Tailored Shareholder Reports Ruling—Disclosure Changes for Mutual and Exchange-Traded Funds

The SEC approved the Tailored Shareholder Reports Ruling (TSR), which aims to enhance accessibility and transparency of shareholder reports and disclosures. It was finalized on Oct. 26, 2022, but has been effective since Jan. 24, 2023. However, registrants have an 18-month window to transition, which ends in July 2024. Here is a synopsis of what SEC filers should know.    

Amendments summary: What you need to know about the Tailored Shareholder Reports Ruling

The ruling applies to all open-end funds, which are required to upgrade their websites with better usability features for investors to view and download online disclosures and facilitate easier retrieval of shareholder reports, with updates to SEC Rule 30e-3. Funds also have to present additional information on Form N-CSR and fee structures with greater clarity. Here’s an overview of the changes:  

• Customized shareholder reports for retail investor needs: The final ruling requires mutual funds and ETFs that are registered on Form N-1A to transmit a Tailored Shareholder Report (two to four pages), similar to a Summary Prospectus, for each fund and share class. Online disclosures need to be interactive, succinct, and visually engaging, as well as readable and printable, with links between documents. They must also be available for download and provided free of charge. With modifications to rule 30e-3, funds shareholders can elect to receive the revised annual and semiannual reports either in paper form or electronically. Funds also need to tag information in reports using iXBRL™ structured data language. 
• Additional information on form N-CSR and online: The SEC also mandated that funds issue further disclosures on Form N-CSR and its digital version, as well as for quarterly fund holdings for quarters one and three upon request.
• Revisions to investment company advertisements: Sales literature advertising fees and expenses issued by investment and business development companies must be transparent and consistent across documentation. 

Tailored Shareholder Reports timing

The 18-month compliance phase-in period became effective on Jan. 24, 2023, and expires in July 2024. Here’s a list of dates to note as you transition: 

• Final ruling: Oct. 26, 2022
• Effective date and technical amendments: Jan. 24, 2023
• Open-end funds XBRL^® taxonomy released: May 4, 2023
• Shareholder reports and related requirements: July 2024 
• iXBRL data tagging: July 2024

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