SEC Improves Disclosure for Mutual Fund Investors:
The Securities and Exchange Commission today voted unanimously to improve mutual fund disclosure by requiring that funds provide investors with a concise summary — in plain English — of the key information they need to make informed investment decisions. The new summary prospectus will appear at the front of a fund’s prospectus.The Commission also approved amendments to encourage funds to make greater use of the Internet so investors can receive more detailed information in a way that best suits their needs.
More on the change from Reuters–“U.S. SEC adopts rules to improve fund disclosures.” Excerpt:
Almost half of the households in the United States use mutual funds to save for retirement or college tuition. But many consumers cannot understand the documents that fund firms such as Fidelity Investments or Vanguard are required to publish, detailing what will be done with their money.Nor do retail investors generally take the time to wade through the prospectuses, which often run hundreds of pages long.
The SEC’s rule requires mutual funds to include key information at the front of its statutory prospectus such as the fund’s investment objectives, strategies, risks and costs.
The summary prospectus also needs to include brief information about the investment advisers and portfolio managers, as well as the fund’s purchase and sale procedures and tax consequences.
The new SEC rules, which do not go into effect until 2010, will allow investors to access more detailed information via the Internet or from the traditional paper prospectus.