Prospectus Requirements

When selling mutual funds and variable products, you must ensure customers receive proper disclosure documents. The prospectus is the primary disclosure document, and understanding delivery requirements is critical for Series 6.

What is a Prospectus?

A prospectus is a legal document that provides material information about a security being offered for sale. It includes:

• Investment objectives and strategies
• Risks of investing
• Fees and expenses
• Past performance
• Management information
• How to buy and sell shares

Types of Prospectuses

Statutory (Full) Prospectus

The statutory prospectus is the traditional, comprehensive disclosure document. It contains:

• Complete information about the fund
• Detailed financial statements
• Legal disclosures
• Often 50+ pages

Summary Prospectus

Since 2010, mutual funds and ETFs can use a summary prospectus to meet delivery requirements. Key features:

The summary prospectus must include:

• Investment objectives
• Fees and expenses (fee table)
• Principal investment strategies
• Principal risks
• Performance information
• Investment adviser information
• Purchase and sale information
• Tax information

Statement of Additional Information (SAI)

The Statement of Additional Information (SAI) expands on the prospectus with additional details:

• More detailed financial information
• Fund policies and procedures
• Directors and officers information
• Brokerage allocation policies

Important: Funds must provide the SAI only upon request — it does not need to be delivered automatically like the prospectus.

Prospectus Delivery Rules

Timing of Delivery

Mutual Funds: Prospectus must be delivered at or before the time of sale (confirmation of purchase).

Variable Annuities/Life: Prospectus must be delivered before or at the time the application is signed.

Methods of Delivery

Prospectuses can be delivered:

• In paper form (mailed)
• Electronically (with customer consent)
• Via summary prospectus with access to full prospectus online

Website Posting Requirements (2025 Update)

Funds using a summary prospectus must post online:

1. Current summary prospectus
2. Full statutory prospectus
3. Statement of Additional Information (SAI)
4. Most recent annual and semi-annual shareholder reports

The website must:

• Be specified in the summary prospectus
• Lead directly to the documents (not just a homepage)
• Allow permanent electronic retention of documents
• Be free of charge to access

Linking Requirements

Electronic documents must provide links between:

• Summary prospectus sections and related statutory prospectus sections
• Summary prospectus and SAI sections with additional detail

This allows investors to easily navigate between documents for more information.

Key Points for the Exam

Sales Literature vs. Prospectus

Remember the distinction:

• Prospectus = Required legal disclosure document
• Sales literature = Supplemental marketing materials

Sales literature can never replace a prospectus, and any claims in sales literature must be consistent with the prospectus.