Securities Lawyer's Deskbook                          published by The University of Cincinnati College of Law

Rule 34b-1 -- Sales Literature Deemed to Be Misleading

---

Any advertisement, pamphlet, circular, form letter, or other sales literature addressed to or intended for distribution to prospective investors that is required to be filed with the Commission by section 24(b) of the Act ("sales literature") shall have omitted to state a fact necessary in order to make the statements made therein not materially misleading unless the sales literature includes the information specified in paragraphs (a) and (b) of this section.

Note to introductory text of §270.34b-1: The fact that the sales literature includes the information specified in paragraphs (a) and (b) of this section does not relieve the investment company, underwriter, or dealer of any obligations with respect to the sales literature 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 sales literature are misleading, see Rule156 of Securities Act of 1933.

1. Sales literature for a money market fund shall contain the information required by paragraph (b)(4) of Rule 482 under the Securities Act of 1933, presented in the manner required by paragraph (b)(5) of Rule 482 of the Securities Act of 1933.
   
   
2. 1. Except as provided in paragraph (b)(3) of this section:
      
      
      1. In any sales literature that contains performance data for an investment company, include the disclosure required by paragraph (b)(3) of Rule 482 under the Securities Act of 1933,presented in the manner required by paragraph (b)(5) of Rule 482 of the Securities Act of 1933.
         
         
      2. In any sales literature for a money market fund:
         
         
         1. Accompany any quotation of yield or similar quotation purporting to demonstrate the income earned or distributions made by the money market fund with a quotation of current yield specified by paragraph (e)(1)(i) of Rule 482 under the Securities Act of 1933;
            
            
         2. Accompany any quotation of the money market fund's tax equivalent yield or tax equivalent effective yield with a quotation of current yield as specified in Rule 482(e)(1)(iii) under the Securities Act of 1933; and
            
            
         3. Accompany any quotation of the money market fund's total return with a quotation of the money market fund's current yield specified in paragraph (e)(1)(i) of Rule 482 under the Securities Act of 1933. 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.
            
            
      3. In any sales literature for an investment company other than a money market fund that contains performance data:
         
         
         1. Include the total return information required by paragraph (d)(3) of Rule 482 under the Securities Act of 1933;
            
            
         2. Accompany any quotation of performance adjusted to reflect the effect of taxes (not including a quotation of tax equivalent yield or other similar quotation purporting to demonstrate the tax equivalent yield earned or distributions made by the company) with the quotations of total return specified by paragraph (d)(4) of Rule 482 under the Securities Act of 1933;
            
            
         3. If the sales literature (other than sales literature for a company that is permitted under Rule 35d-1(a)(4) to use a name suggesting that the company's distributions are exempt from federal income tax or from both federal and state income tax) represents or implies that the company is managed to limit or control the effect of taxes on company performance, include the quotations of total return specified by paragraph (d)(4) of Rule 482 under the Securities Act of 1933;
            
            
         4. Accompany any quotation of yield or similar quotation purporting to demonstrate the income earned or distributions made by the company with a quotation of current yield specified by paragraph (d)(1) of Rule 482 under the Securities Act of 1933; and
            
            
         5. Accompany any quotation of tax equivalent yield or other similar quotation purporting to demonstrate the tax equivalent yield earned or distributions made by the company with a quotation of tax equivalent yield specified in paragraph (d)(2) and current yield specified by paragraph (d)(1) of Rule 482 under the Securities Act of 1933.
            
            
   2. Any performance data included in sales literature under paragraphs (b)(1)(ii) or (iii) of this section must meet the currentness requirements of paragraph (g) of Rule 482 under the Securities Act of 1933.
      
      
   3. The requirements specified in paragraph (b)(1) of this section shall not apply to any quarterly, semi-annual, or annual report to shareholders under Section 30 of the Act containing performance data for a period commencing no earlier than the first day of the period covered by the report; nor shall the requirements of paragraphs (d)(3)(ii), (d)(4)(ii), and (g) of Rule 482 under the Securities Act of 1933 apply to any such periodic report containing any other performance data.
      
      

      ---

      Note: Sales literature (except that of a money market fund) containing a quotation of yield or tax equivalent yield must also contain the total return information. In the case of sales literature, the currentness provisions apply from the date of distribution and not the date of submission for publication.

      ---

      
      
      

	Notice to Users: The Deskbook is made available with the understanding that the University of Cincinnati College of Law is not engaged in rendering legal, accounting or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. See Terms and Conditions of Use.   © Copyright 1998-2008, University of Cincinnati, All Rights Reserved  Contact: joseph.hodnicki@uc.edu