Participant Statements and Regulatory disclosure material

[Earl]

I, a TPA, am in partnership with a mutual fund company. I am producing participant statements. The fund company president wants the fund names on the participant statements to show the share class (there are 2 classes). He feels that to not do so would invite possible regulator inquiry regarding failure to disclose.

I think that the participant statements would not be looked at in that light and that the enrollment/education material is the germaine material to review for proper disclosure.

Would Participant statements be looked at as a Fund company disclosure item in this way?

Thanks for any lead or insight...

[Kirk Maldonado]

I think that simply mentioning the class would be insufficient for most plan participants, unless you also explain the difference between the classes.

I think that what class they belong to is a relevant consideration that participants should know when deciding whether or not to invest in that fund. Thus, I would vote for more disclosure.

[Earl]

Thank you for your reply.

My issue is with the Participant Statement being used for this disclosure. The decision to invest was made way before. The Participant Statement is only a report on the decisions. There is only one class available to the Participants so there is no decision process involved there.

I guess my question boils down to this:

Would regulators look at Participant Statement fund names as a disclosure item (wrt share class offered) when the statements are produced by an administration company that the fund company holds a minority interest in?

I am just trying to keep the names manageable for the statement. The fund company has "California" in the family name so I am in trouble from the start.

[Guest Lebowski]

If there are more than one class, I would state which class the statement pertains to. I don't have any regulatory guidance, but auditors will need the information for sampling at fiscal year end...not to mention that if different classes have different attributes making it important to know which asset the holder owns.

[Demosthenes]

Different share classes have very different attributes and it is unusual to have 2 classes of the same fund in a Plan. Let me guess, one class is an A share with a front end load and the other is a B share with a back end load? Hope the funds have the kind of performance neccessary to justify the loads.

But I digress, why not abbreviate the name and put the ticker symbol in the reports? For Example, Smith Barney Large Cap Value Class A is SBCIX and Class B is SBCCX.

[Earl]

wrt your digression: the funds are no load funds. only one class is available to 401k plans.

the class for 401(k) plans has a 12b1 to pay the admin co for bps that the transfer agent charges the admin co. to have the fund on a trading platform. the class that is for individual direct investors has no 12b1.

"Smith Barney Large Cap Value Class A SBCIX" on a Participant statement is what I am trying to avoid as there is too much space given to the wording.

1. The Participants should know what they are investing in before the Particpant statement is produced.

2. This does not respond to the original question regarding the character of Participant Statement as a fund company disclosure item and thus having requirements as such.

thanks.

[ljr]

It's my understanding the disclosure documents are the fund fact sheet and prospectus. I'd like tickers on participant statements since all the fund classes are confusing and this is the only way to make sure the participant is looking at the right fund in the newspaper. We abbreviate the fund names and at this point do not include the tickers. Someday!