Tailored Shareholder Report Final Rule

March 20, 2023

Purpose

• To enable investors to identify and access key information clearly and concisely
• To provide a layered disclosure framework that highlights information investors most frequently seek while still providing the extended disclosure required by the regulation

Affected entities

• Open-end funds and ETFs filing on Form N-1A
• Excludes CEFs and BDCs filing on Form N-2
• Fee and expense advertising changes applicable to all registered funds

Key components

1. Updated annual and semi-annual report: Tailored Shareholder Report (TSR)
2. TSR Content
3. Structured Data (iXBRL Tagging) for TSRs
4. Updated Form N-CSR
5. Changes to Rule 30e-3 and Accessibility

Additional components

• Defining a broad-based securities market index
• Fee and expense information in advertising
• Form N-1A amendments

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Key Components

Updated Reports, Tailored Shareholder Report (TSR)

Format

• TSR will be the new annual and semi-annual report
• 2–4-page document highlighting key fund information
• No limit to the number of pages, however, intended to be concise
• One fund and one share class included per TSR
• Multiple funds or multiple share classes cannot be combined
• Content must appear in the order instructed by Item 27A of Form N-1A and only include information permitted by the new Item 27A
• Not required to be audited
• Must be filed on the SEC EDGAR system

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TSR Content

Content

• General information
  • Fund name, Class name, Ticker
  • Report label
  • Legend disclosing where additional information can be accessed
  • Statement regarding material changes
• Expense table identifying costs associated with a $10,000 investment (presented as both a percentage and dollar amount)
• Management’s “summary” of key factors impacting fund performance (graphic representation and bullets encouraged)
• Line graph or average annual returns table specific to share class comparing to appropriate broad-based securities market index (included in both TSR and AR)
• Graphical representation of holdings (table or graphic)
• Key fund statistics:
  • Net assets
  • Total number of holdings
  • Portfolio turnover rate
  • Total advisory fees paid
• Changes or disagreements with accountants
• Material changes (identified in prominent statement on cover page):
  • Fund name
  • Investment objectives
  • Principal investment strategies or risks
  • Annual operating expenses, shareholder fees, or maximum account fees
  • Investment adviser(s) or subadviser(s)
  • Optional additional material changes
• Availability of additional information

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Structured data for TSR

• TSR items will require inline XBRL tagging for submission on the SEC EDGAR system
• N-CSR items will not require inline XBRL tagging for submission on the SEC EDGAR system

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Updated Form N-CSR

Format

• Filed for multiple funds and share classes
• Integrates TSRs as Item 1 on Form N-CSR, including inline XBRL tagging
• Financial statements are included under Item 7
• Financial statements for the annual report period must be audited, consistent with current requirements
• Must be posted to fund website by day 60
• Must be filed on EDGAR by day 70
• Must be available to be printed and mailed upon request

Content Moved from Legacy Annual and Semi-Annual Report to Form N-CSR

• Financial statements (Item 7.a)
  • Schedule of Investments, Statement of Assets and Liabilities, Statement of Operations, Changes in Net Assets
• Financial highlights (Item 7.c)
• Results of any shareholder vote during period (Item 9)
• Remuneration paid to directors, officers, and others (Item 10)
• Approval of investment advisory agreement (Item 11)

Additional Notes:

• Manager’s discussion and analysis (condensed and only exists in TSR)
• Expense table (condensed and only exists in TSR)
• Management table (removed from shareholder report and Form N-CSR)
• Liquidity risk management disclosure (removed from shareholder report and Form N-CSR)

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Rule 30e-3 and Accessibility

30e-3 Changes

1. Open-end funds and ETFs will no longer be allowed to rely on rule 30e-3 to provide notice of the availability of the shareholder report
2. Closed-end funds will still be allowed to rely on rule 30e-3

Printing and mailing

• Shareholders will only receive a TSR for each series and class in which they invest
• While TSRs must be created for a single share class per fund, they can be delivered together
• Same as existing requirements, TSRs must be delivered by day 60 and filed by day 70
• Funds must still fulfill any paper requests for the full Form N-CSR

Online availability

• TSRs and Form N-CSR must be posted on the fund website 60 days after period end
• TSRs must link to the applicable semi- or annual Form N-CSR via “one-click”
• TSRs are encouraged to be visually engaging and easy to navigate on the fund website
• First and third quarter portfolio holdings are now required to be posted on a fund website 60 days after period end (previously only a requirement if utilizing rule 30e-3)
• Electronic material is requirement of all to be ADA accessible

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Additional Components

Defining a broad-based securities market index

• A primary index must reflect the overall applicable market
• A more narrowly focused index may be used, but only as a secondary index

Fee and expense information in advertising

• Applicable to all investment companies and BDCs if including fee related fee or expense information
• Advertisements must include the maximum amount of any sales load or nonrecurring fee and total annual expenses without a fee waiver or expense reimbursement
• Fee information must be current as of last prospectus or annual report

Form N-1A amendments

• Funds are permitted to disclose statice dates such as birth year or year service began instead of age or years of services of fund officers, directors and portfolio managers
• Option (not requirement) to include Financial Highlights as incorporated by reference to Form N-CSR pending a disclosure statement on the cover and providing Form N-CSR to any new investors