In a long-awaited move, the Securities and Exchange Commission Tuesday approved rules requiring mutual fund companies to tell investors about any market-timing in their funds as well as regulations about fair-value pricing of funds and disclosing their portfolio holdings. Market-timing, the rapid buying and selling of fund shares, isn't technically illegal, but some funds say they prohibit it in their prospectuses. Last fall, a series of revelations about market-timing badly shook the $7.5 trillion mutual fund industry and left the practice widely discredited. The total costs of undisclosed market-timing arrangements at a slew of mutual fund companies hasn't been accurately tallied, but some estimates suggest longer-term investors saw the value of their shares diluted by billions of dollars. The rules take effect Dec. 5 and mark the first stage of the regulatory and legislative cleanup of the mutual fund industry, as well as the variable annuities business, which uses insurance products to invest in a manner similar to mutual funds. An SEC statement said the new rules were "designed to improve transparency of policies and procedures of mutual funds and variable insurance products with respect to market timing." "I think these are positive steps in the right direction," said Kunal Kapoor, director of mutual fund research at Morningstar. "But these are just the first steps, and the SEC needs to tackle some of the tougher questions." The new regulations will require a mutual fund to describe in its prospectus the risks of market-timing to other shareholders and state whether the fund's board of directors has adopted policies and procedures with respect to frequent purchases and redemptions of fund shares. If no policy exists, the fund will have to explain why. Funds must also describe polices for deterring and discouraging market-timing. Sellers of variable annuities must do the same.