According to a survey released Tuesday, 70% of investors know that the Federal Deposit Insurance Corp. does not insure bank mutual funds - a dramatic increase from two years ago.

The nonprofit Investor Protection Trust, a consumer group based in Arlington, Va., said 1,001 people who own bonds, mutual funds, futures, or stocks were queried to gauge their level of investment knowledge. Princeton Survey Research Associates in New Jersey polled them in January.

Overall, according to the survey, only 20% of respondents were "financially literate." The only good news seemed to be the increased awareness among consumers about mutual funds.

This finding "is the silver lining in a rather gray cloud," said Mark Griffin, a trustee of the group and the director of the securities division of Utah's Department of Commerce.

Two years ago the same survey company found that just 18% of investors understood that bank mutual funds are not backed by the government.

Barbara Roper, the director of investor protection at the Consumer Federation of America, said people understand mutual funds and FDIC insurance better today because "there's been a real focused education campaign from the media ... and from the pressure that has been put on banks from regulators."

The FDIC on Monday released the results of a survey designed to assess how well banks are informing mutual fund customers. More than a fourth of banks visited in person and 55% of the banks contacted by phone failed to disclose that the investments are not insured.

According to the Investor Protection Trust survey, although investors know more than they used to about mutual funds, a hefty 62% still believe that no fees or sales charges are levied on "no-load" mutual funds, which often charge fees but do not charge commissions.

Mr. Smith writes for the Medill News Service.

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