may, however, be considered through the Commission's process under rule
405 for granting waivers of ineligible issuer status.\128\
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    \127\ See ACC Comment Letter; CBD Comment Letter;
    \128\ See paragraph (2) of the ineligible issuer definition in
rule 405 (providing that the Commission may grant waivers of
ineligible issuer status upon a good-cause showing that it is not
necessary under the circumstances for the issuer to be considered an
ineligible issuer).
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    For these reasons, we are adopting the amendments to the ineligible
issuer definition as proposed.

D. Automatic or Immediate Effectiveness for Filings by Affected Funds
Conducting Certain Continuous Offerings

    Based on comments that we received, we are expanding the scope of
rule 486 to permit any registered CEF or BDC that conducts continuous
offerings under rule 415(a)(1)(ix) (e.g., a continuously-offered tender
offer fund) to rely on the rule. Rule 486 under the Securities Act
currently permits interval funds to file post-effective amendments and
certain registration statements that are either immediately effective
upon filing under rule 486(b) or automatically effective 60 days after
filing under rule 486(a).\129\
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    \129\ Filings under rule 486(a) are generally effective on the
sixtieth day after filing, but a registrant may designate a later
date for effectiveness (which must not be later than eighty days
after filing). In addition, the Commission, having due regard to the
public interest and the protection of investors, may declare an
amendment or registration statement effective under rule 486(a) on
an earlier date. See rule 486(a).

---------------------------------------------------------------------------

    As discussed in the Proposing Release, our staff has previously
stated that it would not recommend that the Commission take enforcement
action under certain provisions of the Securities Act if, on a case-by-
case basis, specific listed registered CEFs that conduct offerings
under rule 415(a)(1)(x) use rule 486(b) to file certain post-effective
amendments that are immediately effective upon filing.\130\ The
Proposing Release noted that staff in the Division of Investment
Management were reviewing these no-action letters to determine if they
should be withdrawn in connection with any final rules. The Commission
also requested comment on whether it should make rule 486(b) available
to all or a broader group of registered CEFs and BDCs.\131\ In response
to this request, several commenters asked that we allow certain non-
interval funds that conduct delayed or continuous offerings under rule
415 to rely on rule 486, in whole or in part.\132\ For example, one
commenter suggested that the existing no-action letters be retained or
codified. This commenter stated that withdrawing the no-action letters
would be disruptive to relevant non-WKSI funds and their ability to
update their registration statements and receive automatic
effectiveness.\133\ Additionally, two commenters recommended that we
permit affected funds that are continuously-offered unlisted funds to
rely on rule 486 in its entirety, including rule 486(a) and rule
486(b). The commenters suggested that, like interval funds, these
unlisted funds are continuously offered and would benefit if their
filings could become immediately effective or automatically effective
60 days after filing.\134\ One of these commenters stated that, for
example, allowing continuously-offered unlisted affected funds to rely
on rule 486 would benefit investors in these funds by allowing the
funds to avoid the time and expense of an annual staff review of
registration statements where no changes are made beyond immaterial
updates and updates to audited financial information.\135\
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    \130\ See, e.g., Nuveen California Select Tax-Free Income
Portfolio, SEC Staff No-Action Letter (Nov. 21, 2017); PIMCO Dynamic
Income Fund, SEC Staff No-Action Letter (Dec. 12, 2017); Eagle Point
Credit Company, Inc., SEC Staff No-Action Letter (Feb. 14, 2018);
PIMCO Corporate & Income Opportunity Fund and PIMCO Income
Opportunity Fund, SEC Staff No-Action Letter (Sep. 13, 2018); and
DNP Select Income Fund, Inc., SEC Staff No-Action Letter (Oct. 4,
2018).
    \131\ See Proposing Release, supra footnote 10, at section II.I.
    \132\ See ABA Comment Letter and ICI Comment Letter.
    \133\ See ICI Comment Letter.
    \134\ See ABA Comment Letter and ICI Comment Letter.
    \135\ See ABA Comment Letter.
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    In response to these comments, we are amending rule 486 to allow
any registered CEF or BDC that conducts a continuous offering under
rule 415(a)(1)(ix) to rely on rule 486.\136\ We believe this rule
amendment will allow these continuously-offered affected funds to
maintain effective registration statements in a more efficient, cost-
effective manner. For example, under rule 486(a), these funds will be
able to make material changes to their registration statements on an
automatically effective basis 60 days after filing. In addition, under
rule 486(b), continuously-offered unlisted affected funds will be able,
for example, to update their financial statements under section
10(a)(3) or make non-material changes to their registration statements
on an immediately effective basis. The rule amendment will allow these
funds to more efficiently maintain effective registration statements
while they engage in continuous offerings. This is similar to the
benefits the final rule will provide to affected funds that file short-
form registration statements or qualify as WKSIs, as those funds also
will be able to make certain updates to their registration statements
more efficiently (i.e., through forward incorporation by reference or
automatically effective registration statements and post-effective
amendments).\137\ We believe it is appropriate for any affected fund
that conducts delayed or continuous offerings under rule 415(a)(1)(ix),
(x), or (xi) to have a mechanism for bringing its financial statements
up to date under section 10(a)(3) without delay.\138\ Together, the
amendments we are adopting in this release and current rule 486 will
achieve this objective.
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    \136\ We also are making a technical amendment to rule
486(b)(1)(iv) to provide a more accurate cross reference to Item
9.1.c of Form N-2. Moreover, we are amending Form N-2 to recognize
the broader scope of affected funds that may rely on rule 486. See
General Instruction E.4 of amended Form N-2 and cover page of
amended Form N-2.
    \137\ See supra sections II.B.3.b and II.B.3.c. Although
affected funds that file short-form registration statements or
qualify as WKSIs will be able to use forward incorporation by
reference and automatically effective filings to make a broader
range of updates to their registration statements on an immediate
basis than those specified in rule 486(b), the majority of post-
effective amendments that affected funds currently file are solely
for one or more purposes described in rule 486(b). Moreover,
interval funds, and affected funds that make continuous offerings
under rule 415(a)(1)(ix), will be able to make other, material
amendments that are automatically effective 60 days after filing.
    \138\ Rule 415(a)(1)(ix), (x), and (xi) are the provisions
affected funds primarily use to conduct delayed or continuous
offerings of their securities. Rule 415(a)(1)(ix) allows nontraded
affected funds to engage in continuous offerings but does not allow
delayed (or ``shelf'') offerings. Rule 415(a)(1)(x) allows affected
funds that are eligible to file short-form registration statements
on Form N-2 to engage in delayed or continuous offerings. Rule
415(a)(1)(xi) allows interval funds to engage in delayed or
continuous offerings.
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    Continuously-offered unlisted affected funds relying on rule 486
will continue to be subject to applicable provisions in rule 415.\139\
Moreover, these funds will need to comply with relevant conditions in
rule 486.\140\ If it appears to the Commission that a post-effective
amendment or registration statement filed under rule 486(a) may be
incomplete or inaccurate in any material respect, the Commission may
suspend the effective date of that filing. Further, if it appears to
the Commission that the fund has not complied with the conditions in
rule 486(b), the Commission may suspend the fund's ability to rely on
rule 486(b).\141\
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    \139\ For example, rule 415 limits the amount of securities that
can be registered in a continuous offering under rule 415(a)(1)(ix)
and generally requires an issuer relying on rule 415(a)(1)(ix) to
file a new registration statement every three years. See rule
415(a)(2), (5), and (6).
    \140\ See rule 486(b)(2) (requiring certain written
representations that a post-effective amendment filed under rule
486(b) is filed solely for one or more of the permissible purposes
covered by the provision); rule 486(e) (requiring a fund to have
filed a post-effective amendment or registration statement relating
to its common stock that became effective within two years prior to
the filing made under rule 486(a) or (b)).
    \141\ See rule 486(c).
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    In addition to allowing an affected fund to rely on rule 486 if the
fund makes continuous offerings under rule 415(a)(1)(ix), we are also
amending the scope of registration statements that rule 486 covers.
Currently, rule 486 is available for post-effective amendments and for
registration statements filed for purposes of registering additional
shares of common stock for which a Form N-2 registration statement is
effective. This generally reflects the scope of amendments and
registration statement filings interval funds make after their initial
registration statements are effective. However, unlike interval funds,
the affected funds that will newly be eligible to rely on rule 486
generally are required to file new registration statements every three
years under rule 415(a)(5) and (6). We are amending rule 486 to allow
these registration statements to be immediately or automatically
effective under the rule, depending on the substance of the
disclosure.\142\ Specifically, a registration

statement a fund files to comply with rule 415(a)(5) and (6) could be
immediately effective upon filing if it is filed for no purpose other
than to comply with those provisions of rule 415 or for other purposes
listed in rule 486(b), such as making non-material changes or updating
the fund's financial statements under section 10(a)(3). If the
registration statement does not qualify under rule 486(b) because, for
example, it includes material changes to the fund's disclosure, the
registration statement could be automatically effective 60 days after
filing under rule 486(a). As a result of the amendments, affected funds
that make continuous offerings under rule 415(a)(1)(ix) will be able to
rely on rule 486 for registration statements filed to comply with rule
415(a)(5) and (6), regardless of whether they choose to register
additional shares at the time these provisions requires them to file
new registration statements. This will promote consistent treatment of
these funds' filings under the rule.
---------------------------------------------------------------------------

    \142\ See amended rule 486(a), (b)(1)(vi), and (g).
---------------------------------------------------------------------------

    Although one commenter suggested that we retain or codify the staff
no-action letters discussed above to allow affected funds that conduct
delayed or continuous offerings under rule 415(a)(1)(x) to file post-
effective amendments that are immediately effective under rule 486(b),
we believe the final rule makes such relief unnecessary.\143\ For
example, while these funds will need to file new registration
statements every three years under rule 415, during the interim period
they will be able to update their registration statements through the
forward incorporation by reference provisions applicable to short-form
registration statement filers.\144\ The forward incorporation by
reference provisions allow these funds to avoid filing the types of
post-effective amendments that rule 486(b) covers, as well as other
types of post-effective amendments (e.g., those making material changes
to the fund's disclosure). Thus, we do not believe that affected funds
that make delayed or continuous offerings under rule 415(a)(1)(x) will
need to file the types of post-effective amendments rule 486(b) covers.
---------------------------------------------------------------------------

    \143\ See ICI Comment Letter.
    \144\ See rule 415(a)(5) and (6); General Instructions A.2 and
F.3 of amended Form N-2.
---------------------------------------------------------------------------

    Moreover, while the commenter only referred to post-effective
amendments, rule 486(b) also covers new registration statements under
certain circumstances. For instance, when an eligible fund has an
effective registration statement and wants to register additional
shares without making material amendments to its existing disclosure,
rule 486(b) allows that new registration statement to be immediately
effective.\145\ If we were to permit a fund that makes delayed or
continuous offerings under rule 415(a)(1)(x) to rely on rule 486(b) in
its entirety, then the new registration statement the fund must file
every three years could effectively become an automatic shelf
registration statement, even though the fund does not qualify as a WKSI
(e.g., it does not have $700 million in public float).\146\ As a result
of these considerations, the no-action letters stating that the staff
would not recommend an enforcement action if specific listed,
registered CEFs conducted offerings under rule 415(a)(1)(x) using rule
486(b) will be withdrawn effective August 1, 2021 (one year from the
effective date of the final rule).\147\ Importantly, as recognized
above, the final amendments provide a mechanism for these funds to
efficiently update their registration statements.
---------------------------------------------------------------------------

    \145\ See rule 486(b)(1)(i) and (v).
    \146\ Under these circumstances, a non-WKSI fund potentially
could combine its ability to forward incorporate by reference and
its ability to rely on rule 486(b) to achieve a WKSI-like status,
with registration statements that would always be immediately
effective upon filing. This could occur if, for example, a fund made
material changes to its registration statement by forward
incorporating information into its registration statement and then,
to satisfy the requirement to file a new registration statement
every three years, it filed a new registration statement under rule
486(b). In contrast, when an affected fund that may rely on rule 486
makes a material change to its registration statement, the relevant
filing is not effective immediately. See rule 486(a).
    \147\ See supra footnote 130.
---------------------------------------------------------------------------

