March 15, 2004
I generally favor more disclosure by fund companies including in the area of expenses and fees as addressed by this proposal. The type of data proposed for disclosure IS valuable. I believe the specific proposal, however, is ineffectual and a different approach should be taken.
Consider two trends:
At least some brokers are reducing the paper involved in reporting confirmations by combining multiple trades done the same day onto one page. I welcome this trend. The confirmation is critically important, although it is also desirable to use the least possible amount of paper.
On-line and telephone purchases and sales. How would the point-of-sale form in particular be implemented for on-line or telephonic transactions? Another screen of data? A required recitation by the broker over the phone? Furthermore, without relevant benchmark ranges the absolute data is difficult to interpret.
The result seems to be added transaction complexity and a volume of data that is likely to be ignored.
Some of the data on the forms is already in the prospectus. I believe that the SEC should require that the remaining data and accompanying definitions be added to the prospectus.
Perhaps fund managers and brokers should then be required to make available a short form showing all the same data on fees and expenses. Make viewing it optional on the part of the investor. An optional pop-up for on-line transactions can achieve this purpose. Do not clutter a short form with another page of fine-print definitions.