The Securities and Exchange Commission unanimously approved a proposal Thursday to improve mutual fund disclosures by requiring fund companies to send short-form prospectuses to investors instead of longer, bulky paper prospectuses.

The shorter, summary version is intended to contain key information such as investment objectives, risk and return, costs and strategies, and be written in plain English.

In lieu of the longer printed version, a complete version will be available to investors on the Internet in a layered format that gets more specific depending on where you click. A full-length, printed version will be available to investors on demand, but won’t be sent to everyone automatically.

Proponents of this proposal say this move should save millions of dollars in printing and shipping fees for the lengthy, complicated documents that are largely ignored by consumers.

“This proposal is a giant step forward for investors,” said SEC Chairman Christopher Cox. “2008 will be a watershed year for interactive data.”

The Investment Company Institute applauded the SEC vote. “The Commission and its staff, under the leadership of Chairman Christopher Cox, have recognized that mutual fund investors overwhelmingly prefer information that is concise, straightforward, and focused on the issues most important to them,” said ICI President Paul Schott Stevens in a release. “Further, the Commission’s proposal reflects the power of the Internet to provide more detailed information to investors in a convenient way.”

The SEC will review public comments on the proposal before making its final decision.

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