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.692 Rule 18f-3
Publication date: 27 Jul 2018
us Investment companies ARM 9652.692
Virtually all funds with multiple class structures follow the provisions of Rule 18f-3. A few provisions of the Rule, however, should be emphasized.
- | Section (c)(2) of the Rule permits the allocation of income and gains on a "settled share" basis by funds that pay dividends daily. Some bond funds pay distributions daily but, due to market fluctuations and "as of" trades, may not be able to maintain identical net asset values for all share classes. Additionally, the Rule allows funds to allocate net investment income on the basis of "settled shares" and realized/unrealized gains based on "total shares." The rule also allows the use of the simultaneous equation method. |
- | The Rule permits waivers and reimbursements of expenses on a class-specific basis. Income tax rules, however, limit such waivers, and a violation could result in disqualification of certain distributions from compliance with Subchapter M of the Internal Revenue Code. |
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