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Mutual Funds May Electronically Deliver Written Statements Describing Source of Distributions

Section 19(a) of the Investment Company Act and Rule 19a-1 require that a mutual fund making a distribution from any source other than the fund’s net income provide a written statement to shareholders disclosing the source of the payment (e.g., shareholder capital or capital gains). The SEC’s Division of Investment Management has issued guidance stating that funds may electronically deliver to their shareholders the required written statement describing the sources of their distributions. The guidance is predicated on compliance with all SEC guidance on electronic delivery including the following requirements:

  • electronic delivery of a notice must be in the form of an email message to the fund shareholder containing the notice or a document link to the notice;
  • the fund (or its intermediary) must have obtained prior consent of the shareholder to receive fund shareholder communications through electronic means; and
  • electronic notices must be sent only to shareholders that have provided consent.

Source: Investment Management Guidance Update No. 2013-11, Shareholder Notices of the Sources of Fund Distributions – Electronic Delivery (November 2013).

Copyright © 2020 Godfrey & Kahn S.C.National Law Review, Volume IV, Number 42


About this Author

Susan Hoaglund, Investment Management Attorney, Godfrey Kahn law firm

Susan Hoaglund is a member of the Investment Management Practice Group. Susan provides advice to investment advisers, investment companies, broker-dealers and banks regarding legal, regulatory and compliance matters.

Chris Cahlamer Investment Management Attorney

Chris Cahlamer is the team leader of the firm’s Investment Management Practice Group, where he practices in investment management and securities law, focusing on investment companies, investment advisers, regulatory examinations, new product development, SEC compliance and reporting obligations, CCO support, private fund formation and operation, investment company reorganizations, investment advisor mergers and acquisitions, and general corporate and board fiduciary issues.

Chris earned his law degree, summa cum laude, at Marquette University Law School. While there, he received the Corporate Practice Institute Award and served as senior articles editor on the Marquette Law Review. He completed his undergraduate education at St. Norbert College, graduating as a member of the honors program and earning his bachelor’s degree, summa cum laude, in international economics and political science.

Chris is a member of the State Bar of Wisconsin and the American Bar Association.

Carol A. Gehl, Securities Law Attorney, Godfrey and Kahn law firm

Carol Gehl is a shareholder and the team leader of the Securities Practice Group in the Milwaukee office.

Carol’s practice is focused on investment management entities, including mutual funds, hedge funds, investment advisers and broker-dealers throughout the nation. During the last number of years, Carol has facilitated the organization of numerous mutual funds, hedge funds and investment advisers; assisted in SEC and FINRA examinations of regulated entities; provided ongoing advice to mutual fund Boards of Directors; and assisted with several mergers of investment advisers and...