Home / Markets / Industries / Finance

Wednesday, November 19, 2008

SEC Approves New Disclosures for Mutual Fund Investors

Dunstan Prial

FOXBusiness

The Securities and Exchange Commission on Wednesday voted unanimously to require mutual funds to provide investors with a concise summary written in easily understood language of each fund’s methods and goals.

The new summary will appear at the front of a fund’s prospectus, according to and SEC statement.

The SEC also encouraged funds to make greater use of the Internet so investors can “receive more detailed information in a way that best suits their needs,” the statement read.

“Today’s action will help mutual fund investors more easily obtain the key information they need – such as the description of the fund’s investment objectives and strategies, fees, risks, and performance,” SEC Chairman Christopher Cox said in the statement.

“The summary prospectus will quickly give investors a basic understanding of the fund and will permit them readily to compare one fund to another. Investors will also have access to more searchable information about mutual funds on the Internet – an important improvement in their ability to comparison shop.”

The changes will require every mutual fund to include key information at the front of its statutory prospectus related to the fund’s investment objectives and strategies, risks, and costs.

The summary will also include brief information regarding investment advisers and portfolio managers, purchase and sale procedures, tax consequences, and financial intermediary compensation.

Funds will be required to provide the summary information in “plain English” and in a standardized order.