PRA - Form N-1A SUPPORTING STATEMENT (2013)

PRA - Form N-1A SUPPORTING STATEMENT (2013).pdf

Form N-1A under the Securities Act of 1933 and under the Investment Company Act of 1940, registration statement of open- end management investment companies

OMB: 3235-0307

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SUPPORTING STATEMENT
Form N-1A
A.

JUSTIFICATION
1.

Necessity for the Information Collection

Form N-1A (17 CFR 239.15A and 274.11A) is the form used by open-end
management investment companies (“funds”) under the Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.) (“Investment Company Act”) and/or to register their
securities under the Securities Act of 1933 (15 U.S.C. 77a et seq.) (“Securities Act”).
Section 5 of the Securities Act (15 U.S.C. 77e) requires the filing of a registration
statement prior to the offer of securities to the public and that the statement be effective
before any securities are sold, and Section 8 of the Investment Company Act (15 U.S.C.
80a-8) requires a fund to register as an investment company. Form N-1A also permits
funds to provide investors with a prospectus and a statement of additional information
(“SAI”) covering essential information about the fund when it makes an initial or
additional offering of its securities. Section 5(b) of the Securities Act requires that
investors be provided with a prospectus containing the information required in a
registration statement prior to the sale or at the time of confirmation or delivery of the
securities.
On June 5, 2013, the Commission issued a release proposing two alternatives as
part of a money market reform proposal. Under the first alternative, prime institutional
money market funds would be required to float their net asset value (“floating NAV
proposal”). Under the second alternative, money market funds whose weekly liquid
assets fell below 15% of total assets would be required to impose a 2% liquidity fee
unless the fund’s board of directors determines that such a fee would not be in the best

interest of the fund, and permit the funds to suspend redemptions temporarily (i.e., “gate”
the fund) (“liquidity fees and gates proposal”). 1 The proposed amendments would
require that money market funds amend their registration statements and statements of
additional information (“SAI”) to include new disclosure regarding the risks of investing
in money markets generally, as well as the particular risks associated with our floating
NAV proposal and liquidity fees and gates proposal.
2.

Purpose of the Information Collection

The title for the collection of information is: Form N-1A under the Investment
Company Act of 1940 and Securities Act of 1933, Registration Statement of Open-End
Management Investment Companies.” The purpose of Form N-1A is to meet the filing
and disclosure requirements of the Securities Act of 1933 (“Securities Act”) and the
Investment Company Act of 1940 (“Investment Company Act”) and to enable funds to
provide investors with information necessary to evaluate an investment in the fund.
Unlike many other federal information collections, which are primarily for the use and
benefit of the collecting agency, this information collection is primarily for the use and
benefit of investors. The information filed with the Commission also permits the
verification of compliance with securities law requirements and assures the public
availability and dissemination of the information.
3.

Role of Improved Information Technology

The Commission’s electronic filing system (Electronic Data Gathering, Analysis
and Retrieval or “EDGAR”) is designed to automate the filing, processing and
dissemination of full disclosure filings. The system permits publicly held companies to

See Money Market Fund Reform; Amendments to Form PF, Investment Company Act Release
No. 30551 (June 5, 2013).

transmit filings to the Commission electronically. This automation has increased the
speed, accuracy, and availability of information, generating benefits to investors and
financial markets. Form N-1A is required to be filed with the Commission electronically
on EDGAR. (17 CFR 232.101(a)(1)(i) and (iv)). The public may access filings on
EDGAR through the Commission’s Internet Web site (http://www.sec.gov) or at EDGAR
terminals located at the Commission’s public reference rooms. Prospectuses and SAIs
may be sent to investors by electronic means so long as the fund meets certain
requirements. 2
4.

Efforts to Identify Duplication

The Commission periodically evaluates rule-based reporting and recordkeeping
requirements for duplication, and reevaluates them whenever it adopts changes in its
rules. The requirements of Form N-1A are not generally duplicated elsewhere.
5.

