Form N-PORT Supporting Statement revised

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Rule 30b1-9 and Form N-PORT
A.

JUSTIFICATION
1.

Necessity for the Information Collection

Section 30(b) of the Investment Company Act of 1940 [15 U.S.C. 80a-30(b)]
(“Act”) provides that “[e]very registered investment company shall file with the
Commission…such information, documents, and reports (other than financial
statements), as the Commission may require to keep reasonably current the information
and documents contained in the registration statement of such company…” Final rule
30b1-9 under the Act [17 CFR 270.30b1-9], entitled “Monthly Report,” provides that
each registered management investment company or exchange-traded fund organized as a
unit investment trust, or series thereof, other than a registered open-end management
investment company that is regulated as a money market fund under rule 2a-7 [17 CFR

270.2a-7] or a small business investment company registered on Form N-5 [17 CFR 239.24
and 274.5], must file a monthly report of portfolio holdings on Form N-PORT [17 CFR
274.150], current as of the last business day, or last calendar day, of the month.

On October 13, 2016, the Commission issued a release adopting rules requiring
that certain funds file Form N-PORT, as described above, as part of an investment
company reporting modernization release. 1 On that same day, the Commission also
issued a companion release adopting additional reporting requirements on Form N-PORT

1

See Investment Company Reporting Modernization, Investment Company Act Release No. 32314
(October 16, 2016) (“Reporting Modernization Adoption”).

related to liquidity risk management. 2 Similar to Form N-MFP [17 CFR 274.201], Form
N-PORT will require funds to report portfolio holdings information in a structured, XML
format. The form will be filed electronically using the Commission’s electronic filing
system (Electronic Data Gathering, Analysis and Retrieval or “EDGAR”). Consistent
with the current portfolio disclosure regime, only information reported for the third
month of each fund’s fiscal quarter on Form N-PORT will be made publicly available,
and such information will not be made public until 60 days after the end of the third
month of the fund’s fiscal quarter. This approach is intended to minimize the harm of
free-riding and front running activity that might occur with more frequent or rapid public
disclosure.

2.
Purpose and Use of the Information Collection
The information provided in reports on Form N-PORT will be used by the
Commission in its regulatory, disclosure review, inspection, and policymaking roles.
Unlike many other federal information collections, which are primarily for the use and
benefit of the collecting agency, this information collection will also be for the use and
benefit of investors. As discussed above, the Commission will make information
reported for the third month of each fund’s fiscal quarter on Form N-PORT publicly
available. The Commission expects that investors will be able to use this information to
make more informed investment decisions either through direct use or through analyses
prepared by third-party users that provide services to investors.
3.

Consideration Given to Information Technology

The Commission’s EDGAR electronic filing system is designed to automate the

2

See Investment Company Liquidity Risk Management Programs, Investment Company Act
Release No. 32315 (October 13, 2016) (the “Liquidity Release”).

2

filing, processing and dissemination of full disclosure filings. The system permits filers
to transmit filings to the Commission electronically. This automation has increased the
speed, accuracy and availability of information, generating benefits to investors and
financial markets. Reports on Form N-PORT are filed with the Commission
electronically on EDGAR. 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.
4.

Duplication

The Commission periodically evaluates rule-based reporting and recordkeeping
requirements for duplication, and reevaluates them whenever it proposes a rule or a
change in a rule. Although reports of portfolio holdings on Form N-PORT for the first
and third fiscal quarters of each fund’s fiscal year would be largely redundant with
similar reports on Form N-Q, the Commission has adopted rules rescinding Form N-Q to
avoid such duplication. 3 Funds will also report certain information on Form N-PORT in
a structured format that may be similarly disclosed or reported elsewhere in a nonstructured format (e.g., portfolio investments are also currently included as part of the
schedules of investments contained in shareholder reports, and filed on a semi-annual
basis with the Commission on Form N-CSR). Because collecting information in a
structured format will enhance the ability of the Commission as well as investors and
other potential users to analyze portfolio data, the Commission believes it is appropriate
to require this information to be reported on Form N-PORT.
5.
3

Effect on Small Entities

See Reporting Modernization Adoption, supra note 1.

