The Division of Investment Management (the “Division”) recently issued a set of interpretive answers (“Guidance”) to questions relating to the investment company reporting reforms adopted by the Securities and Exchange Commission in October 2016. The Guidance, which focuses on various aspects of new Forms N-PORT and N-CEN and the amendments to Regulation S-X, includes the following information:
- Form N-PORT. The compliance dates are June 1, 2018 for larger entities and June 1, 2019 for smaller entities1. Funds are required to file their reports on Form N-PORT no later than 30 days after the end of each month. Accordingly, a large fund would file its first report on Form N-PORT, reflecting data as of June 30, 2018, no later than July 30, 2018.
- Form N-CEN. The compliance date is June 1, 2018 for all funds, and each fund must report on Form N-CEN within 75 days of the fund’s fiscal year end. For example, a fund with a June 30 fiscal year end should make its first Form N-CEN filing for the year ended June 30, 2018 by September 13, 2018.
- Regulation S-X. The compliance date is August 1, 2017 for all funds. Accordingly, financial statements included in fund reports on Form N-CSR for the period ended August 31, 2017 should comply with the amendments to Regulation S-X since the period ends after the compliance date of August 1, 2017.
- Securities Lending Disclosures. The compliance date for the amendments to Forms N-1A and N-CSR is August 1, 2017. Mutual funds with fiscal year ends after August 1, 2017 should reflect the amendments in their next annual prospectus update2.
- Accounting. Funds may distinguish between the basis on which they calculate the value of portfolio holdings and the basis on which they calculate risk metrics. Accordingly, a fund that uses T+1 accounting for calculating the fund’s daily net asset value and reporting portfolio holdings may calculate and report security-level and portfolio-level risk metrics on a T+0 basis, provided that the information provided complies with Form N-PORT’s general instructions.
- Multiple Series Companies and Combined Part F Attachments. A reporting fund that is a separate series of an investment company that offers shares of multiple portfolios with the same fiscal year end date (the “Different Series”) may contain in its Part F attachment the respective portfolio schedules of the fund and the Different Series, and one set of financial statement notes covering the fund and the Different Series combined into one Part F attachment.3
- Public Availability. Reports filed on Form N-PORT for the months ended on or after December 31, 2018 will be made public, but only with respect to a fund’s filing for the third month of a fiscal quarter.4
- Shares of Other Funds. For purposes of reporting the asset type and issuer type of shares of other investment companies, funds should report the asset type as either “short-term investment vehicle” (e.g., money market fund or other cash management vehicle) or “equity – common” (e.g., other mutual funds), and report the issuer type as “registered fund” or “private fund,” as appropriate.
- Sub-Transfer Agents and Intermediaries. In reporting information on sub-transfer agents, a fund is not required to identify administrative service-type arrangements (i.e., “sub-accounting” and “sub-transfer agent” arrangements) with intermediaries, such as relationships with broker-dealers or third party administrators of retirement plans, that provide sub-transfer agent or administrative services for customers whose shares of the fund are maintained in omnibus accounts with the fund’s primary transfer agent.
- Derivatives. A fund should identify a derivative transaction as being restricted for purposes of rules 12-13 through 12-13D if, as of the balance sheet date, the fund would not have been able to exit the transaction.
The Division expects to update the Guidance from time to time to respond to additional questions.
1 For purposes of Form N-PORT, “larger entities” means funds that, together with other investment companies in the same group of related investment companies, have net assets of at least $1 billion as of the end of the most recent fiscal year, and “smaller entities” means funds that, together with other investment companies in the same group of related investment companies, have net assets of less than $1 billion as of the end of the most recent fiscal year.
2 For example, a fund that has a 2017 fiscal year end of July 31, 2017 (a date prior to the compliance date) should first reflect the amendments in its prospectus update following the fund’s July 31, 2018 fiscal year end.
3 The Division notes that the Part F attachment is designed to ensure that, notwithstanding the recession of Form N-Q, portfolio holdings schedules are presented in a manner with which investors are familiar.
4 However, any portfolio holdings information filed as an exhibit to Form N-PORT for the first and third quarter of a fund’s fiscal year will be made public.