Late last Friday, the staff of the Securities and Exchange Commission (SEC) issued guidance on disclosures relating to investments in derivatives by investment companies. In a letter to the Investment Company Institute (ICI), the SEC staff shared observations from its ongoing evaluation of existing disclosures in fund prospectuses and Statements of Additional Information and shareholder reports (including the financial statements included therein). The staff indicated that, while its review was ongoing, it was taking what, in our view at least, is the relatively unusual step of providing interim guidance to encourage funds to proactively assess the adequacy of their disclosures in both registration statements and shareholder reports. The guidance applies to mutual funds, as well as other types of registered investment companies and business development companies.