Posted on Thursday, November 5, 2020

The Securities and Exchange Commission published a rule proposal to the Federal Register, Tailored Shareholder Reports, Treatment of Annual Prospectus Updates for Existing Investors, and Improved Fee and Risk Disclosure for Mutual Funds and Exchange-Traded Funds; Fee Information in Investment Company Advertisements, which aims to modernize the disclosure framework for open end management investment companies.

The proposal includes revising the disclosure framework for shareholder reports, and revising disclosure requirements for open end fund prospectus disclosures to provide “greater clarity and more consistent information about fees, expenses, and principal risks.”

The proposal addresses amendments to Form N-CSR which investment management companies must file within 10 days of distributing annual and semiannual reports to shareholders. Form N-CSR typically includes report to stockholders, the firm code of ethics, disclosure of principal accountants fees and services, the firms security holdings and proxy voting policies. The proposal indicates that the Commission would not require Form N-CSR to be prepared in machine-readable (XBRL) format but it raises the question in the proposal as to whether some or all of the data in N-CSR should be.

Comment letters are due January 4, 2021.