Rule Text

§ 270.31a–1

17 CFR Ch. II (4–1–08 Edition)

capacity as such if such person is solely an employee, other than an officer,
of such investment adviser.

ebenthall on PRODPC60 with CFR

[67 FR 43537, June 28, 2002]

§ 270.31a–1 Records to be maintained
by registered investment companies, certain majority-owned subsidiaries thereof, and other persons
having transactions with registered
investment companies.
(a) Every registered investment company, and every underwriter, broker,
dealer, or investment adviser which is
a majority-owned subsidiary of such a
company, shall maintain and keep current the accounts, books, and other
documents relating to its business
which constitute the record forming
the basis for financial statements required to be filed pursuant to section 30
of the Investment Company Act of 1940
and of the auditor’s certificates relating thereto.
(b) Every registered investment company shall maintain and keep current
the following books, accounts, and
other documents:
(1) Journals (or other records of
original entry) containing an itemized
daily record in detail of all purchases
and sales of securities (including sales
and redemptions of its own securities),
all receipts and deliveries of securities
(including certificate numbers if such
detail is not recorded by custodian or
transfer agent), all receipts and disbursements of cash and all other debits
and credits. Such records shall show
for each such transaction the name and
quantity of securities, the unit and aggregate purchase or sale price, commission paid, the market on which effected, the trade date, the settlement
date, and the name of the person
through or from whom purchased or received or to whom sold or delivered. In
the case of a money market fund, also
identify the provider of any Demand
Feature or Guarantee (as defined in
§ 270.2a–7(a)(8) or § 270.2a–7(a)(15) respectively) and give a brief description of
the nature of the Demand Feature or
Guarantee (e.g., unconditional demand
feature, conditional demand feature,
letter of credit, or bond insurance) and,
in a subsidiary portfolio investment
record, provide the complete legal
name and accounting and other infor-

mation (including sufficient information to calculate coupons, accruals,
maturities, puts, and calls) necessary
to identify, value, and account for each
investment.
(2) General and auxiliary ledgers (or
other records) reflecting all assets, liability, reserve, capital, income and
expense accounts, including:
(i) Separate ledger accounts (or other
records) reflecting the following:
(a) Securities in transfer;
(b) Securities in physical possession;
(c) Securities borrowed and securities
loaned;
(d) Monies borrowed and monies
loaned (together with a record of the
collateral therefor and substitutions in
such collateral);
(e) Dividends and interest received;
(f) Dividends receivable and interest
accrued.
Instruction. (a) and (b) of this subdivision
shall be stated in terms of securities quantities only; (c) and (d) of this subdivision
shall be stated in dollar amounts and securities quantities as appropriate; (e) and (f) of
this subdivision shall be stated in dollar
amounts only.

(ii) Separate ledger accounts (or
other records) for each portfolio security, showing (as of trade dates) (a) the
quantity and unit and aggregate price
for each purchase, sale, receipt, and delivery of securities and commodities
for such accounts, and (b) all other debits and credits for such accounts. Securities positions and money balances in
such ledger accounts (or other records)
shall be brought forward periodically
but not less frequently than at the end
of fiscal quarters. Any portfolio security, the salability of which is conditioned, shall be so noted. A memorandum record shall be available setting forth, with respect to each portfolio security account, the amount and
declaration ex-dividend, and payment
dates of each dividend declared thereon.
(iii) Separate ledger accounts (or
other records) for each broker-dealer
bank or other person with or through
which transactions in portfolio securities are effected, showing each purchase or sale of securities with or
through such persons, including details
as to the date of the purchase or sale,
the quantity and unit and aggregate

910

VerDate Aug<31>2005

13:34 May 19, 2008

Jkt 214056

PO 00000

Frm 00920

Fmt 8010

Sfmt 8010

Y:\SGML\214056.XXX

214056

ebenthall on PRODPC60 with CFR

Securities and Exchange Commission

§ 270.31a–1

price of such securities, and the commissions or other compensation paid to
such persons. Purchases or sales effected during the same day at the same
price may be aggregated.
(iv) Separate ledger accounts (or
other records), which may be maintained by a transfer agent or registrar,
showing for each shareholder of record
of the investment company the number
of shares of capital stock of the company held. In respect of share accumulation accounts (arising from periodic
investment plans, dividend reinvestment plans, deposit of issued shares by
the owner thereof, etc.), details shall
be available as to the dates and number
of shares of each accumulation, and except with respect to already issued
shares deposited by the owner thereof,
prices of each such accumulation.
(3) A securities record or ledger reflecting separately for each portfolio
security as of trade date all ‘‘long’’ and
‘‘short’’ positions carried by the investment company for its own account and
showing the location of all securities
long and the off-setting position to all
securities short. The record called for
by this paragraph shall not be required
in circumstances under which all portfolio securities are maintained by a
bank or banks or a member or members of a national securities exchange
as custodian under a custody agreement or as agent for such custodian.
(4) Corporate charters, certificates of
incorporation or trust agreements, and
by-laws, and minute books of stockholders’ and directors’ or trustees’
meetings; and minute books of directors’ or trustees’ committee and advisory board or advisory committee
meetings.
(5) A record of each brokerage order
given by or in behalf of the investment
company for, or in connection with,
the purchase or sale of securities,
whether executed or unexecuted. Such
record shall include the name of the
broker, the terms and conditions of the
order and of any modification or cancellation thereof, the time of entry or
cancellation, the price at which executed, and the time of receipt of report
of execution. The record shall indicate
the name of the person who placed the
order in behalf of the investment company.