E. Final Prospectus Delivery Reforms

    We are adopting, as proposed, rule amendments that will allow an
affected fund to satisfy its final prospectus delivery obligations by
filing its final prospectus with the Commission.
    The Securities Act requires registrants to deliver to each investor
in a registered offering a prospectus meeting the requirements of
section 10(a) (known as a ``final prospectus'').\148\ Section 5(b)(2)
makes it unlawful to deliver a security for the purpose of sale or for
delivery after sale unless accompanied or preceded by a final
prospectus. After the effectiveness of a registration statement, a
written communication that offers a security for sale, or confirms the
sale of a security, may be provided to investors if a final prospectus
is sent or given previously or at the same time. Otherwise, such a
communication may not be provided unless it is otherwise permitted
under Commission rules or meets the requirements of section 10(a).\149\
---------------------------------------------------------------------------

    \148\ 15 U.S.C. 77j(a).
    \149\ 15 U.S.C. 77e(b)(2).
---------------------------------------------------------------------------

    Rule 172 allows issuers, brokers, and dealers to satisfy final
prospectus delivery obligations if a final prospectus is or will be on
file with the Commission within the time required by the rules and
other conditions are satisfied.\150\ For example, rule 172 provides
that a final prospectus will be deemed to precede or accompany a
security for sale for purposes of section 5(b)(2) as long as the final
prospectus is filed with the Commission or it will be filed as part of
the registration statement.\151\ Rule 172 applies only to final
prospectuses and not to other documents.\152\ Rule 173 requires the
delivery of a copy of the final prospectus or, in lieu of a final
prospectus, a notice to purchasers stating that a sale of securities
was made pursuant to a registration statement or in a transaction in
which a final prospectus would have been required to have been
delivered in the absence of rule 172.\153\
---------------------------------------------------------------------------

    \150\ 17 CFR 230.172 (Securities Act rule 172); see also
Securities Offering Reform Adopting Release, supra footnote 5, at
nn.560-562 and accompanying text.
    \151\ See Securities Act rule 172. In the event that the issuer
fails to file such a prospectus in a timely manner, the issuer must
file the prospectus as soon as practicable thereafter. Securities
Act rule 172(c)(3); see also Securities Offering Reform Adopting
Release, supra footnote 5, at n.568 and preceding text (describing
this ``cure'' provision).
    \152\ See, e.g., Securities Offering Reform Adopting Release,
supra footnote 5, at text following n.567.
    \153\ 17 CFR 230.173 (Securities Act rule 173). See also
Proposing Release, supra footnote 10, at n.109. Rule 173(d) provides
that a purchaser who receives a notification may request a copy of
the final prospectus. We proposed a change to Item 34.6 of Form N-2,
under which funds currently undertake to provide an SAI upon
request, to require an affected fund to also undertake to provide a
prospectus upon request. We received no comments regarding this
aspect of the proposal and are making the change as proposed. See
Item 34.7 of amended Form N-2.
---------------------------------------------------------------------------

    Rules 172 and 173 do not apply to offerings of affected funds.\154\
The BDC Act directs us to remove the exclusion for BDC offerings.\155\
To implement the BDC Act, and to provide parity for registered CEFs
consistent with the Registered CEF Act, we proposed to amend rules 172
and 173 to remove the exclusion for offerings of all affected funds.
Commenters supported this approach, stating that the proposed
amendments would reduce prospectus printing and delivery costs and
provide parity for affected funds, consistent with

the BDC Act and the Registered CEF Act.\156\ We are adopting the
amendments to rules 172 and 173 as proposed.\157\
---------------------------------------------------------------------------

    \154\ See Securities Act rule 172(d)(1)-(2); Securities Act rule
173(f)(2)-(3).
    \155\ Section 803(b)(2)(L) of the BDC Act; see also section
509(a) of Registered CEF Act (requiring parity of securities
offering rules with operating companies for listed registered CEFs
and interval funds).
    \156\ See, e.g., SIFMA Comment Letter; ICI Comment Letter;
Invesco Comment Letter; TIAA Comment Letter.
    \157\ See amended Securities Act rule 172(d); amended Securities
Act rule 173(f).
---------------------------------------------------------------------------

F. Communications Reforms

1. Offering Communications
    We are adopting amendments to the communications rules, as
proposed, to extend to affected funds the rules that currently provide
operating companies and other parties (such as underwriters) increased
flexibility in their communications.\158\ The amendments permit these
communications notwithstanding the ``gun-jumping provisions'' in the
Securities Act, which restrict the types of offering communications
that issuers or other parties subject to the Act's provisions may use
in connection with a registered public offering.\159\ The gun-jumping
provisions were designed to make the statutorily mandated prospectus
the primary means for investors to obtain information regarding a
registered securities offering.\160\ Accordingly, the statute provides
that unless otherwise permitted:
---------------------------------------------------------------------------

    \158\ See, Proposing Release, supra footnote 10 at section
II.E.1; see also Securities Act rule 134; Securities Act rule 168;
Securities Act rule 156; Securities Act rule 163; Securities Act
rule 163A; Securities Act rule 164; Securities Act rule 168;
Securities Act rule 169; and Securities Act rule 433.
    \159\ Unless otherwise noted, offering communications generally
refer to written communications. Rule 405 provides that ``[e]xcept
as otherwise specifically provided or the context otherwise
requires, a written communication is any communication that is
written, printed, a radio or television broadcast, or a graphic
communication as defined in [rule 405].''
    \160\ See Securities Offering Reform Adopting Release, supra
footnote 5, at 44731. But see section 5(d) of the Securities Act [15
U.S.C. 77e(d)], which permits an emerging growth company, or any
person authorized to act on its behalf, to engage in oral or written
communications with potential investors that are qualified
institutional buyers, as defined in 17 CFR 230.144A (Securities Act
rule 144A), or institutions that are accredited investors, as
defined in 17 CFR 230.501(a) (Securities Act rule 501(a)), either
prior to or after the filing of a registration statement, to
determine their interest in a contemplated registered offering.
These communications are often referred to as ``testing the
waters.'' 17 CFR 230.163B (Securities Act rule 163B), recently
adopted by the Commission, extends this accommodation to all
issuers. Solicitations of Interest Prior to a Registered Public
Offering, Securities Act Release No. 10699 (Sept. 25, 2019) [84 FR
53011 (Oct. 4, 2019)] (``Rule 163B Adopting Release'').
---------------------------------------------------------------------------

     Before an issuer files a registration statement, all
offers, in whatever form, are prohibited; \161\
---------------------------------------------------------------------------

    \161\ See section 5(c) of the Securities Act [15 U.S.C. 77e(c)].
---------------------------------------------------------------------------

     After the issuer files a registration statement but before
it has become effective, the only written offers that are permitted are
those made using a preliminary prospectus that meets the requirements
of section 10 of the Securities Act, which must be filed with the
Commission; \162\ and
---------------------------------------------------------------------------

    \162\ This is because after the filing of the registration
statement but before its effectiveness, offers made in writing
(including electronically), by radio, or by television are limited
to a ``statutory prospectus'' that conforms to the information
requirements section 10 of the Securities Act. See sections 5(b)(1)
and 10 of the Securities Act [15 U.S.C. 77e(b)(1) and 77(j)].
---------------------------------------------------------------------------

     Even after the registration statement is declared
effective, offering participants still may make written offers only
through a statutory prospectus, except that they may use additional
written offering materials if a final prospectus that meets the
requirements of Securities Act section 10(a) is sent or given prior to
or with those materials.\163\
---------------------------------------------------------------------------

    \163\ See section 2(a)(10) and section 5(b)(1) of the Securities
Act [15 U.S.C. 77b(a)(10) and 77e(b)(1)].
---------------------------------------------------------------------------

    Since the adoption of the Securities Act, the Commission has
recognized that certain communications before, during, and after the
filing of a registration statement do not raise the investor protection
concerns that the gun jumping provisions aim to address. For this
reason, the Commission has adopted several rules to provide clarity to
issuers on the types of communications that are permissible and how to
communicate with investors without violating the gun jumping
provisions. We proposed to extend those rules to affected funds in the
Proposing Release. Commenters generally supported the proposed
amendments to the communications rules.\164\ Two commenters stated that
the amendments would allow increased flexibility in communications and
provide parity with operating companies.\165\ One commenter added that
the amendments would make it easier to execute offerings by affected
funds and would decrease costs, leading to lower offering costs and
potentially enhance capital formation while not negatively impacting
investor protections.\166\
---------------------------------------------------------------------------

    \164\ See, e.g., SIFMA Comment Letter; Comment Letter of Sidley
Austin LLP (June 10, 2019); ICI Comment Letter; ACC Comment Letter;
CBD Comment Letter; MFDF Comment Letter; TIAA Comment Letter.
    \165\ See, e.g., SIFMA Comment Letter; ICI Comment Letter.
    \166\ See, e.g., SIFMA Comment Letter.
---------------------------------------------------------------------------

    The Commission continues to believe that investors and the market
will benefit from access to greater communications under conditions
that preserve investor protections. To implement the BDC Act, and to
provide parity for registered CEFs consistent with the Registered CEF
Act, we are extending, as proposed, the communications rules currently
available to operating companies to affected funds by removing the
exclusions for affected funds and making other conforming changes.\167\
Specifically, the amended rules will:
---------------------------------------------------------------------------

    \167\ See amended rules 134(g), 163(b)(3), 163A(b)(4), 164(f),
168(d)(3), and 169(d)(4) (removing references to BDCs and limiting
the rules' exclusion of registered investment companies from the
safe harbor to exclude registered funds other than registered CEFs).
    See also amended rule 168 (adding to paragraphs (b)(1) and (2)
references to the Investment Company Act to parallel current
references to the Exchange Act to provide that forward-looking
information and factual business information may be included in
materials filed under the Investment Company Act); amended rule 433
(adding to paragraphs (a)(1)(i) and (iv) references to registration
statements filed on Form N-2 under adopted General Instruction A.2
to parallel current references to Form S-3; adding to paragraph
(c)(1)(ii) a reference to reports filed under section 30 of the
Investment Company Act as reports with which a free-writing
prospectus may not conflict). See also amended rule 156(d); infra
footnote 172.
---------------------------------------------------------------------------

     Permit affected funds to use rule 134 to publish factual
information about the issuer or the offering, including ``tombstone
ads.'' \168\
---------------------------------------------------------------------------

    \168\ See Proposing Release, supra footnote 10, at n.122
(discussing rule 134).
---------------------------------------------------------------------------

     Permit affected funds to rely on rule 163A, which provides
issuers a bright-line time period, ending 30 days prior to filing a
registration statement, during which they may communicate without risk
of violating the gun-jumping provisions.\169\
---------------------------------------------------------------------------

    \169\ See id. at n.123 (discussing rule 163A).
---------------------------------------------------------------------------

     Permit affected funds that are reporting companies to rely
on rule 168 to publish or disseminate regularly released factual
business information and forward-looking information at any time,
including around the time of a registered offering.\170\ The amendments
to rule 169 will also permit affected funds' continued publication or
dissemination of regularly released factual business information that
is intended for use by persons other than in their capacity as
investors or potential investors.\171\ We also are adopting amendments
to rule 156 to state that nothing in that rule may be construed to
prevent an affected fund from qualifying for an exemption under rule
168 or 169.\172\ The contents of any rule 168 or 169 communication
remain subject to the anti-fraud provisions of the Federal securities
laws.
---------------------------------------------------------------------------

    \170\ See id. at n.124 (discussing rule 168).
    \171\ Rule 169 is also a safe harbor from the definition of
``prospectus'' in section 2(a)(10) of the Securities Act.
    \172\ See amended rule 156(d); section 803(b)(2)(G) of the BDC
Act; section 509(a) of Registered CEF Act.

