State Street Research and Management Company moved this month to put its mutual fund prospectuses into "plain English."
The company issued a simpler, more readable prospectus for its Equity Income Fund about two weeks ago and will introduce the streamlined documents for its other 17 funds as their fiscal years end, said C. Troy Shaver Jr., executive vice president.
The legalese in prospectuses has baffled investors for years, Mr. Shaver said. "You can boil it down to this: There is plain English and there is legal English." The fact that 45% of U.S. households own stocks, bonds, and mutual funds illustrates the need for simpler prospectuses, Mr. Shaver said.
"I call it an owner's manual," he said, adding that if the investor can understand what he or she owns, they will likely hold their position longer.