Form N-8B-2 (P-Names Rule) Supporting Statement

OMB CONTROL NUMBER: 3235-0186
SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Form N-8B-2
A. JUSTIFICATION
1.

Necessity for the Information Collection

Unit investment trusts (“UITs”) are required to register with the Securities and Exchange
Commission (“Commission”) as investment companies under the Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.) (the “Investment Company Act”). Section 8(b) of the Investment
Company Act (15 U.S.C. 80a-8(b)) provides that each registered investment company must file a
registration statement with the Commission that includes certain information about the company
and recites the company’s policies on certain significant matters. UITs other than separate
accounts that are currently issuing securities, including UITs that are issuers of periodic payment
plan certificates, UITs of which a management investment company is the sponsor or depositor,
and UIT ETFs 1, satisfy this requirement by filing on Form N-8B-2. Among other items, this
Form requires disclosure about the organization of a UIT, its securities, the personnel and
affiliated persons of the depositor, distribution and redemption of securities, the trustee or
custodian, and financial statements.
UITs also may be required to register offerings of securities with the Commission 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 that, unless an exemption is available, a registration statement be
filed before any securities are offered to the public by use of the mails or other facilities of
1

See Exchange-Traded Funds, Investment Company Act Release No. 33646 (Sept. 25,
2019) [84 FR 57162 (Oct. 24, 2019)].

interstate commerce, and that the statement be declared effective before any securities are sold.
The purpose of the registration statement is not to gather information for the Commission to use,
but rather to provide disclosure of financial and other information on the basis of which investors
may make informed decisions regarding the merits of the securities being offered for sale. To that
end, section 5(b) of the Securities Act (15 U.S.C. 77e(b)) requires that investors be furnished a
prospectus containing material information along with or prior to the confirmation of sale or
delivery of securities, whichever occurs first. UITs that are required to file on Form N-8B-2 to
register under the Investment Company Act satisfy the requirements imposed under the Securities
Act by filing a registration statement on Form S-6. This form requires a prospectus that includes
much of the information required in Form N-8B-2 and certain financial statements for the trust, in
addition to undertakings by the UIT to file, among other things, periodic reports with the
Commission.
For UITs that are required to file on Form N-8B-2 to register under the Investment
Company Act, the Commission has yet to adopt an integrated registration form satisfying the
requirements of the Securities Act and the Investment Company Act. Absent an integrated
disclosure system, filings on Form N-8B-2 serve as the only means by which such UITs can
satisfy the filing and disclosure requirements imposed by section 8(b) of the Investment Company
Act.
On May 25, 2022, the Commission issued a release proposing rule and form amendments to
enhance and modernize the investor protections provided by the Investment Company Act’s

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“names rule,” rule 35d-1 under the Investment Company Act. 2 The names rule currently requires
that that registered investment companies whose names suggest a focus in a particular type of
investment (among other areas) to adopt a policy to invest at least 80 percent of the value of their
assets in those investments (an “80 percent investment policy”). The proposed amendments,
among other things, would extend the requirement to any fund name with terms suggesting that
the fund focuses in in investments that have (or whose issuers have) particular characteristics.
Further, the proposed amendments would amend Form N-8B-2 to require that each fund
that is required to adopt and implement an 80 percent investment policy to include disclosure in
its prospectus that defines the terms used in its name, including the specific criteria the fund uses
to select the investments that the term describes, if any. 3
2.

Purpose and Use of the Information Collection

The purpose of Form N-8B-2 is to satisfy the filing and disclosure requirements of the
Investment Company Act. This information collection differs significantly from many other
federal information collections, which are primarily for the use and benefit of the collecting
agency. The information required to be filed with the Commission assures the public availability
and dissemination of the information and permits verification of compliance with Investment
Company Act requirements. In addition, the adopted amendments will facilitate access to exhibits
by investors and other users of the information.

2

Investment Company Names, Securities Act Release No. 11067; Securities Exchange Act Release
No. 94981; Investment Company Act Release No. 34593, File No. S7-16-22 (May 25, 2022)
available at https://www.sec.gov/rules/proposed/2022/33-11067.pdf (the “Names Rule Proposing
Release”).

