From
the SEC website
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.
“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,” said SEC Chairman Christopher
Cox. “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.”
Andrew
J. Donohue, Director of the SEC’s Division of Investment
Management, added, “Many investors often find current fund
prospectuses to be lengthy, legalistic and confusing. This mutual
fund disclosure framework will provide information that is easier
to use and more readily accessible, while retaining the comprehensive
quality of the mutual fund information available today.”
Specifically,
the Commission adopted the following improvements to mutual
fund disclosure:
Summary
Information at the Front of the Prospectus
The Commission adopted amendments to Form N-1A, the registration
form for mutual funds, to require that every mutual fund include
key information at the front of its statutory prospectus about
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.
New
Prospectus Delivery Option for Mutual Fund Securities
The Commission adopted a new rule that permits sending a summary
prospectus to satisfy prospectus delivery requirements provided
that the mutual fund’s summary prospectus, statutory prospectus,
and other specified information are available online. The summary
prospectus must have the same information in the same order
as the summary at the front of the statutory prospectus. In
addition:
The
online materials must be in a user-friendly format that permits
investors and other users to move back and forth between the
summary prospectus and the statutory prospectus. This will allow
investors and others to efficiently access particular information
that is of interest to them.
Investors have to be able to download and retain an electronic
version of the information.
The statutory prospectus and other information must be provided
in paper or by e-mail upon request so investors can choose the
format in which they receive more detailed information.
The rule changes are effective on Feb. 28, 2009, and funds must
begin complying with the form changes on Jan. 1, 2010. The full
text of the Commission’s new disclosure requirements will
be posted to the SEC Web site as soon as possible.