3

The Commission will provide smaller entities (i.e., funds that together with other
investment companies in the same “group of related investment companies” have net
assets of less than $1 billion as of the end of the most recent fiscal year) an extra 12
months to comply with the new reporting requirements for Form N-PORT.
However, the requirements for reports on Form N-PORT will not distinguish
between small entities and other funds in terms of what information will be required to be
reported. The Commission believes that imposing different reporting requirements on
smaller funds will not be consistent with investor protection and the purposes of portfolio
holdings reports. Differing reporting requirements will not provide comparable
information about portfolio holdings held by small entities and other funds that could be
used by Commission staff to identify trends and outliers and by investors to make
informed investment decisions.
The Commission reviews all rules periodically, as required by the Regulatory
Flexibility Act, to identify methods to minimize recordkeeping or reporting requirements
affecting small entities.

4

6.

Consequences of Not Conducting Collection

Funds will be required to file reports on Form N-PORT with the Commission no
later than 30 days after the end of each month. Less frequent collection would mean that
current information will not be available to the Commission.
7.

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

Final rule 30b1-9 requires funds to submit reports on Form N-PORT on a monthly
basis. Given the rapidly changing composition of fund portfolios, monthly reports are
necessary to ensure that the Commission receives timely and accurate portfolio holdings
information.
8.

Consultation Outside the Agency

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 the staff with a means of ascertaining and acting
upon paperwork burdens confronting the industry. The Commission requested public
comment on the collection of information requirements in Form N-PORT before it
submitted this request for approval to the Office of Management and Budget.
We received two comments on proposed Form N-PORT’s estimated hour and
costs burdens. One commenter, who submitted a comment letter on behalf of certain
asset management firms focused on alternative investment strategies, stated that the
proposed estimates of hours and costs were not realistic. 4 The commenter stated that,
based on its outreach, several firms were currently spending more than 198 hours per
4

See Simpson Thacher Comment Letter (Aug. 11, 2015) available at
https://www.sec.gov/comments/s7-08-15/s70815-312.pdf..

5

year on investment company quarterly reporting. 5 This commenter additionally noted
that Form N-PORT requires more information than current quarterly reports, particularly
for funds that implement “alternative” strategies, and must be filed monthly. The
commenter also indicated that at least one firm they reached out to anticipated hiring one
or more full-time equivalents to handle the reporting requirements. Another commenter
suggested that complying with Form N-PORT reporting requirements could cost
$800,000 to $1,500,000 for the fund complex (of approximately 250 funds). 6 The
commenter specified that the initial burden associated with the proposed requirements
would be over 6000 hours in total to conduct analysis, develop and test newly created
interfaces between the reporting solution and internal and external data sources in an
attempt to automate the collection, aggregation, and validation of data reported on Form
N-PORT. The commenter further asserted that ongoing reporting requirements on Form
N-PORT may require a support team of up to 10-15 members. The commenter’s
estimates of initial burden hours are therefore approximately 24 hours, based on a
complex of 250 funds, lower than our proposed estimated initial filing burden of 44 hours
per fund for fund filers filing in-house, and 60 hours per fund for fund filers retaining a
third party service provider. Assuming the support team was 15 members (i.e., the high
end of the range set forth by the commenter), and a 2,000 hours work year, the
5

See id. The commenter noted that in the Proposing Release that we estimated 198 burden hours in
the first year, and 168 hours thereafter “for each investment company.” As noted in the proposing
release, 168 hours was the Commission’s “per fund” burden hour estimate for the first year for
funds preparing and filing the reports in house, where “fund” is a registered management
investment company and any separate series thereof. It is not clear from the comment letter
whether firms that provided estimates to the commenter were providing estimated burdens for
quarterly reporting per fund series, per investment company, or per fund complex. For purposes
of the PRA, however, we conservatively assume it is per fund series.

