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).