Effect on Small Entities

The current disclosure requirements for reports on Form N-1A do not distinguish
between small entities and other funds. The burden on smaller funds, however, to
prepare and file registration statements may be greater than for larger funds. The
Commission believes, however, that imposing different requirements on smaller
investment companies would not be consistent with investor protection and the purposes
of the registration statements. We review all rules periodically, as required by the
Regulatory Flexibility Act, to identify methods to minimize recordkeeping or reporting
requirements affecting small businesses.

See Use of Electronic Media for Delivery Purposes, Securities Act Release No. 7233,
Exchange Act Release No. 36345, Investment Company Act Release No. 21399 (Oct. 6,
1995) (60 FR 53458 (Oct. 13, 1995)).

With respect to the proposed amendments, pursuant to 5 U.S.C. section 605(b),
the Commission certified that the proposed amendments to Form N-1A would not, if
adopted, have a significant impact on a substantial number of small entities.
6.

Consequences of Less Frequent Collection

The Investment Company Act requires that funds file annual amendments to their
registration statements. Less frequent collection would mean that current information
might not be available to fund investors.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

Not Applicable.
8.

Consultation Outside the Agency

Form N-1A has previously been amended through rulemaking actions pursuant to
the Administrative Procedures Act. Comments are generally received from registrants,
trade associations, the legal and accounting professions, and other interested parties. In
addition, the Commission and staff of the Division of Investment Management participate
in an ongoing dialogue with representatives of the investment company industry through
public conferences, meetings, and informal exchanges. The Commission requested
public comment on the collection of information requirements in Form N-1A before it
submitted this request for revision and approval to the Office of Management and
Budget. The Commission received no comments in response to its request.
9.

Payment of Gift to Respondents

Not Applicable.
10.

Assurance of Confidentiality

Not Applicable.

11.

Sensitive Questions

Not Applicable.
12.

Estimate of Hour Burden

Open-end funds register as investment companies under the Investment Company
Act and register their securities under the Securities Act on Form N-1A. Compliance
with the disclosure requirements of Form N-1A is mandatory. Form N-1A generally
imposes two types of reporting burdens on investment companies: (1) the burden of
preparing and filing the initial registration statement; and (2) the burden of preparing and
filing post-effective amendments to a previously effective registration statement. In our
most recent Paperwork Reduction Act submission for Form N-1A, Commission staff
estimated the annual compliance burden to comply with the collection of information
requirement of Form N-1A is 1,578,689 hours. The proposed amendments would affect
the staff’s estimates of the hour burden as described below.
i.

Floating NAV Proposal

The incremental burden hour estimate below is based only on the effects to
money market funds that would be required to float their NAV, or alternatively, affect
government and retail money market funds relying on the proposed government fund
exemption and retail fund exemption from the floating NAV requirement. For purposes
of the PRA, staff estimates that, of the estimated 586 total money market funds, 3 165

This estimate is based on a staff review of reports on Form N-MFP filed with the Commission for
the month ended February 28, 2013.

funds would rely on the proposed government fund exemption,4 and 100 funds would
rely on the proposed retail fund exemption. 5
The burdens associated with the proposed amendments to Form N-1A under our
floating NAV proposal include one-time burdens as well as ongoing burdens. Staff
estimates that each floating NAV money market fund would incur a one-time burden of 5
hours, 6 at a time cost of $1,480, 7 to draft and finalize the required disclosure and amend
its registration statement. In aggregate, staff estimates that floating NAV money market
funds would incur a one-time burden of 1,605 hours, 8 at a time cost of $475,080, 9 to
comply with the proposed Form N-1A disclosure requirements. In addition, Commission
staff estimates that each floating NAV money market fund would incur an ongoing
burden of 0.5 hours, at a time cost of $148, 10 each year to review and update the SAI
disclosure regarding historical instances in which the fund has received financial support

This estimate is based on the number of money market funds that self-reported as
Government/Agency or Treasury funds on Form N-MFP as of February 28, 2013.

This estimate is based on the number of money market funds that self-reported as “retail” funds as
of February 28, 2013 (based on iMoney.net data).

