SEC Adopts Fund "Name Test" Rule

Washington, DC, January 18, 2001 - The Securities and Exchange Commission has adopted a new rule requiring registered investment companies (including mutual funds, closed-end funds, and UITs) with names suggesting a focus on particular types of investments or industries to invest at least 80 percent of assets in accordance with their names. The effective date of the new rule is March 31, 2001; however, funds will have until July 31, 2002 to comply with the rule’s requirements.

Rule 35d-1 also addresses names suggesting a focus on investments in a particular country or geographic region, names indicating funds’ distributions are exempt from income tax, and names suggesting that funds or their shares are guaranteed or approved by the U.S. government. The Institute submitted a comment letter on the proposal in 1997.