§80a–11 Offers to exchange securities

Summary

Registered open-end investment companies (mutual funds) and their main underwriters may not offer to swap a holder’s shares for shares of the same or another fund on any basis other than the funds’ relative net asset values, unless the offer’s terms are first sent to and approved by the Securities and Exchange Commission or the offer follows SEC rules that are in effect when the offer is made. An offer by a principal underwriter means one sent to holders of a class or series, but not a sales pitch to an individual retail investor. Net asset value means the NAV used to set the public sale price either when the offer is accepted or at a later time the offer says. This rule does not apply to an exchange made under a reorganization plan that must be voted on and approved by holders of at least a majority of the outstanding shares of the affected class or series. The rule also applies no matter how the swap is described when exchanging shares between open-end funds and unit investment trusts or face-amount certificate companies, and when those types are exchanged for other investment company securities.