SEC Requires Tailored Shareholder Reports And Amends Fund Advertising Rules

Recently, the U.S. Securities and Exchange Commission (SEC) adopted rule and form amendments for registered open-end funds (Final Rules) that will substantially change the form and content of fund shareholder reports. The SEC also adopted related amendments to the fund advertising rules. Effective January 24, 2023, the Final Rules reflect the SEC's ongoing effort to require funds to provide clear and concise disclosures to shareholders, particularly retail shareholders. Notably, a fund must prepare and deliver shareholder reports that are specific to each share class of a single fund. Such reports are expected to be as short as three or four pages. Expanding on the SEC's approach to layered disclosures, the Final Rules also require that more detailed information must be available online or by request. The new streamlined and tailored reports are intended to help retail investors monitor their fund holdings more easily.