WASHINGTON--Consumer advisers to the Securities and Exchange Commission have expressed support for an agency plan to allow mutual fund companies to market their products using shortened prospectuses.
At the inaugural meeting last week of the SEC's Consumer Affairs Advisory Committee, several members said the so-called off-the-page prospectuses would help consumers choose funds by giving them concise information about fund performance, prices, and other key factors.
"I think this is a fascinating idea," said panel member David W. Hunter, a former chairman of the National Association of Securities Dealers. It appears from investor comments that "people will learn more than they do now," he said.
The proposal, which the SEC unveiled in May 1992, would allow mutual fund companies to sell funds through application forms in newspaper ads and direct mail. The SEC is expected to consider the plan this summer.
The ads would be required to contain specific disclosures on the investment objectives of the fund, as well as the risks, fees, and tax consequences of investing in the fund.
At present, fund companies can't close mutual fund sales until the investor has received a full-fledged prospectus, a process that can take several days.
Response to Concerns
The consumer advisory panel, made up of securities professionals, consumer advocates, and academics, was formed in March to help the SEC be more responsive to investor concerns.
Opening last week's meeting, SEC Chairman Arthur Levitt said he wanted the group to "take a good hard look at our day-to-day operations to see how we can better meet the needs of retail investors."
The SEC's prospectus proposal was opposed by the Consumer Federation of America's representative on the advisory panel.