SEC Proposes More Mutual Fund Reporting

December 11, 2002 ( - The Securities and Exchange Commission (SEC) has proposed new regulations to give investors more up-to-date information on mutual fund holdings and expenses.

Available for public comment for 30 days, the  new regulations would require mutual funds to disclose their holdings to the SEC each quarter, with a 60-day lag, and make the same information available to investors on request.  Current regulations only require semi-annual portfolio holding disclosure with a 60-day lag.

Additionally, the new proposals will allow mutual funds to provide only a summary of current holdings in semiannual shareholder reports. However, the complete information must be available through either the fund or the SEC Web site.  Graphics or tables showing portfolio holdings would accompany written descriptions, allowing investors to see holdings at a glance.

Money market and index funds would be exempt from such reporting; provided they deliver holdings information on request.

Other provisions of the proposal would require fund managers to provide key factors affecting the fund’s prior-year performance and a requirement for funds to report actual fund expenses in semiannual reports in terms of dollar and cents.

Current fund prospectuses merely provide hypothetical examples of expense based on a $10,000 investment.   The new proposal would require funds to display actual dollar cost for a $10,000, in addition to the impact the fees have on investments in a standardized 5% return.

The SEC said this provision would provide a standard calculation and more information to investors when comparing mutual fund expenses.

Comments concerning these proposals should be received by the Commission within 30 days of their publication in the Federal Register