(June 28) – “Is less more when you’re reading about your mutual fund?” writes Aaron Lucchetti in today’s Wall Street Journal.

“The Securities and Exchange Commission is considering a proposal that could simplify, but reduce, the information that fund companies are required to send out to shareholders, even as many investor groups are clamoring for more data.”

“The idea, still in its early stages, would affect the twice-yearly reports that fund companies mail to shareholders. Specifically, the SEC’s Division of Investment Management is looking at ‘streamlining’ these reports, said Paul Roye, director of the investment-management division, in an interview this week. ‘It’s one of the things we’re focusing on.'”

“Currently, the shareholder reports must include every stock and bond held by the fund, the number of shares the fund has and how much those shares are worth; it usually also includes management’s discussion of investment results. But SEC officials are wondering if fund investors would be more likely to read something shorter and less cumbersome, but more revealing in other ways.”

“‘Do shareholders want the actual portfolio? That’s something we’re struggling with,’ Mr. Roye said.”

“One option the SEC is considering: a report that summarizes top holdings and explains, with graphs and charts, how investment results were achieved, instead of a long listing of holdings that can be intimidating and not necessarily revealing to many investors. A ‘shorter and more succinct’ list ‘could be a more efficient way to reach shareholders,’ the regulator said. He noted that fund firms would still be required to dispatch a full list of holdings to any fund owner specifically requesting it.”

“But in an environment in which many investors think more disclosure, not less, is the way to go, the ideas of the nation’s top mutual-fund regulator are likely to find some opposition. ‘It would be a giant step backward,’ said H. Davis Nadig, cofounder of MetaMarkets.com, a South San Francisco, Calif., asset-management firm that releases its mutual-fund stockholdings in real time and has been pressing the fund industry to step up its disclosure.”

“The SEC will soon feel some heat on the subject. A former SEC official, Mercer Bullard, is planning to join a major financial-planners’ group to file a petition today requesting that the SEC require more frequent fund-holdings disclosure. Mr. Bullard, formerly assistant chief counsel of the Division of Investment Management, would like to see an SEC rule requiring funds to post their holdings monthly on the Internet. ‘If people are going to invest in mutual funds at all, disclosure is a big component in making informed decisions,’ said Mr. Bullard, who runs a Web site called FundDemocracy.com devoted to advocacy of fund-shareholder issues.”

“Mr. Roye said the division will consider the petition ‘in due course,’ but wouldn’t specify a timetable. On the general subject of requiring more frequent holdings disclosure, he said: ‘There are tensions there. There are some professionals [such as financial planners] who’d like to see more information’ from their funds. ‘The question is the cost-benefit’ of such a proposal and ‘how many people want it.'”