SEC permits mutual funds to use a summary prospectus and updates statutory prospectus requirements

The purpose of this paper is to examine SEC rule amendments that permit a mutual fund to use a three‐ or four‐page “summary prospectus” to satisfy statutory prospectus delivery obligations and amendments to a fund's statutory prospectus requirements that require key information in a standardized order at the front of the document.

The approach is to explain the SEC's regulatory changes to the basic mutual fund disclosure documents designed to help investors choose among the more than 8,000 mutual funds.

The investing public's use of the internet for fund research and fund transactions has made it possible for the SEC to take a “layered” approach to disclosure documents, providing an investor with a short‐form document and making available more detailed information on fund web sites. The SEC will likely follow suit with other documents and updated compliance requirements.

The paper will assist fund legal counsel and compliance professionals: to comply with the new statutory prospectus requirements; and to determine whether the summary prospectus is an appropriate disclosure document for a particular fund.