SEC Proposes Use of Summary Prospectus and Other Changes Designed to Enhance Prospectus Disclosure

February 06, 2008
Mutual funds may soon be permitted to provide key information directly to investors in a “summary prospectus” and make the statutory prospectus and certain other information available on an Internet web site in satisfaction of their prospectus delivery obligations under the Securities Act of 1933, as amended. On November 21, 2007, the U.S. Securities and Exchange Commission (the “SEC”) issued a release (the “Proposing Release”), proposing rule, and form amendments (“Proposed Rules”) that would permit these changes and also require each fund to provide key investment information in plain English in a standardized order at the front of the statutory prospectus, using the same format as the summary prospectus. The Proposed Rules appear to serve the intended purpose of both enhancing disclosure and giving investors a choice in the format and quantity of information they would like to receive before making an investment decision. Comments must be received by February 28, 2008. This article analyzes the Proposed Rules.