Sunday, December 20, 2009


Last January the Securities and Exchange Commission enabled mutual-fund companies to begin sending a summary prospectus to their investors, rather than the full-blown prospectuses that they had previously received. As anyone who has invested in mutual funds knows, these prospectuses regularly arrive in the mail. And, as the vast majority of investors also know, the prospectuses almost invariably remain unread, resulting in reams of paper and postage wasted on a service that isn't used.

Given some high-profile investment meltdowns and scams during the past couple of years, investors should expect to receive and should be expected to pay attention to comprehensible information about the stuff in which they're investing. Most don't, though. Is it right for the SEC to continue to require these companies to regularly send these paper documents? Or is it wrong to require mutual-fund companies to send the prospectuses if few recipients read them?

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Jeffrey L. Seglin, author of The Right Thing: Conscience, Profit and Personal Responsibility in Today's Business (Smith Kerr, 2006), is an associate professor at Emerson College in Boston, where he teaches writing and ethics. He is also the administrator of The Right Thing, a Web log focused on ethical issues.

Do you have ethical questions that you need answered? Send them to or to "The Right Thing," New York Times Syndicate, 620 Eighth Ave., 5th floor, New York, N.Y. 10018.

c.2009 The New York Times Syndicate (Distributed by The New York Times Syndicate)


jennie said...

Jeff, it is mutual fund companies’ responsibility to provide financial details in prospectuses/reports; regardless how many investors actually pay attention to them. I think SEC should require mutual fund companies to disclose the information. Investors have the choice of receiving prospectuses/reports either by mail or electronically. If they are concerned about the waste, they should sign up for e-delivery.

Susan H. said...

Well, as someone who has received the half inch or more thick documents and allowed them to pile up without reading them (which of course, I do eventually recycle!), I am all in favor of summaries going out to investors. God bless you, Chris Cox, for this! Of course, with the summary, should be (and I think is) the offer of a more in-depth look at the investments, if the investor wants it or needs it.
Summaries do help save paper, but the never-ending hullaballoo about paper is really quite unneccessary, because trees are a renewable resource when managed well. Pure wastefulness is not acceptable, of course, no matter how abundant a resource is. But, summaries of prospectuses should not be considered wasteful. It is in the court of the investor to decide if he wants to read them or not, but the companies should continue to provide them unless the investor simply wishes to opt out (not recommended!), but again, this should be his/her choice, if possible.

Anonymous said...

Nice post & nice blog. I love both.

Anonymous said...

Email is the way to go or possibly a CD, if requested. This huge bound book that I receive is not being utilized for the energy that it took to produce it. Also, not all the information pertains to me. Total waste. Let's push this to eventually being paperless and go website/email/CD.

Anonymous said...

Keep posting stuff like this i really like it