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This page was last updated on January 10, 2001. Articles by Fund Democracy: Archives Letter to Mutual Funds Magazine (Dec. 22, 2000) In its January 2001 issue, Mutual Funds magazine questioned the advisability of requiring mutual funds to disclose their portfolios more frequently. As discussed in the following response, the magazine's own investment advice to readers makes the best case for improved disclosure: investors need more information to be able to make informed investment decisions. Dear Sir/Madam: I was surprised to read in your January issue that you "disagree" that "investors have a right to fresher information on what their funds own." Ironically, your own investing tips in the same issue make a strong case for requiring more frequent portfolio disclosure. In your "How to Hold Funds Wisely" column, your advice to readers is to "monitor" funds that have had a good run "more closely," "monitor your fund's cash allocation," and check your fund's holdings to ensure that they still reflect your asset allocation plan. How can investors do this with portfolio information that is up to eight months stale, which is as fresh as current rules require that it be? Your view also conflicts with the judgment of diverse groups representing tens of millions of shareholders who have petitioned the SEC to require monthly disclosure of fund portfolio holdings. These groups include the AFL-CIO, the National Association of Investors, ten consumer groups, my advocacy group Fund Democracy, and the Financial Planning Association, the trade group for 30,000 certified financial planners. These groups recognize that more frequent disclosure is necessary for investors to make informed investment decisions, and to deter portfolio pumping and window dressing (these are forms of portfolio fraud that are currently being investigated by an SEC task force). You suggest that the marketplace should decide how often funds disclose their portfolios. Determining when the government should step in and make choices for consumers is always a difficult question. But it shouldn't be a difficult decision simply to require funds to provide the information that investors need to make informed decisions about where best to invest their hard-earned money. Sincerely, Mercer Bullard
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