6

See Invesco Comment Letter (Aug. 12, 2015) available at https://www.sec.gov/comments/s7-0815/s70815-313.pdf.

6

commenter’s annual estimated burden to file reports on Form N-PORT would be
approximately 120 hours per fund. 7 This is in the range of our proposed annual estimate
of 168 hours per year for fund filers filing in house and 108 hours per year for fund filers
retaining a third-party service provider. Finally, assuming that the dollar estimates that
the commenter cited of between $800,000 to $1,500,000 were additional external costs of
reporting on Form N-PORT, the commenter’s estimated external costs would be between
$3,200 and $6,000 per fund. These are in the range of our estimated external costs per
fund (not including monetization of internal burden hours) of $4,805 per year for fund
filers filing in house, and $11,440 per year for fund filers using a service provider.
As discussed above, our adoption includes some modifications from the proposal
that address concerns raised by commenters and that are intended, in part, to decrease
reporting and implementation burdens relative to the proposal. We believe that our
modifications from the proposal will reduce the estimated initial burden hours associated
with implementation of Form N-PORT reporting requirements, relative to the proposal,
particularly for funds that will be required to report risk metrics or custom derivatives
transactions but will not affect external costs or ongoing burden hours.
Commenters also expressed concerns over the operational costs associated with
the assignment of liquidity classifications and the reporting of this information on Form
N-PORT. Several commenters expressed the belief that the liquidity classification
requirement could impose significant direct costs to a fund and its shareholders (e.g., new
operational systems, trade order management systems, and other processes to handle
complex classification schemes), which commenters anticipated to be in excess of the
7

15 members x 2000 hours = 30,000 hours. 30,000 hours / 250 funds = 120 hours.

7

Commission’s estimates under the proposal. 8 One commenter estimated that the costs
associated with building a liquidity classification system could range in the millions of
dollars for fund complexes that have large numbers of portfolio positions. 9 Another
commenter estimated $2 million in initial implementation costs and more than $650,000
in annual recurring costs in connection with automating the classification process for over
63,000 portfolio positions. 10 This commenter also expressed the belief that substantial
resources, including additional investment professionals and compliance personnel, and
additional expenses associated with third-party service providers would increase costs
associated with the classification requirement. 11 Some commenters also expressed
concern that the costs of diverting resources and key personnel were not considered in the
Commission’s cost estimates. 12
We are adopting a liquidity classification requirement under rule 22e-4 of the Act
with a number of modifications to address commenters’ concerns. Unlike the proposal
which would have applied to all open-end funds, “In-Kind Exchange-Traded Funds”
8

See, e.g., Comment Letter of CFA Institute (Jan. 12, 2016) available at
https://www.sec.gov/comments/s7-16-15/s71615-34.pdf; Comment Letter of Federated Investors,
Inc. (Jan. 13, 2016) available at https://www.sec.gov/comments/s7-16-15/s71615-50.pdf;
Comment Letter of Investment Company Institute (Jan. 13, 2016) (“ICI Comment Letter)
available at https://www.sec.gov/comments/s7-16-15/s71615-54.pdf; Comment Letter of Voya
Investment Management (Jan. 12, 2016) available at https://www.sec.gov/comments/s7-1615/s71615-40.pdf.

9

See Comment Letter of T. Rowe Price (Jan. 13, 2016) available at
https://www.sec.gov/comments/s7-16-15/s71615-72.pdf (noting that its fund complex has just
under 44,000 portfolio positions combined as of December 31, 2015).

10

See Comment Letter of Invesco Advisers, Inc. (Jan. 13, 2016) available at
https://www.sec.gov/comments/s7-16-15/s71615-75.pdf.

11

Id.

12

See, e.g., Comment Letter of Dechert LLP (Jan. 13, 2016) available at
https://www.sec.gov/comments/s7-16-15/s71615-70.pdf; ICI Comment Letter I; Comment Letter
of Nuveen Fund Advisors, LLC (Jan. 13, 2016) available at https://www.sec.gov/comments/s716-15/s71615-38.pdf; Comment Letter of Wells Fargo Funds Management, LLC (Jan. 13, 2016)
available at https://www.sec.gov/comments/s7-16-15/s71615-69.pdf.

