SEC Proposed Disclosure Reform
In June 2018, the SEC issued a request for comment seeking feedback on retail investors’ experiences with fund disclosure and on ways to improve fund disclosure. In response, the SEC received several comments, including from ICI, which generally showed that retail investors prefer concise, layered disclosure and feel overwhelmed by the volume of fund information they currently receive.
In August 2020, the SEC proposed a layered disclosure framework for fund shareholders that would highlight key information for assessing and monitoring fund investments and informing investment decisions, with additional information available online and upon request. The proposal would implement this framework principally by streamlining fund shareholder reports, limiting them to key information particularly important for retail shareholders to assess and monitor their ongoing fund investments. These tailored shareholder reports would serve as the primary disclosure that existing fund shareholders receive each year, in addition to notices of certain material changes if they occur over the period. The proposal is designed to alleviate concerns that fund retail shareholders currently receive disclosure materials that are not well-suited to their needs, which may contribute to investor confusion or indifference. The SEC’s objective is to improve the retail investor experience and to help investors make more informed investment decisions. ICI supports the SEC’s efforts and has offered comments and research to inform the discussion on how to best modernize fund disclosure.