In an effort to curb misleading advertisements for mutual funds, the

Securities and Exchange Commission

announced a new rule Wednesday for fund investors who read the fine print.

Typically, funds advertise their performance by printing or citing returns as of the last quarter. So whether the returns advertised are from the past year or past 10 years, the information is as of the last day of the preceding quarter. Obviously, these numbers can be out of date by several weeks or months.

Now, however, the SEC is mandating that funds include a phone number with every advertisement, which prospective investors can use to get performance information as of the last day of the past month.

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Advertisements also will have to state that past performance is not an indicator of future performance, and provide more information as to the time frame of the performance record, and the fund's goals, risks and costs.

"At the tail end of the bull market we saw an explosion of ads touting past performance," says John Nestor, a spokesperson for the SEC. "It causes investors to focus on past performance rather than all the other far more important factors. And with the market going up, we're seeing a resurgence of those types of ads."

The new rules will apply to advertisements submitted after March 31, 2004.

While the SEC's rule certainly has the fund investor's best interest at heart, investors shouldn't become giddy. Certainly, more timely data are a big plus, but investors shouldn't base their purchase decisions on how a fund has performed in the past month. As always, the criteria remain: low costs, tax efficiency and a proper fit in your asset-allocation plan.

"The new rule strikes me as a little tone-deaf, given everything else that's going on right now," says Morningstar analyst Brian Portnoy. "Investors don't need up-to-the-minute return information; they need full disclosure of costs and how managers are compensated."

The upshot, Portnoy says: "It's harmless, but I'm not sure it's helpful."