Rule Text

Securities and Exchange Commission

§ 230.482

where indicated, in a manner reasonably calculated to draw investor attention to specific information.
[63 FR 6385, Feb. 6, 1998]

§ 230.482 Advertising by an investment
company as satisfying requirements
of section 10.
(a) Scope of rule. This section applies
to an advertisement or other sales material (advertisement) with respect to securities of an investment company registered under the Investment Company
Act of 1940 (15 U.S.C. 80a–1 et seq.) (1940
Act), or a business development company, that is selling or proposing to
sell its securities pursuant to a registration statement that has been filed
under the Act. This section does not
apply to an advertisement that is excepted from the definition of prospectus by section 2(a)(10) of the Act
(15 U.S.C. 77b(a)(10)) or § 230.498(d) or to
a summary prospectus under § 230.498.
An advertisement that complies with
this section, which may include information the substance of which is not
included in the prospectus specified in
section 10(a) of the Act (15 U.S.C
77j(a)), will be deemed to be a prospectus under section 10(b) of the Act
(15 U.S.C. 77j(b)) for the purposes of
section 5(b)(1) of the Act (15 U.S.C.
77e(b)(1)).

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NOTE TO PARAGRAPH (a): The fact that an
advertisement complies with this section
does not relieve the investment company,
underwriter, or dealer of any obligations
with respect to the advertisement under the
antifraud provisions of the federal securities
laws. For guidance about factors to be
weighed in determining whether statements,
representations, illustrations, and descriptions contained in investment company advertisements are misleading, see § 230.156. In
addition, an advertisement that complies
with this section is subject to the legibility
requirements of § 230.420.

(b) Required disclosure. This paragraph describes information that is required to be included in an advertisement in order to comply with this section.
(1) Availability of additional information. An advertisement must include a
statement that advises an investor to
consider the investment objectives,
risks, and charges and expenses of the
investment company carefully before

investing; explains that the prospectus
and, if available, the summary prospectus contain this and other information about the investment company;
identifies a source from which an investor may obtain a prospectus and, if
available, a summary prospectus; and
states that the prospectus and, if available, the summary prospectus should
be read carefully before investing.
(2) Advertisements used prior to effectiveness of registration statement. An advertisement that is used prior to effectiveness of the investment company’s
registration statement or the determination of the public offering price
(in the case of a registration statement
that becomes effective omitting information from the prospectus contained
in the registration statement in reliance upon § 230.430A) must include the
‘‘Subject to Completion’’ legend required by § 230.481(b)(2).
(3) Advertisements including performance data. An advertisement that includes performance data of an open-end
management investment company or a
separate account registered under the
1940 Act as a unit investment trust offering variable annuity contracts (trust
account) must include the following
(i) A legend disclosing that the performance data quoted represents past
performance; that past performance
does not guarantee future results; that
the investment return and principal
value of an investment will fluctuate
so that an investor’s shares, when redeemed, may be worth more or less
than their original cost; and that current performance may be lower or
higher than the performance data
quoted. The legend should also identify
either a toll-free (or collect) telephone
number or a Web site where an investor
may obtain performance data current
to the most recent month-end unless
the advertisement includes total return quotations current to the most recent month ended seven business days
prior to the date of use. An advertisement for a money market fund may
omit the disclosure about principal
value fluctuation; and
NOTE TO PARAGRAPH (b)(3)(i): The date of
use refers to the date or dates when an advertisement is used by investors, not the
date on which an advertisement is published
or submitted for publication. The date of use

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§ 230.482

17 CFR Ch. II (4–1–10 Edition)

refers to the entire period of use by investors
and not simply the first date on which an advertisement is used.

(ii) If a sales load or any other nonrecurring fee is charged, the maximum
amount of the load or fee, and if the
sales load or fee is not reflected, a
statement that the performance data
does not reflect the deduction of the
sales load or fee, and that, if reflected,
the load or fee would reduce the performance quoted.
(4) Money market funds. An advertisement for an investment company that
holds itself out to be a money market
fund must include the following statement:

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An investment in the Fund is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve
the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund.

