A recent advertisement by Munder Capital Management of Birmingham, Mich., promoting its soon-to-be-released @Vantage fund, is a novel response to the SEC's increased demands for greater disclosure in fund advertising, fund marketing executives said.

"Even though it's tongue-in-cheek, it addresses risk in a very serious way and it helps the fund find its audience," said Dan Ross, president of Wechsler Ross & Partners of New York, a marketing and design firm for financial service firms.

The fund addresses the potential risks involved in the closed-end, Internet venture capital fund with a huge warning label discouraging investors who are "weak-kneed" from investing in the fund.

The full-page advertisement includes the profile of a Pac-Man-like cartoon character with mouth agape and eyes bulging in an expression of consternation. Lines shoot from the top of its head denoting stress. Below the character, a label reads, in bold black letters across the width of the advertisement: "Warning: Due to the extreme volatility of the Munder @Vantage Fund, investors who are weak-kneed, incessant nail-biters, prone to fainting spells or dizziness, tend to stay up late worrying, or have serious qualms, hysteria or neurosis, should not consider this fund. Those with stronger stomachs may proceed only after consulting a professional advisor." The fund's tagline reads, "Extreme risk, explosive potential."

The advertisement will be published in Barron's, The Wall Street Journal, The New York Times and USA Today, said Elyse Essick, director of marketing for Munder. Three versions of the advertisement will run in the publications until the fund's launch September 11, Essick said. All of the ads will include the same cartoon character with varying warning labels, she said. The @Vantage Fund is the second closed-end fund that invests purely in Internet securities (MFMN 5/22/00) and the first to advertise extensively, Essick said.

While the fund is sold through intermediaries only, the ad is clearly and effectively directed to retail customers, said Darby Hobbs, president of Graylyn Associates, of Chatham, Mass., a marketing consulting firm for the financial services industry.

"They've chosen a very retail-oriented sticker with the warning label," she said. "I think it's clever and bold. They will catch the consumer's eye and it will absolutely draw them in."

The advertisement breaks new ground for mutual fund advertising because it takes a consumer goods approach and gives the impression that Munder is a forward-looking company with its unorthodox style, she said.

Although the advertisement treats the fund's investment risk in a humorous manner, it clearly warns risk-averse investors that this is not a suitable investment for them. It directs more risk-averse investors to financial advisors before they purchase the fund, said Ross.

SEC and NASD officials declined to comment on the ad. But, the fund and its bold-typeface warning label would appear to meet the regulators' demands for increased disclosure of investment risk. The SEC investigates advertisements that either give investors the wrong impression of a fund's potential or establish unrealistic expectations, said Cindy Fornelli, an advisor to Paul Roye, director of the SEC's division of investment management.

"Whether [the ad] is too flip or cute isn't our concern," she said.

D. Bruce Johnston, director of retail mutual fund sales and marketing for Conseco Funds Group of Carmel, Ind., however, said the ad could cause problems.

"I think if you make light of a serious subject, you have to be cautious and you need to exercise some balance," he said. "You can't be too flippant." Both the SEC and the NASD have become extremely vigilant and an ad that is too irreverent is sure to attract regulators' attention, he said.

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