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Portfolio > Mutual Funds

Disclosures Should Be Online, Easy To Read

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The Securities and Exchange Commission has voted to propose improvements in mutual fund disclosure. The proposed rules would require that all mutual fund investors receive a clear, concise summary of key information needed to make an informed investment decision and would encourage funds to use the Internet to allow investors to choose the format in which they receive more detailed information.

“The core of the proposal is a concise, plain English summary of key information about a mutual fund’s investment objectives and strategies, costs and risks, with more detailed information available both in paper and in a user-friendly online format,” says Andrew J. Donohue, director of the commission’s division of investment management.

Industry leaders have supported the SEC’s proposals. The SEC has “recognized that mutual fund investors overwhelmingly prefer information that is concise, straightforward, and focused on the issues most important to them,” explains ICI President Paul Schott Stevens. “Further, the Commission’s proposal reflects the power of the Internet to provide more detailed information to investors in a convenient way.”

“As a leader in candid, ‘plain talk’ shareholder communications, Vanguard supports the concept of a summary prospectus,” explains Heidi Stam, managing director of legal affairs at Vanguard. “The summary prospectus has the potential to provide critical, high-level fund information in a reader-friendly format to investors, and we look forward to formally commenting on the proposal.”

Janet Levaux is the managing editor of Research; reach her at [email protected].


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