This estimate is based on the following calculation: 1 hour to update registration statement to
include bulleted disclosure statement + 3 hours to update registration statement to include tax- and
operations-related disclosure about floating NAV + 1 hour to update registration statement to
include disclosure about financial support received by the fund = 5 hours.

This estimate is based on the following calculations: (1 hour (to update registration statement to
include bulleted disclosure statement) x $296 (blended rate for a compliance attorney and a senior
programmer) = $296) + (3 hours (to update registration statement to include tax- and operationsrelated disclosure about floating NAV) x $296 (blended rate for a compliance attorney and a
senior programmer) = $888) + (1 hour (to update registration statement to include disclosure about
financial support received by the fund) x $296 (blended rate for a compliance attorney and a senior
programmer) = $296 = $1,480.

This estimate is based on the following calculations: 5 hours x 321 funds (586 total money market
funds – 165 funds that would rely on the proposed government fund exemption – 100 funds that
would rely on the proposed retail fund exemption) = 1,605 hours.

This estimate is based on the following calculation: 1,605 hours x $296 (blended rate for a
compliance attorney and a senior programmer) = $475,080.

This estimate is based on the following calculation: 0.5 hours x $296 (blended rate for a
compliance attorney and a senior programmer) = $148.

from a sponsor or fund affiliate. In aggregate, staff estimates that floating NAV money
market funds would incur an annual burden of approximately 161 hours, 11 at a time cost
of $47,656, 12 to comply with the proposed Form N-1A disclosure requirements.
Amortizing these one-time and ongoing hour and cost burdens over three years
results in an average annual increased burden of approximately 2 hours per floating NAV
fund, 13 at a time cost of $592 per fund. 14 In aggregate, staff estimates that floating NAV
money market funds would incur an average annual increased burden of 642 hours, 15 at a
time cost of $190,032, 16 to comply with the proposed Form N-1A disclosure
requirements.
Commission staff estimates that each government or retail money market fund
would incur a one-time burden of 2 hours, 17 at a time cost of $592, 18 to draft and finalize
the required disclosure and amend its registration statement. In aggregate, staff estimates

This estimate is based on the following calculation: 0.5 hours x 321 funds (586 total money
market funds – 165 funds that would rely on the proposed government fund exemption – 100
funds that would rely on the proposed retail fund exemption) = approximately 161 hours.

This estimate is based on the following calculation: 161 hours x $296 (blended rate for a
compliance attorney and a senior programmer) = $47,656.

This estimate is based on the following calculation: 5 burden hours (year 1) + 0.5 burden hours
(year 2) + 0.5 burden hours (year 3) ÷ 3 = 2 hours.

This estimate is based on the following calculation: $1,480 (year 1 monetized burden hours) +
$148 (year 2 monetized burden hours) + $148 (year 3 monetized burden hours) ÷ 3 = $592.

This estimate is based on the following calculation: 2 hours x 321 funds (586 total money market
funds – 165 funds that would rely on the proposed government fund exemption – 100 funds that
would rely on the proposed retail fund exemption) = 642 hours.

This estimate is based on the following calculation: 642 hours x $296 (blended rate for a
compliance attorney and a senior programmer) = $190,032.

This estimate is based on the following calculation: 1 hour to update registration statement to
include bulleted disclosure statement + 1 hour to update registration statement to include
disclosure about financial support received by the fund = 2 hours.

that government and retail money market funds would incur a one-time burden of 530
hours, 19 at a time cost of $156,880, 20 to comply with the proposed Form N-1A disclosure
requirements. In addition, Commission staff estimates that each government or retail
money market fund would incur an ongoing burden of 0.5 hours, at a time cost of $148, 21
each year to review and update the SAI disclosure regarding historical instances in which
the fund has received financial support from a sponsor or fund affiliate. In aggregate,
staff estimates that government and retail money market funds would incur an annual
burden of approximately 133 hours, 22 at a time cost of $39,368, 23 to comply with the
proposed Form N-1A disclosure requirements.
Amortizing these one-time and ongoing hour and cost burdens over three years
results in an average annual increased burden of 1 hour per government or retail fund, 24
at a time cost of $296. 25 In aggregate, staff estimates that government and retail fund

This estimate is based on the following calculation: 2 hours x 265 funds (165 funds that would
rely on the proposed government fund exemption + 100 funds that would rely on the proposed
retail fund exemption) = 530 hours.

