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Prospectus Disclosure and Delivery Requirements § 4:4.1§ 4:4 Prospectus UpdatesA fund must annually update its statutory prospectus and SAI byamending its registration statement. It may also have to makeprospectus and SAI updates at other times during the year, eitherby formal amendment to the fund’s registration statement or by“supplement” to the prospectus or SAI.§ 4:4.1 Annual Amendment of the RegistrationStatementThe need for an annual amendment to a fund’s registrationstatement arises from section 10(a)(3) of the 1933 Act, which providesthat when a prospectus is used more than nine months after theeffective date of the registration statement of which it is a part,the information in the prospectus must be as of a date not morethan sixteen months prior to the date of use. For this purpose, theSAI is also considered to be a “prospectus.”[A]Information to Be UpdatedOnce a fund is in regular operation, every prospectus includesaudited financial highlight information for its latest full fiscal year,and every SAI includes or incorporates by reference audited financialstatements for that year. Thus, as a practical matter, the financialinformation in its prospectus must be updated annually, within fourmonths after the end of its fiscal year. 28 Because this is highly materialinformation and involves the filing of accountants’ consents, theupdated financial statements must be added by post-effectiveamendment to the fund’s registration statement rather than bythe prospectus supplement method described below.To avoid liability under the 1933 Act for material misstatementsand omissions in an annual amendment to a fund’s registrationstatement, all of the other information in the registration statementmust also be reviewed and updated as necessary. Much of this processis routine, to include information previously provided by specialsupplement, to add new and amended agreements as exhibits, andto update a variety of information such as information about feesand expenses; new or revised portfolio management techniques andinstruments; changes relating to officers, directors and portfolio28. Although prospectuses also normally include other dated information thatmay become “stale” earlier than the financial statements, the financialstatements are generally accepted as the relevant item.(Mutual Fund Reg., Rel. #9, 6/11)4–29