Rule 27f-1 statuatory authority

Securities and Exchange Commission

§ 270.27f–1

least as large as 10-point modern type. All
type shall be leaded at least 2 points. Parenthetical references should be completed in
accordance with the itemized instructions
below and need not be underlined or boldfaced.
B. The notice shall bear the letterhead of
the sender and the mailing date. An inconspicuous reference to the form number may
appear on the notice.
Itemized instructions. Insert the following in
the corresponding numbered spaces on Form
N–27E–1:
(1) The name of the plan and the account
number of the certificate holder. An additional internal recordkeeping reference may
also be included at the option of the sender.
(2) The name of certificate holder or an
identification
such
as
‘‘Investor’’
or
‘‘Planholder.’’
(3) Whichever of the following statements
is appropriate: ‘‘three or more payments during the first 15 months’’ or ‘‘a payment after
the 15th month.’’
(4) The name of the plan.
(5) The date of the first business day which
is 18 months from the date of the issuance of
the certificate or in the event such notice is
not mailed prior to 15 days before the expiration of the 18th month, the date of the first
business day which is 15 days from the date
such notice is mailed.
(6) A date which is not more than 2 business days prior to the date of the notice.
(7) The sum of Items 8 and 9.
(8) The value of the account payable to the
certificate holder if the certificate had been
received on the date set forth in Item 6. In
the event such certificate holder has made a
partial withdrawal in accordance with the
terms of his certificate, the notice may state
after the first sentence in the third paragraph that ‘‘The value of your account reflects the partial withdrawal which you
made previously.’’
(9) The amount as of the date set forth in
Item 6 which is equal to that part of the excess paid for sales loading which is over 15
percent of the gross payments made by the
certificate holder.
(10) Average percentage deducted for sales
charges to the date set forth in Item 6.
(11) The percentage to be deducted for sales
charges after the date set forth in Item 6.
If the holder has made less than 12 monthly payments, the following shall be substituted for the first sentence of the third
paragraph of the notice:
‘‘In determining whether to exercise your
right to terminate your plan, you should
consider that, while the sales charge deducted from your payments has amounted to
lll (10) percent of the total payments
made, the sales charge for the next lll
(11a) payments will be lll (11b) percent
and the sales charge for the remainder of the
payments will be lll (11c) percent. If you

complete the plan, the average sales charge
will be lll (12) percent.’’
(11a) The number of payments yet to be
made which are subject to the initial sales to
completion.
(11b) The percentage to be deducted from
sales charges from such payments.
(11c) The percentage to be deducted for
sales charges from all subsequent payments.
(12) Average percentage to be deducted for
sales charges from inception of the plan to
completion.
(13) Name and address of custodian bank or
other person authorized to accept surrendered certificates.
(14) Same date as in Item 5.
(15) The name of a responsible officer of the
sender, with his title.
[36 FR 13137, July 15, 1971, as amended at 36
FR 14727, Aug. 11, 1971; 37 FR 9990, May 18,
1972]

§ 270.27f–1 Notice of right of withdrawal required to be mailed to
periodic payment plan certificate
holders and exemption from section
27(f) for certain periodic payment
plan certificates.
(a) The notice and statement of
charges (notice) required by section
27(f) of the Act shall be sent by firstclass mail and shall be accompanied by
a written instruction sheet and a return form to be used in connection
with the exercise of the right of withdrawal described in the notice. Except
for a confirmation slip, the plan certificate, and any notice required by applicable State law, no other written or
graphic material may be included with
such notice.
(b) The notice may be mailed by the
issuer, the principal underwriter for, or
the depositor of, the issuer or a recordkeeping agent for the issuer if the custodian bank has delegated the mailing
of the notice to any of them or the
issuer has been permitted to operate
without a custodian bank by Commission order.
(c) Solely for purposes of section 27(f)
of the Act, the postmark date on the
envelope containing the certificate
shall determine whether a certificate
has been surrendered within the 45-day
period.
(d) Form N–27F–1 is hereby prescribed
to inform certificate holders, other
than holders of plans upon which the
amount of sales load deducted from
any payment does not exceed 9 percent
of any payment and variable annuity

