ICI Supports SEC Fund Advertising Proposal

Washington, DC, August 1, 2002 - The Institute submitted a comment letter supporting many aspects of the SEC's proposed amendments to the regulatory framework that governs fund advertising practices. The proposed amendments generally represent a positive development for investors and an improvement in fund communications.

The proposed amendments address the currentness of funds' performance information, funds' use of the media to provide more current information, disclosure in fund advertisements, and funds' obligation to ensure that the advertising or sales literature is not false or misleading.

In particular, the SEC proposal would eliminate the "substance of which" requirement from Rule 482. As a result, funds would be able to include more relevant and timely information in their advertisements and eliminate from their statutory prospectuses information that clutters the prospectus and often obscures more important information.

The proposal would also allow an advertisement containing total return quotations to use most recent calendar quarter data, but also includes a condition that performance information current to the most recent month-end be made available via a toll-free phone number. The Institute believes that funds should have flexibility regarding the method (e.g., website or toll-free phone number) by which investors can obtain performance information current to the most recent month-end.