[14040]
October 15, 2001
TO: ACCOUNTING/TREASURERS COMMITTEE No. 30-01
SEC RULES COMMITTEE No. 81-01
RE: DRAFT SUPPLEMENT TO INSTITUTE VALUATION PAPER
Attached for your review is a draft paper on mutual fund valuation issues, focusing
primarily on issues related to fair valuation of fund portfolio securities in light of recent SEC
staff guidance in this area. The draft paper is designed as a supplement to the Institute’s 1997
paper on valuation and liquidity issues for mutual funds. It has been drafted with the
assistance of a working group comprised primarily of members of the SEC Rules,
Accounting/Treasurers, and International Committees.
The supplement briefly reviews the statutory and regulatory framework for valuation
described in greater detail in the Institute’s 1997 paper and summarizes the letters issued by the
SEC staff in 1999 and earlier this year concerning valuation. It then discusses the valuation of
foreign and domestic portfolio securities in light of these letters and the review of fair valuation
methodologies used in that process. Finally, the supplement reviews the responsibilities of
fund boards of directors or trustees in the valuation process.
Please provide any comments on the attached draft paper by Friday, October 26th. You
may direct your comments to me (phone: 202/371-5430 or email: rcg@ici.org) or to Frances
Stadler (phone: 202/326-5822 or email: frances@ici.org). You also may fax comments to my
attention at 202/326-5841.
Robert C. Grohowski
Associate Counsel
Attachment (in .pdf format)