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§ 270.27f–1

17 CFR Ch. II (4–1–06 Edition)

contracts, of their withdrawal right
pursuant to section 27(f) of the Act.
The text of Form N–27F–1 is as follows:
FORM N–27F–1 NOTICE TO PERIODIC PAYMENT
PLAN CERTIFICATE HOLDERS OF 45-DAY
WITHDRAWAL RIGHT WITH RESPECT TO PERIODIC PAYMENT PLAN CERTIFICATES
IMPORTANT
(Date of mailing)
Re: ll (1) ll
Dear ll (2) ll: This notice is required to
be sent to all purchasers of plan certificates
pursuant to laws administered by the U.S.
Securities and Exchange Commission. You
should read it carefully and retain it with
your financial records.
Of the $llllll (3) ll you have paid
on your ll (4) ll plan, representing ll
(5)
ll
regular
monthly
payments,
$lllll (6) ll or ll (7) ll percent has
been deducted for various charges.
[The following sentence is to be included
when any periodic payment remains outstanding in which the sales load charges exceed 9 percent of such payment.]
A total of $llllll (8) ll or ll (9)
ll percent of your first ll (10) ll monthly payments will be deducted from those
payments for similar charges.
Charges of $llllll (11) ll or ll (12)
ll percent will be deducted from each subsequent payment. You have until ll (13)
ll to surrender your certificate for any
reason and receive a refund of all of the
charges which have been deducted from your
payments, and, in addition, the value of your
account on the date your certificate is received.
In determining whether or not to exercise
your right you should consider, among other
things, the projected cost of your investment
and your ability to make the scheduled payments over the life of your plan as they become due. Your plan provides for ll (14)
ll payments of $llllll (15) ll per
ll (16) ll, or total payments of
$llllll (17) ll. If you made all of the
scheduled payments over the full term of
your plan, the total deductions would be
$llllll (18) ll or an effective charge
of ll (19) ll percent of your total payments. However, if you do not complete your
program, the deduction of various charges
from your initial payments will result in
your paying effective charges in excess of
that rate. For a more complete description
of the charges deducted under your plan,
carefully review your prospectus.
If you wish to exercise your right of withdrawal, return your plan certificate to ll
(20) ll by ll (21) ll in accordance with
the enclosed instructions.
Very truly yours,
ll (22) ll.

INSTRUCTIONS FOR USE OF FORM N–27F–1
General instructions. A. The notice shall be
legible and shall be printed or typed on letter-size paper. It shall be in modern type at
least as large as 10-point modern type. All
type shall be leaded at least 2 points. Parenthetical references should be completed in
accordance with the Itemized Instructions
below and need not be underlined or boldfaced.
B. The notice shall bear the letterhead of
the sender and the mailing date. An inconspicuous reference to the form number may
appear on the notice.
Itemized Instructions. Insert the following in
the corresponding numbered spaces on Form
N–27F–1.
(1) The name of the plan and the account
number of the certificate holder. An additional internal record keeping reference may
also be included at the option of the sender.
(2) The name of certificate holder or an
identification
such
as
‘‘Investor’’
or
‘‘Planholder.’’
(3) The total amount paid by the certificate holder as of the date of the mailing.
(4) The name of the plan.
(5) The number of regular monthly payments or their equivalent made by the certificate holder as of the date of mailing.
(6) The total amount deducted for all
charges from the amount paid by the certificate holder as of the date of the mailing.
(7) The percentage that the total charges
set forth in Item (6) are of the total payments included under Item (3) above.
(8) The total dollar amount of all charges
scheduled to be deducted from the payments
made by the certificate holder before the
first regular payment upon which there
would be a reduction in the rate of the applicable sales charge below 9 percent of the certificate holder’s gross payment.
(9) The percentage that the total charges
set forth in Item 8 are of the total payments
included under Instruction 8 above.
(10) The number of regular monthly payments required to be made before the rate of
the sales charges deducted from such regular
payment is reduced to less than 9 percent of
the certificate holder’s gross payment.
(11) The dollar amount of the charges to be
deducted from each payment made by the
certificate holder after the first regular payment upon which there would be a reduction
in the rate of the applicable sales charge
below 9 percent of the certificate holder’s
gross payment. If a portion of the payments
is used for the purchase of completion insurance, the amount attributable thereto shall
not be included as a charge and the following
phrase shall be added: ‘‘Apart from insurance
premiums based upon the amount of coverage in effect at the time of payment.’’
(12) The percentage that the amount of the
charges set forth in Item 11 are of the

