ICI Supports Efforts to Improve Disclosure in Municipal Securities Market

Washington, DC, November 4, 2002 - The Institute strongly supports efforts by the National Federation of Municipal Analysts (NFMA), including the recently released Draft Recommended Best Practices in Disclosure for Variable Rate and Short-Term Securities, which will improve the level of disclosure in the municipal securities market. The Institute states that the report issued by the NFMA is an excellent step toward improving disclosure and will facilitate a greater understanding of the needs of money market funds with respect to variable rate demand notes and other short-term securities.

In its letter, the Institute also notes the importance of rule 2a-7 of the Investment Company Act, which permits money market funds to use special share pricing and portfolio valuation methods, subject to certain requirements. The Institute recommends that NFMA outline the main requirements of the rule in an appendix, enabling money market funds to better evaluate, analyze, and purchase securities.

The Institute has long supported measure to improve disclosure in the municipal securities market. In a November 2001 comment letter, the Institute noted the difficulty mutual funds have in obtaining information in the secondary market, and urged the SEC to amend certain Exchange Act rules.