SEC To Require Up-to-Date Mutual Fund Information

September 24, 2003 ( - The US Securities and Exchange Commission (SEC) will begin requiring mutual fund companies to provide current information about their returns through toll-free telephone numbers or on the Internet.

SEC board members approved the measure in addition to requiring more complete disclosure in mutual fund ads, designed “to encourage advertisements that convey balanced information to prospective investors, particularly with respect to past performance.”   The moves are part of an effort by the SEC to improve the flow of information, including data on performance and fees to mutual fund investors, according to an Associated Press report.

However, while the current information requirement is universal, the additional advertising disclosure applies only to those funds that tout their performance in ads.   Included in the disclosure will be advice to investors to consider the fees associated with a particular fund, their own investment objectives and that past strong performance does not guarantee future returns.

All of this comes as the SEC has applied the magnifying glass to the mutual fund industry.   Earlier this year, the governing body proposed new rules that would tighten internal controls within mutual fund companies and opened to public review the idea of creating a self-policing organization for the fund industry. Additionally, the five SEC commissioners acted to force mutual funds to tell investors how they voted on decisions at the companies whose shares they hold despite industry objections.