ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Tuesday, March 4, 1997 TAG: 9703040004
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
In an effort to make mutual funds easier to understand, the Securities and Exchange Commission agreed to accept public comments on proposed changes in disclosure requirements for the popular investments.
The market watchdog commission voted 3-0 on Thursday to take the next step in pushing the proposals, which it started developing 21/2 years ago with the mutual fund industry.
The public will have 90 days to submit written comments on the proposals, which SEC Chairman Arthur Levitt Jr. described as the most sweeping revisions of mutual fund disclosure rules in 14 years.
They ``will be a catalyst for change throughout the fund industry,'' Levitt said before the vote.
Barry Barbash, director of the SEC's Division of Investment Management, called the proposals ``a complete overhaul'' of mutual fund disclosure requirements that would, among other things, clear away the technical ``clutter'' that fills traditional, bulky prospectuses.
Under the plans, unveiled by Levitt on Tuesday, potential investors would receive new, shorter summaries outlining the risks, performance and investment style of mutual funds. For the first time, funds would be allowed to be sold without first giving investors the traditional prospectuses. Investors would get a shorter summary profile and would receive detailed prospectuses after buying fund shares.
Besides the new profile documents, the SEC is proposing:
*A rewrite of the prospectus document to make it simpler for both investors and mutual fund companies. It will use plain English and include a new summary of the risks and return of a fund.
*Another rule intended to prevent mutual funds from misleading investors about investment objectives and risks. That rule would require funds with a name suggesting a particular type of investment to allocate at least 80 percent of their money accordingly. For example, a Japanese bond fund must have 80 percent or more of its money in Japanese bonds.
An estimated 63 million Americans now invest in more than 6,270 mutual funds, which had combined assets of $3.54 trillion in December.
WRITTEN COMMENTS
can be sent to the Office of the Secretary, U.S. Securities and Exchange Commission, 450 5th Street, N.W., Washington, D.C. 20549.
LENGTH: Medium: 52 lines KEYWORDS: 3DAby CNB