8

(“In-Kind ETFs”) as defined in rule 22e-4 under the Act are not subject to the
classification requirements under rule 22e-4(b)(ii) and related reporting requirements on
Form N-PORT. In addition, the classification categories have been reduced from six to
four and the timeframe for projections substantially reduced, with the fourth category
designated for those investments that qualify as “illiquid investments” harmonized with
the codified 15% illiquid investment limit. Furthermore, a fund may classify portfolio
investments based on asset class, rather than position-by-position, so long as the fund or
its adviser does not have information about any market, trading, or investment-specific
considerations that are reasonably expected to significantly affect the liquidity
characteristics of an investment and would suggest a different classification for that
investment.
We believe that these modifications to the liquidity classification requirements
will reduce the number of funds subject to the liquidity classification requirements and
will address some of the costs commenters anticipate funds and fund shareholders would
bear to establish new operational, trade, and other systems to process and report fund
liquidity classification information. However, we recognize, as discussed above, that
several commenters suggested that implementation of liquidity classification systems
would be more costly than we estimated. Accordingly, we believe, on balance, that the
per fund estimates that we proposed are reasonable and are not reducing them, despite
having adopted some modifications to rule 22e-4 and Form N-PORT that we believe
reduce the burden relative to the proposal.
9.

Payment or Gift

Not applicable.

9

10.

Confidentiality

Not applicable.
11.

Sensitive Questions

No information of a sensitive nature, including social security numbers, will be
required under this collection of information. The information collection collects basic
Personally Identifiable Information (PII) that may include names, job titles, work
addresses and telephone numbers. However, 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 E-Government 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 1/29/2016, is provided as a supplemental
document and is also available at https://www.sec.gov/privacy.
12.

Burden of Information Collection

We estimate that the burden hours that would be imposed by Form N-PORT are
as follows:
a. Form N-PORT
We estimate that 11,382 funds 13 will be required to file, on a monthly basis, a
complete report on Form N-PORT reporting certain information regarding the fund and its
portfolio holdings. Based on our experience with other interactive data filings, we estimate
that funds would prepare and file their reports on Form N-PORT by either (1) licensing a
13

This estimate includes 9,039 mutual funds (excluding money market funds), 1,594 ETFs and 749
closed-end funds and is based on data obtained from the ICI and reports filed by registrants on
Form N-SAR. See ICI, 2016 I NVESTMENT C OMPANY F ACT B OOK (56th ed., 2016), available
at https://www.ici.org/pdf/2016_factbook.pdf;

10

software solution and preparing and filing the reports in house, or (2) retaining a service
provider to provide data aggregation, validation and/or filing services as part of the
preparation and filing of reports on Form N-PORT on behalf of the fund. We estimate that
35% of funds (3,984 funds) would license a software solution and file reports on Form NPORT in house. 14 We further estimate that each fund that files reports on Form N-PORT in
house will require an average of approximately 43.5 burden hours to compile (including
review of the information), tag, and electronically file a report on Form N-PORT for the first
time and an average of approximately 14 burden hours for subsequent filings.
Therefore, we estimate the per fund average annual hour burden associated with
Form N-PORT for 3,984 fund filers is 197.5 hours for the first year 15 and 168 hours for each
subsequent year. 16 Amortized over three years, the average aggregate annual hour burden
would be 178 hours per fund. 17
We estimate that 65% of funds (7,398 funds) will retain the services of a third party
to provide data aggregation, validation and/or filing services as part of the preparation and
filing of reports on Form N-PORT on the fund’s behalf. 18 Because reports on Form N-PORT
will be filed in a structured format and more frequently than current portfolio holdings

14

See Amendments to Form PF, Investment Company Act Release No. 31166 (July 23, 2014) [79
FR 47736 (Aug. 14, 2014)] (“Money Market Fund Reform 2014 Release”), at 47945 (adopting
amendments to Form N-MFP and noting that approximately 35% of money market funds that
report information on Form N-MFP license a software solution from a third party that is used to
assist the funds to prepare and file the required information).