---------------------------------------------------------------------------

     Permit affected funds to rely on rules 164 and 433 to use
a ``free writing prospectus.'' \173\
---------------------------------------------------------------------------

    \173\ See Proposing Release, supra footnote 10, at n.127
(discussing rules 164 and 433).
---------------------------------------------------------------------------

     Permit affected funds that are WKSIs to engage at any time
in oral and written communications, including use at any time of a free
writing prospectus (before or after a registration statement is filed),
subject to the same conditions applicable to other WKSIs.\174\
---------------------------------------------------------------------------

    \174\ See id. at n.128 (discussing how communications rules
apply to WKSIs).
---------------------------------------------------------------------------

    As we discussed in the Proposing Release, investment company
communications currently are subject to rule 482.\175\ Rule 482
communications can only be used by a fund that is selling or is
proposing to sell its securities pursuant to a filed registration
statement, and are prospectuses subject to prospectus liability under
section 12 of the Securities Act.\176\ The amendments to the
communications rules provide affected funds with incremental
flexibility in their communications, including additional flexibility
to communicate before filing a registration statement, and some
additional flexibility in using communications that are not subject to
prospectus liability under section 12 of the Securities Act.\177\
Moreover, as we discussed in the Proposing Release, both the BDC Act
and Registered CEF Act direct the Commission to continue to make
available Securities Act rule 482 communications, or ``ads,''
notwithstanding the amendments to the communications rules.\178\
Affected funds therefore can now take advantage of additional
flexibility under the communications rules as amended or continue to
rely on rule 482 and other rules currently applicable to investment
company communications.
---------------------------------------------------------------------------

    \175\ See id. at section II.E.1.
    \176\ 17 CFR 230.482 (Securities Act rule 482); see also 17 CFR
230.497(i) (Securities Act rule 497).
    \177\ See Proposing Release, supra footnote 10, at section
II.E.1.
    \178\ See id. at text following n.128; see also sections
803(e)(2) of the BDC Act (prohibiting the Commission from
interpreting the amendments directed by the BDC Act in a manner that
would prevent BDCs from distributing sales material pursuant to rule
482 under the Securities Act); and 509(c)(1) of the Registered CEF
Act (prohibiting the Commission from interpreting the amendments
directed by the Registered CEF Act to impair or limit in any way a
registered closed-end company from using rule 482 communications,
under the Investment Company Act, to distribute sales material).
---------------------------------------------------------------------------

    In addition to comments on the proposed amendments to the
communications rules, two commenters urged us to adopt rules that would
extend the safe harbors for liability in private actions for certain
forward looking statements under section 27A of the Securities Act and
section 21E of the Exchange Act to affected funds.\179\ Those
commenters did not specify what the conditions or requirements of such
a rule might be, and the public has not had the opportunity to comment
on whether or how to extend safe harbors for forward-looking statements
to affected funds. For these reasons, we believe commenters' request
requires more extensive consideration beyond the scope of this
rulemaking.
---------------------------------------------------------------------------

    \179\ See Dechert Comment Letter; IPA Comment Letter; see also
sections 27A(b)(2)(B) and 27A(g) of the Securities Act [15 U.S.C.
77z-2(b)(2)(B) and 15 U.S.C. 77z-2(g)] and sections 21E(b)(2)(B) and
21E(g) of the Exchange Act [15 U.S.C. 78u-5(b)(2)(B) and 15 U.S.C.
78u-5(g)].
---------------------------------------------------------------------------

2. Broker-Dealer Research Reports
    We are adopting the amendments to Securities Act rule 138 as
proposed. Rule 138 permits a broker-dealer participating in the
registered offering of an eligible issuer's common stock and similar
securities to publish or distribute research reports about that
issuer's fixed income securities, and vice versa, if it publishes or
distributes that research in the regular course of its business.
    Although rule 138 does not currently exclude affected funds from
coverage, it does include references to Form S-3 but not Form N-2. We
therefore proposed to amend the rule's references to shelf registration
statements filed on Form S-3 to include a parallel reference to a
registration statement filed on Form N-2 under the proposed short-form
registration instruction. Rule 138 also currently provides that an
issuer covered in a research report published in reliance on the rule
must be required to file reports, and must have filed all periodic
reports required during the preceding 12 months (or such shorter time
that the issuer was required to file such reports), on Forms 10-K and
10-Q.\180\ Because registered CEFs do not file the periodic reports
currently specified in rule 138, we proposed to include parallel
references to the reports that registered CEFs are required to file,
i.e., reports on Forms N-CSR, N-Q, N-CEN, and N-PORT.\181\ We did not
receive any comments on these amendments and are adopting them as
proposed.
---------------------------------------------------------------------------

    \180\ See 17 CFR 230.138(a)(2)(i) (Securities Act rule
138(a)(2)(i)).
    \181\ See supra section II.B.3.a (Form N-Q will be rescinded on
May 1, 2020).
---------------------------------------------------------------------------

    We are not adopting changes to 17 CFR 230.139 (rule 139).\182\ That
rule provides a safe harbor for a broker-dealer's publication or
distribution of research reports where the broker-dealer is
participating in the registered offering of the issuer's securities
and, unlike rule 138, permits the research report to cover any class of
the issuer's securities.
---------------------------------------------------------------------------

    \182\ See Proposing Release, supra footnote 10, at section
II.E.2.
---------------------------------------------------------------------------

    As we stated in the Proposing Release, in 2018 the Commission
adopted new 17 CFR 230.139b (Securities Act rule 139b) to implement the
Fair Access to Investment Research Act of 2017 (the ``FAIR Act'').\183\
The FAIR Act directed that the Commission extend rule 139 to cover
broker-dealers' publication or distribution of ``covered investment
fund research reports.'' These include research reports about affected
funds.\184\
---------------------------------------------------------------------------

    \183\ See Fair Access to Investment Research Act of 2017, Public
Law 115-66, 131 Stat. 1196 (2017); see also Covered Investment Fund
Research Reports Adopting Release, supra footnote 101.
    \184\ 17 CFR 230.139b; see also Covered Investment Fund Research
Reports Adopting Release, supra footnote 101, at 64183 (providing
that under rule 139b, the term ``covered investment fund'' includes,
among other things, registered investment companies and BDCs).
---------------------------------------------------------------------------

    Rule 139b includes specific provisions mandated by Congress for
covered investment fund research reports. For example, rule 139b
excludes from the rule's safe harbor research reports published or
distributed by the covered investment fund itself, any affiliate of the
covered investment fund, or any broker-dealer that is an investment
adviser (or an affiliated person of an investment adviser) for the
covered investment fund.\185\ The Commission did not propose changes to
rule 139 because it believed that rule 139b satisfies the directives of
the BDC Act and Registered CEF Act by extending rule 139's safe harbor
to research reports on BDCs and registered CEFs and is consistent with
Congress's core objective regarding research reports covering these
funds.\186\ The Commission observed that, if it were to amend rule 139
to cover research reports on BDCs, or on affected funds generally,
exactly the same conduct would be subject to different standards based
on the rule a broker-dealer chose to use.\187\ The Commission believed
that it would be more appropriate to provide a consistent approach for
affected fund research reports under rule 139b.\188\
---------------------------------------------------------------------------

    \185\ See Covered Investment Fund Research Reports Adopting
Release, supra footnote 101 at sections II.A.1 and II.E.2; see also
section 2(f)(3) of the FAIR Act.
    \186\ See Covered Investment Fund Research Reports Adopting
Release, supra footnote 101, at nn.144-145 and accompanying
paragraph.
    \187\ Id.
    \188\ Id.
---------------------------------------------------------------------------

    One commenter suggested that we amend rule 139 and repeal rule
139b, in order to provide the same requirements for broker-dealer
research reports on

affected funds and operating companies.\189\ The commenter raised
concerns regarding differences between these two rules' requirements,
such as rule 139b's ``affiliate exclusion.'' That provision makes rule
139b's safe harbor inapplicable to research reports by a broker-dealer
that is an investment adviser (or an affiliated person of an investment
adviser) to the covered investment fund.
---------------------------------------------------------------------------

    \189\ See ABA Comment Letter.
---------------------------------------------------------------------------

    We acknowledged the differences between rule 139b and rule 139 in
the Proposing Release. Indeed, the different requirements in rule
139b--which were mandated by Congress in the FAIR Act--are why we did
not propose amendments to rule 139. We continue to believe that rule
139b already satisfies the directives of the BDC Act and Registered CEF
Act by extending rule 139's safe harbor to research reports on BDCs and
registered CEFs and is consistent with Congress's core objective
regarding research reports covering these funds. If we were to amend
rule 139 and rescind rule 139b as urged by this commenter, this would
not give effect to Congress's more specific directives in the FAIR Act.
Moreover, rule 139b, as directed by the FAIR Act, provides a consistent
framework for research reports on ``covered investment funds,'' which
are not limited to the affected funds covered in this rulemaking.
Maintaining rule 139b therefore provides a consistent approach for all
``covered investment fund research reports.''

G. Other Rule Amendments

1. Rule 418 Supplemental Information
    As proposed, we are adopting amendments to rule 418 to exempt
affected funds that are eligible to file a short-form registration
statement on Form N-2 from the requirement to furnish certain
supplemental information to the Commission or staff on request under
paragraph (a)(3) of the rule. As discussed in the Proposing Release,
operating companies that are eligible to use Form S-3 are already
exempt from having to furnish certain information under rule
418(a)(3).\190\ Commenters did not address the amendments to rule 418,
which we proposed to implement the BDC Act and to provide parity for
registered CEFs consistent with the Registered CEF Act.\191\ Consistent
with the proposal, affected funds that are eligible to file a short-
form registration statement on Form N-2 will not be required to
furnish, on request, recent engineering, management, or similar reports
or memoranda relating to broad aspects of the business, operations, or
products of the registrant under amended rule 418(a)(3).\192\
---------------------------------------------------------------------------

    \190\ See Proposing Release, supra footnote 10, at text
accompanying n.147.
    \191\ See section 803(b)(2)(M) of the BDC Act.
    \192\ See Proposing Release, supra footnote 10, at n.148.
---------------------------------------------------------------------------

2. Amendments to Incorporation by Reference Into Proxy Statements
    We are adopting amendments to Schedule 14A under the Exchange Act
as proposed, consistent with the BDC Act and the Registered CEF
Act.\193\ We did not receive comments on the proposed amendments to
Schedule 14A. The amendments will allow affected funds that meet the
requirements of the short-form registration instruction in Form N-2, as
further described in Note E to Schedule 14A, to incorporate certain
information by reference to previously-filed documents for proxy
statements containing specific proposals under Item 13 of Schedule
14A.\194\ The amendments allow eligible funds to incorporate by
reference certain required information for relevant proxy proposals to
the same extent that operating companies meeting the requirements of
Form S-3 (as defined in Note E to Schedule 14A) may use incorporation
by reference under the same circumstances.\195\
---------------------------------------------------------------------------

    \193\ Section 803(b)(2)(N) of the BDC Act (directing us to amend
Item 13(b)(1) of Schedule 14A to include as an issuer to which Item
13(b)(1) applies a BDC that would otherwise meet the requirements of
Note E of the Schedule); section 509(a) of the Registered CEF Act
(requiring us to provide certain registered CEFs with the same
flexibility under the proxy rules, subject to appropriate
conditions, as is available to other issuers required to file
reports under section 13 or section 15(d) of the Exchange Act).
    \194\ Item 13 applies to proxy statements seeking security
holder approval to authorize, issue, modify, or exchange securities
as described in Items 11 or 12 of Schedule 14A.
    \195\ The proposed definition in Note E of Schedule 14A of an
affected fund that ``meets the requirements of General Instruction
A.2 of Form N-2'' included certain conditions relating to the
transaction requirements in General Instruction I.B or I.C of Form
S-3, consistent with the conditions in the definition in Note E of
an operating company that ``meets the requirements of Form S-3.'' We
are adopting the definition in Note E as proposed to provide parity
between affected funds and operating companies although, as
discussed in the Proposing Release, we believe these conditions are
less likely to be relevant to affected funds. See Proposing Release,
supra footnote 10, at n.152.
---------------------------------------------------------------------------

3. Rule 103 of Regulation FD
    We are adopting amendments to rule 103(a) of Regulation FD, as
proposed, to provide that an affected fund's failure to make a public
disclosure required solely by rule 100 of Regulation FD will not affect
the fund's eligibility under the short-form registration instruction of
Form N-2.\196\ We did not receive comments on the proposed amendments
to rule 103(a). The final amendments to rule 103(a) will enhance parity
between affected funds and operating companies, consistent with the BDC
Act and the Registered CEF Act, as rule 103(a) already provides that an
operating company's failure to make a public disclosure required solely
by rule 100 of Regulation FD will not affect its eligibility to use
Form S-3.\197\
---------------------------------------------------------------------------

    \196\ Rule 100 of Regulation FD generally requires an issuer to
make either simultaneous or prompt public disclosure of any material
nonpublic information regarding the issuer or its securities that
the issuer or a person acting on its behalf has selectively
disclosed to certain parties. See 17 CFR 243.100 (requiring
simultaneous public disclosure in the case of an intentional
selective disclosure or prompt public disclosure in the case of a
non-intentional selective disclosure).
    \197\ See section 803(b)(2)(O) of the BDC Act; 17 CFR 243.103(a)
(rule 103(a) of Regulation FD).
---------------------------------------------------------------------------

H. New Registration Fee Payment Method for Interval Funds and Issuers
of Certain Exchange-Traded Products

    We are adopting a modernized approach to registration fee payment
that will require interval funds to pay securities registration fees
using the same method that mutual funds and ETFs use today.\198\
Specifically, for interval funds, the final rule will provide that such
funds register an indefinite amount of securities upon their
registration statements' effectiveness.\199\ Like mutual funds and
ETFs, interval funds will be required to

pay registration fees based on their net issuance of shares, no later
than 90 days after the funds' fiscal year ends.\200\ These issuers will
be required to file information about the computation of this
registration fee and other information on Form 24F-2 under the
Investment Company Act when paying the fee.\201\ In response to
comments that we received, we also are extending similar treatment to
certain ETPs that are not registered under the Investment Company Act.
---------------------------------------------------------------------------

