[Federal Register Volume 83, Number 10 (Tuesday, January 16, 2018)]
[Notices]
[Pages 2247-2248]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-00491]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-321, OMB Control No. 3235-0358]


Proposed Collection; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 
20549-2736

Extension:
    Rule 11a-3

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange Commission 
(the ``Commission'') is soliciting comments on the collection of 
information summarized below. The Commission plans to submit this 
existing collection of information to the Office of Management and 
Budget for extension and approval.
    Section 11(a) of the Investment Company Act of 1940 (``Act'') (15 
U.S.C. 80a-11(a)) provides that it is unlawful for a registered open-
end investment company (``fund'') or its underwriter to make an offer 
to the fund's shareholders or the shareholders of any other fund to 
exchange the fund's securities for securities of the same or another 
fund on any basis other than the relative net asset values (``NAVs'') 
of the respective securities to be exchanged, ``unless the terms of the 
offer have first been submitted to and approved by the Commission or 
are in accordance with such rules and regulations as the Commission may 
have prescribed in respect of such offers.'' Section 11(a) was designed 
to prevent ``switching,'' the practice of inducing shareholders of one 
fund to exchange their shares for the shares of another fund for the 
purpose of exacting additional sales charges.
    Rule 11a-3 (17 CFR 270.11a-3) under the Act is an exemptive rule 
that permits open-end investment companies (``funds''), other than 
insurance company separate accounts, and funds' principal underwriters, 
to make certain exchange offers to fund shareholders and shareholders 
of other funds in the same group of investment companies. The rule 
requires a fund, among other things, (i) to disclose in its prospectus 
and advertising literature the amount of any administrative or 
redemption fee imposed on an exchange transaction, (ii) if the fund 
imposes an administrative fee on exchange transactions, other than a 
nominal one, to maintain and preserve records with respect to the 
actual costs incurred in connection with exchanges for at least six 
years, and (iii) give the fund's shareholders a sixty day notice of a 
termination of an exchange offer or any material amendment to the terms 
of an exchange offer (unless the only material effect of an amendment 
is to reduce or eliminate an administrative fee, sales load or 
redemption fee payable at the time of an exchange).
    The rule's requirements are designed to protect investors against 
abuses associated with exchange offers, provide fund shareholders with 
information necessary to evaluate exchange offers and certain material 
changes in the terms of exchange offers, and enable the Commission 
staff to monitor funds' use of administrative fees charged in 
connection with exchange transactions.
    The staff estimates that there are approximately 1,606 active open-
end investment companies registered with the Commission as of September 
2017.

[[Page 2248]]

The staff estimates that 25 percent (or 402) of these funds impose a 
non-nominal administrative fee on exchange transactions. The staff 
estimates that the recordkeeping requirement of the rule requires 
approximately 1 hour annually of clerical time per fund, for a total of 
402 hours for all funds.
    The staff estimates that 5 percent of these 1,606 funds (or 80) 
terminate an exchange offer or make a material change to the terms of 
their exchange offer each year, requiring the fund to comply with the 
notice requirement of the rule. The staff estimates that complying with 
the notice requirement of the rule requires approximately 1 hour of 
attorney time and 2 hours of clerical time per fund, for a total of 
approximately 240 hours for all funds to comply with the notice 
requirement.\1\ The staff estimates that such notices will be enclosed 
with other written materials sent to shareholders, such as annual 
shareholder reports or account statements, and therefore any burdens 
associated with mailing required notices are accounted for in the 
burdens associated with Form N-1A registration statements for funds. 
The recordkeeping and notice requirements together therefore impose a 
total burden of 642 hours on all funds.\2\ The total number of 
respondents is 482, each responding once a year.\3\ The burdens 
associated with the disclosure requirement of the rule are accounted 
for in the burdens associated with the Form N-1A registration statement 
for funds.
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    \1\ This estimate is based on the following calculations: (1,606 
(funds) x 5% = 80 funds); (80 x 1 (attorney hour) = 80 total 
attorney hours); (80 (funds) x 2 (clerical hours) = 160 total 
clerical hours); (80 (attorney hours) + 160 (clerical hours) = 240 
total hours).
    \2\ This estimate is based on the following calculations: (240 
(notice hours) + 402 (recordkeeping hours) = 642 total hours).
    \3\ This estimate is based on the following calculation: (402 
funds responding to recordkeeping requirement + 80 funds responding 
to notice requirement = 482 total respondents).
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    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act, and is not derived from a 
comprehensive or even a representative survey or study of the costs of 
Commission rules and forms. An agency may not conduct or sponsor, and a 
person is not required to respond to, a collection of information 
unless it displays a currently valid control number.
    Written comments are requested on: (a) Whether the collection of 
information is necessary for the proper performance of the functions of 
the Commission, including whether the information has practical 
utility; (b) the accuracy of the Commission's estimate of the burden(s) 
of the collection of information; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burden of the collection of information on respondents, 
including through the use of automated collection techniques or other 
forms of information technology. Consideration will be given to 
comments and suggestions submitted in writing within 60 days of this 
publication.
    Please direct your written comments to Pamela Dyson, Director/Chief 
Information Officer, Securities and Exchange Commission, C/O Remi 
Pavlik-Simon, 100 F Street NE, Washington, DC 20549; or send an email 
to: [email protected].

    Dated: January 9, 2018.
 Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-00491 Filed 1-12-18; 8:45 am]
 BILLING CODE 8011-01-P


