The Financial Markets Authority recently announced another round of consultation on the issue after receiving a large amount of feedback from securities issuers and fund managers on its draft guidance note.

Pathfinder Asset Management, in a joint submission with fellow boutique manager PIE Funds, said that in its current form the guidance note would be a "financially crippling burden" for boutiques, and that the FMA should focus its attention on investment statements because these are the documents that actually get read.

"We agree that the prospectus and investment statement can in theory be accessed by the same audience. However, in our experience in relation to managed funds a copy of the prospectus is rarely (if ever) obtained or
read," the submission said.

It said there was a "complete lack of interest" from both institutional and retail investors.  For example, of the documents Pathfinder has distributed for its Commodity Plus Fund, 97% have been investment statements and only 3% prospectuses.

"The reasons that prospectuses are so seldom relied on in the fund management industry are well understood. The prospectus format is complex, illogical and virtually impenetrable even to an experienced reader," the submission said.

"Attempting to bring sanity and clarity to an unstructured document (the prospectus) is a near impossible task. It is also a pointless exercise given how little it is read and relied on by investors."

"The FMA's focus should be on introducing useful information from the prospectus into the investment statement. A prospectus can often include information that is not (and in our view should be) included in the investment statement."

Pathfinder executive director John Berry told Good Returns he was pleased the FMA had responded to concerns raised in the submission process.