Tailored Shareholder Reports, Bullets, AI, and a Meaningful Presentation

A few brief thoughts on the SEC Tailored Report initiative and in particular the Management Discussion of Fund Performance:

First and foremost – the objective of moving toward performance narratives that are more meaningful to the target audience is commendable. From the SEC release:

“The disclosure must “briefly summarize” the “key” factors that materially affected the fund’s performance during the last fiscal year, including the relevant market conditions and the investment strategies and techniques used by the fund’s investment adviser (emphasis added). As proposed, the final rules instruct funds not to include lengthy, generic, or overly broad discussions of these factors.”

This direction is clearly aimed at producing a more concise, and in practice more informative, product. With respect to the latter, ultimate objective, it seems clear that care should be taken to continue to provide reasonable context (i.e., “relevant market conditions”) and texture.

In short – more than a few bullets are in order.

Moreover, given the goals of this initiative around increasing engagement and utility, it goes without saying that there is a Plain English/avoiding jargon aspect that may not be best left to the tender mercies of AI and an attribution report (especially for bond fund reports). And yes, I am aware of John Henry’s legendary efforts to outpace a steam-powered rock-drilling machine.

The preceding possibly self-serving remarks aside, what follows is one example of what copy for a one-page MDFP could look like:


The International Equity Fund’s Class A shares returned -xx.xx% for the 12-month period ended August 31, 2022. The Fund’s benchmark, the MSCI ACWI ex-USA Index, returned -19.52% for the same period.

The Fund’s outperformance relative to the benchmark was primarily the result of favorable security selection, while country and sector allocations contributed to a lesser degree.

In broad terms, the Fund’s relative performance benefited from a tilt toward value stocks relative to growth stocks.


Entering the period, expectations that leading central banks were preparing to hike interest rates in reaction to persistently high inflation weighed on investor sentiment. Russia’s late-February invasion of Ukraine spurred sharp increases in commodity prices even as renewed COVID-19 lockdowns in China battered that economy and intensified fears of a global recession. Against this backdrop, investors fled riskier assets including most equities. The energy sector was the exception as oil and gas prices soared on the prospect of Russia limiting or even cutting off entirely the West’s access to its energy production in retaliation for sanctions imposed in the wake of the Ukraine invasion.


Selection within information technology led positive contributions to relative performance, in large part due to a lack of exposure to more expensive stocks within the sector, such as e-commerce platform provider Shopify.

An overweight to and selection within energy also contributed to performance. Most notably, Norwegian oil & gas company Equinor was a prime beneficiary of the rise in energy prices seen in the wake of the Russia-Ukraine conflict.

Selection within communications services proved additive as well. Within China, the Fund’s lack of exposure to Tencent helped performance as the government’s stepped-up oversight of key industries weighed on shares of internet platform providers.

Leading detractors from the Fund’s relative performance

Detractors from relative performance included selection within materials, most notably holdings of Akzo Nobel, a Dutch paint and coatings manufacturer, as concerns over limited access to Russian gas weighed on the stock.

Selection within financials also detracted as banks held that focus on Central and Eastern European markets were viewed as vulnerable to weaker conditions in the wake of Russia’s invasion of Ukraine.

Within consumer discretionary, Adidas sold off as China lockdowns severely constrained the sneaker and apparel manufacturer’s sales into that market.

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