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BDCs and New Fund of Funds Arrangements

The SEC recently adopted new Rule 12d1-4 (the Rule) under the 1940 Act intended to streamline the regulation of registered funds that invest in other registered funds and BDCs (“fund of funds” arrangements). Among other things, the Rule increases the limits now applicable to registered funds’ investments in BDCs.

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SEC Proposes Modernized Fund Reports and Disclosure Amendments


Time to Read: 1 minutes Practices: Asset Management, Investment Management

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On August 5, 2020, the SEC unanimously proposed rule and form amendments intended to modernize the disclosure framework for mutual funds and ETFs (the “Proposals”). This Alert summarizes the key provisions of the Proposals.

The Proposals, if adopted, would modify the disclosure framework for funds registered on Form N-1A (mutual funds and ETFs) to follow a “layered” approach to fund disclosure that highlights key information for retail investors. 

  • For existing shareholders, the Proposals would make streamlined (3-4 page) annual and semi-annual shareholder reports the primary source of fund disclosure.  Certain information now required in a fund’s shareholder reports, such as the fund’s financial statements, would no longer appear in these reports. Instead, this information would be made available online and delivered free of charge upon request, and filed with the SEC on a semi-annual basis on Form N-CSR. 
  • Funds would no longer be required to deliver an updated prospectus to existing shareholders who purchase additional shares. Instead, funds would rely on their shareholder reports to keep shareholders informed, along with (i) timely notification to shareholders of any material changes to the fund through prospectus supplements and (ii) the availability of the fund’s prospectus online and on request.
  • The Proposals would also amend the advertising rules for funds (including closed-end funds and business development companies (“BDCs”).

Click here to read the full Alert.

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