[Federal Register Volume 66, Number 79 (Tuesday, April 24, 2001)]
[Notices]
[Pages 20696-20697]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-10108]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-24939; File No. S7-11-97]
RIN 3235-AH11


Investment Company Names; OMB Approval of Collections of 
Information

AGENCY: Securities and Exchange Commission.

ACTION: Notice of OMB Approval of Collections of Information.

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SUMMARY: The Securities and Exchange Commission adopted rule 35d-1 
under the Investment Company Act of 1940 on January 17, 2001. Rule 35d-
1 addresses certain broad categories of investment company names that 
are likely to mislead investors about an investment company's 
investments and risks. Certain provisions of rule 35d-1 contain 
``collection of information'' requirements within the meaning of the 
Paperwork Reduction Act [44 U.S.C. 3501 et seq.], and the Commission 
submitted the proposed collections of information to the Office of 
Management and Budget (OMB) for review. The Office of Management and 
Budget has approved the collection of information requirements 
contained in rule 35d-1.

DATES: On March 13, 2001, OMB approved the collections of information 
contained in rule 35d-1.

FOR FURTHER INFORMATION CONTACT: Paul G. Cellupica, Senior Special 
Counsel, Office of Disclosure and Insurance Product Regulation, at 
(202) 942-0670, in the Division of Investment Management, Securities 
and Exchange Commission, 450 5th Street, NW., Washington, DC 20549-
0506.

SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission 
(``Commission'') adopted new rule 35d-1 [17 CFR 270.35d-1] under the 
Investment Company Act of 1940 [15 U.S.C. 80a-1 et seq.] (``Investment 
Company Act'') on January 17, 2001.\1\ Rule 35d-1 addresses certain 
broad categories of investment company names that are likely to mislead 
investors about an investment company's investments and risks. The rule 
requires a registered investment company with a name suggesting that 
the company focuses on a particular type of investment (e.g., an 
investment company that calls itself the ABC Stock Fund, the XYZ Bond 
Fund, or the QRS U.S. Government Fund) to invest at least 80% of its 
assets in the type of investment suggested by its name. The rule also 
addresses other types of names, including names suggesting that an 
investment company focuses its investments in a particular country or 
geographic region.
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    \1\ Investment Company Act Release No. 24828 (Jan. 17, 2001) [66 
FR 8509 (Feb. 1, 2001), correction 66 FR 14828 (Mar. 14, 2001)] 
(``Adopting Release''). All references to ``rule 35d-1'' or any 
paragraph of the rule are to 17 CFR 270.35d-1, as adopted by the 
Adopting Release.
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    The rule generally requires that the 80% investment requirement 
either may be a fundamental policy of an investment company affected by 
the rule, or the investment company may adopt a policy to provide 
notice to shareholders at least 60 days prior to any change in its 80% 
investment policy. Additionally, an investment company with a name 
suggesting that it focuses its investments in a particular country or 
geographic region must disclose in its prospectus the specific criteria 
that are used to select investments that meet this standard, in order 
for its name not to be deemed misleading under the rule.
    As explained in the Adopting Release, certain provisions of rule 
35d-1 contain ``collection of information'' requirements within the 
meaning of the Paperwork Reduction Act of 1995 [44 U.S.C. 3501 et 
seq.].\2\ In the Adopting Release, the Commission estimated the burden 
hours for these collection of information requirements and solicited 
comments on the collection of information requirements and the burden 
estimate. The Commission submitted the proposed collection of 
information requirements to OMB for review in accordance with 44 U.S.C. 
3507 and 5 CFR 1320.11. The titles for the collections of information 
are: (1) ``Rule 35d-1 under the Investment Company Act of 1940, 
Investment Company Names''; (2) ``Form N-1A under the Investment 
Company Act of 1940 and Securities Act of 1933, Registration Statement 
of Open-End Management Investment Companies''; and (3) ``Form N-2 under 
the Investment Company Act of 1940 and Securities Act of 1933, 
Registration Statement of Closed-End Management Companies.'' The 
Commission did not receive any comments on the collection of 
information requirements of rule 35d-1.
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    \2\ See Adopting Release, supra note 1, 66 FR at 8516-8518.
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    The purpose of the notice policy provision of rule 35d-1 is to 
ensure that when shareholders purchase shares in an investment company 
based on its name, and with the expectation that it will follow the 
investment policy suggested by that name, they will have sufficient 
time to decide whether to redeem their shares in the event that the 
investment company decides to pursue a different investment policy. The 
Commission estimates that the total annual burden of this notice policy 
provision will be 480 hours.\3\
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    \3\ The Commission estimates that 24 investment companies and 
series would provide prior notice to shareholders of a change in 
their investment policies pursuant to a notice policy adopted in 
accordance with rule 35d-1, and that the annual burden for each such 
investment company or series would be 20 hours, for a total annual 
burden of 480 hours. See Adopting Release, supra note 1, 66 FR at 
8517.
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    The purpose of the prospectus disclosure requirement of rule 35d-1 
applicable to investment companies with names suggesting an investment 
focus in a particular country or geographic region is to enable 
investors to make more informed choices about their investments in 
investment companies with such names. The likely respondents to this 
information collection are open-end management investment companies or 
series registering with the Commission on Form N-1A and closed-end 
management investment companies registering with the Commission on Form 
N-2. The Commission estimates that the total annual burden of this 
disclosure requirement will be 404 hours for open-end management 
investment companies or series filing post-effective amendments or 
initial registration statements on Form N-1A, and 52 hours for closed-
end management investment companies filing registration statements on 
Form N-2.\4\
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    \4\ The Commission estimates that 202 open-end management 
investment companies or series that file post-effective amendments 
or initial registration statements on Form N-1A would have names 
suggesting a focus in a particular country or geographic region, and 
that each such investment company would spend two hours annually to 
comply with the prospectus disclosure requirements of the rule, for 
a total annual burden of 404 hours. The Commission also estimates 
that 26 closed-end management investment companies filing 
registration statements on Form N-2 annually would have names 
suggesting a focus on a particular country or geographic region, and 
that each such investment company would spend two hours to comply 
with the prospectus disclosure requirements of the rule, for a total 
annual burden of 52 hours. See Adopting Release, supra note 1, 66 FR 
at 8517-8518.