This estimate is based on the following calculation: 530 hours x $296 (blended rate for a
compliance attorney and a senior programmer) = $156,880.

This estimate is based on the following calculation: 0.5 hours x $296 (blended rate for a
compliance attorney and a senior programmer) = $148.

This estimate is based on the following calculation: 0.5 hours x 265 funds (165 funds that would
rely on the proposed government fund exemption + 100 funds that would rely on the proposed
retail fund exemption) = approximately 133 hours.

This estimate is based on the following calculation: 133 hours x $296 (blended rate for a
compliance attorney and a senior programmer) = $39,368.

This estimate is based on the following calculation: 2 burden hours (year 1) + 0.5 burden hours
(year 2) + 0.5 burden hours (year 3) ÷ 3 = 1 hour.

This estimate is based on the following calculation: $592 (year 1 monetized burden hours) + $148
(year 2 monetized burden hours) + $148 (year 3 monetized burden hours) ÷ 3 = $296.

money market funds would incur an average annual increased burden of 265 hours, 26 at a
time cost of $78,440, 27 to comply with the proposed Form N-1A disclosure requirements.
In total, the staff estimates that all money market funds (floating NAV funds, as
well as government and retail funds that rely on the proposed government and retail
exemptions) would incur an annual increased burden of 907 hours, 28 at a time cost of
$268,472, 29 to comply with the proposed Form N-1A disclosure requirements. Staff
estimates that our proposed amendments to Form N-1A under the floating NAV
alternative would result in a total aggregate annual collection of information burden of
1,579,596 hours. 30
ii.

Liquidity Fees and Gates Proposal

The incremental burden hour estimate below is based on the effects to all money
market funds that are not government funds that rely on the proposed rule 2a-7 exemption
from the fee and gate requirements, as well as government funds relying on the proposed
exemption. For purposes of the PRA, staff estimates that, of the estimated 586 total
money market funds, 31 165 funds would rely on the proposed government fund
exemption.32

This estimate is based on the following calculation: 1 hour x 265 funds (165 funds that would rely
on the proposed government fund exemption + 100 funds that would rely on the proposed retail
fund exemption) = 265 hours.

This estimate is based on the following calculation: 265 hours x $296 (blended rate for a
compliance attorney and a senior programmer) = $78,440.

This estimate is based on the following calculation: 642 hours + 265 hours = 907 hours.

This estimate is based on the following calculation: $190,032 + $78,440 = $268,472.

This estimate is based on the following calculation: current approved burden of 1,578,689 hours +
907 in additional burden hours as a result of our proposed amendments = 1,579,596 hours.

See supra note 3.

This estimate is based on the number of money market funds that self-reported as
Government/Agency or Treasury funds on Form N-MFP as of February 28, 2013.

The burdens associated with the proposed amendments to Form N-1A under our
liquidity fees and gates proposal include one-time burdens as well as ongoing burdens.
Commission staff estimates that each money market fund (except government money
market funds that have chosen to rely on the proposed rule 2a-7 exemption from the fee
and gate requirements) would incur a one-time burden of 5 hours, 33 at a time cost of
$1,480, 34 to draft and finalize the required disclosure and amend its registration
statement. In aggregate, staff estimates that these funds would incur a one-time burden of
2,105 hours, 35 at a time cost of $623,080, 36 to comply with the proposed Form N-1A
disclosure requirements. In addition, Commission staff estimates that each money
market fund (except government money market funds relying on the proposed
government fund exemption) would incur an ongoing burden of 1 hour, at a time cost of
$296, 37 each year to: 1) review and update the SAI disclosure regarding historical

This estimate is based on the following calculation: 1 hour to update registration statement to
include bulleted disclosure statement + 3 hours to update registration statement to include
disclosure about effects that fees/gates may have on shareholder redemptions, and disclosure about
historical occasions in which the fund’s weekly liquid assets have fallen below 15% or the fund
has imposed fees/gates + 1 hour to update registration statement to include disclosure about
financial support received by the fund = 5 hours.

