[Code of Federal Regulations]
[Title 17, Volume 2]
[Revised as of April 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR210.6-08]

[Page 275-276]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER II--SECURITIES AND EXCHANGE COMMISSION
 
PART 210--FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL STATEMENTS,
 
Sec. 210.6-08  Special provisions applicable to the statements of operations of issuers of face-amount certificates.

    Statements of operations filed by issuers of face-amount 
certificates shall comply with the following provisions:

                        Statements of Operations

    1. Investment income. State separately income from: (a) Interest on 
mortgages; (b) interest on securities; (c) dividends; (d) rental income; 
and (e) other investment income. If income from investments in or 
indebtedness of affiliates is included hereunder, such income shall be 
segregated under an appropriate caption subdivided to show separately 
income from: (1) Controlled companies; and (2) other affiliates. If non-
cash dividends are included in income, the bases of recognition and 
measurement used in respect to such amounts shall be disclosed. Any 
other category of income which exceeds five percent of the total shown 
under this caption shall be stated separately.
    2. Investment expenses. (a) State separately the total amount of 
investment advisory, management and service fees, and expenses in 
connection with research, selection, supervision, and custody of 
investments. Amounts of expenses incurred from transactions with 
affiliated persons shall be disclosed together with the identity of and 
related amount applicable to each such person accounting for five 
percent or more of the total expenses shown under this caption together 
with a description of the nature of the affiliation. Expenses incurred 
within the person's own organization in connection with research, 
selection and supervision of investments shall be stated separately. 
Reductions or reimbursements of management or service fees shall be 
shown as a negative amount or as a reduction of total expenses shown 
under this caption.
    (b) State separately any other expense item the amount of which 
exceeds five percent of the total expenses shown under this caption.
    (c) A note to the financial statements shall include information 
concerning management and service fees, the rate of fee, and the base 
and method of computation. State separately the amount and a description 
of any fee reductions or reimbursements representing: (1) Expense 
limitation agreements or commitments; and (2) offsets received from 
broker-dealers showing separately for each amount received or due from: 
(i) Unaffiliated persons; and (ii) affiliated persons. If no management 
or service fees were incurred for a period, state the reason therefor.
    (d) If any expenses were paid otherwise than in cash, state the 
details in a note.

[[Page 276]]

    (e) State in a note to the financial statements the amount of 
brokerage commissions (including dealer markups) paid to affiliated 
broker-dealers in connection with purchase and sale of investment 
securities.
    3. Interest and amortization of debt discount and expense.
    4. Provision for certificate reserves. State separately any 
provision for additional credits, or dividends, or interests, in 
addition to the minimum maturity or face amount specified in the 
certificates. State also in an appropriate manner reserve recoveries 
from surrenders or other causes.
    5. Investment income before income tax expense.
    6. Income tax expense. Include under this caption only taxes based 
on income.
    7. Investment income-net.
    8. Realized gain (loss) on investments-net.
    (a) State separately the net realized gain or loss on transactions 
in: (1) Investment securities of unaffiliated issuers, (2) investment 
securities of affiliated issuers, and (3) other investments.
    (b) Distributions of capital gains by other investment companies 
shall be shown separately under this caption.
    (c) State separately any: (1) Federal income taxes and (2) other 
income taxes applicable to realized gain (loss) on investments, 
distinguishing taxes payable currently from deferred income taxes.
    9. Net income or loss.