April 18, 1989
TO: SEC RULES MEMBERS NO. 22-89
RE: RECENT SEC NO ACTION LETTERS ON PERFORMANCE ADVERTISING
__________________________________________________________
In an attached no action request and response the staff of
the SEC's Division of Investment Management stated that it would
not take action if the requesting mutual funds advertised
performance results from the date on which new management began
advising the funds without including in such advertisements or
supplemental sales literature the funds' average annual total
returns for one, five and ten years (or life of fund if less).
The staff said that it would not recommend that the Commission
take action provided that any such advertisement or sales
literature
(1) clearly indicates the date of inception for the
particular Fund and the fact that the Fund
previously operated under different management; and
(2) states that per share income and capital
changes for the last ten fiscal years of the Fund
are disclosed in its statutory prospectus.
The response states that the staff's position is based on
the particular facts and representations in the no action request
and that the staff might come to a different conclusion if
presented with different facts.
In a separate no action request and response the staff
declined to provide no action assurance to a money market fund
designed for corporate and institutional cash managers that
wished to include in an advertisement subject to Securities Act
Rule 482 a one-day yield in addition to its seven day yield.
We will keep you informed of developments concerning
performance advertising by mutual funds.
Mary K. Bellamy
Associate General Counsel
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