3

See proposed instruction (2) to Item 11 of Form N-8B-2, Names Rule Proposing Release at 207.

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3.

Consideration Given to Information Technology

The Commission’s electronic filing system, called “EDGAR” (for Electronic Data
Gathering, Analysis and Retrieval), automates the filing, processing, and dissemination of all
disclosure filings. EDGAR permits publicly-held companies to transmit their filings to the
Commission electronically. This automation has increased the speed, accuracy, and availability
of information, generating benefits to investors and financial markets. All UITs filing Form
N-8B-2 are required to use EDGAR to make such filings. 4
4.

Duplication

Form S-6, the form used by certain UITs to register their securities under the Securities
Act, requires a prospectus that includes much of the information requested in Form N-8B-2. To
eliminate presenting duplicative information in the registration forms used by those UITs, the
Commission has proposed 5 and reproposed, 6 but has not yet adopted, Form N-7, an integrated
disclosure form under the Securities Act and the Investment Company Act.
Other than the information required in Form S-6, the Commission believes that there are
no federal rules duplicating, overlapping, or conflicting with Form N-8B-2.
5.

Effect on Small Entities

The current disclosure requirements for registration statements do not distinguish between
small entities and other investment companies. The burden on smaller investment companies to
prepare and file registration statements may be greater than for larger investment companies. The
4

See rule 101(a)(iv) of Regulation S-T [17 CFR 232.101(a)(iv)].

5

Investment Company Act Release No. 14513 (May 14, 1985) (50 FR 21282 (May 23, 1985)).

6

Investment Company Act Release No. 15612 (Mar. 9, 1987) (52 FR 8268 (Mar. 17, 1987)).

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Commission believes, however, that it would not be in the best interest of investors to reduce the
reporting and recordkeeping requirements for small entities.
6.

Consequences of Not Conducting Collection

Section 8(b) of the Investment Company Act requires each registered investment company
to file an initial registration statement with the Commission that includes certain information
about the company and recites the company’s policies on certain significant matters. Absent
information collection on Form N-8B-2, UITs required to file on Form N-8B-2 to register under
the Investment Company Act would fail to satisfy this legal requirement. Each UIT subject to the
Form N-8B-2 filing requirement is required to file Form N-8B-2 only once and does not file posteffective amendments to Form N-8B-2. 7
7.

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

Not applicable.
8.

Consultation Outside the Agency

Before determining whether to adopt the proposed amendments to Form N-8B-2, the
Commission will receive and evaluate public comments on the proposal and its collection of
information requirements. Moreover, the Commission and the 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. These various forums
provide the Commission and staff with a means of ascertaining and acting upon the paperwork
burdens that may confront the industry.

7

See Exchange-Traded Funds, Investment Company Act Release No. 33140 (June 28, 2018) [83
FR 37332 (July 31, 2018)] at note 7 and accompanying text.

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9.

Payment or Gift

Not applicable.
10.

Confidentiality

Not applicable.
11.

Sensitive Questions

Form N-8B-2 collects certain Personally Identifiable Information (“PII”) that may include
information on the officers, directors, and principal shareholders of the registrant, as well as
information on certain other persons having a relationship with the registrant. The records
describe the individual’s relationship to the registrant and other relevant material business
information about the individual. No information of a sensitive nature, including social security
numbers, will be required under this collection of information.
Based on the scope of the information collection, the agency has determined that the
information collection does not constitute a system of record for purposes of the Privacy Act.
Information is not retrieved by a personal identifier. In accordance with Section 208 of the EGovernment Act of 2002, the agency has conducted a Privacy Impact Assessment (“PIA”) of the
EDGAR system, in connection with this collection of information. The EDGAR PIA, published
on 2/5/2020, is provided as a supplemental document and is also available at
https://www.sec.gov/privacy.
12.

