Form N-CEN Supporting Statement

OMB CONTROL NUMBER: 3235-0729

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Form N-CEN
A.

JUSTIFICATION
1.

Necessity of Information Collection

All registered investment companies with the exception of face amount certificate
companies are required to file periodic reports with the Commission under the Investment
Company Act of 1940 (“Investment Company Act”) (15 U.S.C. 80a-1 et seq.). Section
30(a) of the Investment Company Act (15 U.S.C. 80a-29(a)) provides that each registered
investment company must file annually with the Commission such information,
documents and reports as investment companies having securities registered on a national
securities exchange are required to file annually under the Securities Exchange Act of
1934 (“Exchange Act”) (15 U.S.C. 78a et seq.). In addition, Section 30(b) of the
Investment Company Act (15 U.S.C. 80a-29(b)) requires each registered investment
company to file, among other things, “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….”
Form N-CEN is a structured form that requires registered funds to provide censustype information to the Commission on an annual basis. 1 Filers must submit this report
electronically using the Commission’s electronic filing system (“EDGAR”) in Extensible
Markup Language (“XML”) format. This collection of information is mandatory for all
registered funds, and responses will not be kept confidential.
See Investment Company Reporting Modernization, Investment Company Act Release No. 32314
(October 13, 2016) (“Reporting Modernization Adopting Release”). Form N-CEN was proposed in
Investment Company Reporting Modernization, Investment Company Act Release No. 31610 (May 20,
2015) (“Proposing Release”).
1

On October 7, 2020, the Commission issued a release adopting amendments to
Form N-CEN, relating to new rule 12d1-4 under the Investment Company Act. 2 Rule
12d1-4 permits registered funds and BDCs that satisfy certain conditions to acquire
shares of another fund in excess of the limits of section 12(d)(1) of the Investment
Company Act without obtaining an exemptive order from the Commission. In relevant
part, the proposed Form N-CEN amendments requires management companies and unit
investment trusts (“UITs”) to report whether they relied on section 12(d)(1)(G) of the
Investment Company Act or rule 12d1-4 during the reporting period to participate in a
fund of funds arrangement (“FOF”). 3
2.

Purpose and Use of the Information Collection

Form N-CEN contains “collections of information” within the meaning of the
Paperwork Reduction Act of 1995 (“PRA”), and the Commission is submitting the
collection of information to the Office of Management and Budget (“OMB”) for review
in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. The purpose of Form N-CEN
is to satisfy the filing and disclosure requirements of Section 30 of the Investment
Company Act, and of amended rule 30a-1 thereunder. The information required to be
filed with the Commission assures the public availability of the information and is
designed to facilitate the Commission’s oversight of registered funds and its ability to
monitor trends and risks.

See Fund of Funds Arrangements, Investment Company Act Release No. 34045 (October 7, 2020)
(the “FOF Release”).

2

See proposed Items C.7.l. and C.7.m. of Form N-CEN (relating to management companies) and
proposed Items F.18 and F.19 of Form N-CEN (relating to UITs).

3

2

3.

Consideration Given to 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
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-CEN are required to be filed with the Commission
electronically on EDGAR in a structured XML format which would permit the electronic
analysis of the data in a single filing or in comparison over time or among similar
investment companies. 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 form
or a change in a rule or form. The information provided under reports on Form N-CEN
either would not be duplicated elsewhere at all or would not be duplicated in a format that
permits the electronic analysis of the data in a single filing or in comparison over time or
among similar investment companies. Any information solicited by Form N-CEN that
may be duplicated in other documents filed with the Commission is in narrative format so
that it can be read and understood by investors. The Commission is not able to analyze
narrative information electronically on a regular basis, using database or spreadsheet
applications.

3

5.

Effect on Small Entities

Form N-CEN must be filed by all registered investment companies other than face
amount certificate companies, regardless of size. The burden on smaller investment
companies, however, to prepare reports on Form N-CEN may be greater than for larger
investment companies. The Commission believes, however, that imposing different
requirements on smaller investment companies would not be consistent with investor
protection and the purposes of Section 30 of the Investment Company Act.
The Commission reviews all rules periodically, as required by the Regulatory
Flexibility Act, to identify methods to minimize recordkeeping or reporting requirements
affecting small businesses.
6.

Consequences of Not Conducting Collection

The Commission requires the filing of Form N-CEN annually for all registered
investment companies so that it will have current information available for use in
performing inspections, selectively reviewing registration documents, and conducting
studies and other types of analyses necessary to keep the Commission’s regulatory
program for investment companies current with industry conditions. Less frequent
collection would mean that current information may not be available to investors and
may potentially decrease investor confidence in the full and fair disclosure system that is
the hallmark of the U.S. capital markets.
7.

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

Not applicable.
8.

Consultation Outside The Agency

The Commission and staff of the Division of Investment Management participate
in an ongoing dialogue with representatives of the investment company industry through
4

public conferences, meetings, and information 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 also requested public comment on
changes in information collection requirements related to the proposed Form N-CEN
amendments in the FOF Release before it submitted this request for revision and approval
to the OMB. The Commission received no comments related to changes in information
collection requirements in the proposed Form N-CEN amendments in response to this
request.
9.

Payment or Gift

Not applicable.
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.

5

12.

Burden of Information Collection

We previously estimated that the Commission would receive an average of 2,835
reports on Form N-CEN. 4 We further estimated the total aggregate annual hour burden
to be 52,397 hours. 5
We estimate in the FOF Release that, based on Commission staff experience, we
believe that our proposal to require management companies and UITs to report if they are
relying on section 12(d)(1)(G) or rule 12d1-4 during the reporting period would increase
the estimated burden hours associated with Form N-CEN by approximately 0.1 hours,
both initially and on an ongoing basis. 6 Therefore, in the aggregate, we estimate that
management companies and UITs would incur an annual burden of an additional 283.5
hours to comply with the proposed amendments to Form N-CEN, 7 for a new annual
aggregate total of 52,680.6. 8 The monetized value of these 52,680.6 burden hours is
estimated to be $18.49 million. 9

This estimate is based on the following calculation: 2,139 management investment companies +
696 UITs = 2,835 total funds.

