Householding Rules, Preventing Duplicate Copies of Prospectuses and Mutual Fund Reports

Investors today often own securities through a variety of individual and family accounts. As a result, investors sometimes receive multiple copies of the same documents. To avoid the distribution of duplicate copies, the SEC adopted what are known as "householding rules."

Under the householding rules, companies and mutual funds may deliver a single prospectus, annual and semi-annual reports, and proxy and information statements, to investors who reside at the same address.

The householding rules are voluntary for companies and mutual funds. The rules permit implied consent with respect to investors with the same last name or who are reasonably believed to be members of the same family-meaning that the fund or company may assume the investor would opt to household unless informed otherwise. Relying on implied consent, funds and companies must send a notice of householding to investors 60 days before householding can begin, and the notice must be mailed separately or bear a prominent legend on the envelope. Investors receive an annual reminder of their ability at any time to revoke consent.

For more information about householding, you can read the SEC final rules, Delivery of Disclosure Documents to Households and Delivery of Proxy Statements and Information Statements to Households.

In January 2007, the SEC amended its proxy rules to allow issuers to furnish proxy materials to shareholders by posting them on an Internet website. Shareholders must be provided with notice of this availability. Issuers may household this notice pursuant to Rule 14a-3(e) of the Securities Exchange Act of 1934. Issuers may use this “notice and access” model beginning on July 1, 2007. In a separate release, the SEC proposed further amendments that would require that issuers use the notice and access model.