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Three Critical Questions You Should Be Asking About the SEC’s Big Changes for Shareholder Reporting

If you work in the US funds space and don’t live under a rock, then you know that this summer the SEC proposed comprehensive changes to the way that fund companies communicate with their shareholders, with a focus on retail investors (the “proposal”). Among a whole host of changes, the proposal would establish a new type of summary shareholder report, transform the annual and semi-annual report into an online presentation of data, and change certain components of the prospectus and the requirements for its distribution to existing shareholders annually. Now in the comment phase, the SEC will accept submissions until January 4, 2021. The implications for the industry are far-reaching and the world’s biggest fund managers are racing to figure out what this will mean and how they will both comply with and take advantage of the opportunity that the SEC presents with this rule.

As a global leader in investment data management automation for regulatory, financial and investor reporting, Confluence has been solving these kinds of challenges for our clients for close to 30 years. This proposal suggests a bunch of changes to the way that funds communicate with shareholders and we have been solving these exact challenges for our clients for years. We developed our flagship Unity Financial Reporting product in the wake of the Sarbanes-Oxley legislation to help our clients comply with certain funds requirements from that landmark law and have made significant investments into our solution over the years to make it the market-leading financial reporting solution that it is today.

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• Will you use this rule as an opportunity to improve your

product and your clients’ and shareholders’ experience?

Or are you simply going to react to the requirements and just do the minimum that needs to be done?

• As proposed, the rule would require fund data to be included

in the twice-annual N-CSR filings and be posted online1 , likely on a fund’s website.

• Will you use the same tools (people, process, technology)

that you use to produce financial statements today to produce the new “summary” shareholder report?

1: https://www.sec .gov/news/press-release/2020-172