1 See Memorandum to Accounting/Treasurers Committee No. 29-95, Money Market Funds Ad Hoc Committee No. 9-95 and SEC Rules Committee No. 84-95, dated July 25, 1995.
September 18, 1995
TO: ACCOUNTING/TREASURERS COMMITTEE No. 35-95
MONEY MARKET FUNDS AD HOC COMMITTEE No. 12-95
SEC RULES COMMITTEE No. 104-95
RE: DRAFT INSTITUTE LETTER ON MONEY FUND PROSPECTUS
SIMPLIFICATION PROPOSAL
______________________________________________________________________________
Attached is a draft of the Institutes comment letter on the SECs proposed amendments
to the disclosure requirements for money market funds, to allow such funds to provide
investors with a shorter, more readable document.1 The SEC also proposed several
amendments to the disclosure requirements applicable to all mutual funds. The letter reflects
the views expressed by members at the August 17th meeting at which this proposal was
discussed.
The letter generally expresses support for the proposed amendments to permit a
simplified money fund prospectus, the most significant of which include replacing the financial
highlights with a bar graph showing the funds total return for each of the last ten years and
permitting funds to describe themselves in their prospectuses with very general statements
about their investment objectives and portfolio composition, rather than a detailed discussion
of the particular securities in which they may invest. The letter recommends that these
amendments be extended to all mutual funds. The letter strongly opposes, however, the
proposed requirement that the bar graph reflect, by shading or other means, any capital gains
distributions made by the fund.
The letter expresses support for most of the other proposed changes to Form N-1A, but
with proposed modifications to several of the proposals.
Comments are due to the SEC by September 27th. Therefore, please provide me with
your comments on the draft letter by Friday, September 22, 1995. My direct number is
202/326-5824.
Amy B.R. Lancellotta
Associate Counsel
Attachment