    \198\ In general, issuers today--including interval funds--are
required under the Securities Act to pay a registration fee to the
Commission at the time of filing a registration statement. See
sections 6(b)(1) (requiring applicants to pay a fee to the
Commission at the time of filing a registration statement) and (c)
(providing that a registration statement shall not be deemed to have
taken place without payment of a registration fee) of the Securities
Act [15 U.S.C. 77f(b)(1)]. This means that they pay registration
fees at the time they register the offering of securities,
regardless of when (or if) they sell them. WKSIs using automatic
shelf registration statements have additional flexibility to pay
filing fees at or prior to the time of a securities offering. See
supra footnote 78; see also Securities Offering Reform Adopting
Release, supra footnote 5, at 44780. This arrangement is commonly
known as ``pay-as-you-go.'' Id. As a result, these filers may defer
payment until a future takedown of shares off a shelf registration
statement. Affected funds that become WKSIs as a result of our final
rule will also gain that flexibility, but other affected funds will
not. See supra section II.C.
    \199\ The final rule applies to interval funds the same
treatment provided by rule 24f-2 to open-end funds and UITs. See
amended rule 23c-3(e) (providing that an interval fund would be
deemed to have registered an indefinite amount of securities under
section 24(f) upon the effective date of its registration
statement); see also amended rule 24f-2 (providing for interval
funds to pay their registration fees on the same annual net basis as
mutual funds, other open-end funds, and UITs). See section 4(e) of
the Exchange Act [15 U.S.C. 78d-4(e)]; section 28 of the Securities
Act [15 U.S.C. 77z-3)].
    \200\ See section 24(f)(2) of the Investment Company Act [15
U.S.C. 80a-24(f)(2)]. Specifically, mutual funds and ETFs currently
are required to pay fees on a net basis, based upon the sales price
for securities sold during the fiscal year and reduced based on the
price of shares redeemed or repurchased that year.
    \201\ 17 CFR 274.24.
---------------------------------------------------------------------------

    We proposed to amend rules 23c-3 and 24f-2 so that interval funds
would pay registration fees on this same annual net basis.\202\ The
commenters who addressed this aspect of the proposal supported it.\203\
Two commenters suggested expanding the scope of this aspect of our
proposal to include additional types of issuers.\204\ One commenter
recommended extending the scope of the provision to ``all other funds''
to confer the same benefits to those additional funds, such as
eliminating the need to predict the number of shares the fund expects
to sell.\205\ Another commenter suggested extending the scope to
``tender offer funds''--those that make repurchase offers but that are
not, like interval funds, required to periodically repurchase shares or
to have a fundamental policy regarding its repurchase offers that can
be changed only by a shareholder vote.\206\ We are adopting this
provision as proposed. Of the categories of investment companies
contemplated by commenters, only interval funds routinely repurchase
shares at NAV and are required to periodically offer to repurchase
their shares, making these funds more like mutual funds and ETFs, which
are required to use this method.
---------------------------------------------------------------------------

    \202\ Proposing Release, supra footnote 10, at section II.G
(discussing how and why interval funds are currently not permitted
to pay registration fees on an annual net basis).
    \203\ ICI Comment Letter; Invesco Comment Letter. No commenter
expressed opposition to the proposed provision.
    \204\ ABA Comment Letter; ICI Comment Letter.
    \205\ ICI Comment Letter.
    \206\ ABA Comment Letter.
---------------------------------------------------------------------------

    In response to a request for comment in the Proposing Release, a
number of commenters also recommended that certain ETPs that are not
registered under the Investment Company Act be permitted to register
offerings of an indefinite number of securities and pay registration
fees in a manner equivalent to that under rule 24f-2.\207\ These
commenters stated that these ETPs operate in a manner substantially
similar to that of ETFs and would similarly benefit from paying
registration fees on an annual net basis and from registering offerings
of an indefinite number of securities.\208\ Some of these commenters
also noted that the attributes cited in the Proposing Release for
extending the ability to pay registration fees on an annual net basis
to interval funds (routine repurchases of shares at NAV and avoiding
the possibility that an interval fund would inadvertently sell more
shares than it had registered) would also apply to these ETPs.\209\
---------------------------------------------------------------------------

    \207\ GraniteShares Comment Letter; Invesco Comment Letter;
ProShares Comment Letter; Comment Letter of State Street Global
Advisors (June 21, 2019) (``SSGA Comment Letter''); USCF Comment
Letter; WGC Comment Letter; Comment Letter of Morgan, Lewis &
Bockius LLP (Jan. 15, 2020).
    \208\ Invesco Comment Letter (stating that the provision would
assist ETPs); ProShares Comment Letter (same); SSGA Comment Letter
(same); GraniteShares Comment Letter (stating that the provision
would assist ETPs, and would eliminate a competitive difference
between ETPs and mutual funds); USCF Comment Letter (stating that
the provision would provide ETPs with cost savings and efficiencies
that would benefit investors); WGC Comment Letter (same). One
commenter noted that the securities of these ETPs are issued and
redeemed in large blocks called ``creation units'' through either
in-kind transactions with brokerage firms and institutional
investors or on a cash basis when the ETPs invest in futures
contracts and other investments that cannot be transferred in-kind.
GraniteShares Comment Letter.
    \209\ USCF Comment Letter; SSGA Comment Letter; WGC Comment
Letter.
---------------------------------------------------------------------------

    After considering these comments, we have determined to adopt
amendments to enable certain ETPs that are not registered under the
Investment Company Act to elect to register an offering of an
indeterminate number of securities and to pay registration fees for
such an offering in a manner equivalent to that for mutual funds and
ETFs (i.e., in arrears on an annual net basis). In view of the concerns
raised by commenters as well as the similarities between these ETPs and
ETFs, we agree that it is appropriate to extend the availability of
this treatment to these ETPs under the Securities Act. Accordingly,
issuers that offer exchange-traded vehicle securities, as the term will
now be defined in amended rule 405,\210\ will be eligible under new
Securities Act rule 456(d) to elect to register an offering of an
indeterminate amount of exchange-traded vehicle securities and pay
registration fees for such an offering on an annual net basis no later
than 90 days after the end of the fiscal year when making this
election. We are also adopting Securities Act rule 457(u), which sets
forth the calculation method for paying registration fees in this
manner and is consistent with the fee calculation provisions of Form
24F-2.\211\ Finally, we are adopting rule 424(i) pursuant to which
issuers that elect to register an offering of an indeterminate amount
of securities pursuant to rule 456(d) will be required to file a
prospectus supplement when paying registration fees on an annual net
basis.\212\
---------------------------------------------------------------------------

    \210\ We believe that the scope of this definition properly
limits the availability of this treatment to offerings of securities
that share substantially similar attributes with those issued by
ETFs, such as being listed on a national securities exchange and
routine purchases and redemptions of the securities in ``creation
units'' at NAV. The reference to ``ratable share'' in the definition
encompasses repurchases or redemptions of securities that occur at
NAV on an in-kind basis or cash basis.
    \211\ We are amending a number of Securities Act registration
statement forms (Forms S-1, S-3, F-1 and F-3) to provide that an
issuer may elect to register an indeterminate amount of exchange-
traded vehicle securities on these registration statement forms.
    \212\ Rule 424(i) also includes certain disclosure requirements
modeled after Form 24F-2.
---------------------------------------------------------------------------

I. Disclosure and Reporting Parity Proposals

    We are adopting amendments to our rules and forms, substantially as
proposed, intended to tailor the disclosure and regulatory framework
for affected funds in light of our amendments to the offering rules.
Many of these amendments are not required by the BDC Act or the
Registered CEF Act, but we believe are consistent with the respective
Acts' requirements to increase regulatory parity of affected funds with
otherwise similarly-situated issuers.\213\ As discussed in detail
below, these amendments include structured data requirements; new
annual reporting requirements; amendments to provide all affected funds
additional flexibility to incorporate information by reference; and
enhancements to the disclosures that registered CEFs make to investors
when the funds are not updating their registration statements.
---------------------------------------------------------------------------

    \213\ For example, regulatory parity could mitigate any
competitive disparities between affected funds and other issuers. It
also could help investors in affected funds by providing them
investor protections that are currently provided to investors in
similarly-situated issuers. See, e.g., infra discussion in
paragraphs accompanying footnotes 284-289.
---------------------------------------------------------------------------

1. Structured Data Requirements
    We are adopting, substantially as proposed, certain new structured
data reporting requirements for registered CEFs and BDCs. In
particular, and as discussed in detail below, we are requiring:

     BDCs, like operating companies, to submit financial
statement information using Inline XBRL format;
     registered CEFs and BDCs to include structured cover page
information in their registration statements on Form N-2 using Inline
XBRL format;
     certain information required in an affected fund's
prospectus to be tagged using Inline XBRL format; and
     filings on Form 24F-2 to be submitted in eXtensible Markup
Language (``XML'') format.
a. Inline XBRL Requirements for Financial Statements and Notes to
Financial Statements
    We are adopting, as proposed, an amendment to 17 CFR 229.601 (Item
601 of Regulation S-K) to subject BDCs to the Inline XBRL financial
statement tagging requirements that apply to operating companies, by
removing the exclusion for BDCs from the Inline XBRL financial
statement tagging requirements.\214\ We continue to believe that
reporting in a structured data format makes financial information
easier for investors to analyze and helps automate regulatory filings
and business information processing.\215\ We also believe that BDC
investors and other market participants would benefit from the
availability of relevant information in a structured data format.\216\
These requirements will reduce the current disparity between the
accessibility of financial information BDCs provide to the market and
the accessibility of substantially similar financial information that
operating companies provide to the market.\217\
---------------------------------------------------------------------------

    \214\ Compare 17 CFR 229.601(b)(101)(i) (amended Item
601(b)(101)(i) of Regulation S-K) (excluding registered investment
companies from rule 601's tagging requirements) with current Item
601(b)(101)(i) of Regulation S-K (excluding all registrants that
prepare financial statements in accordance with 17 CFR 210.6-01
through 210.6-10 (Article 6 of Regulation S-X); see also amended
rule 405(b)(3)(i) of Regulation S-T (requiring a BDC to tag its
financial statements). We also are making conforming amendments to
Items 601(b)(101)(ii)(A) and (iii) of Regulation S-K to clarify the
exclusion of registered investment companies from rule 601's tagging
requirements.
    \215\ Proposing Release, supra footnote 10, at section II.H.1.a.
    \216\ Id. We also observed that having this information in a
structured data format would enhance our staff's ability to review
and analyze BDCs' financial statements.
    \217\ Id. (summarizing the structured data reporting
requirements for operating companies and registered investment
companies).
---------------------------------------------------------------------------

    The commenters who addressed this proposed requirement supported
it.\218\ Some of these commenters stated that structured financial
statement data would be more useful to investors than information in
only a HyperText Markup Language (``HTML'') or plain text format.\219\
One of these commenters stated that more structured financial statement
reporting would improve the clarity and transparency of reported
information by using consistent, agreed-upon definitions, and would
yield information that is less expensive to process and more timely
than unstructured data.\220\ Another commenter stated that eliminating
the delay for data users to obtain information once it is public makes
capital markets more efficient.\221\
---------------------------------------------------------------------------

    \218\ Calcbench Comment Letter; Comment Letter of IRIS Business
Services Ltd. (June 10, 2019) (``IRIS Comment Letter''); Comment
Letter of XBRL US (June 10, 2019) (``XBRL US Comment Letter'').
    \219\ Calcbench Comment Letter; XBRL US Comment Letter.
    \220\ XBRL US Comment Letter.
    \221\ Calcbench Comment Letter.
---------------------------------------------------------------------------

    Two commenters supported the use of the Inline XBRL format
specifically.\222\ One of these commenters noted that, because Inline
XBRL is both machine-readable and human-readable, it will help
investors in BDCs quickly access structured data just as investors in
operating companies can.\223\ This commenter also highlighted potential
benefits of the format for issuers, stating that data in Inline XBRL
format is easier to review than, for example, the same data in separate
XBRL and HTML formats.\224\ Some commenters also stated that the
currently available XBRL taxonomies will be sufficient for BDCs.\225\
After considering public comments received, and because we continue to
believe that investors will benefit from the availability of relevant
information in a structured data format, we are adopting this
requirement as proposed.\226\
---------------------------------------------------------------------------