This estimate is based on the following calculation: (1 hour (to update registration statement to
include bulleted disclosure statement) x $296 (blended rate for a compliance attorney and a senior
programmer) = $296) + (3 hours (to update registration statement to include disclosure about
effects that fees/gates may have on shareholder redemptions, and disclosure about historical
occasions in which the fund’s weekly liquid assets have fallen below 15% or the fund has imposed
fees/gates) x $296 (blended rate for a compliance attorney and a senior programmer) = $888) + (1
hour (to update registration statement to include disclosure about financial support received by the
fund) x $296 (blended rate for a compliance attorney and a senior programmer) = $296) = $1,480.

This estimate is based on the following calculation: 5 hours x 421 funds (586 total money market
funds – 165 funds that would rely on the proposed government fund exemption) = 2,105 hours.

This estimate is based on the following calculation: 2,105 hours x $296 (blended rate for a
compliance attorney and a senior programmer) = $623,080.

This estimate is based on the following calculation: (0.5 hours (to review and update the SAI
disclosure regarding historical occasions in which the fund’s weekly liquid assets have fallen
below 15% or the fund has imposed liquidity fees or redemption gates, and to inform prospective
investors of any fees or gates currently in place (as appropriate) by means of a prospectus
supplement) x $296 (blended rate for a compliance attorney and a senior programmer) = $148) +
(0.5 hours (to review and update the SAI disclosure regarding historical instances in which the

occasions in which the fund’s weekly liquid assets have fallen below 15% or the fund has
imposed liquidity fees or redemption gates; 2) review and update the SAI disclosure
regarding historical instances in which the fund has received financial support from a
sponsor or fund affiliate; and 3) inform prospective investors of any fees or gates
currently in place (as appropriate) by means of a prospectus supplement. In aggregate,
staff estimates that these funds would incur an annual burden of 421 hours, 38 at a time
cost of $124,616, 39 to comply with the proposed Form N-1A requirements.
Amortizing these one-time and ongoing hour and cost burdens over three years
results in an average annual increased burden of approximately 2 hours per fund (except
government money market funds that have chosen to rely on the proposed rule 2a-7
exemption from the fee and gate requirements), 40 at a time cost of approximately $691
per fund. 41 In aggregate, staff estimates that these funds would incur an average annual
increased burden of 842 hours, 42 at a time cost of $249,232, 43 to comply with the
proposed Form N-1A disclosure requirements.

fund has received financial support from a sponsor or fund affiliate) x $296 (blended rate for a
compliance attorney and a senior programmer) = $148) = $296.
38

This estimate is based on the following calculation: 1 hours x 421 funds (586 total money market
funds – 165 funds that would rely on the proposed government fund exemption) = 421 hours.

This estimate is based on the following calculation: 421 hours x $296 (blended rate for a
compliance attorney and a senior programmer) = $124,616.

This estimate is based on the following calculation: (5 burden hours (year 1) + 1 burden hour (year
2) + 1 burden hours (year 3)) ÷ 3 = approximately 2 hours.

This estimate is based on the following calculation: ($1,480 (year 1 monetized burden hours) +
$296 (year 2 monetized burden hours) + $296 (year 3 monetized burden hours)) ÷ 3 =
approximately $691.

This estimate is based on the following calculation: 2 hours x 421 funds (586 total money market
funds – 165 funds that would rely on the proposed government fund exemption) = 842 hours.

This estimate is based on the following calculation: 842 hours x $296 (blended rate for a
compliance attorney and a senior programmer) = $249,232.