(6) A record of all other portfolio purchases or sales showing details comparable to those prescribed in paragraph (b)(5) of this section.
(7) A record of all puts, calls, spreads,
straddles, and other options in which
the investment company has any direct
or indirect interest or which the investment company has granted or
guaranteed; and a record of any contractual commitments to purchase,
sell, receive or deliver securities or
other property (but not including open
orders placed with broker-dealers for
the purchase or sale of securities,
which may be cancelled by the company on notices without penalty or
cost of any kind); containing, at least,
an identification of the security, the
number of units involved, the option
price, the date of maturity, the date of
issuance, and the person to whom
issued.
(8) A record of the proof of money
balances in all ledger accounts (except
shareholder accounts), in the form of
trial balances. Such trial balances
shall be prepared currently at least
once a month.
(9) A record for each fiscal quarter,
which shall be completed within ten
days after the end of such quarter,
showing specifically the basis or bases
upon which the allocation of orders for
the purchase and sale of portfolio securities to named brokers or dealers and
the division of brokerage commissions
or other compensation on such purchase and sale orders among named
persons were made during such quarter. The record shall indicate the consideration given to (i) sales of shares of
the investment company by brokers or
dealers, (ii) the supplying of services or
benefits by brokers or dealers to the investment company, its investment adviser or principal underwriter or any
persons affiliated therewith, and (iii)
any other considerations other than
the technical qualifications of the brokers and dealers as such. The record
shall show the nature of the services or
benefits made available, and shall describe in detail the application of any
general or specific formula or other determinant used in arriving at such allocation of purchase and sale orders
and such division of brokerage commissions or other compensation. The

911

VerDate Aug<31>2005

13:34 May 19, 2008

Jkt 214056

PO 00000

Frm 00921

Fmt 8010

Sfmt 8010

Y:\SGML\214056.XXX

214056

ebenthall on PRODPC60 with CFR

§ 270.31a–2

17 CFR Ch. II (4–1–08 Edition)

record shall also include the identities
of the persons responsible for the determination of such allocation and such
division of brokerage commissions or
other compensation.
(10) A record in the form of an appropriate memorandum identifying the
person or persons, committees, or
groups authorizing the purchase or sale
of portfolio securities. Where an authorization is made by a committee or
group, a record shall be kept of the
names of its members who participated
in the authorization. There shall be retained as part of the record required by
this paragraph any memorandum, recommendation, or instruction supporting or authorizing the purchase or
sale of portfolio securities. The requirements of this paragraph are applicable to the extent they are not met by
compliance with the requirements of
paragraph (b)(4) of this section.
(11) Files of all advisory material received from the investment adviser,
any advisory board or advisory committee, or any other persons from
whom the investment company accepts
investment advice, other than material
which is furnished solely through uniform publications distributed generally.
(12) The term ‘‘other records’’ as used
in the expressions ‘‘journals (or other
records of original entry)’’ and ‘‘ledger
accounts (or other records)’’ shall be
construed to include, where appropriate, copies of voucher checks, confirmations, or similar documents which
reflect the information required by the
applicable rule or rules in appropriate
sequence and in permanent form, including similar records developed by
the use of automatic data processing
systems.
(c) Every underwriter, broker, or
dealer which is a majority-owned subsidiary of a registered investment company shall maintain in the form prescribed therein such accounts, books
and other documents as are required to
be maintained by brokers and dealers
by rule adopted under section 17 of the
Securities Exchange Act of 1934.
(d) Every depositer of any registered
investment company, and every principal underwriter for any registered investment company other than a closedend investment company, shall main-

tain such accounts, books and other
documents as are required to be maintained by brokers and dealers by rule
adopted under section 17 of the Securities Exchange Act of 1934, to the extent
such records are necessary or appropriate to record such person’s transactions with such registered investment company.
(e) Every investment advisor which is
a majority-owned subsidiary of a registered investment company shall
maintain in the form prescribed therein such accounts, books and other documents as are required to be maintained by registered investment advisers by rule adopted under section 204 of
the Investment Advisers Act of 1940.
(f) Every investment adviser not a
majority-owned subsidiary of a registered investment company shall
maintain such accounts, books and
other documents as are required to be
maintained by registered investment
advisers by rule adopted under section
204 of the Investment Advisers Act of
1940, to the extent such records are
necessary or appropriate to record such
person’s transactions with such registered investment company.
(Sec. 31, 54 Stat. 838; 15 U.S.C. 80a–30)
[27 FR 11993, Dec. 5, 1962, as amended at 61
FR 13983, Mar. 28, 1996; 62 FR 64986, Dec. 9,
1997]

§ 270.31a–2 Records to be preserved by
registered investment companies,
certain majority-owned subsidiaries
thereof, and other persons having
transactions with registered investment companies.
(a) Every registered investment company shall:
(1) Preserve permanently, the first
two years in an easily accessible place,
all books and records required to be
made pursuant to paragraphs (1)
through (4) of § 270.31a–1(b);
(2) Preserve for a period not less than
six years from the end of the fiscal
year in which any transactions occurred, the first two years in an easily
accessible place, all books and records
required to be made pursuant to paragraphs (5) through (12) or § 270.31a–1(b)

912

VerDate Aug<31>2005

13:34 May 19, 2008

Jkt 214056

PO 00000

Frm 00922

Fmt 8010

Sfmt 8010

Y:\SGML\214056.XXX

214056