8.31.2008 The Investment Company Institute (the “ICI”), the trade group for the mutual fund industry, has posted a comment letter addressed to the SEC regarding the SEC’s focus group used in conjunction with the mutual fund prospectus delivery and disclosure proposal. In general, the ICI reiterated its strong support for the SEC's proposal to permit funds to provide investors with a summary prospectus, and make additional information available on the Internet or upon request. Additionally, the ICI urged the SEC to move forward as soon as possible.

The letter reviewed the findings of a recent SEC focus group survey on the new prospectus. Focus group participants were generally in favor of the concept of providing investors with a streamlined disclosure document and making more information available online and upon request. They were able and willing to use the Internet to access additional investment information, including quarterly updates of performance and portfolio holdings information. The ICI disagreed with one conclusion drawn from the focus groups that top ten portfolio holdings should be disclosed in the summary prospectus.

The results from the SEC's focus groups included the following findings, among others:

  • 94% percent of investors generally supported the concept of receiving a short-form prospectus, so long as additional information is available upon request. Some focus group participants viewed the short-form document as a tool in determining whether or not to pursue additional research about a given fund.
  • 90% of people who purchased mutual funds in the last five years have Internet access;
  • 54% reported using the Internet to make investment decisions; and
  • participants generally agreed that they would like to see performance information updated at least every six months or quarter, and there was virtually unanimous willingness to obtain such results on the Internet.

Click http://www.ici.org/new/08_sec_prospectus_disc_com.html#TopOfPage to access the letter.