Investment Company Notebook

Practical insight and analysis on the accounting, audit and tax issues impacting investment companies.

Posts about Mutual Funds

Major Changes to Mutual Fund and Exchange-Traded Fund Shareholder Reports

Posted by Lori Ehleben and Richard Wagner Nov 22, 2022 1:11:41 PM

The Securities and Exchange Commission has adopted rules and form amendments that are designed to require mutual funds and exchange-traded funds (“ETFs”) to transmit concise and visually engaging annual and semi-annual reports to shareholders. The updated approach to funds’ shareholder reports will highlight key information that is particularly important for retail investors to assess and monitor their fund investments.

In this summary, we will provide an overview of the major changes affecting open-end and exchange traded funds.

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An In-Depth Look at the New Open-End Fund Shareholder Reports

Posted by Richard Wagner Nov 14, 2022 6:41:12 PM

The Securities and Exchange Commission has adopted rules and form amendments that are designed to require mutual funds and exchange-traded funds (“ETFs”) to transmit concise and visually engaging annual and semi-annual reports to shareholders. The updated approach to funds’ shareholder reports will highlight key information that is particularly important for retail investors to assess and monitor their fund investments.

 

The new Rule will amend Rule 30e-3 to exclude open-end funds, including ETFs. Closed-end funds, unit investment trusts and other open-end funds that do not file Form N-1A are not affected by this rule change.

In this summary, we will outline the format of the new annual and semi-annual report. Funds must prepare a separate annual report for each fund in a series and each class in a multi-class structure. The reports should be concise and visually engaging but will not be subject to any page or word limits.

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BBD's Industry Insights Video Series Episode 3: What Private Fund Managers Need to Know About the '40 Act

Posted by admin Oct 19, 2022 11:35:00 AM

BBD's Industry Insights video series offers our clients and industry friends a brief look into important and timely developments in the investment management industry.

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What's In an (Investment Company) Name?

Posted by Lori Ehleben Jun 30, 2022 12:15:00 PM

The Securities and Exchange Commission has long enforced consistency between the name and strategy of a regulated investment company.

The original “Names Rule,” Rule 35d-1 of the Investment Company Act of 1940, was issued in 2001 and was intended to help ensure a fund’s name does not misrepresent the fund’s investments and risks to investors. It generally requires that if a fund’s name suggests a focus in a particular investment type, industry or geographic region, the fund must adopt a policy to invest at least 80% of its assets accordingly. Similarly, if the fund’s name suggests that its distributions are tax-exempt, for example, the investment policy must adhere to this claim.

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BBD's Industry Insights Video Series Episode 2: New Cybersecurity Rules for Investment Companies

Posted by admin Jun 16, 2022 5:24:12 PM

BBD's Industry Insights video series offers our clients and industry friends a brief look into important and timely developments in the investment management industry.

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Introducing BBD's Industry Insights Video Series

Posted by admin Aug 17, 2021 5:25:34 PM

Welcome to Industry Insights, BBD’s new video series that offers our clients and industry friends a brief look into important and timely developments in the investment management industry.

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Mutual Fund and ETF Audits: Key Differences

Posted by Jim Kaiser Apr 15, 2021 10:26:00 AM

Given that mutual funds and ETFs are both types of regulated investment companies with audits subject to the requirements of the Public Company Accounting Oversight Board, there are certainly many similarities in the audit process for both. However, there are some key differences to note, particularly in the areas of:

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Rule 2a-5: Let's Work Together

Posted by John Braun Feb 5, 2021 7:34:00 PM

On December 3, 2020, the SEC voted to approve Rule 2a-5 (the “Rule”) to address valuation practices and the role of the Board of Directors for registered investment companies and business development companies relative to the fair value of investments. The new Rule is meant to modernize existing SEC regulations that have not been comprehensively addressed by the SEC for 50 years. BBD has summarized the Rule in a previous post.

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Your Funds Don't Employ Derivatives, or Use Them Sparingly? 5 Questions You Still Need To Ask About the SEC's New Derivatives Rule

Posted by Richard Wagner Jan 12, 2021 10:58:52 AM

On October 28, 2020, the SEC adopted a new rule designed to address the investor protection purposes and concerns underlying Section 18 of the Investment Company Act of 1940. More specifically, Rule 18f-4 provides an updated and more comprehensive approach to the regulation of funds’ use of derivatives.5 Things To Know About the Derivatives Rule This Rule is effective for all funds February 19, 2021, with a compliance date of August 19, 2022. While the final Rule offers a more than 450-page comprehensive framework for funds utilizing derivatives, management and Boards of funds not employing derivatives, or utilizing them on a limited basis, still should be aware of the impact of certain key points of the Rule.

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Join the Conversation on the SEC's New Derivatives Rule- 11 Things You Need to Know

Posted by Richard Wagner Jan 12, 2021 9:41:15 AM

On October 28, 2020, the SEC adopted a new Rule designed to address the investor protection purposes and concerns underlying Section 18 of the Investment Company Act of 1940. More specifically, Rule 18f-4 provides an updated and more comprehensive approach to the regulation of funds’ use of derivatives. This Rule is effective for all funds February 19, 2021, with a compliance date of August 19, 2022.

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