In an effort to minimize increasing fulfillment costs, fund companies have been combining multiple fund prospectuses into a phone-book-sized "one-size-fits-all" document distributed in a single mass mailing. What began as a noble effort to inform investors and protect them has resulted in "investor disclosure" that is costly, wasteful and confusing. As the industry moves toward greater transparency in mutual fund sales transactions and standardization of information, a central need has been simplicity.

After more than a decade of effort by the fund industry and the U.S. Securities Exchange Commission (SEC), the answer is on the horizon. On November 21, 2007, the SEC announced a proposed rule for a shorter, simpler, standardized prospectus that would tell investors what they need to know within 3-4 pages and provide Web access to more detailed information if desired. The stated goal is to provide the average investor with clear, succinct information and also to standardize information to facilitate fund-to-fund comparisons. In the subsequent months, the rule has received over 90% favorable commentary and has been endorsed by the Investment Company Institute (ICI).

A study by Forrester Consulting -- commissioned by NewRiver, Inc. -- also revealed strong industry support of a streamlined "short-form" prospectus. Forrester conducted an online survey of 150 companies that sell mutual funds and annuities and determined 95% would consider using the summary prospectus in lieu of the current statutory ("long-form") prospectus. According to the study, respondents recognized that the summary prospectus could provide significant savings and better ways to fulfill investor communications. Ninety-percent of respondents would consider combining the trade confirm with the summary prospectus into a single mailing to reduce postage costs and 86% would likely explore electronic delivery ?the most cost-efficient and "greenest" form of disclosure document delivery available.

The Proposed Rule The SEC抯 Proposed Release 33-8861 ("Enhanced Disclosure and New Prospectus Delivery Option for Registered Open-End Management Investment Companies") is designed to simplify investor disclosure by providing fund investors with an easier to read document and better enable "fund-to-fund" comparisons. The proposed rule includes two key components:

?Summary Prospectus ?Introduces a streamlined prospectus to be delivered to fund investors for mutual fund sales or confirmation in lieu of the current statutory prospectus. The Summary Prospectus could be delivered in print or electronically (with electronic consent), and would contain standardized information that must also appear at the front of the current statutory prospectus. Fund companies would also be required to make it available online.

?Layered Disclosure on the Web ?Introduces a layered approach to conveying fund information. Investors seeking more information than what is contained in the Summary Prospectus would be able to access it fast and efficiently online. Fund companies would be responsible for providing electronic versions of the statutory prospectus, statement of additional information, shareholder reports and supplements. All of this information would be required to be organized by individual fund (although separate share classes may be combined under a single fund).