Securities Lawyer's Deskbook                          published by The University of Cincinnati College of Law

Rule 498 -- Profiles for Certain Open-End Management Investment Companies

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1. Definitions.
   
   
   1. A Fund means an open-end management investment company, or any series of such a company, that has, or is included in, an effective registration statement on Form N-1A and that has a current prospectus under section 10(a) of the Act.
      
      
   2. A Profile means a summary prospectus that is authorized under section 10(b) of the Act and section 24(g) of the Investment Company Act for the purpose of section 5(b)(1) of the Act.
      
      
2. General requirements. A Fund may provide a Profile to investors, which may include, or be accompanied by, and application that investors may use to purchase the Fund's shares, if the Profile contains the information required or not precluded by paragraph (c) of this section and does not incorporate any information by reference to another document.
   
   

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   Instructions to paragraph (b).
   
   
   1. The Profile is intended to be a standardized summary of key information in the Fund's prospectus under section 10(b) of the Act. Additional information is available in the Fund's prospectus under section 10(a) of the Act, in the Fund's Statement of Additional Information under Form N-1A, and in the Fund's annual and semi-annual shareholder reports prepared in accordance with Rule 30d-1. [Editor's note: This section was redesignated as Rule 30e-1. See 66 FR 3734, 3759, Jan. 16, 2001.] Funds may not use cross-references in the Profile to other Fund disclosure documents unless required or permitted by this rule. Funds should minimize cross-reference and the use of footnotes within the Profile; cross- references and footnotes should generally be used only to promote a better understanding of the information about the Fund contained in the Profile.
      
      
   2. Provide clear and concise information in the Profile in a format designed to communicate the information effectively. Avoid excessive detail, technical or legal terms, and long sentences and paragraphs. Provide the information in the Profile using the plain English writing principles in Rule 421(d).
      
      
   3. A Fund may use document design techniques intended to promote effective communication of the information in the Profile unless inconsistent with the requirements of this section.
      
      
   4. A Profile may describe more than one Fund or class of a Fund. A Profile that offers the securities of more than one Fund or class of a Fund does not need to repeat information that is the same for each Fund or class of Fund described in the Profile.
      
      
   5. File the Profile with the Commission as required by Rule 497(k).

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3. Specific requirements.
   
   
   1. Include on the cover page of the Profile or at the beginning of the Profile:
      
      
      1. The Fund's name and, at the Fund's option, the Fund's investment objective or the type of fund or class offered, or both;
         
         
      2. A statement identifying the document as a "Profile," without using the term "prospectus";
         
         
      3. The approximate date of the Profile's first use;
         
         
      4. The following legend:
         
         This Profile summarizes key information about the Fund that is included in the Fund's prospectus. The Fund's prospectus includes additional information about the Fund, including a more detailed description of the risks associated with investing in the Fund that you may want to consider before you invest. You may obtain the prospectus and other information about the Fund at no cost by calling _____.
         
         
      5. Provide a toll-free (or collect) telephone number that investors can use to obtain the prospectus and other information. The Fund may indicate, as applicable, that the prospectus and other information is available on the Fund's Internet site or by E-mail request. The Fund also may indicate, if applicable, that the prospectus and other information is available from a financial intermediary (such as a broker-dealer or bank) through which shares of the Fund may be purchased or sold.
         
         

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         Instruction to Paragraph (c)(1)(v).
         
         When the Fund (or financial intermediary through which shares of the Fund may be purchased or sold) receives a request for the Fund's prospectus, the Fund's Statement of Additional Information, or the Fund's annual or semi-annual report, the Fund (or financial intermediary) must send the requested document within three business days of receipt of the request, by first-class mail or other means designed to ensure equally prompt delivery. Funds are encouraged to send other information requested by shareholders within the same period.
         

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   2. Provide the information required by paragraphs (c)(2) (i) through (ix) of this section in the order indicated:
      
      
      1. Fund objectives/goals. Provide the information about the Fund's investment objectives or goals required by Item 2(a) of Form N-1A.
         
         
      2. Principal investment strategies of the Fund. Provide the information about the Fund's principal investment strategies required by Item 2(b) of Form N-1A. In addition, a Fund (other than a Fund that has not yet been required to deliver a semi-annual or annual report under Rule 30d-1 under the Investment Company Act of 1940 [Editor's note: This section was redesignated as Rule 30e-1. See 66 FR 3734, 3759, Jan. 16, 2001.]) must provide disclosure to the following effect:
         
         Additional information about the Fund's investments is available in the Fund's annual and semi-annual reports to shareholders. In the Fund's annual report you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during the last fiscal year. You may obtain either or both of these reports at no cost by calling _____.
         
         
      3. Principal risks of investing in the Fund. Provide the narrative disclosure, bar chart, and table required by Item 2(c) of Form N-1A. Provide in the table the Fund's average annual total returns and, if applicable, yield as of the end of the most recent calendar quarter prior to the Profile's first use. Update the return information as of the end of each succeeding calendar quarter as soon as practicable after the completion of the quarter. Disclose the date of the return information adjacent to the table.
         
         
         

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         Instruction to Paragraph (c)(2)(iii).
         
         A Fund may reflect the updated performance information in this section of the profile by affixing a label or sticker, or by other reasonable means.
         

