Sec Form N3 - Registration Statement Under The Securities Act Of 1933 And/or Registration Statement Under The Investment Company Act Of 1940 Page 45

Download a blank fillable Sec Form N3 - Registration Statement Under The Securities Act Of 1933 And/or Registration Statement Under The Investment Company Act Of 1940 in PDF format just by clicking the "DOWNLOAD PDF" button.

Open the file in any PDF-viewing software. Adobe Reader or any alternative for Windows or MacOS are required to access and complete fillable content.

Complete Sec Form N3 - Registration Statement Under The Securities Act Of 1933 And/or Registration Statement Under The Investment Company Act Of 1940 with your personal data - all interactive fields are highlighted in places where you should type, access drop-down lists or select multiple-choice options.

Some fillable PDF-files have the option of saving the completed form that contains your own data for later use or sending it out straight away.

Guide 9. Short Sales

In the Division’s view, a short sale involves the creation of a senior security and is, therefore, subject to the limitations of section 18 of

the 1940 Act. The staff has taken the position that in order to comply with section 18 of the 1940 Act, the selling registrant must put in

a segregated account (not with the broker) cash or United States government securities equal in value to the difference between (a) the

market value of the securities sold short when they were sold short and (b) any cash or United States government securities required to

be deposited as collateral with the broker in connection with the short sale (not including the proceeds from the short sale). In addition,

until the registrant replaces the borrowed security, it must daily maintain the segregated account at such a level that (1) the amount

deposited in it plus the amount deposited with the broker as collateral will equal the current market value of the securities sold short,

and (2) the amount deposited in it plus the amount deposited with the broker as collateral will not be less than the market value of the

securities at the time they were sold short.

Selling short is not the same as selling short “against the box.” While a short sale is made by selling a security the separate account

does not own, a short sale is “against the box” to the extent that the separate account contemporaneously owns or has the right to

obtain at no added cost securities identical to those sold short. The procedures described above for short sales subject to Section 18 of

the 1940 Act are not applicable to short sales “against the box.”

If the registrant expects to sell short, or to sell short “against the box,” its policy and the effect of such policy should be described

in the registration statement. Whether the description should be included in the prospectus will depend upon how often and in what

amount the registrant will sell short (see Guide 3). The registration statement should include:

an explanation of the requirement of collateral and a segregated account and

the maximum percentage of the value of the registrant’s net assets that will be, when added together: (a) deposited as

collateral for the obligation to replace securities borrowed to effect short sales and (b) allocated to segregated accounts in

connection with short sales.

Guide 10. Purchases on Margin

Because of the prohibition in section 18 of the 1940 Act against the issuance of senior securities by management accounts, except

in connection with borrowings from banks, the Division’s position is that management accounts may not establish or use a margin

account with a broker to effect securities transactions on margin.

Guide 11. Restricted Securities

Although the acquisition of restricted securities (securities that must be registered under the Securities Act of 1933 before they may be

offered or sold to the public) might not be deemed to be an underwriting commitment under section 12(c) of the 1940 Act, a registrant

should describe in the prospectus any policy permitting the purchase of restricted securities if such securities constitute five percent or

more of the registrant’s portfolio securities. Otherwise, registrant’s policy concerning restricted securities should be described in the

Statement of Additional Information.

Note: If a management account holds a material percentage of its assets in restricted securities, such holdings may raise questions

about valuation and the separate account’s ability to make payment within seven days of the date it receives a request for the

withdrawal of contract values. See also Guides 13 and 26.

Guide 12. Purchase and Sale of Real Estate

Registrant should indicate the type of real estate investments which it proposes to make, if any, in response to Item 5 and Item 19,

as appropriate in light of the level of any such investments (see Guide 3). A management account should not acquire illiquid assets,

including real estate without an establishment market, in excess of 10 percent of the registrant’s net assets.

For purposes of these disclosure requirements, the Division views an interest in real estate as including securities (other than

marketable securities) of companies whose assets consist substantially of real property and interests in real property, including

mortgages and other liens, but does not include securities of companies whose investments in real estate are incidental to its primary

business, e.g., banks.

Guide 13. The Making of Loans to Other Persons

In response to Item 19, and, if appropriate, in Item 5, the registrant should state its policy on the purchase of non-publicly offered debt

securities (including convertible securities).

The purchase of a portion of an issue of publicly-distributed bonds, debentures, or other

securities, whether or not the purchase is made upon the original issuance of the securities, is not a loan. The registrant should state

whether it will make loans which are short term (nine months or less), long term, or both. If a management account holds a material

percentage of its assets in debt securities having no established market, there may be a question about the ability of the separate

account to make payment within seven days of the date it receives a request for the withdrawal of contract values. A management

8 Investment Company Act Release No. 7221 (June 9, 1972)[37 FR 12790 (June 24, 1972)].

9 Investment Company Act Release No. 7220, supra note 5.

10 Investment Company Act Release No. 7221, supra note 6.

11 See, e.g., Investment Company Act Release No. 5847 (October 21, 1969) [35 FR 19989 (December 31, 1970)].

12 However, interests in companies that invest in real estate are not interests in real estate for purposes of section 3(c)(5)(C) of the Act. See Investment Company

Act Release No. 3140 (November 18, 1960) [25 FR 12177 (November 29, 1960)].

13 See Investment Company Act Release No. 7220, supra note 5.

SEC 2124 (5/15)