    \222\ IRIS Comment Letter; XBRL US Comment Letter.
    \223\ IRIS Comment Letter.
    \224\ IRIS Comment Letter. The commenter also stated that it is
appropriate to subject BDCs to the same format as operating
companies--compared to requiring BDCs to report on Forms N-PORT and
N-CEN--because the format of their financial statements is similar
to that of operating companies. Id. Another commenter observed that
the same applications used to prepare XBRL for operating companies
could be leveraged for BDCs, increasing economies of scale. XBRL US
Comment Letter.
    \225\ IRIS Comment Letter; XBRL US Comment Letter. Based on our
staff's review of BDCs' disclosures and assessment of the XBRL
taxonomies' development since they were first adopted in 2009, the
Commission stated its belief that relevant XBRL taxonomies were
sufficiently well developed for financial statement reporting by
BDCs. Proposing Release, supra footnote 10, at section II.H.1.a. One
commenter observed that BDC financial statement line items were
already captured in the US GAAP Taxonomy and that a new custom
schema would be an unnecessary cost for the Commission and the
marketplace. XBRL US Comment Letter. Another commenter stated,
however, that it would expect a greater use of non-standard
reporting elements than for average operating companies. IRIS
Comment Letter. We continue to believe that the relevant XBRL
taxonomies are sufficiently well developed for use by BDCs, even if
BDCs use non-standard elements more than the average operating
company.
    \226\ See supra footnote 214.
---------------------------------------------------------------------------

b. New Check Boxes and Structured Data Format for Form N-2 Cover Page
Information
    We are adopting, as proposed, a requirement that all affected funds
tag all of the data points that appear on the cover page of Form N-2,
except the Calculation of Registration Fee table, using Inline XBRL
format.\227\ These cover page data points will include, for example,
the company name, the Act or Acts to which the registration statement
relates, and check boxes relating to the effectiveness of the
registration statement. We currently require operating companies to tag
all of the data points on the cover page of Form 10-K, Form 10-Q, Form
8-K, Form 20-F, and Form 40-F using Inline XBRL format.\228\ The
Commission generally proposed to extend this requirement to mandatory
tagging of the data points on the cover page of Form N-2 because it
believed it would allow investors, other market participants, and other
data users to automate their use of this information.\229\
---------------------------------------------------------------------------

    \227\ See new General Instruction I.1 of amended Form N-2; new
rule 405(b)(3)(ii) of amended Regulation S-T.
    We also are making certain conforming revisions to proposed
General Instruction H (Interactive Data Files), which we renumbered
as General Instruction I of amended Form N-2. In addition, and as a
result, we renumbered General Instruction I of current Form N-2
(Registration of Additional Securities) as General Instruction J of
amended Form N-2.
    \228\ See 17 CFR 232.406 [rule 406 of Regulation S-T]; FAST Act
Modernization Adopting Release, supra footnote 66, at 12674.
    \229\ Proposing Release, supra footnote 10, at section II.H.1.b.
The Commission noted that this requirement would enhance investors'
ability to better identify, count, sort, aggregate, compare, and
analyze registrants and disclosures to the extent these data points
otherwise would be formatted only in HTML.
---------------------------------------------------------------------------

    The commenters who addressed the proposed requirement supported
it.\230\ As above, two commenters supported the proposed Inline XBRL
format, stating that it would provide benefits for investors,
regulators, and issuers.\231\ One commenter specifically supported
requiring the Inline XBRL format over allowing reporting entities to
choose from more than one data standard or developing a custom schema
for the required information.\232\ After

considering public comments received, and because we continue to
believe that it would allow investors, other market participants, and
other data users to automate their use of this information, we are
adopting this requirement as proposed.
---------------------------------------------------------------------------

    \230\ IRIS Comment Letter; XBRL US Comment Letter.
    \231\ IRIS Comment Letter; XBRL US Comment Letter; see also
supra footnotes 222-224 and accompanying text.
    \232\ XBRL US Comment Letter (stating that multiple data
standards would cause confusion in the marketplace and unnecessary
costs throughout the reporting supply chain and that a custom schema
would require the development of new tools to create and to extract
and analyze the data).
---------------------------------------------------------------------------

    The Commission did not propose to require affected funds to tag the
table on the form's cover page that includes information about
calculation of the fund's registration fee under the Securities
Act.\233\ One commenter recommended that the Commission require tagging
of such registration fee information, stating that these are valuable
data elements and that extending the requirement to fee information
would not increase the burden of tagging on issuers.\234\ The
Commission recently proposed such amendments to Form N-2 as part of a
larger proposal to modernize the filing fee disclosure and payment
methods for most of the Commission's fee-bearing forms, statements, and
related rules.\235\ As a result, we believe that the filing fee
disclosure and payment modernization rulemaking is a more appropriate
vehicle for considering whether the fee calculation information on Form
N-2 should be tagged.
---------------------------------------------------------------------------

    \233\ See Proposing Release, supra footnote 10, at section
II.H.1.b.
    \234\ See XBRL US Comment Letter.
    \235\ See Filing Fee Disclosure and Payment Methods
Modernization, Investment Company Act Release No. 33676 (Oct. 24,
2019) [84 FR 71580 (Dec. 27, 2019)].
---------------------------------------------------------------------------

    In addition, we are amending Form N-2 to add new check boxes to its
cover page, as proposed.\236\ We proposed several new check boxes to
allow investors, Commission staff, and others to more readily identify
types of issuers and securities.\237\ We continue to believe that this
check box information will allow investors, Commission staff, and
others to more readily identify types of issuers and securities, and so
are adopting this provision as proposed.\238\ These check boxes will be
among the data points required to be tagged using Inline XBRL
format.\239\
---------------------------------------------------------------------------

    \236\ See cover page of amended Form N-2. For purposes of 17 CFR
230.401(g) (Securities Act rule 401(g)), an affected fund that
checks a box on Form N-2 to indicate that it is relying on the
short-form registration instruction or that it is a WKSI filing an
automatic shelf registration statement will be deemed to have filed
the relevant registration statement or post-effective amendment
properly under the applicable provisions of Form N-2 unless the
Commission objects in the manner set forth in rule 401(g). See 17
CFR 230.401(g).
    \237\ Proposing Release, supra footnote 10, at section II.G.1.b.
(discussing proposed check box requirements on Form N-2 cover page).
In a conforming change, we are also including a check box that is
substantively identical to a parallel check box on Form S-3 for
emerging growth companies that have elected not to use an extended
transition period for complying with new or revised accounting
standards. See cover page of amended Form N-2.
    \238\ Commenters recommended that the Commission clarify that
the check box indicating that the only securities being registered
are being offered pursuant to dividend or interest reinvestment
plans is not intended to affect the ability of affected funds to
rely on ``Guide 5. Dividend Reinvestment Plans'' to Form N-2. See
Dechert Comment Letter; IPA Comment Letter. The new check box will
not affect that ability.
    \239\ See supra footnote 227.
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c. Tagging of Prospectus Disclosure Items
    We are adopting, as proposed, a requirement that all affected funds
tag certain information that is required to be included in an affected
fund's prospectus using Inline XBRL format. All affected funds will be
required to submit certain information in registration statements or
post-effective amendments filed on Form N-2 and certain forms of
prospectuses filed pursuant to rule 424 under the Securities Act to the
Commission using Inline XBRL.\240\ A seasoned fund filing a short-form
registration statement on Form N-2 also will be required to tag
information appearing in Exchange Act reports--such as those on Form N-
CSR, 10-K, 10-Q, or 8-K--if that information is required to be tagged
in the fund's prospectus.\241\
---------------------------------------------------------------------------

    \240\ See new General Instruction I.2 of amended Form N-2.
    \241\ See new General Instruction I.3 of amended Form N-2.
---------------------------------------------------------------------------

    We will require affected funds to tag the following prospectus
disclosure items using Inline XBRL format: Fee Table; Senior Securities
Table; Investment Objectives and Policies; Risk Factors; Share Price
Data; and Capital Stock, Long-Term Debt, and Other Securities.\242\ We
continue to believe that these items are of greatest utility for
investors and other data users that seek structured data to analyze and
compare funds, as they provide important information about a fund's key
features, costs, and risks.\243\ We believe tagging the Fee Table,
which provides detailed information about the fund's costs, could
facilitate analysis of fund costs and allow investors and other data
users to compare the costs of a particular affected fund to the costs
of other funds or other investment products, such as mutual funds. The
Senior Securities Table requires registrants to include information
about each class of senior securities, including bank loans. Tagging
this information will facilitate analyses of outstanding senior
securities that may bear on the likelihood, frequency, and size of
distributions from the fund to its investors. Tagging Investment
Objectives and Policies, which provides information about the fund's
principal portfolio emphasis, will help an investor determine the
degree to which a fund's objectives and policies align with the
investor's preferences. Risk Factors describes risks associated with an
investment in the fund. Tagging Risk Factors will facilitate the
aggregation, analysis, and comparison by investors and other data users
of information about a fund's risks alongside the fund's features and
benefits. Tagging Share Price Information is important because the
presence of a premium or discount may bear on the likelihood,
frequency, and size of distributions from the fund to its investors,
which we believe may be of particular importance to many affected fund
investors. Tagging Capital Stock, Long-Term Debt, and Other Securities
better informs common shareholders how their rights, expenses, and
risks are affected when the fund issues other types or classes of
securities. We also continue to believe that these items are best
suited to being tagged in a structured format.
---------------------------------------------------------------------------

    \242\ See new General Instructions I.2 and I.3 of amended Form
N-2; see also Items 3.1, 4.3, 8.2.b, 8.2.d, 8.3.a, 8.3.b, 8.5.b,
8.5.c, 8.5.e, 10.1.a-d, 10.2.a-c, 10.2.e, 10.3, and 10.5 of amended
Form N-2. This information largely parallels similar information
contained in the Form N-1A risk/return summary. See Item 2 (Risk/
Return Summary: Investment Objectives/Goals), Item 3 (Risk/Return
Summary: Fee Table), and Item 4 (Risk/Return Summary: Investments,
Risks and Performance) of Form N-1A.
    \243\ See generally Proposing Release, supra footnote 10, at
section II.H.1.b.
---------------------------------------------------------------------------

    The commenters who addressed the proposed requirement supported
it.\244\ These commenters stated that the tagged data would be useful,
including both numeric and narrative information.\245\ In addition, one
commenter asserted that the Commission should require tagging all
financial data that is required to be reported.\246\ We believe that
this rule is appropriately focused on the key items that are most
suitable for tagging and of greatest utility for investors.
---------------------------------------------------------------------------

    \244\ IRIS Comment Letter; XBRL US Comment Letter.
    \245\ Id. One commenter also supported the proposed scope of the
new requirement--all affected funds--stating that if some issuers
are excluded, it would result in higher costs for preparer and users
of data. XBRL US Comment Letter. One commenter offered support for
the proposed Inline XBRL format, stating that it would provide
benefits to investors, regulators, and issuers. IRIS Comment Letter;
see also supra footnotes 222-224 and accompanying text.
    \246\ XBRL US Comment Letter.
---------------------------------------------------------------------------

    Because we continue to believe that structuring these data elements
will allow investors, other market participants, and other data users
to automate their use of this information,

we are adopting this requirement as proposed.\247\ As with other new
Commission XBRL taxonomies, staff will post for public review and
feedback a draft Inline XBRL taxonomy for affected funds' tagged
prospectus disclosures.\248\ When available, affected funds will be
required to use the most recent version of the Inline XBRL taxonomy for
tagged prospectus disclosures, as specified by the EDGAR Filer
Manual.\249\
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    \247\ See new General Instructions I.2 and I.3 of amended Form
N-2; new rule 405(b)(3)(iii) of amended Regulation S-T. We also are
making conforming amendments to rule 601(b)(101)(i)(C) of Regulation
S-K, rule 11 of Regulation S-T, and adding a new general instruction
to Form N-CSR to implement the specified prospectus disclosure
tagging requirements for affected funds.
    \248\ Taxonomies are available at https://www.sec.gov/structureddata/dera_taxonomies.
    \249\ See rule 405(c)(1) of Regulation S-T.
---------------------------------------------------------------------------

    As the Commission proposed, and as required of mutual funds and
ETFs under the recently adopted Inline XBRL regime,\250\ we will
require affected funds to submit ``Interactive Data Files'' (i.e.,
machine-readable computer code that presents information in XBRL
format) \251\ as follows:
---------------------------------------------------------------------------

