 401(k) plans) are of little value because the employer chooses the available investment options. Hence, the proportion of taxable assets in the investor groups targeted by performance ads is significantly higher than the overall industry percentage.
9 See, e.g., "The SEC Perspective on Investing Social Security in the Stock Market," Remarks by Arthur Levitt, Chairman, SEC, at the John F. Kennedy School of Government Forum, Harvard University (Oct. 19, 1998)(available at http://www.sec.gov/news/speech/speecharchive/1998/spch223.htm); Remarks by Paul F. Roye, Director, Division of Investment Management, before the ICI's Securities Law Procedures Conference, Washington D.C., (Dec. 7, 1998)(available at http://www.sec.gov/news/speech/speecharchive/1998/spch238.htm); "Challenges for the Mutual Fund Industry in the Competitive Frontier," Remarks by Paul F. Roye, Director, Division of Investment Management, SEC, at the 2000 Mutual Funds and Investment Management Conference, Palm Desert, California (Mar. 27, 2000)(available at http://www.sec.gov/news/speech/spch358.htm); "Our Shared Responsibilities for Fund Compliance," Remarks by Lori Richards, Director, Office of Compliance, Inspections, Examinations, SEC, before the ICI 1999 Mutual Fund Compliance Conference, (June 10, 1999)(available at http://www.sec.gov/news/speech/speecharchive/1999/spch282.htm).
10 These returns were calculated using the After-Tax Returns Calculator available at The Vanguard Group's website (www.vanguard.com) and are computed in the same manner as in the Commission's proposal.
11 Vanguard provides shareholders the ability to calculate after-tax, post-liquidation returns using a web-based calculator, as do a number of other firms and third-party service providers. Because this tool is meant to allow shareholders to customize their after-tax returns to their tax situation, we believe that including a post-liquidation calculation is appropriate in this format. However, in our annual report disclosure, we only present pre-liquidation returns because we view the annual report as a discussion of how the manager affected the performance of the fund.
12 Reporting a pre-liquidation return as the only after-tax return required is also consistent with current performance presentation standards adopted by the Association for Investment Management and Research (AIMR) in creating after-tax composite returns. These standards are available at http://www.aimr.com/standards/pps/ppsstand.html.
13 "Fee-Adjusted Performance" represents the currently required standardized SEC performance calculation, which includes all purchase and redemption charges.
14 "Investment Return" would be the pre-tax return, which would include the fund's expense ratio but exclude any front-end or back-end loads or other non-recurring fees. For purposes of computing the investment return and after-tax return, we propose that funds with multiple share classes use the same class that is shown in the bar chart.
15 "After-Tax Return" would be the aforementioned investment return less taxes due on the fund's distributions to shareholders.
16 The "Index" return would be the same as is currently required; namely, the pre-tax return (assuming no expenses or other fees) on a broadly diversified representative index. Although after-tax index returns might also be desired, we are not comfortable with any current methodology to tax-effect an index's return.
17 The return effects of front-end and back-end loads and other non-recurring charges can be seen by comparing the Fee-Adjusted Performance figure with the Investment Return figure. The tax bite of a manager's investment approach can be determined by comparing the Investment Return with the After-Tax Return. Finally, the manager's investment performance can be evaluated by comparing the Investment Return to the Index calculation-a comparison that is not readily available under current SEC performance reporting standards that mix investment performance and fees into one calculation.
18 For purposes of our comment, we propose excluding those funds that could be called a "bond fund" under the informal standard used by the Commission staff (i.e., a fund that has at least 65 percent of its assets invested in fixed-income securities) and distributes dividends to shareholders at least monthly.
19 These returns were calculated using the After-Tax Returns Calculator on Vanguard's website www.vanguard.com) and assume the shares were still held at the end of the ten-year period.
20 Share classes with higher expense ratios have lower dividend distributions because such distributions represent investment company taxable income, which is net of fund expenses. As such, shareholders in classes with higher expense ratios pay less to the government in taxes but more of their potential return is paid to the fund sponsor. Capital gain distributions are not affected by expense differences and, as a percent of the fund's net asset value (NAV), should be nearly identical for all share classes.
21 IRC Sec. 4982. Funds with November or December fiscal year-ends can elect to use their fiscal year-end to meet the capital gain excise distribution requirements.
22 Certain funds will still be able to defer some gain realization into future reporting periods. For example, a December fiscal year-end fund might realize gains in November or December but not distribute these gains until the following year in the form of a supplemental capital gain distribution.
23 Rule 482 under the Securities Act of 1933.
24 Our suggestion is to use IRS Form 1099-DIV as a pro-forma document detailing those features that must be incorporated into the after-tax return calculations. Technically, Form 1099-DIV is computed on a calendar year basis for individuals, but after-tax returns may be required for periods that may not correspond to a calendar year.
25 Ordinary dividend distributions reported on IRS Form 1099-DIV are "grossed-up" for any foreign taxes paid for which the fund elects flow-through treatment.
26 We would recommend that funds have the option of including an adjustment for foreign tax credits because not doing so would only lower the fund's after-tax return.
27 For example, assume a 40% tax rate, a $95 income distribution amount and $5 foreign tax paid. The grossed-up distribution would be $100, resulting in a tax liability of $35, which represents the 40% tax rate applied to the grossed-up amount less the $5 credit available for foreign taxes paid. Thus, the after-tax reinvested distribution would be the $95 distribution minus the $35 tax liability, or $60.
28 These calculations may need to be modified if tax laws are changed in the future. Specifically, the tax liability upon redemption should be tied to how a taxpayer would compute the liability based on Schedule D (Capital Gains and Losses) of IRS Form 1040.
29 See Bergstresser and Poterba, Ibid. Also, Michael Barclay, Neil Pearson, and Michael Weisbach, "Open End Mutual Funds and Capital Gains Taxes," Journal of Financial Economics 49 (1998), pp. 3-43.
30 Bergstresser and Poterba, Ibid.


Vastavam web: Veteran actor Rishi Kapoor has taken exception to Rahul Gandhi's reference of Bollywood while talking about dynasty politics during his speech at Berkeley.Kapoor said each generation of his family has been "chosen on merit" by the public and the Kapoors' contribution to the 106 years of Indian cinema is 90 years.Rahul, in his speech at the University of California in Berkeley, had talked about how dynasties are a fact of life in India. He, however, did not mention the Kapoor family in his speech.
Kapoor, however, posted a series of tweets as a reaction to Rahul's speech."Rahul Gandhi. In the 106 years of Indian cinema of India, Kapoor's contribution is 90 years. And each generation is chosen by public on merit," Kapoor tweeted."By God's grace we are in 4 generations. Prithviraj Kapoor. Raj Kapoor. Randhir Kapoor. Ranbir Kapoor Males.Kapoor had courted controversy last year too when he suggested that roads and building named by the Congress after the Gandhi family be changed.


text:
Survey of Extradition and Fugitive Offenders Legislation as Between Commonwealth Jurisdictions (Revised 1982)
The legislation contained in this Survey is set out in three Schedules. Schedule I deals with the extradition or fugitive offenders legislation of those Commonwealth countries which have legislated as a result of the Commonwealth Law Officers' Conference, 1966 and of those to which the United Kingdom post-1966 legislation was extended by United Kingdom Order in Council but which have attained independence since. Schedule II deals with the legislation of Commonwealth countries to which United Kingdom post-1966 legislation has been applied by United Kingdom Order in Council but have not yet attained independence.