A money market fund that does not
hold itself out as maintaining a stable
net asset value may omit the second
sentence of this statement.
(5) Presentation. In a print advertisement, the statements required by paragraphs (b)(1) through (b)(4) of this section must be presented in a type size at
least as large as and of a style different
from, but at least as prominent as,
that used in the major portion of the
advertisement, provided that when performance data is presented in a type
size smaller than that of the major portion of the advertisement, the statements required by paragraph (b)(3) of
this section may appear in a type size
no smaller than that of the performance data. If an advertisement is delivered through an electronic medium,
the legibility requirements for the
statements required by paragraph (b)(1)
through (b)(4) of this section relating
to type size and style may be satisfied
by presenting the statements in any
manner reasonably calculated to draw
investor attention to them. In a radio
or television advertisement, the statements required by paragraph (b)(1)
through (b)(4) of this section must be
given emphasis equal to that used in
the major portion of the advertisement. The statements required by
paragraph (b)(3) of this section must be
presented in close proximity to the per-

formance data, and, in a print advertisement, must be presented in the
body of the advertisement and not in a
footnote.
(6) Commission legend. An advertisement that complies with this section
need not contain the Commission legend required by § 230.481(b)(1).
(c) Use of applications. An advertisement that complies with this section
may not contain or be accompanied by
any application by which a prospective
investor may invest in the investment
company, except that a prospectus
meeting the requirements of section
10(a) of the Act (15 U.S.C. 77j(a)) by
which a unit investment trust offers
variable annuity or variable life insurance contracts may contain a contract
application although the prospectus includes, or is accompanied by, information about an investment company in
which the unit investment trust invests that, pursuant to this section, is
deemed a prospectus under section
10(b) of the Act (15 U.S.C. 77j(b)).
(d) Performance data for non-money
market funds. In the case of an open-end
management investment company or a
trust account (other than a money
market fund referred to in paragraph
(e) of this section), any quotation of
the company’s performance contained
in an advertisement shall be limited to
quotations of:
(1) Current yield. A current yield that:
(i) Is based on the methods of computation prescribed in Form N–
1A(§§ 239.15A and 274.11A of this chapter), N–3 (§§ 239.17a and 274.11b of this
chapter), or N–4 (§§ 239.17b and 274.11c of
this chapter);
(ii) Is accompanied by quotations of
total return as provided for in paragraph (d)(3) of this section;
(iii) Is set out in no greater prominence than the required quotations of
total return; and
(iv) Adjacent to the quotation and
with no less prominence than the
quotation, identifies the length of and
the date of the last day in the base period used in computing the quotation.
(2) Tax-equivalent yield. A tax-equivalent yield that:
(i) Is based on the methods of computation prescribed in Form N–1A
(§§ 239.15A and 274.11A of this chapter),

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Securities and Exchange Commission

§ 230.482

N–3 (§§ 239.17a and 274.11b of this chapter), or N–4 (§§ 239.17b and 274.11c of this
chapter);
(ii) Is accompanied by quotations of
yield as provided for in paragraph (d)(1)
of this section and total return as provided for in paragraph (d)(3) of this section;
(iii) Is set out in no greater prominence than the required quotations of
yield and total return;
(iv) Relates to the same base period
as the required quotation of yield; and
(v) Adjacent to the quotation and
with no less prominence than the
quotation, identifies the length of and
the date of the last day in the base period used in computing the quotation.
(3) Average annual total return. Average annual total return for one, five,
and ten year periods, except that if the
company’s
registration
statement
under the Act (15 U.S.C. 77a et seq.) has
been in effect for less than one, five, or
ten years, the time period during which
the registration statement was in effect is substituted for the period(s) otherwise prescribed. The quotations
must:
(i) Be based on the methods of computation prescribed in Form N–1A
(§§ 239.15A and 274.11A of this chapter),
N–3 (§§ 239.17a and 274.11b of this chapter), or N–4 (§§ 239.17b and 274.11c of this
chapter);
(ii) Be current to the most recent calendar quarter ended prior to the submission of the advertisement for publication;
(iii) Be set out with equal prominence; and
(iv) Adjacent to the quotation and
with no less prominence than the
quotation, identify the length of and
the last day of the one, five, and ten
year periods.
(4) After-tax return. For an open-end
management investment company, average annual total return (after taxes
on distributions) and average annual
total return (after taxes on distributions and redemption) for one, five, and
ten year periods, except that if the
company’s
registration
statement
under the Act (15 U.S.C. 77a et seq.) has
been in effect for less than one, five, or
ten years, the time period during which
the registration statement was in effect is substituted for the period(s) oth-