15

The estimate is based on the following calculation: (1 filing x 43.5 hours) + (11 filings x 14 hours)
= 197.5 burden hours in the first year.

16

This estimate is based on the following calculation: 12 filings x 14 hours = 168 burden hours in
each subsequent year.

17

The estimate is based on the following calculation: (197.5 + (168 x 2)) / 3 = 178.

18

See Money Market Fund Reform 2014 Release, supra note 14, at 47945 (adopting amendments to
Form N-MFP and noting that approximately 65% of money market funds that report information
on Form N-MFP retain the services of a third party to provide data aggregation and validation
services as part of the preparation and filing of reports on Form N-MFP).

11

reports (i.e., Form N-CSR and Form N-Q), we anticipate that funds and their third-party
service providers will move to automate the aggregation and validation process to the extent
they do not already use an automated process for portfolio holdings reports. For these funds,
we estimate that each fund will require an average of approximately 59.5 burden hours to
compile and review the information with the service provider prior to electronically filing the
report for the first time and an average of approximately 9 burden hours for subsequent
filings. Therefore, we estimate the per fund average annual hour burden associated with
Form N-PORT for 7,398 funds would be 158.5 hours for the first year 19 and 108 hours for
each subsequent year. 20 Amortized over three years, the average aggregate annual hour
burden would be 125 hours per fund. 21

We estimate that these funds will incur certain costs associated with preparing,
reviewing, and filing reports on Form N-PORT. Assuming that 35% of funds (3,984
funds) will choose to license a software solution to file reports on Form N-PORT, we
estimate costs to funds choosing this option of $56,682 per fund for the first year 22 with
annual ongoing costs of $47,465 per fund. 23 We further assume that 65% of funds (7,398

19

The estimate is based on the following calculation: (1 filing x 59.5 hours) + (11 filings x 9 hours)
= 158.5 burden hours per year.

20

The estimate is based on the following calculation: 12 filings x 9 hours = 108.

21

The estimate is based on the following calculation: (158.5 + (108 x 2)) / 3 = 125.

22

This estimate is based upon the following calculations: $56,682 = $4,805 in external costs +
$51,876.50 in internal costs ($51,876.50 = (15 hours x $308/hour for a senior programmer) +
(38.5 hours x $317/hour for a senior database administrator) + (30 hours x $271/hour for a
financial reporting manager) + (30 hours x $201/hour for a senior accountant) + (30 hours x
$160/hour for an intermediate accountant) + (30 hours x $306/hour for a senior portfolio manager)
+ (24 hours x $288/hour for a compliance manager)). The hourly wage figures in this and
subsequent footnotes are from SIFMA’s Management & Professional Earnings in the Securities
Industry 2013, modified by Commission staff to account for an 1800-hour work-year and
inflation, and multiplied by 5.35 to account for bonuses, firm size, employee benefits, and
overhead.

23

This estimate is based upon the following calculations: $47,465 = $4,805 in external costs +
$42,660 in internal costs ($42,660 = (30 hours x $271/hour for a financial reporting manager) +
(30 hours x $201/hour for a senior accountant) + (30 hours x $160/hour for an intermediate

12

funds) will choose to retain a third-party service provider to provide data aggregation and
validation services as part of the preparation and filing of reports on Form N-PORT, and
we estimate costs to funds choosing this option of $55,492 per fund for the first year 24
with annual ongoing costs of $39,214 per fund. 25 In total, we estimate that funds will
incur initial costs of $636,350,904 and ongoing annual costs of $479,205,732. 26
Amortized over three years, the average aggregate cost will be $46,704 per fund. 27
In sum, we estimate that filing reports on Form N-PORT would impose an average
total annual hour burden of 1,633,902 on applicable funds 28 and an average annual cost of
$46,704 per fund. 29

b. Additional Liquidity Risk Management Reporting Items on Form N-PORT
As adopted in the Liquidity Release, additional items to Form N-PORT require funds
to report certain liquidity-related information, including (1) the fund’s highly liquid
investment minimum (if applicable), (2) the liquidity classification for each portfolio
accountant) + (30 hours x $306/hour for a senior portfolio manager) + (24 hours x $288/hour for a
compliance manager) + (24 hours x $317/hour for a senior database administrator)).
24

