SEC Approves NASD Fund Rankings Proposal

Washington, DC, March 14, 1997 - The Securities and Exchange Commission has approved the proposal of the National Association of Securities Dealers, Inc. (NASD) to revise its guidelines for the use of rankings in mutual fund advertising and sales literature. Under the NASD's prior guidelines, all rankings based on total return used in fund advertising and sales literature had to be accompanied by rankings from the same entity for one, five, and ten-year periods (unless the fund was not in existence for the requisite time period). The new guidelines provide that, if one, five, and ten-year rankings are not published by the ranking entity, the fund may use other rankings from that entity representing short, medium, and long term performance. For purposes of the guidelines, the NASDR staff considers "short" to be interpreted as 1-4 years, "medium" as 5-9 years, and "long" as ten years or more. The amendments also clarify that the rankings for these prescribed time periods must be for the same investment category (or subcategory) as the total return ranking(s) that they accompany. The Institute had filed a comment letter supporting the proposal.