Commission staff estimates that each government money market fund that has
chosen to rely on the proposed rule 2a-7 exemption from the fee and gate requirements
would incur a one-time burden of 2 hours, 44 at a time cost of $592, 45 to draft and finalize
the required disclosure and amend its registration statement. In aggregate, staff estimates
that these government funds would incur a one-time burden of 330 hours, 46 at a time cost
of $97,680, 47 to comply with the proposed Form N-1A disclosure requirements. In
addition, Commission staff estimates that each government fund relying on the proposed
government fund exemption would incur an ongoing burden of 0.5 hours, at a time cost
of $148, 48 each year to review and update the SAI disclosure regarding historical
instances in which the fund has received financial support from a sponsor or fund
affiliate. In aggregate, staff estimates that government funds would incur an annual
burden of approximately 83 hours, 49 at a time cost of $24,568, 50 to comply with the
proposed Form N-1A disclosure requirements.

This estimate is based on the following calculation: 2 hours x 165 funds that would rely on the
proposed government fund exemption = 330 hours.

This estimate is based on the following calculation: 330 hours x $296 (blended rate for a
compliance attorney and a senior programmer) = $97,680.

This estimate is based on the following calculation: 0.5 hours x $296 (blended rate for a
compliance attorney and a senior programmer) = $148.

This estimate is based on the following calculation: 0.5 hours x 165 funds that would rely on the
proposed government fund exemption = approximately 83 hours.

This estimate is based on the following calculation: 83 hours x $296 (blended rate for a
compliance attorney and a senior programmer) = $24,568.

Amortizing these one-time and ongoing hour and cost burdens over three years
results in an average annual increased burden of 1 hour per government fund that has
chosen to rely on the proposed rule 2a-7 exemption, 51 at a time cost of $296 per fund. 52
In aggregate, staff estimates that these government funds would incur an average annual
increased burden of 165 hours, 53 at a time cost of $48,840, 54 to comply with the proposed
Form N-1A disclosure requirements.
In total, the staff estimates that all money market funds would incur an average
annual increased burden of 1,007 hours, 55 at a time cost of $298,072, 56 to comply with
the proposed Form N-1A disclosure requirements. Staff estimates that our proposed
amendments to Form N-1A under the liquidity fees and gates alternative would result in a
total aggregate annual collection of information burden of 1,579,696 hours. 57
iii.

A Note Regarding the Form 83-I

This estimate is based on the following calculation: 2 burden hours (year 1) + 0.5 burden hours
(year 2) + 0.5 burden hours (year 3) ÷ 3 = 1 hour.

This estimate is based on the following calculation: $592 (year 1 monetized burden hours) + $148
(year 2 monetized burden hours) + $148 (year 3 monetized burden hours) ÷ 3 = $296.

This estimate is based on the following calculation: 1 hour x 165 funds that would rely on the
proposed government fund exemption = 165 hours.

This estimate is based on the following calculation: 165 hours x $296 (blended rate for a
compliance attorney and a senior programmer) = $48,840.

This estimate is based on the following calculation: 842 hours + 165 hours = 1,007 hours.

This estimate is based on the following calculation: $249,232 + $48,840 = $298,072.

This estimate is based on the following calculation: current approved burden of 1,578,689 hours +
1,007 in additional burden hours as a result of our proposed amendments = 1,579,696 hours.

is averaging the increased hour burden under each alternative proposal and therefore, the
average annual increased burden for purposes of the Form 83-I is 957 burden hours. 58
Staff estimates that our proposed amendments to Form N-1A for purposes of the Form
83-I would result in a total aggregate annual collection of information burden of
1,579,646 hours. 59
13.

Estimate of Total Annual Cost Burden

In addition to the costs associated with the hour burdens discussed in Item 12
above, money market funds incur other external costs. This cost burden is the cost of
goods and services purchased to prepare and update reports filed on Form N-1A, such as
for the services of outside counsel. Estimates are based on the Commission’s experience
with the filing of Form N-1A. In our most recent Paperwork Reduction Act submission
for Form N-1A, Commission staff estimated the annual cost burden to comply with the
collection of information requirement of Form N-1A is $122,730,472. The proposed
amendments would affect the staff’s estimates of the cost burden as described below.
i.