This estimate is based upon the following calculations: $55,492 = $11,440 in external costs +
$44,051.50 in internal costs ($44,051.50 = (30 hours x $308/hour for a senior programmer) + (46
hours x $317/hour for a senior database administrator) + (16.5 hours x $271/hour for a financial
reporting manager) + (16.5 hours x $201/hour for a senior accountant) + (16.5 hours x $160/hour
for an intermediate accountant) + (16.5 hours x $306/hour for a senior portfolio manager) + (16.5
hours x $288/hour for a compliance manager)).

25

This estimate is based upon the following calculations: $39,214 = $11,440 in external costs +
$27,774 in internal costs ($27,774 = (18 hours x $271/hour for a financial reporting manager) +
(18 hours x $201/hour for a senior accountant) + (18 hours x $160/hour for an intermediate
accountant) + (18 hours x $306/hour for a senior portfolio manager) + (18 hours x $288/hour for a
compliance manager) + (18 hours x $317/hour for a senior database administrator)).

26

These estimates are based upon the following calculations: $636,350,904 = (3,984 funds x
$56,682 per fund) + (7,398 funds x $55,492 per fund). $479,205,732 = (3,984 funds x $47,465
per fund) + (7,398 funds x $39,214 per fund).

27

These estimates are based on the following calculations: (.35 x ((56,682 + (2x47,465))/3)) + (.65 x
((55,492 + (39,214 x 2)/3)) = $46,704.

28

The estimate is based on the following calculation: (3,984 x 178 hours) + (7,398 x 125 hours) =
1,633,902.

29

See supra note 27.

13

investment of the fund among four liquidity categories, (3) certain information on the
percentage of the fund’s highly liquid investments that is segregated to cover, or pledged to
satisfy margin requirements in connection with, a fund’s derivatives transactions in each of
the other liquidity categories, and (4) the aggregate percentage of the fund representing each
of the four liquidity categories. 30
We estimate that 9,347 funds will be required to file responses on Form N-PORT as a
result of the liquidity risk management additions to the form. 31 We estimate that each fund
will incur a one-time additional average one-time burden of 54 hours, at a time cost of
$15,576 to initially classify a fund’s portfolio securities and program existing systems to
conduct the ongoing classifications and reviews for reporting purposes as a result of the
adopted additions to the form. 32 Amortized over a three-year period, we estimate that this
will result in an additional average annual hour burden of approximately 18 hours and a time
cost of $5,192. 33

We estimate that each fund that files reports on Form N-PORT in house (35%, or
3,271) will require an average of approximately 6 burden hours to compile (including
review of the information), tag, and electronically file the additional liquidity information

30

See the Liquidity Release, supra note 2.

31

This is based on estimates that there are 9,039 open-end mutual funds (excluding money market
funds) and 1,594 ETFs as of the end of 2015. See 2016 ICI Fact Book, supra footnote 13, at 22,
176, 183. There were approximately 50 ETFs that invest in other ETFs, which are not included in
our figures.

32

We estimate that these systems modifications will include the following costs: (i) project planning
and systems design (24 hours x $264 (hourly rate for a senior systems analyst) = $6,336) and (ii)
systems modification integration, testing, installation and deployment (30 hours x $308 (hourly
rate for a senior programmer) = $9,240. $6,336 + $9,240 = $15,576. Estimates for drafting,
integrating, implementing policies and procedures are addressed in a separate PRA submission for
rule 22e-4 of the Act. This figure incorporates the costs that we estimated associated with
preparing the section of the fund’s report on Form N-PORT that will incorporate the information
that will be required under Item C.7.

