U.S. – SEC Modern Shareholder Disclosures

U.S. – SEC Modern Shareholder Disclosures

On 5 August 2020, SEC proposed to modernize fund shareholder reports.

  • SEC proposed to improve retail investor experience, by modernizing fund shareholder reports, disclosures; update mutual fund and ETF disclosures to retail investor needs.
  • Chair Clayton, commissioners Peirce, Roisman, Herren Lee issued statements on rule.
  • Feature concise and visually engaging shareholder reports, highlight information that is particularly important for retail investors to assess and monitor their fund investments.
  • Follows SEC 2018 review on retail investor experience of fund disclosure.

Streamlined Reporting

  • Require streamlined reports to shareholders that include relevant financial information.
  • On fund expenses, performance, illustrations of holdings, and material fund changes.
  • Significantly revised the content to better align disclosures with market developments.
  • Encourage funds to use more graphic or text features, such as tables, bullet lists, and question-and-answer formats, to promote effective communication.

Online Information

  • Promote layered framework by continuing to make available online certain information currently required in shareholder report but that is less relevant to retail shareholders.
  • This information would be filed on a semi-annual basis with the SEC, on Form N-CSR.
  • Includes for example, schedule of investments and other financial statement elements.

Ongoing Investments

  • Provide alternative approach to keep investors informed on ongoing fund investments.
  • New investors would receive a fund prospectus on initial investment in open-end fund, as now, but funds would not deliver annual prospectus updates to shareholders after.
  • Instead of receiving both prospectus updates, and shareholder reports, which can be lengthy and complex, existing investors receive the streamlined shareholder report.
  • Including summary section in the annual report of material change over the prior year.
  • Amend prospectus disclosure requirements to provide greater clarity and more consistent information regarding fees, expenses, and principal risks.
  • To improve fee- and expense-related information, amend investment company advertising rules to promote transparent, balanced statements on investment costs.
  • As part of proposal, SEC provided hypothetical streamlined shareholder report.


  • Comment period will be open for 60 days after pending publication in federal register.