    \250\ See Inline XBRL Filing of Tagged Data, Investment Company
Act Release No. 33139 (June 28, 2018) (``Inline XBRL Adopting
Release'').
    \251\ The term ``Interactive Data File'' is defined to mean
``the machine-readable computer code that presents information in
[XBRL] electronic format pursuant to [rule 405 of Regulation S-T]
and as specified by the EDGAR Filer Manual.'' See rule 11 of
Regulation S-T. The EDGAR Filer Manual sets forth the technical
formatting requirements for the presentation and submission of
electronic filings through the EDGAR system.
---------------------------------------------------------------------------

     For any registration statements and post-effective
amendments, Interactive Data Files must be filed either concurrently
with the filing or in a subsequent amendment that is filed on or before
the date that the registration statement or post-effective amendment
that contains the related information becomes effective; \252\
---------------------------------------------------------------------------

    \252\ New General Instruction I.2 of amended Form N-2; cf.
General Instruction C.3.(g)(i)(B) of Form N-1A.
---------------------------------------------------------------------------

     for any form of prospectus filed pursuant to rule 424,
Interactive Data Files must be submitted concurrently with the filing;
\253\ and
---------------------------------------------------------------------------

    \253\ New General Instruction I.2 of amended Form N-2; cf.
General Instruction C.3.(g)(ii) of Form N-1A.
---------------------------------------------------------------------------

     for any Exchange Act reports that a seasoned fund filing a
short-form registration statement on Form N-2 will have to tag, as
discussed above, Interactive Data files must be submitted concurrently
with the filing.\254\
---------------------------------------------------------------------------

    \254\ New General Instruction I.3 of amended Form N-2.
---------------------------------------------------------------------------

    We proposed this approach to facilitate timely availability and
promote the comparability and utility of important information in a
structured data format for investors, other market participants, and
other data users, which we believed would yield substantial
benefits.\255\ We did not receive comments on this aspect of the
proposal. We continue to believe that this approach will yield the
substantial benefits discussed above and therefore are adopting it as
proposed.
---------------------------------------------------------------------------

    \255\ Proposing Release, supra footnote 10, at section II.H.1.c.
---------------------------------------------------------------------------

d. Structured Data Format for Form 24F-2
    We will require submission of filings on Form 24F-2 in a structured
XML format.\256\ We proposed this use of a structured data format,
believing that it would make it easier for issuers to accurately
prepare and submit the information required by Form 24F-2 and would
make the submitted information more useful to Commission staff.\257\
The commenters who addressed the proposed requirement to structure Form
24F-2 supported it,\258\ with one commenter observing that the
structured registration fee information could be useful in validating
the submission.\259\ Commenters were mixed on the proposed custom XML
format, with one commenter supporting the proposed XML format,\260\ and
another recommending that the Commission use an XBRL format
instead.\261\
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    \256\ See General Instruction A.3 to amended Form 24F-2
(requiring reports on Form 24F-2 to be submitted in electronic
format pursuant to the EDGAR Filer Manual and Appendices). We are
expanding the group of issuers subject to filing on Form 24F-2 to
include interval funds. See supra section II.H. We also are making a
technical correction in Form 24F-2 to refer to the applicable
paragraph of 17 CFR 232.101 (rule 101 of Regulation S-T). See
General Instruction A.3 to amended Form 24F-2 (correcting ``rule
101(a)(1)(i)'' to ``rule 101(a)(1)(iv)''). In addition, we are
amending Form 24F-2 to add a free text response field, and a
requirement to provide the EDGAR series/class (contract) ID for each
separately reported series/class (contract) to facilitate
implementation of the new structured data format. See amended Form
24F-2.
    \257\ Proposing Release, supra footnote 10, at section II.H.1.d.
    \258\ IRIS Comment Letter; XBRL US Comment Letter.
    \259\ IRIS Comment Letter.
    \260\ IRIS Comment Letter. Additionally, two commenters
recommended that the Commission require that reports on Forms N-CEN
and N-PORT, which require reporting of information in a structured
data format using a custom XML schema, be in XBRL or Inline XBRL
format. See XBRL US Comment Letter; IRIS Comment Letter. The
Commission considered requiring reporting in XBRL format in
connection with its adoption of Forms N-CEN and N-PORT and
determined that the relatively simple characteristics reported on
those forms is more suited to XML than XBRL. See Investment Company
Reporting Modernization, Investment Company Act Release No. 32314
(Oct. 13, 2016) [81 FR 81870, 81906-07 (Nov. 17, 2016)]
(``Investment Company Reporting Modernization Adopting Release'').
    \261\ XBRL US Comment Letter (stating that a custom XML schema
will result in added costs for reporting entities and data consumers
relative to XBRL). This commenter also suggested requiring the use
of validation rules and linking custom extensions to improve data
quality for reported financial information. XBRL US Comment Letter.
While we encourage the use of appropriate tools to improve data
quality, we believe that consideration of a requirement to use
validation rules or use custom extension linking would best be taken
up on a separate, holistic basis, for BDCs and operating companies
alike, rather than in the context of this final rule.
---------------------------------------------------------------------------

    Because Form 24F-2 is primarily used by Commission staff to
validate registration fees paid by issuers and not for financial
reporting purposes, we continue to believe that a custom XML schema
will be an appropriate format for the required information. For
example, while XBRL allows issuers to capture the rich complexity of
financial information presented in accordance with GAAP, we believe
that XML is more appropriate for the relatively simple characteristics
of the fund's fee information in reports on Form 24F-2.\262\ In
addition we continue to believe that the XML format will improve the
quality of information disclosed by providing a built-in validation
framework of the data in the reports.\263\ We therefore will require
reports on Form 24F-2 to be filed in a structured XML format, as
proposed.
---------------------------------------------------------------------------

    \262\ See Investment Company Reporting Modernization Adopting
Release, supra footnote 260, at nn.449-50 and accompanying text.
    \263\ See id.
---------------------------------------------------------------------------

2. Periodic Reporting Requirements
    We are also adopting new annual report requirements, as proposed.
As we discussed in the Proposing Release, we expect several of the
reforms we are adopting in this release, such as those relating to
automatically effective shelf registration, forward incorporation by
reference, and final prospectus delivery, will elevate the importance
of periodic reporting relative to prospectus disclosure for affected
funds.
    A seasoned fund filing a short-form registration statement on Form
N-2 will be required to forward incorporate all periodic Exchange Act
reports into its registration statement.\264\ This should result in
periodic reports becoming a more salient, convenient, and comprehensive
source of updated information about a particular seasoned fund,
relative to that fund's registration statement. As a result, these
funds' annual reports may take on greater prominence, with investors
looking to the annual reports for key

information.\265\ Registered CEFs' shareholder reports may also take on
greater prominence for investors because, under the final rule,
affected funds will not be required to deliver final prospectuses but
will still be required to deliver shareholder reports at least semi-
annually.\266\
---------------------------------------------------------------------------

    \264\ See new General Instruction F.3.b of amended Form N-2.
    \265\ In 2005, the Commission observed that recent enhancements
to Exchange Act reporting enabled us to rely on those reports to a
greater degree in adopting our rules to reform the securities
offering process. Securities Offering Reform Adopting Release, supra
footnote 5, at 44726. As the Commission did then, we believe that
enhanced periodic reporting is an important corollary to reform of
the offering process under the Securities Act. See id.
    \266\ Compare Securities Act rule 172 with 17 CFR 270.30e-1
(Investment Company Act rule 30e-1); see also supra section II.C.
---------------------------------------------------------------------------

    Accordingly, as proposed, we are requiring seasoned funds that
register using the proposed short-form registration instruction to
include key information in their annual reports regarding fees and
expenses, premiums and discounts, and outstanding senior securities
that the funds currently disclose in their prospectuses.\267\ Because
the annual report will be incorporated by reference into the fund's
prospectus, requiring disclosure in both the prospectus and annual
report should not require duplicative disclosure. Moreover, specifying
identical disclosure requirements in both places may facilitate forward
incorporation by reference, by making clear that the same required
disclosure will satisfy both requirements. We continue to believe that
investors should have no less current information than they do today
about these items when the fund is offering its shares.\268\ Finally,
we are requiring, as proposed, registered CEFs to provide management's
discussion of fund performance (or ``MDFP'') in their annual reports to
shareholders, BDCs to provide financial highlights in their
registration statements and annual reports, and affected funds filing a
short-form registration statement on Form N-2 to disclose material
unresolved staff comments.\269\ These provisions are intended to
modernize and harmonize our periodic report disclosure requirements for
affected funds with those applicable to operating companies and mutual
funds and ETFs.\270\
---------------------------------------------------------------------------

    \267\ In general, these requirements are expressed as a cross-
reference to the specified registration statement requirements in
Form N-2. See new Instructions 4.h.(1)-4.h.(3) to Item 24 of amended
Form N-2 (referencing Items 4.3, 3.1, and 8.5 of amended Form N-2,
respectively).
    \268\ Proposing Release, supra footnote 10, at section II.H.2.
    \269\ See infra sections II.I.2.a-II.I.2.d. See new Instruction
4.g to Item 24 of amended Form N-2 (MDFP); deletion of Instruction 1
to Item 4 of current Form N-2 (BDC financial highlights); and new
Instruction 4.h.(4) to Item 24.4.h(4) of amended Form N-2 (material
unresolved staff comments).
    \270\ We are also, as proposed, amending Form N-2 to apply
certain of its requirements for annual reports to BDCs. See new
Instruction 10 to Item 24 of amended Form N-2.
---------------------------------------------------------------------------

a. Fee and Expense Table, Share Price Data, and Senior Securities Table
    We are adopting a requirement, as proposed, that funds filing a
short-form registration statement on Form N-2 include key information
in their annual reports that they disclose in their prospectuses in
light of the importance of this information and the increased
prominence of shareholder reports under our final rule. Specifically,
we will require that these funds include the following information in
their annual reports: \271\
---------------------------------------------------------------------------

    \271\ See new Instructions 4.h.(1) (senior securities table),
4.h.(2) (fee and expense table), and 4.h.(3) (share price data) to
Item 24 of amended Form N-2.
---------------------------------------------------------------------------

     Fee and Expense Table: Form N-2 requires registrants to
include information about the costs and expenses that the investor will
bear directly or indirectly, using specified captions and a specified
tabular format.\272\ This table is designed to help investors
understand the costs of investing in an affected fund and to compare
those costs with the costs of other affected funds.\273\ The Commission
has previously noted the importance of costs to an investment decision
and, in the case of registered open-end funds, has specified the
location of the fee table to enhance the prominence of the cost
information.\274\
---------------------------------------------------------------------------

    \272\ See Item 3.1 of amended Form N-2; see also new Instruction
4.h.(2) to Item 24 of amended Form N-2.
    \273\ See Enhanced Disclosure and New Prospectus Delivery Option
for Registered Open-End Management Investment Companies, Investment
Company Release No. 28064 (Nov. 21, 2007) [72 FR 67790, 67794 (Nov.
30, 2007)].
    \274\ See id.; Enhanced Disclosure and New Prospectus Delivery
Option for Registered Open-End Management Investment Companies,
Investment Company Act Release No. 28584 (Jan. 13, 2009) [74 FR
4546, 4553 (Jan. 26, 2009)]; Request for Comment on Fund Retail
Investor Experience and Disclosure, Investment Company Act Release
No. 33113 (June 5, 2018) [83 FR 26891, 26901 (June 11, 2018)]
(``Investor Experience Request for Comment'').
---------------------------------------------------------------------------

     Share Price Data: Form N-2 requires registrants to include
information about the share price of the registrant's stock as well as
information about any premium or discount that the share price
reflects, compared to the registrant's NAV.\275\ The presence of a
premium or discount may bear on the likelihood, frequency, and size of
distributions from the fund to its investors, which we believe may be
of particular importance to many affected fund investors.
---------------------------------------------------------------------------

    \275\ See Item 8.5 of amended Form N-2; see also new Instruction
4.h.(3) to Item 24 of amended Form N-2 (share price data).
---------------------------------------------------------------------------

     Senior Securities Table: Form N-2 requires registrants to
include information about each of its classes of senior securities,
including bank loans.\276\ As with a premium or discount, any
outstanding senior securities may bear on the likelihood, frequency,
and size of distributions from the fund to its investors. A registrant
must disclose information about its senior securities for the most
recent ten years, the last five years of which must be audited.\277\
---------------------------------------------------------------------------

    \276\ See Item 4.3 of amended Form N-2; see also new Instruction
4.h.(1) to Item 24 of amended Form N-2.
    \277\ See Instruction 1 to Item 4.3 (applying Instruction 8 to
Item 4.1 to Item 4.3) and Instruction 8 to Item 4.1 (requiring the
information to be audited) of amended Form N-2.
---------------------------------------------------------------------------

