[Federal Register Volume 70, Number 58 (Monday, March 28, 2005)]
[Notices]
[Page 15668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1366]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of Filings and Information Services, Washington, DC 
20549.

Extension: Rule 482, SEC File No. 270-508, OMB Control No. 3235-
0565.

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501 et seq.) the Securities and Exchange Commission 
(the ``Commission'') is soliciting comments on the collection of 
information summarized below. The Commission plans to submit this 
existing collection of information to the Office of Management and 
Budget (``OMB'') for extension and approval.
    Like most issuers of securities, when an investment company \1\ 
(``fund'') offers its shares to the public, its promotional efforts 
become subject to the advertising restrictions of the Securities Act of 
1933, as amended (the ``Securities Act''). In recognition of the 
particular problems faced by funds that continually offer securities 
and wish to advertise their securities, the Commission has previously 
adopted advertising safe harbor rules. The most important of these is 
rule 482 under the Securities Act, which, under certain circumstances, 
permits funds to advertise investment performance data, as well as 
other information. Rule 482 advertisements are deemed to be 
``prospectuses'' under section 10(b) of the Securities Act.\2\
    Rule 482 contains certain requirements regarding the disclosure 
that funds are required to provide in qualifying advertisements. These 
requirements are intended to encourage the provision to investors of 
information that is balanced and informative, particularly in the area 
of investment performance. For example, a fund is required to include 
disclosure advising investors to consider the fund's investment 
objectives, risks, charges and expenses, and other information 
described in the fund's prospectus or accompanying profile (if 
applicable), and highlighting the availability of the fund's 
prospectus. In addition, rule 482 advertisements that include 
performance data of open-end funds or insurance company separate 
accounts offering variable annuity contracts are required to include 
certain standardized performance information, information about any 
sales loads or other nonrecurring fees, and a legend warning that past 
performance does not guarantee future results. Such funds including 
performance information in rule 482 advertisements are also required to 
make available to investors month-end performance figures via Web site 
disclosure or by a toll-free telephone number, and to disclose the 
availability of the month-end performance data in the advertisement. 
The rule also sets forth requirements regarding the prominence of 
certain disclosures, requirements regarding advertisements that make 
tax representations, requirements regarding advertisements used prior 
to the effectiveness of the fund's registration statement, requirements 
regarding the timeliness of performance data, and certain required 
disclosures by money market funds.
    Rule 482 advertisements must be filed with the Commission or, in 
the alternative, with NASD Regulation, Inc. (``NASDR'').\3\ This 
information collection differs from many other federal information 
collections that are primarily for the use and benefit of the 
collecting agency.
---------------------------------------------------------------------------

    \1\ ``Investment company'' refers to both investment companies 
registered under the Investment Company Act of 1940, as amended, and 
business development companies.
    \2\ 15 U.S.C. 77j(b).
    \3\ See Rule 24b-3 under the Investment Company Act [17 CFR 
270.24b-3], which provides that any sales material, including rule 
482 advertisements, shall be deemed filed with the Commission for 
purposes of Section 24(b) of the Investment Company Act upon filing 
with the NASDR.
---------------------------------------------------------------------------

    As discussed above, rule 482 contains requirements that are 
intended to encourage the provision to investors of information that is 
balanced and informative, particularly in the area of investment 
performance. The Commission is concerned that in the absence of such 
provisions fund investors may be misled by deceptive rule 482 
performance advertisements and may rely on less-than-adequate 
information when determining in which funds they should invest their 
money. As a result, the Commission believes it is beneficial for funds 
to provide investors with balanced information in fund advertisements 
in order to allow investors to make better-informed decisions.
    The Commission estimates that 56,936 responses are filed annually 
pursuant to rule 482 by 4,384 investment companies offering 37,500 
portfolios. Respondents consist of all the investment companies that 
take advantage of the safe harbor offered by the rule for their 
advertisements. The burden associated with rule 482 is presently 
estimated to be 5.16 hours per response. The hourly burden is therefore 
approximately 293,790 hours (56,936 responses times 5.16 hours per 
response).
    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act, and is not derived from a 
comprehensive or even a representative survey or study of the costs of 
Commission rules and forms.
    Cost burden is the cost of services purchased to comply with rule 
482, such as for the services of computer programmers, outside counsel, 
financial printers, and advertising agencies. The Commission attributes 
no cost burden to rule 482.
    Written comments are invited on: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information will 
have practical utility; (b) the accuracy of the agency's estimate of 
the burden of the collection of information; (c) ways to enhance the 
quality, utility, and clarity of the information collected; and (d) 
ways to minimize the burden of the collection of information on 
respondents, including through the use of automated collection 
techniques or other forms of information technology. Consideration will 
be given to comments and suggestions submitted in writing within 60 
days of this publication.
    Please direct your written comments to R. Corey Booth, Director/
Chief Information Officer, Office of Information Technology, Securities 
and Exchange Commission, 450 5th Street, NW., Washington, DC 20549.

    Dated: March 22, 2005.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-1366 Filed 3-25-05; 8:45 am]
BILLING CODE 8010-01-P