4

This estimate is based on the following calculation: ((2,139 management investment companies ×
13.35 hours per year) + (696 UITs × 9.11 hours per year)) ÷ 2,835 total funds = 12.31 hours per year.
5

This estimate stems from the Commission staff’s understanding of the time it takes to complete
initially complete and review items on Form N-CEN.

6

7

This estimate is based on the following calculation: 0.1 hours x 2,835 filers = 283.5 hours.

8

This estimate is based on the following calculation: 52,397.1 hours + 283.5 hours = 52,680.6

hours.

This estimate is based on average annual burden estimate of 52,680.6 hours. This was then
multiplied by a blended hourly wage of $351 per hour, $334 per hour for Senior Programmers and $368 per
hour for compliance attorneys, as we believe these employees would commonly be responsible for
completing reports on Form N-CEN ($351 × 52,680.5 = $18,490,890.60). The estimated wage figures are
based on published rates for senior programmers and compliance attorneys, 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, yielding effective hourly rates of $334 and $368, respectively. See
Securities Industry and Financial Markets Association, Report on Management & Professional Earnings in
the Securities Industry 2013.

9

6

TABLE 1: FORM N-CEN PRA ESTIMATES
Internal
Burden

Cost of
Internal Burden

Wage Rate

BURDEN FOR UPDATING FILING
$351 (blended rate of $368
for compliance attorney and
$334 for senior
programmer)

Preparing and filing initial
registration statement

12.31 hours

Number of annual filings

× 2,835

× 2,835

Total annual burden

34,896 hours

$12,248,496

×

$4,320.81

BURDEN FOR LIQUIDITY RISK MANAGEMENT ITEMS
Liquidity Risk Management Items
Number of funds filing

1 hour

×

$351 blended rate

$351

×12,365

×12,365

12,365 hours

$4,340,115

BURDEN FOR SWING PRICING ITEMS
Swing Pricing Items

.5 hours

Number of funds filing

×9,854

×

$351 blended rate

$175.5
×9,854

4,927 hours

$1,729,377

BURDEN FOR RULE 6c-11 ITEMS
Rule 6c-11 Items

.1 hours

Number of ETFs

×

$351 blended rate

$35.1

×2,091

×2,091

209.1 hours

$73,394.1

BURDEN FOR RULE 12d1-4 ITEMS
Rule 12d1-4 Items

0.1 hour

Number of funds filing

×2,835

×

$351 blended rate

$35.1
×2,835

283.5 hours

$99,508.5
TOTAL BURDEN

52,680.6 hours

Total annual burden

$18,490,890.6

TABLE 2: CHANGE IN BURDEN ESTIMATES
Annual Number of Responses

Form NCEN

Annual Time Burden (hours)

Cost Burden (dollars)

Previously
Approved

Revised
Estimate

Change

Previously
Approved

Revised
Estimate

Change

Previously
Approved

Revised
Estimate

Change

2,835

2,835

0

52,397.1

52,680.6

283.5

$18,391,382.14

$18,490,890.6

$99,508.46

7

13.

Cost to Respondents
The Commission previously estimated, with respect to the filing of a report on

Form N-CEN, an external cost of $91 per fund. 10 External costs include the cost of
goods and services, which with respect to reports on Form N-CEN, would include the
costs of registering and maintaining an LEI for the registrant/funds. 11 We estimate in the
FOF Release that the proposed amendments to Form N-CEN would impose no additional
external costs associated with this collection of information. In sum, we estimated that all
applicable funds will incur, in the aggregate, external annual costs of $1,344,980. 12

14.

Costs to Federal Government

We previously estimated that the annual cost of reviewing and processing new
registration statements, post-effective amendments, proxy statements, and shareholder
reports of investment companies amounted to approximately $21.9 million in fiscal year
2019, based on the Commission’s computation of the value of staff time devoted to this
activity and related overhead. We estimate that the proposed amendments to Form NCEN would impose no additional costs to the federal government associated with this
collection of information.

As of 2020 the annual cost of maintaining an LEI from the GMEI Utility was $80, plus a $11
surcharge for the LEI Central Operating Unit. See GMEI Utility, Frequently Asked Questions, available at
https://www.gmeiutility.org/frequentlyAskedQuestions.jsp. The Commission has further estimated the
one-time burden associated with obtaining an LEI is one hour, with ongoing administration of an LEI
corresponding to one hour per year.
10

See Items B.1.d. and C.1.c. of Form N-CEN (requiring LEI for the registrant and each
management investment company).

11

This estimate is based on the following calculation: $91 per registrant or fund per year × (2,835
investment company registrants + 9,854 mutual funds (which reflects the number of mutual fund series, but
excludes money market funds, which would have already obtained LEIs pursuant to the requirements of
Form N MFP) + 2,091 ETFs) = $91 per fund per year × 14,780 registrants and funds = $1,344,980 per year.

12

8

15.

Changes in Burden

The estimated change in burden for the collection of information for Form NCEN associated with the proposed amendments to Form N-CEN in the FOF Release is an
increase of 283.5 hours. We estimate that the proposed amendments to Form N-CEN
would impose no additional external costs associated with this collection of information.
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.

Exceptions to Certification for Paperwork Reduction Act Submissions

Not applicable.
B.

COLLECTION OF INFORMATION EMPLOYING STATISTICAL METHODS

Not applicable.

9