    The commenters that addressed these proposed requirements related
to the Fee and Expense Table, Share Price Data, and Senior Securities
Table supported them.\278\ Because we continue to believe in the
importance of this information and the increased prominence of
shareholder reports under our final rule,\279\ we are adopting this
aspect of the proposal as proposed.\280\
---------------------------------------------------------------------------

    \278\ ICI Comment Letter; Invesco Comment Letter. Two other
commenters stated that they did ``not object'' to the proposed
requirements. Dechert Comment Letter; IPA Comment Letter. Several
commenters opposed related potential modifications addressed in the
requests for comment within the Proposing Release that we are not
adopting. Dechert Comment Letter (opposing expansion of proposed
requirement to semi-annual reports; opposing expansion of
requirement to ``portfolio companies'' table); IPA Comment Letter
(same). One commenter recommended that the Commission continue to
consider ways to enhance the fund retail investor experience,
including the content of the annual report. ICI Comment Letter. The
Commission staff is continuing to consider comment letters received
in response to the Investor Experience Request for Comment. See
supra footnote 274.
    \279\ Proposing Release, supra footnote 10, at section II.H.2.a.
    \280\ One commenter recommended that we add an instruction to
Form N-2 to ``clarify'' that the schedules required by 17 CFR
210.12-12 (rule 12-12 of Regulation S-X) satisfy the Portfolio
Companies table requirement in Item 8.6.a of Form N-2. See Dechert
Comment Letter. We are not making this change because the two
provisions do not require the same information. Disclosure
satisfying the requirements of rule 12-12 of Regulation S-X would
not always satisfy the requirements of Item 8.6.a. For example, Item
8.6.a of Form N-2 requires certain information about each portfolio
company, such as the percentage of each class owned by the issuer,
the issuer's relationship with the portfolio company, and the
address of the portfolio company. Regulation S-X requires no such
disclosures.
---------------------------------------------------------------------------

    With respect to the Senior Securities Table, two commenters
requested that we revise the instruction to Form N-2

as it relates to affected funds to reduce the audit requirement from
the last five-years (in the registration statement) to the same periods
as contained in the audited balance sheet presented in the annual
report.\281\ However, such a change would alter the periods presented
for the Senior Securities Table, which match the periods presented in
the Financial Highlights.\282\ Given the importance of asset coverage
and the comparability of information contained in both the Financial
Highlights and the Senior Securities Table, we do not believe such a
change is appropriate. Additionally, because the annual report will be
incorporated by reference into the fund's prospectus, filing the
audited senior securities table in the annual report will not result in
duplicative disclosure. For this reason, we have determined not to
amend the requirements in the manner suggested by the commenters.
---------------------------------------------------------------------------

    \281\ Dechert Comment Letter (``[W]e believe that the SEC should
revise the instructions to Item 4.3 of Form N-2 to state that an
Affected Fund need only audit the information in the senior
securities table for the same periods as contained in the audited
balance sheet included in the fund's annual report.''); IPA Comment
Letter.
    \282\ See Instruction 1 to Item 4.3 of Form N-2 (applying
Instruction 3 to Item 4.1 to the Senior Securities Table).
---------------------------------------------------------------------------

b. Management's Discussion of Fund Performance
    We are also adopting, as proposed, an amendment to Form N-2 that
will extend the MDFP disclosure requirements to all registered
CEFs.\283\ Currently, mutual funds and ETFs are required to include
MDFP in their annual reports to shareholders.\284\ MDFP disclosure aids
investors in assessing a fund's performance over the prior year and
complements other backward looking information required in the annual
report, such as financial statements.\285\ This required disclosure is
grounded conceptually in the disclosure requirement for operating
companies (as well as BDCs) to include a narrative discussion of the
financial statements of the company--``management discussion and
analysis'' or ``MD&A''--and to provide an opportunity to look at a
company ``through the eyes of management.'' \286\
---------------------------------------------------------------------------

    \283\ New Instruction 4.g to Item 24 of amended Form N-2.
    \284\ Item 27(b)(7) of Form N-1A. This requirement applies to
registered open-end management investment companies other than money
market funds.
    \285\ Shareholder Reports and Quarterly Portfolio Disclosure of
Registered Management Investment Companies, Investment Company Act
Release No. 26372 (Feb. 27, 2004) [69 FR 11243, 11254 (Mar. 9,
2004)] (``Quarterly Portfolio Disclosure Adopting Release''); see
also Proposing Release, supra footnote 10, at section II.H.2.b
(summarizing the history and purpose of the requirement).
    \286\ Disclosure and Analysis of Mutual Fund Performance
Information; Portfolio Manager Disclosure, Investment Company Act
Release No. 17294 (Jan. 8, 1990) [55 FR 1460, 1462 (Jan. 16, 1990)].
---------------------------------------------------------------------------

    We proposed to amend Form N-2 to extend the MDFP disclosure
requirements to all registered CEFs.\287\ Specifically, we proposed to
require that registered CEFs:
---------------------------------------------------------------------------

    \287\ Proposing Release, supra footnote 10, at section II.H.2.b.
---------------------------------------------------------------------------

     Discuss the factors that materially affected their
performance during the most recently completed fiscal year, including
the relevant market conditions and the investment strategies and
techniques used by the fund;
     Provide a line graph comparing the initial and subsequent
account values at the end of each of the most recently completed ten
fiscal years of the fund and a table of the fund's total returns for
the 1-, 5-, and 10-year periods as of the last day of the fund's most
recent fiscal year; and
     Discuss the effect of any policy or practice of
maintaining a specified level of distributions to shareholders on the
fund's investment strategies and per share NAV during the last fiscal
year, as well as the extent to which the registrant's distribution
policy resulted in distributions of capital.
    Commenters that addressed this aspect of the proposal supported
it.\288\ Because we continue to believe that investors in these funds--
like investors in mutual funds, ETFs, BDCs, and operating companies--
would benefit from annual report disclosure that aids them in assessing
the fund's performance over the prior year and that complements other
information in the report,\289\ we are adopting this requirement as
proposed.\290\
---------------------------------------------------------------------------

    \288\ ABA Comment Letter; ICI Comment Letter; Invesco Comment
Letter; TIAA Comment Letter. One commenter stated that MDFP
information can assist investors with understanding fund performance
and market conditions over the reporting period from the fund
manager's perspective. ICI Comment Letter. In the Proposing Release,
we asked whether, instead of requiring MDFP information for
registered CEFs, we should require such funds to disclose MD&A
information like BDCs and operating companies. Proposing Release,
supra footnote 10, at section II.H.2.b. A few commenters expressly
opposed this change to the proposed requirement compared with the
MDFP requirement in Form N-1A. ABA Comment Letter; ICI Comment
Letter; Invesco Comment Letter; TIAA Comment Letter.
    \289\ Proposing Release, supra footnote 10, at section II.H.2.b.
    \290\ New Instruction 4.g to Item 24 of amended Form N-2.
---------------------------------------------------------------------------

c. Financial Highlights
    We are amending Form N-2, as proposed, to require that a BDC, like
other affected funds, include financial highlights disclosure
summarizing its financial statements in its registration statement and
annual report.\291\ Today, BDCs include their full financial statements
in their prospectus, and we currently permit BDCs to omit financial
highlights disclosure summarizing these financial statements.\292\ We
understand, however, that it is generally market practice for BDCs to
include financial highlights disclosure. This information is arranged
to allow investors to trace the operating performance of a fund on a
per share basis from the fund's beginning NAV to its ending NAV so that
investors may understand the sources of changes.\293\ It summarizes the
financial statements.\294\ Commenters did not address this aspect of
the proposal. Because we continue to believe that investors will
benefit from required disclosure summarizing a BDC's financial
statements,\295\ we are adopting this change as proposed.\296\
---------------------------------------------------------------------------

    \291\ To effectuate this change, we are removing and reserving
Instruction 1 to Item 4, and adding new Instruction 10 to Item 24 of
amended Form N-2. Currently, only registered CEFs are required to
include financial highlights in their registration statements, and
annual reports to shareholders. See Instruction 1 to Item 4.1
(limiting the applicability of Item 4.1 in the case of BDCs), and
Instruction 4.b (requiring the financial highlights required by Item
4.1 to be included in the annual report) to Item 24 of current Form
N 2.
    \292\ General Instruction 1 to Item 4.1 of current Form N-2.
    \293\ Registration Form for Closed-End Management Investment
Companies, Investment Company Act Release No. 19115 (Nov. 20, 1992)
[57 FR 56826, 56829 (Dec. 1, 1992)].
    \294\ Registration Form for Closed-End Management Investment
Companies, Investment Company Act Release No. 17091 (July 28, 1989)
[54 FR 32993, 32997 (Aug. 11, 1989)].
    \295\ See Proposing Release, supra footnote 10, at section
II.H.2.c.
    \296\ See Instruction 1 to Item 4.1 of amended Form N-2 (removed
and reserved); new Instruction 10 to Item 24 of amended Form N-2.
    In addition, we are adopting, as proposed, a conforming change
to the financial highlights requirements to eliminate the current
requirement that registered CEFs specify the average commission rate
paid. See Item 4.1 of amended Form N-2 (removing Instructions 18-19
from Item 4.1). Although this information is currently required for
registered CEFs, the Commission previously eliminated a similar
requirement from Item 13(a) of Form N-1A for open-end funds
registered on Form N-1A. Item 4.1.l of Form N-2; Instructions 18-19
to Item 4.1 of Form N-2; Item 13(a) of Form N-1A; See Registration
Form Used by Open-End Management Investment Companies, Investment
Company Act Release No. 23064 (Mar. 13, 1998) [63 FR 13916, 13936
(Mar. 23, 1998)]. The Commission reached this determination after
receiving and considering public comment arguing that these rates
are technical information that typical investors are unable to
understand. Id. We continue to believe that the same considerations
supporting elimination of this requirement from Form N-1A also apply
to registered CEFs.

