In the five years since the SEC enacted its Rule 498 to allow mutual funds to issue summary prospectuses, the majority have adopted it. Investors have benefitted from receiving four- or six-page documents in plain English, with links to the full information on their fund company's website, rather than long, jargon-filled traditional prospectuses.

Many firms manage the distribution of these summary prospectuses and upkeep of the related websites in-house via a painstaking manual process. However, these firms may not be aware of how much this effort is costing them and whether they are truly complying with Rule 498 and delivering a positive investor experience.

To address these challenges, firms should consider the following actions:

* Managing swift technology change and investor expectations to receive digital content on mobile devices.

* Monitoring filing updates on EDGAR and ensuring documents sent to investors match what is on the website.

* Re-checking SEC Rule 498 requirements for summary prospectus delivery and website maintenance.

* Performing a cost/benefit analysis to determine if handling summary prospectus in-house still makes fiscal sense.


According to a May 2014 report by Ignites Distribution Research, of the 15 largest managers of long-term mutual funds and ETFs, 93% now offer some type of mobile access, either a mobile-optimized website or a mobile app. This is up from 80% of the top 15 last year.

Unfortunately, the rest of the fund channel is not adapting as quickly. According to our recent assessment of 34 mid-size funds that manage summary prospectuses in-house, 84% had issues with their public websites regarding document accessibility and display.

If technology adoption is not done timely and effectively, the investor vantage via a mobile device will not match the desktop user's web display. That's a bad customer experience and potential compliance risk should the SEC update Rule 498 requirements to include mobile devices.

Another layer of complexity lies in quality assurance and continuous process improvement. Best practices also dictate that firms track whether investors are accessing their site from mobile devices or from desktop computers. This ensures that their websites will continue to meet the visual display needs for their customers' preferred devices.


The volume of updates required industry-wide on a daily basis can be staggering and makes the process costly and difficult to manage manually. On average, new filings on EDGAR affect nearly 4% of all mutual fund, ETF and variable products each day, according to our research. On the busiest day, filing changes on EDGAR affect 20% - representing over 8,100 funds.

Updating a fund's public website with the most recent EDGAR filings poses several challenges. If done in-house, the firm needs to make certain the document it posts is the most recent filing on EDGAR and that there is consistent presentation to customers in all channels.

When there is a new filing on EDGAR, the firm needs to be able to update the public website the next business day, or in a timely manner, ensure that all the supplements associated with the fund CUSIP are available online and that they are associated with the correct fund.

A fund company's in-house team also needs to be able to meet Summary Prospectus Rule requirements while ensuring the website is available 24/7. Such requirements include free, direct access to all of a fund's disclosure documents; the ability to move within two clicks between the summary prospectus and other documents; and the ability to deliver requested documents, by paper or email, within three business days.


Since the implementation of the summary prospectus, it's worth asking if your approach is cost-effective, compliant and investor friendly. Some things you can include in your cost-benefit analysis:

* Confirm you are meeting all requirements of Rule 498.

* Maintain documents, coordinate with legal and marketing to ensure documents mailed are the same as posted on the website.

* Check documents to make sure they reflect the latest filings on EDGAR.

* Ensure consistency of document delivery across all customer-facing media: print fulfillment, e-delivery and web display.

* Post the latest SEC filings promptly online - within one business day is ideal.

* Apply linking and layering methodology to all existing documents and new filings, and run quality assurance tests as changes are made, as well as periodically.

* Have the IT group track new web browsers and devices to make sure your website displays properly on these, and all functionality works and continues to be compliant.

* Have redundant, stable servers and a disaster recovery plan in place should the servers go down.

It also makes sense to conduct a cost-benefit analysis to see if your firm is better served outsourcing this time-consuming, manual process.

Gavin Long is product manager at Broadridge Financial Solutions and member of the Insured Retirement Institute's Research Committee. 

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