erwise prescribed. The quotations
must:
(i) Be based on the methods of computation prescribed in Form N–1A
(§§ 239.15A and 274.11A of this chapter);
(ii) Be current to the most recent calendar quarter ended prior to the submission of the advertisement for publication;
(iii) Be accompanied by quotations of
total return as provided for in paragraph (d)(3) of this section;
(iv) Include both average annual
total return (after taxes on distributions) and average annual total return
(after taxes on distributions and redemption);
(v) Be set out with equal prominence
and be set out in no greater prominence than the required quotations of
total return; and
(vi) Adjacent to the quotations and
with no less prominence than the
quotations, identify the length of and
the last day of the one, five, and ten
year periods.
(5) Other performance measures. Any
other historical measure of company
performance (not subject to any prescribed method of computation) if such
measurement:
(i) Reflects all elements of return;
(ii) Is accompanied by quotations of
total return as provided for in paragraph (d)(3) of this section;
(iii) In the case of any measure of
performance adjusted to reflect the effect of taxes, is accompanied by
quotations of total return as provided
for in paragraph (d)(4) of this section;
(iv) Is set out in no greater prominence than the required quotations of
total return; and
(v) Adjacent to the measurement and
with no less prominence than the
measurement, identifies the length of
and the last day of the period for which
performance is measured.
(e) Performance data for money market
funds. In the case of a money market
fund:
(1) Yield. Any quotation of the money
market fund’s yield in an advertisement shall be based on the methods of
computation prescribed in Form N–1A
(§§ 239.15A and 274.11A of this chapter),
N–3 (§§ 239.17a and 274.11b of this chapter), or N–4 (§§ 239.17b and 274.11c of this
chapter) and may include:

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§ 230.483

17 CFR Ch. II (4–1–10 Edition)

(i) A quotation of current yield that,
adjacent to the quotation and with no
less prominence than the quotation,
identifies the length of and the date of
the last day in the base period used in
computing that quotation;
(ii) A quotation of effective yield if it
appears in the same advertisement as a
quotation of current yield and each
quotation relates to an identical base
period and is presented with equal
prominence; or
(iii) A quotation or quotations of taxequivalent yield or tax-equivalent effective yield if it appears in the same
advertisement as a quotation of current yield and each quotation relates
to the same base period as the
quotation of current yield, is presented
with equal prominence, and states the
income tax rate used in the calculation.
(2) Total return. Accompany any
quotation of the money market fund’s
total return in an advertisement with a
quotation of the money market fund’s
current yield under paragraph (e)(1)(i)
of this section. Place the quotations of
total return and current yield next to
each other, in the same size print, and
if there is a material difference between the quoted total return and the
quoted current yield, include a statement that the yield quotation more
closely reflects the current earnings of
the money market fund than the total
return quotation.
(f) Advertisements that make tax representations. An advertisement for an
open-end
management
investment
company (other than a company that is
permitted under § 270.35d-1(a)(4) of this
chapter to use a name suggesting that
the company’s distributions are exempt from federal income tax or from
both federal and state income tax) that
represents or implies that the company
is managed to limit or control the effect of taxes on company performance
must accompany any quotation of the
company’s performance permitted by
paragraph (d) of this section with
quotations of total return as provided
for in paragraph (d)(4) of this section.
(g) Timeliness of performance data. All
performance data contained in any advertisement must be as of the most recent practicable date considering the
type of investment company and the

media through which the data will be
conveyed, except that any advertisement
containing
total
return
quotations will be considered to have
complied with this paragraph provided
that:
(1)(i) The total return quotations are
current to the most recent calendar
quarter ended prior to the submission
of the advertisement for publication;
and
(ii) Total return quotations current
to the most recent month ended seven
business days prior to the date of use
are provided at the toll-free (or collect)
telephone number or Web site identified pursuant to paragraph (b)(3)(i) of
this section; or
(2) The total return quotations are
current to the most recent month
ended seven business days prior to the
date of use of the advertisement.
NOTE TO PARAGRAPH (g): The date of use refers to the date or dates when an advertisement is used by investors, not the date on
which an advertisement is published or submitted for publication. The date of use refers
to the entire period of use by investors and
not simply the first date on which an advertisement is used.

(h) Filing. An advertisement that
complies with this section need not be
filed as part of the registration statement filed under the Act.
NOTE TO PARAGRAPH (h): These advertisements, unless filed with NASD Regulation,
Inc., are required to be filed in accordance
with the requirements of § 230.497.
[68 FR 57777, Oct. 6, 2003, as amended at 74 FR
4584, Jan. 26, 2009]

§ 230.483 Exhibits for certain registration statements.
If a registration statement is prepared on a form available solely to investment companies registered under
the Investment Company Act of 1940,
or a business development company
which is selling or proposing to sell its
securities pursuant to a registration
statement which has been filed under
the Act, the following provisions apply:
(a) Such registration statement shall
contain an exhibit index, which should
immediately precede the exhibits filed
with such registration statement. The
exhibit index shall indicate by handwritten, typed, printed or other legible
form of notation in the manually

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