Regulated Investment Companies

To qualify as a regulated investment company, the company must be a Registered Investment Company under the Investment Company Act of 1940, and derive at least 90% if its income from dividends, interest, and capital gains. Further it must also distribute at least 90% of the dividends and interest received and its assets must meet minimum diversification rules. Typically, the following wording will appear in a RIC prospectus: “The Fund intends to qualify for treatment as a ‘Regulated Investment Company’ for U.S. income tax purposes. In order to so qualify, the Fund must meet certain tests with respect to the sources and types of its income, the nature and diversification of its assets, and the timing and amount of its distributions.”