ICI Comments on Proposed Rules for Related Performance Information, January 2001

Washington, DC, January 18, 2001 - The Institute filed a comment letter with the Securities and Exchange Commission in response to its request for comment on NASD Regulation Inc.'s proposed new Interpretive Material 2210-5 to permit certain types of related performance information in mutual fund sales material.

While the Institute's letter generally supports NASDR's proposal, it provides several recommendations. To avoid potential confusion, the letter recommends deleting the proposed prohibition on material differences between the portfolio to which the related performance refers and the advertised fund (General Standard (d)(1)).

requiring a clone fund's investment policies, objectives, and strategies to be "in all material respects equivalent" to those of the original fund, instead of requiring them to be "the same;"
that the proposal be modified to permit funds to advertise clone fund performance where the original fund and the clone fund have different investment advisers, but the adviser to the original fund is the subadviser to the clone fund, under certain circumstances; and
a clarification that a clone of a multiple class fund does not need to show the performance of all classes of the original fund in order to advertise clone performance.

The letter recommends that funds advertising predecessor performance be required to present only one set of total return calculations, which would include the predecessor entity's performance. The letter also provides specific comments regarding the presentation of predecessor performance and several technical comments.