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How do taxes on SPDR and MidCap SPDR investments compare with those for mutual funds?

Because there is limited purchasing or selling of component stocks by the SPDR Trust and MidCap SPDR Trust, SPDRs and MidCap SPDRs may be more tax-efficient than many actively managed mutual funds with higher portfolio turnover rates. Generally, investors in mutual funds or SPDRs and MidCap SPDRs will pay income taxes on dividends paid by funds and SPY or MDY. Mutual fund investors will also pay taxes and distributions of net capital gains by their fund, while SPDR and MidCap SPDR investors pay taxes at applicable capital gains tax rates on profits from their sale of SPY and MDY shares.

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