§80a–5 Subclassification of Management Companies

Summary

Divides management companies into two main types. Open-end companies sell or have outstanding redeemable shares that investors can turn back to the company. Closed-end companies are any management companies that are not open-end. Also splits companies into diversified and non-diversified. A diversified company must have at least 75% of its assets in cash (and similar items), government bonds, shares of other investment companies, and other securities. For any one issuer, those other securities cannot be more than 5% of the fund’s total assets and the fund cannot own more than 10% of that issuer’s voting stock. A company that met the diversified rules when it qualified keeps that status even if values change later, unless the change right after it bought a security was caused, even partly, by that purchase.