November 26, 1991
TO: SUBCOMMITTEE ON ADVERTISING NO. 6-91
RE: LETTER TO STAFF ON COMPARATIVE ADVERTISEMENTS
__________________________________________________________
Attached is the Institute's letter to the staff of the
Division of Investment Management concerning advertisements for
income funds that compare their performance to that of money
market funds. (A draft of the letter was previously circulated
to you. See Memorandum to Subcommittee on Advertising No. 2-91,
dated November 7, 1991.) The letter, which was submitted in
draft form, recommends that any misleading or unbalanced
comparisons be addressed on a case-by-case basis rather than by
prohibiting, or requiring substantial "boilerplate" disclosure in
the case of, advertisements that contain such comparisons.
Specifically, the letter recommends that such advertisements
disclose the greater likelihood and magnitude of principal
fluctuations on the part of an income fund, as opposed to a money
market fund. The nature and prominence of the disclosure would
depend on the manner in which the performance comparison is
presented, as well as on the type of income fund in question.
Craig S. Tyle
Deputy General Counsel
Attachment