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Take Full Advantage of SEC Rule 30e-3

An update on the rule that helped streamline shareholder communications.

SEC Rule 30e-3 Provides for Optional Internet Availability of Shareholder Reports

Broadridge’s integrated solution to help funds comply with SEC Rule 30e-3 lowers costs and delivers better investor experiences

Digital transformation continues to reshape our world and fund communications are no exception. The Securities and Exchange Commission (SEC) supports modernized and enhanced investor disclosures and so adopted SEC Rule 30e-3, which, as of January 1, 2021, allows fund companies to mail a short notice of internet availability of shareholder reports instead of full shareholder reports.

In this update, we will provide an overview of SEC Rule 30e-3, how it has benefited fund firms and investors, and how your firm can maximize the benefits of the rule.

Industry adoption of Rule 30e-3

At this writing:

  • 95% of funds have participated in Rule 30e-3.
  • Broadridge has delivered over 300 million notices to investors since 30e-3 inception.
  • 80% of notices contain QR codes for quick and easy customer engagement.
  • < 2% if shareholders have instructions in place to receive full reports.
  • <0.1% of shareholders make ad hoc requests for full reports.

Below are some key aspects of SEC Rule 30e-3, best practices for funds and frequently asked questions to help your firm maximize the benefits of this new and transformative digital-first rule.

Learn more about how you can take advantage of the ruling.

Key aspects of Rule 30e-3

  • Rule 30e-3 allows, but does not mandate, mutual funds to use the “Notice & Access” method to deliver Annual Reports (ARs) and Semi-Annual Reports (SARs), instead of mailing full paper reports
  • Funds can mail a notice of the internet availability of shareholder reports beginning January 1, 2021 (see compliance dates and transition information below)
  • Existing e-delivery consents will continue to be applied
  • Investors who have not opted for e-delivery will receive a paper notice in the mail that includes:
    • Details of the website where they can read the full report
    • Instructions for requesting a full paper report by mail, on an ad hoc basis or permanently
    • Instructions for e-delivery sign-up
  • The rule allows funds to include summary content from the full shareholder report

SEC RULE 30E-3 BEST PRACTICES FOR FUNDS

br icons email If only one fund is on the notice, include a URL that takes the shareholder directly to the documents.
br icons email For notices with multiple funds, leverage a landing page to direct shareholders to reports and portfolio holdings with one click. The landing page should host the annual and semi-annual report and fund holdings for the 1st and 3rd quarters.
br icons email Ensure each URL is short and intuitive, keep the character count low and try to avoid the use of special characters and capitalization.
br icons email List fund names specific to the investor’s holdings so that they match the naming convention on the website; do not use generic names.
br icons email Include a QR code; this helps avoid typos and makes it fast and easy for shareholders to access websites and/or documents.
Plus iconWhat content should be in the notice?
  • A prominent legend in bold-face type that An Important Report to Shareholders of the Fund is Now Available Online and In Print by Request.
  • Language that the report contains important information about the fund including portfolio holdings and financial statements.
  • URL of the website where the report is available.
  • The website does not have to be specific for each report, however, the shareholders must be able to navigate to the required document with one click.
  • A toll-free telephone number to contact the fund or the broker-dealer.
  • Instructions for requesting a paper report or email copy, free of charge.
  • Instructions for how to opt for paper reports in the future.
  • Instructions for how to opt for e-delivery for future reports, if applicable.
Plus icon2What additional information MAY be included in the notice?
  • Funds can include information from the full report in the notice, if such content is set forth after the required information, such as a list of the fund’s top 10 holdings, performance information, the type of fund, brief statement of the fund’s objectives and investment strategies, expense ratios and the name of the fund manager. If including content, funds must file the notice with their Form N-CSR filing.
  • If a fund chooses to include any particular information such as performance of the fund, the content from the report should include all required information.
  • There is no specified page limit, but optional content should be brief to avoid detracting from the primary purpose of the notice and to encourage investors to access the full report.
  • A control number or account number—a unique way to identify a shareholder for ease of preference management.
  • Pictures, logos or similar design elements as long as they are not misleading.
  • QR codes for shareholders to easily access the report and holdings or to change their delivery preferences.
Plus icon3What are the compliance dates and transition period?
  • Funds that provided the transition disclosure on their reports and prospectuses for two years could begin sending notices on January 1, 2021.
  • During the transition period, funds provided shareholders the ability to communicate their preferences for full paper reports immediately after receiving notification.
  • Funds that did not provide the transition disclosure on their reports and prospectuses for two years can begin sending notices on January 1, 2022. Exceptions apply (e.g., new funds).
Plus icon4What are the details around the Notice and Access fees?

The New York Stock Exchange fee schedule was updated to include Notice and Access fees for 30e-3. Notice and Access fees have pricing tiers and cannot be charged on any accounts for which a fund pays a preference management fee.

Plus icon5Does Broadridge support 30e-3 preference management?

Broadridge offers a comprehensive solution that enables the capture of investor distribution preferences through a centralized website and, working with banks, brokers and mutual funds, it also allows for easy enrollment in e-delivery. Use of QR codes simplifies the election process for shareholders by routing them directly to the website.

For additional information on best practices, the ruling and how it may impact your business, please contact us below.

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