The relevant expense caption on the statement of operations and the expense ratio in the financial highlights shall include the amount that would have been incurred by the investment company for brokerage services had it paid for the services directly in an arm's-length transaction. Such amounts shall also be shown as a corresponding reduction in total expenses, captioned as fees paid indirectly.
The amounts of any payments or allocations for advisory services from the general partner shall be presented in either the statement of operations or the statement of changes in partners' capital.
Expense offset arrangements, under which a third party explicitly reduces its fees by a specified or readily ascertainable amount for services provided to the investment company in exchange for use of the investment company's assets, shall be presented in the statement of operations, the expense ratio in the financial highlights, and notes to financial statements in the same manner as brokerage service arrangements.
The unique features (primarily the existence of significant debt) of small business investment companies often make it desirable that their financial statements be presented in a conventional balance sheet format.
Though all venture capital investment companies shall prepare their financial statements in conformity with generally accepted accounting principles (GAAP), the statement presentation of some venture capital investment companies may need to be tailored to present the information in a manner most meaningful to their particular group of investors. For example, if debt is a significant item, a balance sheet might be more appropriate than a statement of net assets.