Floating NAV Proposal

Staff estimates that there would be one-time aggregate external costs (in the form
of printing costs) of $3,134,588 associated with the proposed Form N-1A disclosure
requirements under our floating NAV proposal. 60 Amortizing these external costs over

This estimate is based on the following calculation: 907 annual aggregate burden hours (FNAV
alternative) + 1,007 annual aggregate burden hours (fees and gates alternative) = 1,914 ÷ 2 = 957
annual aggregate burden hours.
This estimate is based on the following calculation: current approved burden of 1,578,689 hours +
957 in additional burden hours as a result of our proposed amendments = 1,579,646 hours.
We expect that a fund that must include disclosure regarding historical instances in which the fund
has received financial support from a sponsor or fund affiliate would need to add 1-4 pages of new
disclosure to its registration statement. Adding this new disclosure would therefore increase the
number of pages in, and change the printing costs of, the fund’s registration statement.

three years results in annual aggregate external costs of $1,044,863. Staff estimates that
our proposed amendments to Form N-1A under the floating NAV alternative would result
in a total aggregate annual collection of information cost burden of $123,775,335. 61
ii.

Liquidity Fees and Gates Proposal

Staff estimates that there would be one-time aggregate external costs (in the form
of printing costs) of $6,269,175 associated with the proposed Form N-1A disclosure
requirements. 62 Amortizing these costs over three years results in annual aggregate

Commission staff calculates the external costs associated with the proposed Form N-1A disclosure
requirements as follows: 2.5 pages (mid-point of 1 page and 4 pages) x $0.045 per page x
27,863,000 money market fund registration statements printed annually = $3,134,588 one-time
aggregate external costs. Amortizing these external costs over three years results in aggregate
annual external costs of $1,044,863. Our estimate of potential printing costs ($0.045 per page:
$0.035 for ink + $0.010 for paper) is based on data provided by Lexecon Inc. in response to
Investment Company Act Release No. 27182 (Dec. 8, 2005) [70 FR 74598 (Dec. 15, 2005)]. See
Lexecon Inc. Letter (Feb. 13, 2006), available at
http://www.sec.gov/rules/proposed/s71005/dbgross9453.pdf. For purposes of this analysis, our
best estimate of the number of money market fund registration statements printed annually is
based on 27,863,000 money market fund shareholder accounts in 2012. See Investment Company
Institute, 2013 Investment Company Fact Book, at 178, available at
http://www.ici.org/pdf/2013_factbook.pdf.
61

This estimate is based on the following calculation: current approved external cost burden of
$122,730,472 + $1,044,863 in additional burden costs as a result of our proposed amendments =
123,775,335 hours.

We expect that a fund that must include disclosure about historical occasions in which the fund’s
weekly liquid assets have fallen below 15% or the fund has imposed fees/gates, or historical
instances in which the fund has received financial support from a sponsor or fund affiliate, would
need to add 2-8 pages of new disclosure to its registration statement. Adding this new disclosure
would therefore increase the number of pages in, and change the printing costs of, the fund’s
registration statement.
Commission staff calculates the external costs associated with the proposed Form N-1A disclosure
requirements as follows: 5 pages (mid-point of 2 pages and 8 pages) x $0.045 per page x
27,863,000 money market fund registration statements printed annually = $6,269,175 one-time
aggregate external costs. Amortizing these external costs over three years results in aggregate
annual external costs of $2,089,725. Our estimate of potential printing ($0.045 per page: $0.035
for ink + $0.010 for paper) is based on data provided by Lexecon Inc. in response to Investment
Company Act Release No. 27182 (Dec. 8, 2005) [70 FR 74598 (Dec. 15, 2005)]. See Lexecon
Inc. Letter (Feb. 13, 2006), available at
http://www.sec.gov/rules/proposed/s71005/dbgross9453.pdf. For purposes of this analysis, our
best estimate of the number of money market fund registration statements printed annually is
based on 27,863,000 money market fund shareholder accounts in 2012. See Investment Company
Institute, 2013 Investment Company Fact Book, at 178, available at
http://www.ici.org/pdf/2013_factbook.pdf.

external costs of $2,089,725. Staff estimates that our proposed amendments to Form N1A under the liquidity fees and gates alternative would result in a total aggregate annual
collection of information cost burden of $124,820,197. 63
iii.

