Investment Management and Financial Markets Group
May 7, 2008
SEC Revises Form N-CSR to Provide Protection for Sudan
Divestments
The Securities and Exchange Commission (SEC) recently adopted amendments to Form N-CSR and
Form N-SAR to enable investment companies to take advantage of protections provided by recent
legislation related to the divestment of securities of issuers with certain business operations in Sudan.
The changes to the Forms require additional disclosure if the investment company seeks to protect
itself from legal action related to the divestments. The additional disclosure is optional, but must be
included in the investment company’s next Form N-CSR or Form N-SAR for the company to qualify for
the protection provided by the recent legislation.
The new forms became effective on April 30, 2008. The SEC’s actions also provide an opportunity to
file amended Forms by May 14, 2008 to address divestitures between December 31, 2007 and April 30,
2008.
The Sudan Accountability and Divestment Act of 2007
On December 31, 2007, the President signed the Sudan Accountability and Divestment Act of 2007
(the Act) into law. Among other things, the Act provides that no person may bring any civil, criminal, or
administrative action against any registered investment company, or any employee, officer, director, or
investment adviser of the investment company, based solely upon the investment company’s
divestment of, or avoidance of investment in, securities issued by persons that the investment company
determines, using credible information that is available to the public, conduct or have direct investments
in certain business operations in Sudan. This limitation on actions only applies to a registered
investment company, or any of its employees, officers, directors, or investment advisers, that makes
disclosures about the divestments in accordance with regulations prescribed by the SEC.
To implement the Act, the SEC amended Form N-CSR and Form N-SAR to seek disclosure related to
divestments from securities of issuers that the investment company determines conduct or directly
invest in certain business operations in Sudan. Compliance with the disclosure requirements is
necessary to obtain the benefit of the limitation on civil, criminal, and administrative actions provided in
the Act.
Disclosure Requirements
The amendments to Form N-CSR and Form N-SAR require disclosure of information that will identify
the securities divested and the magnitude of the divestment. This includes:
The issuer’s name;
Exchange ticker symbol;
CHICAGO ● SAN DIEGO● WASHINGTON
CUSIP number;
Total number of shares, or principal amount of debt securities, divested; and
Dates that the securities were divested.
In addition, if the registered investment company continues to hold any securities of the divested issuer,
it is required to disclose:
Exchange ticker symbol;
CUSIP number; and
Total number of shares, or principal amount of debt securities, held on the date of filing.
Also, the SEC adopted Instructions to Form N-CSR and Form N-SAR providing that, for purposes of
determining when a divestment should be reported, if a registered investment company divests its
holdings of a particular security in a related series of transactions, the company may deem the
divestment to occur at the time of the final transaction in the series.
Finally, the SEC specified that the obligation to disclose the above information on Form N-CSR and
Form N-SAR will terminate one year after the date on which the Act terminates.
Transition Period
The amendments to Form N-CSR and Form N-SAR permit a registered investment company that
makes a divestment in accordance with the Act between December 31, 2007 (the date of the
enactment of the Act) and April 30, 2008 (the effective date of the amendments), and that filed a Form
N-CSR or Form N-SAR after the divestment but before April 30, 2008, to disclose the divestment on an
amendment to that Form N-CSR or Form N-SAR filed no later than May 14, 2008.
The SEC believes that this provision will: (i) permit registered investment companies, and their
employees, officers, directors, and investment advisers, to rely on the Act’s limitation on actions for
divestments that occurred after enactment but before the effective date of the SEC’s form amendments,
and (ii) provide registered investment companies with a reasonable opportunity to review the form
amendments and make any necessary filing.
For further information, please contact Cameron Avery 312-807-4302, Kevin Bettsteller 312-807-4442, Paul Dykstra 312-7816029, Jennifer Esquibel 312-807-4262, David Glatz 312-807-4295, Alan Goldberg 312-807-4227, Elizabeth Hudson 312-8074376, Anna Paglia 312-781-7163, Andrew Pfau 312-807-4386, Paulita Pike 312-781-6027, Eric Purple 202-955-7081, Bruce
Rosenblum 202-955-7087, Donald Weiss 312-807-4303, Gwendolyn Williamson 202-955-7059, or Stacy Winick 202-955-7040
of Bell, Boyd & Lloyd’s Investment Management and Financial Markets Group or visit our Web site at www.bellboyd.com.
This publication has been prepared by the Investment Management and Financial Markets Group of Bell, Boyd & Lloyd LLP
for clients and friends of the firm and is for information only. It is not a substitute for legal advice or individual analysis of a
particular legal matter. Readers should not act without seeking professional legal counsel. Transmission and receipt of this
publication does not create an attorney-client relationship.
© 2008 Bell, Boyd & Lloyd LLP All Rights Reserved
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