On August 5, 2020, the Securities and Exchange Commission (the “SEC”) proposed comprehensive modifications to the mutual fund and exchange-traded fund disclosure framework, with the goal of modernizing the disclosure framework for such funds and better tailoring fund disclosures to retail investors’ needs. The proposal is described by the SEC as a “central component” of its investor experience initiative.
The proposed modernized disclosure framework is intended to result in the delivery of more concise and engaging shareholder reports, in lieu of the lengthy and complex prospectus updates and reports fund shareholders currently receive. The proposal aims to highlight information important to retail investors. In addition, the proposal would amend prospectus disclosure requirements regarding fees, expenses and principal risks to provide greater clarity and more consistent information. The proposal would also amend investment company advertising rules with the stated goal of promoting more transparent and balanced statements concerning investment costs.