The SEC voted unanimously last Tuesday to adopt measures to improve the transparency of mutual funds and variable annuities. Beginning Dec. 5, all funds must now disclose what risks, if any, market timing poses for their funds, as well as reveal in their fund prospectuses whether their board has adopted rules against market timing. Should a board have decided such rules are not necessary, it must spell out its reasons why.

If a fund or variable annuity allows frequent purchases or sales of its funds, it must describe the details of such arrangements in its statement of additional information. In addition, funds must also explain when and how they apply fair value pricing, and whether they selectively reveal their holdings to any shareholder.

"We're following a very simple precept here," said SEC Commissioner Cynthia Glassman. "If you disclose to one, you disclose to all." The Commission is trying to "shed some light on what has proved to be a dark and dingy corner of the mutual fund industry," added SEC Chairman William Donaldson.

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