Rules and Regulations
promulgated
under the
Investment Company Act of 1940
Rule 2a41-1 -- Valuation of Standby Commitments by Registered Investment Companies
A standby commitment means a right to sell a specified
underlying security or securities within a specified period of time and at an exercise
price equal to the amortized cost of the underlying security or securities plus accrued
interest, if any, at the time of exercise, that may be sold, transferred or assigned
only with the underlying security or securities. A standby commitment entitles the
holder to receive same day settlement, and will be considered to be from the party
to whom the investment company will look for payment of the exercise price. A standby
commitment may be assigned a fair value of zero, Provided, That:
The standby commitment is not used to affect the
company's valuation of the security or securities underlying the standby commitment;
and
Any consideration paid by the company for the standby
commitment, whether paid in cash or by paying a premium for the underlying security
or securities, is accounted for by the company as unrealized depreciation until the
standby commitment is exercised or expires.
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