[Federal Register Volume 65, Number 31 (Tuesday, February 15, 2000)]
[Notices]
[Pages 7580-7581]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3445]


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SECURITIES AND EXCHANGE COMMISSION


Submission for OMB Review; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of Filings and Information Services, 450 5th 
Street, N.W., Washington, D.C. 20549
Extension: Rule 18f-3; SEC File No. 270-385; OMB Control No. 3235-
0441

    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'') has submitted to the Office of 
Management and Budget (``OMB'') a request for extension and approval on 
the collection of information described below.
    Section 18(f)(1) \1\ of the Investment Company Act of 1940 \2\ (the 
``Investment Company Act'') prohibits registered open-end management 
investment companies (``funds'') from issuing any senior security. Rule 
18f-3 under the act \3\ exempts from section 18(f)(1) a fund that 
issues multiple classes of shares representing interests in the same 
portfolio of securities (a ``multiple class fund'') if the fund 
satisfies the conditions of the rule. In general, each class must 
differ in its arrangement for shareholder services or distribution or 
both, and must pay the related expenses of that different arrangement.
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    \1\ 15 U.S.C. 80a-18(f)(1).
    \2\ 15 U.S.C. 80a.
    \3\ 17 CFR 270.18f-3.
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    The rule includes one requirement for the collection of 
information. A multiple class fund must prepare and fund directors must 
approve a written plan setting forth the separate arrangement and 
expense allocation of each class, and any related conversion features 
or exchange privileges (`` rule 18f-3 plan'').\4\ Approval of the plan 
must occur before the fund issues any shares of multiple classes, and 
whenever the fund materially amends the plan. In approving the plan, 
the fund board, including a majority of the independent directors, must 
determine that the plan is in the best interests of each class and the 
fund as a whole.
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    \4\ Rule 18f-3(d).
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    The requirement that the fund prepare and directors approve a 
written rule 18f-3 plan is intended to ensure that the fund compiles 
information relevant to the fairness of the separate arrangement and 
expense allocation for each class, and that directors review and 
approve the information. Without a blueprint that highlights material 
differences among classes, directors might not perceive potential 
conflicts of interests when they determine whether the plan is in the 
best interests of each class and the fund. In addition, the plan may be 
useful to Commission staff in reviewing the fund's compliance with the 
rule.
    There are approximately 550 multiple class funds.\5\ Based on a 
review of typical rule 18f-3 plans, the Commission's staff estimates 
that the 550 funds together make an average of 275 responses each year 
to prepare and approve a written rule 18f-3 plan, requiring 
approximately 5.5 hours per response, and a total of 1512.5 burden 
hours per year in the aggregate.\6\ The estimated annual burden of 
1512.5 hours represents an increase of 912.5 hours over the prior 
estimate of 600 hours. The increase in burden hours is attributable to 
more accurate estimates of the burden hours that reflect additional 
time spent by professionals and time spent by directors. The estimated 
number of multiple class funds has decreased, however, from 600 to 550.
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    \5\ This estimate is based on data from Form N-SAR, the semi-
annual report that funds file with the Commission.
    \6\ The estimate reflects the assumption that each multiple 
class fund prepares and approves a rule 18f-3 plan every two years 
when issuing a new class or amending a plan (or that 275 of all 550 
funds prepare and approve a plan each year). The estimate assumes 
that the time required to prepare a plan is 3 hours per plan (or 825 
hours for 275 funds annually), and the time required to approve a 
plan is an additional 2.5 hours per plan (or 687.5 hours for 275 
funds annually).
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    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act. The estimate is not derived 
from a comprehensive or even a representative survey or study of the 
costs of Commission rules.

[[Page 7581]]

Complying with this collection of information requirement is necessary 
to obtain the benefit of relying on rule 18f-3. Responses will not be 
kept confidential. 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.
    Please direct general comments regarding the above information to 
the following persons: (i) Desk Officer for the Securities and Exchange 
Commission, Office of Information and Regulatory Affairs, Office of 
Management and Budget, New Executive Office Building, Washington, DC 
20503; and (ii) Michael E. Bartell, Associate Executive Director, 
Office of Information Technology, Securities and Exchange Commission, 
450 5th Street, NW, Washington, DC 20549. Comments must be submitted to 
OMB within 30 days of this notice.

    Dated: February 8, 2000.
Margaret H. McFarland,
Deputy Seccretary.
[FR Doc. 00-3445 Filed 2-14-00; 8:45 am]
BILLING CODE 8010-01-M