33

$15,576 ÷ 3 = $5,192.

14

required on Form N-PORT for the first time and an average of approximately 2 burden
hours for subsequent filings. Therefore, we estimate the per fund average annual hour
burden associated with the incremental changes to Form N-PORT as a result of the added
liquidity information for these funds would be an additional 28 hours for the first year 34
and an additional 24 hours for each subsequent year. 35 Amortized over three years, the
average annual hour burden would be an additional 25.33 hours per fund. 36
For funds that retain the services of a third party to provide data aggregation,
validation and/or filing services as part of the preparation and filing of reports on Form
N-PORT on the fund’s behalf (65%, or 6,076), we estimate that each fund will require an
average of approximately 8 hours to compile and review the added liquidity-related
information with the service provider prior to electronically filing the report for the first
time and an average of 1 burden hour for subsequent filings. Therefore, we estimate the
per fund average annual hour burden associated with the liquidity-related additions to
Form N-PORT for these funds would be an additional 19 hours for the first year 37 and an
additional 12 hours for each subsequent year. 38 Amortized over three years, the average
aggregate annual hour burden would be an additional 14.33 hours per fund. 39 In sum, we
estimate that the adopted additional liquidity reporting information on Form N-PORT

34

The estimate is based on the following calculation: (1 filing x 6 hours) + (11 filings x 2 hour) = 28
burden hours in the first year.

35

This estimate is based on the following calculation: 12 filings x 2 hour = 24 burden hours in each
subsequent year.

36

The estimate is based on the following calculation: (28 + (24 x 2)) ÷ 3 = 25.33.

37

The estimate is based on the following calculation: (1 filing x 8 hours) + (11 filings x 1 hour) = 19
burden hours in the first year.

38

This estimate is based on the following calculation: 12 filings x 1 hour = 12 burden hours in each
subsequent year.

39

The estimate is based on the following calculation: (19 + (12 x 2)) ÷ 3 = 14.33.

15

will impose an average total annual hour burden of an additional 169,923.51 hours, on
applicable funds. 40
The liquidity amendments to Form N-PORT will require funds to report on Form
N-PORT the liquidity classification of each portfolio investment, and we estimate that the
average one-time compliance costs associated with this reporting will be $15,576 per
fund. 41 Furthermore, we estimate that 9,347 funds will be required to file, on a monthly
basis, additional information on Form N-PORT as a result of the amendments. 42
Assuming that 35% of funds (3,271 funds) will choose to license a software solution to
file reports on Form N-PORT in house, we estimate an upper bound on the initial annual
costs to file the additional information associated with the amendments for funds
choosing this option of $783 per fund 43 with annual ongoing costs of $261 per fund. 44
We further assume that 65% of funds (6,076 funds) will choose to retain a third-party
service provider to provide data aggregation and validation services as part of the
preparation and filing of reports on Form N-PORT, and we estimate an upper bound on
the initial costs to file the additional information associated with the amendments for

40

The estimate is based on the following calculation: (3,271 funds x 25.33 hours) + (6,076 funds x
14.33 hours) = 169,923.51 hours.

41

See supra footnote 32.

42

There were 10,633 open-end funds (excluding money market funds, and including ETFs) as of the
end of 2015. See 2016 ICI Fact Book, supra footnote 13, at 22, 176, 183. We assume that 75% of
ETFs, or 1,196 ETFs, will identify as In-Kind ETFs, which are exempt from the classification
requirement, thereby reducing the total number of funds filing classification information to 9,347.

43

This estimate is based upon the following calculations: $783 in internal costs = ($783 = 3 hours x
$261 (blended hourly rate for senior programmer ($308), senior database administrator ($312),
financial reporting manager ($266), senior accountant ($192), intermediate accountant ($157),
senior portfolio manager ($306), and compliance manager ($283)).

44

This estimate is based upon the following calculations: $261 in internal costs ($261 = 1 hour x
$261 (blended hourly rate for senior programmer ($308), senior database administrator ($312),
financial reporting manager ($266), senior accountant ($192), intermediate accountant ($157),
senior portfolio manager ($306), and compliance manager ($283)).

