An excepted investment fund is an investment fund that is… 1. independently managed, 2. “widely held,” and 3. either “publicly traded or available” or “widely diversified” Normally, you have to disclose all of the underlying holdings of an investment fund, but you do not have to list any of the underlying holdings of an excepted investment fund. Instead of listing the underlying holdings, mark the “Excepted Investment Fund” column in the middle of the page. Additional Information about Key Terms • “independently managed”: For purposes of the excepted investment fund definition, an investment fund is independently managed if you lack the ability to control the fund. • “widely held”: An investment fund is widely held if the fund involves at least 100 natural persons as direct or indirect investors. • “publicly traded or available”: An investment fund is publicly traded if it is listed on a national exchange (NYSE or NASDAQ) or a regional exchange in the United States. An investment fund is publicly available if it is, or was, open to anyone who wants to become an investor. A fund is not disqualified solely because it has net worth or income requirements or if an investor must be an “accredited investor.” • “widely diversified”: If your investment fund is “publicly traded or available,” the investment fund does not need to be “widely diversified” in order to qualify as an excepted investment fund. For example, mutual funds on the market are “publicly traded or available,” which means that you do not have to determine whether such a mutual fund is “widely diversified.” If you have some other type of investment fund that is not “publicly traded or available,” you will need to determine whether that fund is “widely diversified.” An investment fund is widely diversified if it (1) holds no more than 5% of the value of its portfolio in the securities of any issuer (other than the United States Government) and (2) holds no more than 20% of the value of its portfolio in any particular economic or geographic sector.
This guide is not intended to provide investment advice, and you should not rely on statements in this guide when making investment decisions.
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