The mutual fund industry has been slow to adopt the summary or "profile" prospectus in part because of a desire to make salespeople indispensable.

The SEC approved new rules, which went into effect in July, that permit companies to use profile prospectuses. Through last month, however, it appeared that only about 150 out of more than 10,000 funds have filed plans with the SEC to use profile prospectuses, according to the SEC.

The profile runs approximately four pages and describes the fundamentals of a fund including its investment objective, expenses and performance. A complete prospectus usually exceeds 20 pages. Use of the profile is optional.

Mutual fund executives, consultants, lawyers and regulators cite a variety of reasons for the slow acceptance of the profile. Fund companies whose products are sold through intermediaries are not interested in using a summary prospectus because they want salespeople to have to interpret the full prospectuses for customers, executives said. Fund companies are also concerned about the increased likelihood of getting sued for using a shortened prospectus. And, unlike traditional prospectuses, the profiles must be updated quarterly, a task which some companies view as cumbersome and costly.

Even the Vanguard Group, the nation's second-largest fund company and a participant in an SEC pilot program for the profile, has decided not to use the shortened prospectus, said John Woerth, a Vanguard spokesperson.

"We just didn't see from a cost standpoint that it made sense," Woerth said.

Vanguard already has simplified its prospectuses and included a summary on the first two pages of these documents, Woerth said. The addition of a profile to the newly revised prospectus represents "an expense without much more value added," he said.

Ever since the rules for the profile document were proposed in 1997, mutual fund industry lawyers have expressed concerns about liability that could arise from their use. Lawyers are uneasy because they fear that shareholders will claim that the shortened prospectus omits facts about which they should have been informed before investing. A fund which fails to state a significant fact to an investor violates state and federal securities laws.

The disadvantages of the profile are not deterring everyone, however. American Century Investments already has sent more than 340,000 profile prospectuses to potential investors and will adopt profiles for all 65 of its retail funds, said Roberta Laughlin, manager, shareholder communications.

Profiles aid investors in understanding a fund, Laughlin said. If they become more widely adopted, profiles whose presentation is highly standardized under SEC rules also will make it easier for investors to compare funds, Laughlin said.

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