16

funds choosing this option of $1,044 per fund 45 with annual ongoing costs of $131 per
fund. 46 In sum, we estimate that funds will incur initial costs of $154,493,409 and
ongoing annual costs of $3,299,374 47 or an average annual cost of an additional $5,627
per fund 48 as a result of the adopted additional liquidity reporting information on Form

N-PORT.
c. Estimated Total Burdens
We estimate that the hour burdens and time costs associated with Form N-PORT,
including the burdens associated with the additional liquidity-related reporting items
discussed in the Liquidity Release, will result in a total average annual hour burden of
1,803,826 hours 49 and an annual cost of $595,631,442. 50

13.

Cost to Respondents

Cost burden is the cost of goods and services purchased to prepare and update
filings on Form N-PORT, such as for licensing software solutions or for the services of
external service providers. The cost burden does not include the hour burden discussed

45

This estimate is based upon the following calculations: $1,044 in internal costs ($1,044 = 4 hours
x $261 (blended hourly rate for senior programmer ($308), senior database administrator ($312),
financial reporting manager ($266), senior accountant ($192), intermediate accountant ($157),
senior portfolio manager ($306), and compliance manager ($283)).

46

This estimate is based upon the following calculations: $130.5 in internal costs ($130.5 = (0.5
hours x $261 (blended hourly rate for senior programmer ($308), senior database administrator
($312), financial reporting manager ($266), senior accountant ($192), intermediate accountant
($157), senior portfolio manager ($306), and compliance manager ($283)).

47

These estimates are based upon the following calculations: $154,493,409 = (3,271 funds x
($15,576 + $783 per fund)) + (6,076 funds x ($15,576 + $1,044 per fund)). $3,299,374 = (3,271
funds x ($261 x 2 per fund)) + (6,076 funds x ($131 x 2 per fund)).

48

This estimate is based on the following calculations: (.35 x (((15,576+783) + (261x2))/3)) + (.65 x
(((15,576+1,0446) + (131 x 2)/3)) = $5,627.22.

49

This estimate is based on the following calculation: 1,633,902 hours + 169,923.51 hours =
1,803,825.51 hours.

50

This estimate is based on the following calculation ($46,704 x 11,382) + ($5,627 x 9,347) =
$584,180,497.

17

in Item 12. Estimates are based on the Commission’s experience with the filing of
registration forms.
Based on our experience with other interactive data filings, we estimate that funds
that would file reports on Form N-PORT in house will license a third-party software solution
to assist in filing their reports at an average cost of $4,805 per fund per year. In addition, we
estimate that funds that will use a service provider to prepare and file reports on Form NPORT would pay an average fee of $11,440 per fund per year for the services of that thirdparty provider. In sum, we estimate that all applicable funds will incur on average, in the
aggregate, external annual costs of $103,776,240. 51

We believe that any external annual costs associated with filing Form N-PORT
will be only incrementally affected by compliance with the additional liquidity-related
reporting items. Thus, we do not estimate any change to the external costs associated
with the additional liquidity-related reporting items on Form N-PORT.
14.

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 $19.5 million in fiscal year 2015, based on the
Commission’s computation of the value of staff time devoted to this activity and related
overhead.
15.

Change in Burden

Not applicable. This is the first request for approval of the collection of

51

This estimate is based on the following calculation: (3,984 funds that will file reports on Form NPORT in house x $4,805 per fund, per year) + (7,398 funds will would file reports on Form NPORT using a third-party service provider x $11,440 per fund, per year) = $103,776,240.

18

information for this rule and form.
16.

Information Collection Planned for Statistical Purposes

Not applicable.
17.

Approval to Omit OMB Expiration Date

We request authorization to omit the expiration date on the electronic version of
the form for design and IT project scheduling reasons. The OMB control number will be
displayed.

18.
Submission

Exceptions to Certification Statement for Paperwork Reduction Act

Not applicable.
B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS

Not applicable.

19