SEC Adopts Amendments Relating to Shareholder Reports and Investment Company Advertisements

Who may be interested: Directors of registered funds, investment advisers and other service providers responsible for shareholder reporting or fund advertising for registered funds.

Quick take: The SEC recently adopted rule and form amendments to require registered open-end funds to significantly alter what information they include in their shareholder reports and how they will present and transmit those reports to their shareholders. The amendments implement a layered approach to disclosure, requiring shareholder reports to include specified fund information, with instructions on how to obtain more-detailed information online or by request, free of charge. The amendments require each share class to have its own report, which must be data-tagged, and require funds to mail these tailored reports to shareholders. The SEC also adopted advertising rule amendments, applicable to registered funds and business development companies, which will require the use of standardized fee and expense presentations in sales literature. The amendments will become effective 60 days after publication in the Federal Register.

For an in-depth discussion of these changes, S&K’s client alert can be found here.

The SEC press release on the proposal can be found here.