SEC FAQ: Binding individual shareholder reports of multiple funds addressed

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On Friday, January 19, 2024, SEC staff of the Division of Investment Management published “Frequently Asked Questions” related to Tailored Shareholder Reports.

The release of the FAQs was timely based on the upcoming compliance date of July 24, 2024. The responses represent the staff views of the Division of Investment Management and are not rules, regulations or statements of the Commission.

Although the Commission has neither approved nor disapproved the answers to these FAQs, they provide guidance for issues raised since the October 2022 adoption of the rule and form amendments.

Important issues addressed in the FAQs include:

  1. Binding individual shareholder reports of multiple funds
  2. Form N-CSR and website availability requirements
  3. Compliance date and Inline XBRL issues
  4. Electronically provided shareholder reports
  5. Appropriate broad-based securities market index

Of these issues, binding individual shareholder reports of multiple funds, will have the most issuer and investor benefit.

Binding individual shareholder reports of multiple funds

The permission for issuers to bind individual Tailored Shareholder Reports of multiple funds into a book provides a huge operational and cost benefit to issuers who choose to take advantage of the permissive guidance. The allowance also provides a better user experience for shareholder report recipients by minimizing the number of individual self-mailers and/or the number of documents inserted into an envelope. Client advocacy was viewed as an important element in our discussions with SEC staff.

Following precedent, the ability to print, bind, and self-mail a group of TSRs in one document is consistent with the mutual fund Summary Prospectus Rule 498 delivery model currently in place.

Unlike Rule 498, which provides the binding allowance for variable product underlying fund Summary Prospectus, the TSR binding allowance extends to TSRs for all fund types and is not specific to variable products. That said, the greatest application and benefit is in the variable product space.

Similar to the Summary Prospectus guideline the SEC suggests a fund should consider including a table of contents to any bound, stapled, or stitched shareholder reports for investors’ ease of use.

The benefits realized through cost savings, manufacturing, technology, and operational efficiencies align with the Commission’s goal to improve investor experience. In addition, following the Summary Prospectus delivery provides a consistent user experience.

Thank you to the Insured Retirement Institute (IRI) staff, specifically Emily Micale and Jason Berkowitz, for their collaboration and the channel to communicate the benefits of these updates to the SEC staff, as well as their continued efforts to push this important decision across the finish line. 

The FAQs can be found on the SEC’s website at the following URL:

How Toppan Merrill can help

Toppan Merrill has been helping funds and variable product issuers with their required financial reporting and compliance requirements for decades. We continually monitor the SEC modernization updates and help with formatting, inline XBRL and website display architecture for the new Tailored Shareholder Report requirements. Our experts are in constant contact with the SEC to clarify rules and ensure our clients are in full compliance.

We offer simple and straightforward solutions that help you bring your filing and reporting into compliance. If you have any questions about the Tailored Shareholder Report Rule, client communications systems, or other matters concerning the 1940 Securities Act, the experts at Toppan Merrill can help. Connect with us or phone at 800.688.4400.



Guy Stanzione - Director, SEC Compliance Services

Guy Stanzione provides deep insight on the Securities Act of 1933, the Investment Company Act of 1940 and SEC regulatory compliance, as well as investment company solutions for regulatory document preparation, filing and distribution including Tailored Shareholder Reports. Leveraging more than 40 years of financial services, shareholder communication, printing and compliance service expertise he is a vital resource for financial services professionals navigating the complexities and pace of SEC regulatory changes .

Guy Stanzione - Director, SEC Compliance Services's Photo

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