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Securities and Exchange Commission

§ 270.27h–1

amount of the payment included under Instruction 11 above.
(13) The date which is 45 days from the
date on which the notice will be mailed.
(14) The number of monthly or quarterly
payments provided for under the plan.
(15) The dollar amount of each scheduled
periodic payment to be made by the certificate holder.
(16) The period (e.g., month, quarter) for
which payments are scheduled to be made
under the plan.
(17) The dollar amount of total payments
scheduled to be made over the full term of
the plan by the certificate holder.
(18) The total dollar amount of all charges
scheduled to be deducted over the full term
of the plan.
(19) The percentage that the total charges
as set forth in Item 18 are of the total payments scheduled to be made by the certificate holder over the full term of the plan.
(20) The name and address of the custodian
bank or other person authorized to accept
surrendered certificates.
(21) The date which is 45 days from the
date on which the notice will be mailed.
(22) The name of a responsible officer of the
sender with his title.
(Secs. 27(e), 27(f), 38(a), 54 Stat. 829, 841; 15
U.S.C. 80a–27(e), 80a–27(f), 80a–37(a); sec. 16,
Pub. L. 91–547, 84 Stat. 1424–1425; sec. 6(c), 15
U.S.C. 80a–6(c))
[36 FR 24055, Dec. 18, 1971, as amended at 37
FR 9990, May 18, 1972; 45 FR 17958, Mar. 20,
1980]

§ 270.27g–1 Election to be governed by
section 27(h).
(a) If any registered investment company which issues or intends to issue a
periodic payment plan certificate
chooses to be governed by the provisions of section 27(h) (of the Act) rather than the provisions of sections 27 (a)
and (d) (of the Act), it shall signify
such choice by filing with the Commission as an exhibit to its registration
statement filed under the Securities
Act of 1933 a written Notice of Election
to be so governed.
(b) Any registered investment company issuing periodic payment plan
certificates which has elected, in accordance with paragraph (a) of this section, to be governed by the provisions
of section 27(h) of the Act may thereafter withdraw such election by filing
with the Commission, in the manner
specified for filing a Notice of Election,
a written Notice of Withdrawal of Election: Provided, however, That no such

withdrawal of election shall be made
within 12 months of an election by such
company under paragraph (a) of this
section and, provided further that such
company may not thereafter elect to
be governed by the provisions of section 27(h) (of the Act) until an additional 12–month period has elapsed.
[36 FR 13139, July 15, 1971]

§ 270.27h–1 Exemptions from section
27(h)(4) for certain payments.
(a) For purposes of this section and
section 27(h)(4) of the Act (1) ‘‘minimum monthly payment, or its equivalent,’’ shall be the amount of the
smallest monthly installment scheduled to be made during the life of the
plan; and (2) ‘‘quarter’’ shall be the 3month period which commences on the
date a periodic payment plan is issued
and each 3–month period thereafter.
(b) The provisions of section 27(h) (4)
(of the Act) shall not apply to:
(1) That portion of the first payment
on a periodic payment plan certificate
which equals the amount of five minimum monthly payments: Provided,
however, That the deduction for sales
load on any other payments received
during the first quarter after the
issuance of the certificate may not exceed the sales load applicable to payments subsequent to the first 48
monthly payments or their equivalent;
(2) A payment or payments received
in any subsequent quarter which equals
the amount of three minimum monthly
payments: Provided, however, That
after an amount equivalent to three
minimum monthly payments (not including payments of arrears) is received in any such subsequent quarter
the deduction for sales load on any additional payments received in such
quarter may not exceed the sales load
applicable to payments subsequent to
the first 48 monthly payments or their
equivalent;
(3) Payments of arrears by a certificate holder who is delinquent in his
payments; and
(4) Any payments made on a periodic
payment plan certificate out of the
proceeds of completion insurance received upon the death of the certificate
holder.
[36 FR 13139, July 15, 1971]

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