---------------------------------------------------------------------------

d. Unresolved Staff Comments
    We are also adopting, as proposed, a requirement that affected
funds filing a short-form registration statement disclose outstanding
staff comments that remain unresolved for a substantial period of time
and that the fund believes are material.\297\ As part of the
Commission's 2005 securities offering reforms for operating companies,
the Commission adopted a similar provision for operating companies,
recognizing that the new rules could eliminate some incentives issuers
may have to timely resolve any staff comments on their Exchange Act
reports.\298\ The Commission observed, in connection with this proposed
requirement, that this rulemaking similarly may eliminate some
incentives for certain affected funds to timely resolve staff comments.
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    \297\ See new Instruction 4.h.(4) to Item 24 of amended Form N-
2. Specifically, such funds will be required to disclose the
substance of any unresolved written staff comments that the fund
believes are material and that were received not less than 180 days
before the end of the fiscal period to which the annual report
relates. Id.
    \298\ See generally Proposing Release, supra footnote 10, at
section II.H.2.d.
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    Two commenters recommended that the Commission not adopt this
proposed requirement.\299\ One commenter stated that the proposed
requirement would be inconsistent with Commission efforts to simplify
disclosure and focus on key information important to investors.\300\ We
believe, however, that, because the requirement only relates to
comments that the issuer believes are material and because they will
relate to information about which the issuer and the Commission staff
disagree, the disclosure of the comments is likely to be information
that is important to investors. This commenter also stated that the
requirement would be at odds with recent statements about the non-
binding nature of staff guidance. However, the provision will not make
the substance of statements by staff in their comments binding upon the
public or the Commission. Rather, the Commission, by rule, will require
affected funds to inform investors about their disagreements with the
staff in connection with the staff's review of disclosures.
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    \299\ ICI Comment Letter; Invesco Comment Letter. One commenter
opposed extending the proposed requirement to additional categories
of issuers, including mutual funds and ETFs. ICI Comment Letter.
    \300\ ICI Comment Letter.
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    Two commenters expressed concern that differing views about whether
a particular comment is ``material'' or ``unresolved'' could result in
inconsistent disclosure among different funds in similar
circumstances.\301\ We recognize that analysis of whether a particular
written comment must be disclosed may involve some subjective judgment
regarding specific facts and circumstances. Many disclosure
requirements inherently involve some subjective judgment and can result
in some variance in the disclosure provided by different funds.
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    \301\ ICI Comment Letter; Invesco Comment Letter.
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    These commenters also suggested some alternatives to the proposed
requirement. For example, one commenter suggested that the Commission,
rather than require disclosure of material unresolved staff comments,
issue a stop order to prevent an offering from going forward if
necessary.\302\ We believe that it is more appropriate to preserve an
intermediate approach for the Commission, in appropriate circumstances,
to allow an offering to proceed while informing investors and others
about material disagreements between the issuer and the Commission's
staff, so that investors can make an informed judgment about the
disagreement. Another commenter recommended, as an alternative, that
the Commission publish its staff's comments and issuer responses.\303\
We believe, however, that investors and other interested persons are
more likely to see and read disclosure of material, unresolved staff
comments if they appear in a fund's annual report than comments and
responses published separately.\304\
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    \302\ ICI Comment Letter.
    \303\ Invesco Comment Letter.
    \304\ Adopting this requirement does not prevent the Commission
from also publishing staff comments or issuer responses, which may
supplement this required disclosure. For example, publishing staff
comments and issuer responses, which the staff currently
disseminates using the EDGAR system, may also inform investors and
the market about comments that are promptly resolved. See Press
Release No. 2004-89; SEC Staff to Publicly Release Comment Letters
and Responses (June 24, 2004) available at https://www.sec.gov/news/press/2004-89.htm.
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    In addition, this requirement parallels the current requirement for
operating companies that use the offering rules.\305\ These commenters,
however, provide no basis for distinguishing affected funds from those
operating companies that are already subject to the requirement. After
considering comments received, and because we continue to believe that
these disclosure requirements will provide an incentive for affected
funds to timely resolve staff comments and that investors may value
information about areas of disagreement that the issuer believes are
material, we are adopting the requirement as proposed.\306\
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    \305\ Proposing Release, supra footnote 10, at section II.H.2.d.
    \306\ New Instruction 4.h.(4) to Item 24 of amended Form N-2.
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3. Current Reporting Requirements for Affected Funds
    As discussed in the Proposing Release, operating companies and BDCs
are required to promptly report certain events on Form 8-K, while
registered CEFs generally are not required to report on Form 8-K. The
Commission proposed to require registered CEFs to report information on
Form 8-K to enhance parity with operating companies and BDCs, to
improve information for investors and the market, and to recognize the
role of Form 8-K reporting in the 2005 offering reform amendments.\307\
It also proposed to amend Form 8-K to: (1) Add two new reporting items
for affected funds on material changes to investment objectives or
policies and material write-downs of significant investments, and (2)
adapt the existing reporting requirements and instructions to affected
funds. As discussed in more detail below, in response to comments, we
are not adopting the proposed Form 8-K amendments.\308\ However, we
will continue to consider current reporting more generally as part of
our ongoing review of the effectiveness of investment company
disclosure.
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    \307\ See Proposing Release, supra footnote 10, at section
II.H.3.a. See also Securities Offering Reform Adopting Release,
supra footnote 5, at 44726 (describing the availability of ongoing
information about a public issuer and its securities, including
current information on Form 8-K, as an important component of the
offering reforms the Commission adopted for operating companies) and
44730 (declining to make the benefits of being a reporting issuer,
seasoned issuer, or WKSI available to voluntary filers and stating
that ``such issuers should be required to register under the
Exchange Act, and thus become subject to all of the results of
registration for all purposes, if they wish to avail themselves of''
these benefits).
    \308\ BDCs will continue to be required to report on Form 8-K,
as they do today.
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a. Form 8-K Reporting for Registered CEFs
    The Commission proposed to require registered CEFs that are
reporting companies under section 13(a) or section 15(d) of the
Exchange Act to report current information on Form 8-K. Commenters
generally opposed a Form 8-K reporting requirement for registered
CEFs.\309\ Commenters suggested that registered CEFs should not be
subject to Form 8-K reporting requirements because the commenters
believe that: (1) Existing registered CEF

disclosure is sufficient; \310\ (2) Form 8-K reporting would be costly
for registered CEFs; \311\ (3) parity with operating companies and BDCs
is unnecessary in the context of Form 8-K reporting; \312\ and (4)
investors, analysts, and regulators have not previously indicated that
registered CEF disclosure is inadequate.\313\
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    \309\ See ABA Comment Letter; ICI Comment Letter; and Invesco
Comment Letter.
    \310\ See ABA Comment Letter; ICI Comment Letter; and Invesco
Comment Letter.
    \311\ See ABA Comment Letter (stating that the cost and
administrative burden of Form 8-K reporting would outweigh the
benefits discussed in the Proposing Release of establishing a
uniform and centralized current reporting regime for registered
CEFs); ICI Comment Letter (suggesting that registered CEFs already
have a greater regulatory filing burden than operating companies
because they report on Forms N-CEN, N-PORT, and N-PX); and Invesco
Comment Letter.
    \312\ See ICI Comment Letter (suggesting there are reasons for
registered CEFs to be subject to a different disclosure regime than
operating companies, including that registered CEFs are highly
regulated under the Investment Company Act).
    \313\ See ABA Comment Letter and ICI Comment Letter. But see
White Comment Letter (stating that there should always be a current
document where an investor can see a fund's strategy, risks,
performance, and costs each year and suggesting that investors
should receive notices of any material changes on a more timely
basis); Proposing Release, supra footnote 10, at n.323 (citing a
similar comment letter the Commission received in response to the
Investor Experience Request for Comment).
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    With respect to existing disclosure practices, commenters stated
that registered CEFs already provide material updates through other
required or voluntary mechanisms (e.g., prospectus supplements, press
releases, shareholder reports, voluntary Form 8-K filings, and website
disclosure) that result in adequate and timely disclosure of
information to investors.\314\ One commenter suggested that registered
CEFs would be unlikely to provide meaningful new information under Form
8-K beyond what they already disclose under other regulatory
requirements.\315\ Two commenters expressed concern that Form 8-K
reporting may not timely inform investors about important fund
events.\316\ One of these commenters suggested that fund investors are
more likely to receive timely information through a registered CEF's
typical practice of issuing a press release about an important event,
posting the press release to its website, and including information
about the event in its next shareholder report.\317\
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    \314\ See ABA Comment Letter; ICI Comment Letter; and Invesco
Comment Letter. As discussed in the Proposing Release, listed
registered CEFs may disclose certain information on Form 8-K to
comply with exchange requirements for listed company disclosure,
although there are other mechanisms they may use to disclose the
information (e.g., press releases). See Proposing Release, supra
footnote 10, at section II.H.3.a. Two commenters pointed to these
requirements in support of their argument that existing disclosure
is adequate. ABA Comment Letter and Invesco Comment Letter.
    \315\ See ABA Comment Letter (stating that Form 8-K is largely
duplicative of information that listed registered CEFs disclose in
press releases in accordance with exchange rules and that
continuously-offered registered CEFs disclose in prospectus
supplements or post-effective amendments under SEC rules).
    \316\ See Invesco Comment Letter and White Comment Letter.
    \317\ See Invesco Comment Letter.
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    Although they opposed a new Form 8-K reporting requirement, a few
commenters suggested alternative approaches if we were to require
registered CEFs to report on Form 8-K. One commenter suggested that, if
the Commission requires registered CEFs to report on Form 8-K, we
should require them to report only a subset of Form 8-K items.\318\
Another commenter suggested that, rather than require registered CEFs
to report on Form 8-K, we could require listed registered CEFs to file
press releases containing material information on Form 8-K, similar to
how continuously-offered registered CEFs file prospectus supplements on
EDGAR.\319\ Additionally, one commenter suggested that we require
registered CEFs to more directly notify investors about material fund
changes and stated that Form 8-K filings would not provide appropriate
notice to a fund's investors.\320\
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    \318\ See ICI Comment Letter.
    \319\ See ABA Comment Letter.
    \320\ See White Comment Letter.
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    As we recognized in the Proposing Release and as noted by
commenters, there are differences between the types of events that are
important to registered CEFs and the types of events that are important
to operating companies.\321\ Moreover, for those Form 8-K events that
would be relevant to registered CEFs, we recognize that these funds
currently may disclose substantially similar information through other
mechanisms, such as prospectus supplements, post-effective amendments,
and press releases. We also are sensitive to commenters' concerns about
the burdens to registered CEFs associated with a new Form 8-K reporting
requirement, particularly for those registered CEFs that will not
qualify as WKSIs or be eligible to file short-form registration
statements under the amendments we are adopting.
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    \321\ See Proposing Release, supra footnote 10, at text
following n.260; ABA Comment Letter (suggesting that, as a general
matter, registered CEFs tend to have a simpler and more transparent
business than operating companies (e.g., many listed registered CEFs
publish their NAVs on a daily or weekly basis)); ICI Comment Letter
(stating that, for example, disclosure about departures of fund
officers on Form 8-K would not be meaningful for registered CEFs
because fund officers generally are not actively involved in the
day-to-day management of a fund's portfolio).
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    As a result of these considerations, we are persuaded that a new
Form 8-K reporting requirement for registered CEFs may not
substantially improve the flow of important current information to
investors and the market and, as a result, would not justify the
additional burdens associated with Form 8-K reporting. Therefore, we
are not adopting the proposed Form 8-K reporting requirements for
registered CEFs.\322\ However, we will continue to consider whether
more current reporting requirements that are tailored to registered
CEFs, or to registered investment companies more generally, may be
appropriate in connection with our continuing review of investment
company disclosure effectiveness.\323\
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    \322\ In addition to the proposed amendments to Form 8-K, we
also are not adopting the associated proposed amendments to 17 CFR
240.13a-11 and 240.15d-11 (Exchange Act rule 13a-11 and rule 15d-11)
because the proposed amendments to those rules were only necessary
to carry out the proposal to require registered CEFs to report on
Form 8-K.
    \323\ See Investor Experience Request for Comment, supra
footnote 274. See also supra footnote 313.
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    Although registered CEFs generally will not be required to file
reports on Form 8-K, a registered CEF that is eligible to file a short-
form registration statement may voluntarily file information on Form 8-
K to forward incorporate that information into its registration
statement or for other purposes (e.g., to publicly disseminate
information under exchange rules, as applicable).\324\ These voluntary
Form 8-K filings will not affect a registered CEF's ability to qualify
as a seasoned fund. This is because the requirements to be current and
timely with respect to the fund's Exchange Act and Investment Company
Act reports only apply to materials a fund is required to file.\325\
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    \324\ Although registered CEFs are only required to file Form 8-
K reports under Item 5.04 (Temporary Suspension of Trading Under
Registrant's Employee Benefit Plans), as applicable, other Form 8-K
reports they file on a voluntary basis will be ``filed pursuant to
Section 13(a) or 15(d) of the Exchange Act'' for purposes of the
incorporation by reference instructions in Form N-2 that apply to
funds that are eligible to file short-form registration statements.
See General Instruction F.3 of amended Form N-2; Exchange Act rule
13a-11(b)(1) and rule 15d-11(b)(1). Information a registered CEF
furnishes on a Form 8-K report will not be incorporated by reference
into the fund's registration statement under this instruction. This
is consistent with the incorporation by reference regime for
operating companies on Form S-3, where information voluntarily filed
on Form 8-K (e.g., under Item 8.01 (Other Events)) is incorporated
by reference into the company's registration statement while
furnished Form 8-K reports are not incorporated by reference. See
also supra footnote 314 (discussing exchange rules requiring listed
registered CEFs to timely disclose certain information to the
public).
    \325\ See new General Instruction A.2 of amended Form N-2;
General Instruction I.A.3 of Form S-3.

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b. Other Proposed Amendments to Form 8-K
    We are similarly not adopting the other proposed amendments to Form
8-K, including the two proposed reporting items regarding material
changes to investment objectives or policies and material write-
downs.\326\ Although the two proposed reporting items also would have
applied to BDCs, we are not adopting these current reporting
requirements for any affected funds. Commenters generally opposed these
proposed reporting items and argued that existing disclosure is
adequate.\327\ We will continue to consider the adequacy of affected
fund disclosure, including the availability and timeliness of
information about material changes in investment objectives or policies
and material write-downs of significant investments, as part of our
ongoing review of the effectiveness of investment company
disclosure.\328\ Rather than establish new current reporting
requirements for affected funds on a piecemeal basis in this release,
we believe it is more appropriate to consider current reporting in
connection with a broader, systematic review of investment company
disclosure.
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    \326\ See Proposing Release, supra footnote 10, at section
II.H.3.b. Since we are not adopting the proposed items to Form 8-K,
we also are not amending the safe harbor in Exchange Act rules 13a-
11 and 15d-11 to include those items. See Proposing Release, supra
footnote 10, at n.289.
    \327\ See ABA Comment Letter (suggesting that neither of the
proposed items would provide additional important information); ACC
Comment Letter (opposing the proposed material write-down item for
BDCs in particular); CBD Comment Letter.
    \328\ See Investor Experience Request for Comment, supra
footnote 274.