A Note Regarding the Form 83-I

As noted above, the Commission has proposed two alternative proposals as part
of its money market fund reform package and is waiting to receive comment from the
industry before making a final determination as to which alternative proposal to adopt.
Accordingly, for purposes of the Form 83-I and obtaining pre-approval from OMB, staff
is averaging the increased external cost burden under each alternative proposal and
therefore, the average annual increased external cost burden for purposes of the Form 83I is $1,567,294. 64 Staff estimates that our proposed amendments to Form N-1A for
purposes of the Form 83-I would result in a total aggregate annual collection of
information cost burden of $124,297,766. 65
14.

Estimate of Cost to the Federal Government

The annual cost of reviewing and processing new registration statements,
post-effective amendments, proxy statements, and shareholder reports of investment
companies amounted to approximately $19.8 million in fiscal year 2012, based on the

This estimate is based on the following calculation: current approved external cost burden of
$122,730,472 + $2,089,725 in additional burden costs as a result of our proposed amendments =
124,820,197 hours.

This estimate is based on the following calculation: $1,044,863annual aggregate external cost
burden (FNAV alternative) + $2,089,725 annual aggregate external cost burden (fees and gates
alternative) = $3,134,588 ÷ 2 = $1,567,294 annual aggregate external cost burden.

This estimate is based on the following calculation: current approved external cost burden of
$122,730,472 + $1,567,294 in additional burden costs as a result of our proposed amendments =
124,297,766 hours.

Commission’s computation of the value of staff time devoted to this activity and related
overhead.
15.

Explanation of Changes in Burden
i.

Floating NAV Proposal

The total annual hour burden of 1,579,596 hours represents an increase of 907
hours over the previous burden hour estimate of 1,578,689 hours. In addition, the annual
external cost burden of $123,775,335 represents an increase of $1,044,863 over the
previous annual external cost burden estimate of $122,730,472. The changes in burden
hours and external cost burdens are due to the staff’s estimates of the time costs and
external costs that would result from our proposed amendments.
ii.

Liquidity Fees and Gates Proposal

The total annual hour burden of 1,579,696 hours represents an increase of 1,007
hours over the previous burden hour estimate of 1,578,689 hours. In addition, the annual
external cost burden of $124,820,197 represents an increase of $2,089,725 over the
previous annual external cost burden estimate of $122,730,472. The changes in burden
hours and external cost burdens are due to the staff’s estimates of the time costs and
external costs that would result from our proposed amendments.
iii.

A Note Regarding the Form 83-I

The total annual hour burden of 1,579,646 hours represents an increase of 957
hours over the previous burden hour estimate of 1,578,689 hours. In addition, the annual
external cost burden of $124,297,766 represents an increase of $1,567,294 over the
previous annual external cost burden estimate of $122,730,472. The changes in burden

hours and external cost burdens are due to the staff’s estimates of the time costs and
external costs that would result from our proposed amendments.
16.

Information Collection Planned for Statistical Purposes

Not Applicable.
17.

Approval Omit OMB Expiration Date

We request authorization to omit the expiration date on the electronic version of
the form. Including the expiration date on the electronic version of the form will result
in increased costs, because the need to make changes to the form may not follow the
application’s scheduled version release dates.. The OMB control number will be
displayed.
18.

Exceptions to Certification Statement

Not Applicable.
B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS

Not Applicable.

File Type	application/pdf
File Modified	2013-09-03
File Created	2013-09-03