Alert January 13, 2009

SEC Issues Adopting Release For Mutual Fund Summary Prospectus

The SEC has issued the formal release describing the disclosure reforms for registered open-end management investment companies (“mutual funds”) adopted at its open meeting on Wednesday, November 19, 2008.  These reforms (i) revise the disclosure requirements for the statutory prospectus currently used by mutual funds and (ii) create the new Summary Prospectus for use in mutual fund sales.  The release also describes amendments to SEC rules designed to provide more useful disclosure to investors who purchase shares of exchange-traded funds in the secondary market.  The revised disclosure requirements create a brief, self-contained presentation of key fund characteristics that must appear in the current statutory prospectus and will constitute the new Summary Prospectus.  Funds will be able to use the Summary Prospectus to satisfy certain prospectus use and delivery requirements under the Securities Act of 1933, as amended (the “1933 Act”), subject to several conditions that include providing investors access to the statutory prospectus and other fund documents via the Internet. 

Effective/Compliance Dates.  The effective date of the new requirements is March 31, 2009.  A mutual fund may choose to prepare documents in accordance with the new disclosure requirements at any time after this effective date.  If a mutual fund has complied with the new requirements, a Summary Prospectus for the fund may be used to satisfy prospectus use and delivery obligations provided related conditions in the reforms are satisfied.  The schedule for mandatory implementation of the reforms follows the usual practice for this type of disclosure initiative by providing an opportunity for the SEC staff to review and comment on the manner in which each fund complies with the new requirements.  All initial registration statements on Form N-1A, which dictates the contents of the mutual fund statutory prospectus, and all post‑effective amendments that are annual updates to effective registration statements on Form N-1A, filed on or after January 1, 2010, must comply with the new disclosure requirements.  All post-effective amendments that add a new series, filed on or after January 1, 2010, must comply with the new disclosure requirements with respect to the new series. The final date for filing post-effective amendments that comply with the new requirements is January 1, 2011.  Post‑effective amendments to existing registration statements filed to comply with the new disclosure requirements must be filed under 1933 Act Rule 485(a), which permits an effective date on the sixtieth day (the seventy-fifth day for a new series) after filing at the earliest (subject to acceleration at the SEC staff's discretion), prior to which time the SEC staff typically reviews and comments on the filing.  The Alert will provide a more detailed description of the adopting release in an upcoming issue.