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[[Page 20697]]

    On March 13, 2001, OMB approved the collections of information 
contained in rule 35d-1. Rule 35d-1 (OMB Control No. 3235-0548) was 
adopted pursuant to section 35(d) of the Investment Company Act [15 
U.S.C. 80a-34(d)]. Form N-1A (OMB Control No. 3235-0307) and Form N-2 
(OMB Control No. 3235-0026) were adopted pursuant to section 8 of the 
Investment Company Act [15 U.S.C. 80a-8] and sections 5 and 10 of the 
Securities Act of 1933 [15 U.S.C. 77e and 77j]. 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.
    Providing prior notice to shareholders of a change in investment 
policy is mandatory if an investment company that has a descriptive 
name subject to the rule has chosen to comply with the rule by adopting 
a non-fundamental 80% investment policy and a notice policy that meets 
the requirements of the rule, and the investment company intends to 
change its 80% investment policy and name. There is no mandatory 
retention period for the information disclosed. Notices to shareholders 
pursuant to a notice policy under the rule are not filed with the 
Commission, but will not in any event be kept confidential.
    The prospectus disclosure required by the rule in Form N-1A and 
Form N-2 is mandatory for an investment company with a name that 
suggests that it focuses its investments in a particular country or 
geographic region. There is no mandatory retention period for the 
information disclosed, and responses to the disclosure requirement will 
not be kept confidential.

    Dated: April 16, 2001.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-10108 Filed 4-23-01; 8:45 am]
BILLING CODE 8010-01-P