Performance can be tested properly only against the avowed purpose set forth by the investment company itself. The Securities and Exchange Commission has deemed it necessary to propose an amendment to the Investment Company Act, having become dissatisfied with the way the provisions concerning objectives and policies have been working. It has proposed that the act require an investment company to state as matters of basic policy, which generally could not be changed without the consent of the shareholders, the extent to which the investment company intends to invest in particular types of securities. The proposal would enlarge the policy statement contained in most prospectuses in the past by requiring a clearer recital, which presumably would include the types of securities to be selected for investment, objectives as to income and capital appreciation, geographical areas of investment, and policy with reference to investment for control or active management. The proposal does not seem to be drastic. The likelihood that flexibility in management will be curtailed seriously by the proposal seems remote.


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