Institute Supports Mutual Fund Protections for Portfolio Investors

Washington, DC, March 28, 2001 - The Institute submitted to the SEC a petition to adopt a rule requiring portfolio investment programs to be registered and regulated under the Investment Company Act, and that the offering and sale of their shares be registered under the Securities Act.

In July 2000, the Institute submitted a letter and memorandum to the SEC regarding the status of portfolio investment programs under federal securities laws. The Institute concluded that these programs involve the offer and sale of a separate security under the Securities Act of 1933 and an investment company under the Investment Company Act of 1940.

The protections afforded to mutual fund investors should be extended to investors in other financial products. In the past, nontraditional mutual fund-like products, such as variable annuities, have registered with the SEC as investment companies and have operated successfully under SEC investor protection regulation.

The mutual fund industry is highly competitive and welcomes new entrants. The focus should always be on ensuring that investors are adequately protected and that their interests are being served.