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      4. Fees and expenses of the Fund. Include the fee table required by Item 3 of Form N-1A.
         
         
      5. Investment adviser, sub-adviser(s) and portfolio manager(s) of the Fund.
         
         
         1. Identify the Fund's investment adviser.
            
            
         2. Identify the Fund's sub-adviser(s) (if any) except that:
            
            
            1. A Fund need not identify a sub-adviser(s) whose sole responsibility for the Fund is limited to day-to-day management of the Fund's holdings of cash and cash equivalent instruments, unless the Fund is a money market fund or other Fund with a principal investment strategy of regularly holding cash and cash equivalent instruments.
               
               
            2. A Fund having three or more sub-advisers, each of which manages a portion of the Fund's portfolio, need not identify each such sub-adviser, except that the Fund must identify any sub-adviser that is (or is reasonably expected to be) responsible for the management of a significant portion of the Fund's net assets. For purposes of this paragraph (c)(2)(v)(B)(2), a significant portion of a Fund's net assets generally will be deemed to be 30% or more of the fund's net assets.
               
               
         3. State the name and length of service of the person or persons employed by or associated with the Fund's investment adviser (or the Fund) who are primarily responsible for the day-to-day management of the Fund's portfolio and summarize each person's business experience for the last five years in accordance with the Instructions to Item 6(a)(2) of Form N-1A. A Fund with three or more such persons, each of whom is (or is reasonably expected to be) responsible for the management of a portion of the Fund's portfolio, need not identify each person, except that a Fund must identify and summarize the business experience for the last five years of each person who is (or is reasonably expected to be) responsible for the management of a significant portion of the Fund's net assets. For purposes of this paragraph (c)(2)(v)(C), a significant portion of a Fund's net assets generally will be deemed to be 30% or more of the Fund's net assets.
            
            
      6. Purchase of Fund shares. Disclose the Fund's minimum initial or subsequent investment requirements, the initial sales load (or other loads) to which the Fund's shares are subject, and, if applicable, the initial sales load breakpoints or waivers.
         
         
      7. Sale of Fund shares. Disclose that the Fund's shares are redeemable, identify the procedures for redeeming shares (e.g., on any business day by written request, telephone, or wire transfer), and identify any charges or sales loads that may be assessed upon redemption (including, if applicable, the existence of waivers of these charges).
         
         
      8. Fund distributions and tax information. Describe how frequently the Fund intends to make distributions and what options for reinvestment of distributions (if any) are available to investors. State, as applicable, that the Fund intends to make distributions that may be taxed as ordinary income or capital gains (which may be taxable at different rates depending on the length of time that the Fund holds its assets) or that the Fund intends to distribute tax-exempt income. If a Fund expects that its distributions, as a result of its investment objectives or strategies, primarily will consist of ordinary income or capital gains, provide disclosure to that effect. For a Fund that holds itself out as investing in securities generating tax-exempt income, provide, as applicable, a general statement to the effect that a portion of the Fund's distributions may be subject to federal income tax.
         
         
      9. Other services are available from the Fund. Provide a brief summary of services available to the Fund's shareholders (e.g., any exchange privileges or automated information services), unless otherwise disclosed in response to paragraphs (c)(2)(vi) through (viii) of this section.
         
         

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         Instruction to Paragraph (c)(2)(ix).
         
         A Fund should disclose only those services that generally are available to typical investors in the Fund.

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   3. The Profile may include an application that a prospective investor can use to purchase the Fund's shares as long as the application explains with equal prominence that an investor has the option of purchasing shares of the Fund after reviewing the information in the Profile or after requesting and reviewing the Fund's prospectus (and other information) before making a decision about investing in the Fund.

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      Instruction to Paragraph (c)(3).
      
      A Fund may include the application in a Profile or otherwise provide an application together with a Profile in any manner reasonably designed to alert investors that the application is to be considered along with the information about the Fund disclosed in the Profile.

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4. Modified Profile for certain funds.
   
   
   1. A Fund may modify or omit the information required by paragraphs (c)(2)(vi) through (ix) of this section for a Profile to be used for a Fund that is offered as an investment option for:
      
      
      1. A defined contribution plan that meets the requirements for qualification under section 401(k) of the Internal Revenue Code;
         
         
      2. A tax-deferred arrangement under section 403(b) or 457 of the Internal Revenue Code; and
         
         
      3. Variable contracts as defined in section 817(d) of the Internal Revenue Code.
         
         
   2. A Fund that uses a Profile permitted under paragraph (d)(1) of this section may:
      
      
      1. Alter the legend required by paragraph (c)(1)(iv) of this section to include a statement to the effect that the Profile is intended for use in connection with a defined contribution plan, another tax-deferred arrangement, or a variable contract, as applicable, and is not intended for use by other investors; and
         
         
      2. Modify other disclosure in a Profile consistent with offering the Fund as a specific investment option for a defined contribution plan, tax-deferred arrangement, or variable contract.
         
         
   3. A Profile used under paragraph (d)(1)(i) or (ii), but not paragraph (d)(1)(iii), of this section may include, or be accompanied by, an enrollment form for the plan or arrangement. The enrollment form does not need to be filed with the Profile under Rule 497.

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