Burden of Information Collection

The following estimates of average burden hours and costs are made solely for purposes
of the Paperwork Reduction Act of 1995 8 and are not derived from a comprehensive or even
8

44 U.S.C. 3501 et seq.

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representative survey or study of the cost of Commission rules and forms. Compliance with the
disclosure requirements of Form N-8B-2 is mandatory. Responses to the disclosure requirements
will not be kept confidential.
TABLE 1: ESTIMATES FOR PROPOSED AMENDMENTS TO FORM N-8B-2
Cost of Internal
Burden per
Portfolio

Annual Cost
Burden per
Portfolio

x

$351 (estimate of wage
rate in most recently
approved supporting
statement)

$3,510

$10,000

18 hours

x

$351 (estimate of wage
rate in most recently
approved supporting
statement)

$6,318

$0

Hyperlinking exhibits on
Form N-8B-2

0.25 hours

X

$334 (senior programmer
wage rate)

$84

$300

Number of Responses

13

1

1

Current Burden
Requirement

28 hours

$9,912

$10,300

$3,560

$992

× 1 UIT

X1 UIT5

$3,560 +
$9,912 =
$13,472

$992 + $10,300
= $11,292

Annual hours1

Wage rate2

CURRENTLY APPROVED BURDENS

Preparing and Filing
Reports on Form N-8B-2
Generally

UITs

10 hours

UIT ETFs

PROPOSED BURDENS
Proposed New Names
Rule Disclosure
Number of Responses

7

10 hours

$356 (1:1 blend of
compliance attorney and
senior programmer)

×

× 1 UIT4
TOTAL ESTIMATED BURDENS INCLUDING AMENDMENTS

Total New Annual Burden6

10 hours + 28
hours = 38
hours

Notes:
1. Includes initial burden estimates annualized over a 3-year period.
2. The estimated wage figure is based on published rates for the professionals described in this chart, modified to account for an 1800-hour
work-year and inflation. The estimates for the proposed burdens were multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead. See Securities Industry and Financial Markets Association’s Report on Management & Professional Earnings in the
Securities Industry 2013.
3. Based on Commission records, in 2016, 2017, 2018, and 2019, during that four-year period, the Commission received 1 filing,
submitted in 2019, on Form N-8B-2. The cumulative 4-year average is, therefore, 0.25 filings per year.
4. For purposes of this PRA we continue to assume 1 filing annually.
5. The estimated burden is based on the estimated wage rate of $496/hour, for 2 hours, for outside legal services. The Commission’s
estimates of the relevant wage rate for external time costs, such as outside legal services, take into account staff experience, a variety of
sources including general information websites, and adjustments for inflation.
6. The estimates in the Commission’s proposing release inadvertently did not add the proposed additional burdens to the current burden
requirement in the estimated “Total New Annual Burden.”

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13.

Cost to Respondents

Cost burden is the external cost of services purchased to comply with Form N-8B-2, such
as for the services of computer programmers, outside counsel, financial printers, and advertising
agencies. The cost burden does not include the cost of the internal hour burden discussed in Item
12 above. We estimate that the annual cost of outside services associated with the proposed
amendments to Form N-8B-2 would be approximately $992 per fund with a total annual external
cost burden for Form N-8B-2 of $11,292 as detailed in Table 1 above.
14.

Cost to the Federal Government

The annual cost of reviewing and processing registration statements, post-effective
amendments, proxy statements, shareholder reports, and other filings of investment companies
amounted to approximately $30 million in fiscal year 2021, based on the Commission’s
computation of the value of staff time devoted to this activity and related overhead.
15.

Changes in Burden

The proposed names rule disclosure requirements would add approximately 10 estimated
internal burden hours per response, increasing the total annual burden to 38 hours. We continue to
estimate 1 response on Form N-8B-2 per year. Thus, the estimated hours per response would
increase from 28 hours to 38 hours.
16.

Information Collection Planned for Statistical Purposes

Not applicable.
17.

Approval to Omit OMB Expiration Date

Not applicable.

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18.
Submission

Exceptions to Certification Statement for Paperwork Reduction Act

Not applicable.
B. COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS
Not applicable.

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