Rule 30e-1 Supporting Statement - 2012

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for
“Rule 30e-1”
A.

JUSTIFICATION
1.

Information Collection Necessity

Section 30(e) of the Investment Company Act of 1940 (“Investment Company Act”) 1
requires a registered investment company (“fund”) to transmit to its shareholders, at least
semi-annually, reports containing financial statements and other financial information as the
Commission may prescribe by rules and regulations. 2 In addition, Section 30(f) permits the
Commission to require by rule that semi-annual reports include such other information as the
Commission deems necessary or appropriate in the public interest or for the protection of
investors. Rule 30e-1 under the Investment Company Act generally requires a fund to transmit
to its shareholders, at least semi-annually, reports containing the information that is required to
be included in such reports by the fund’s registration statement form under the Investment
Company Act. 3 Failure to require the collection of this information would seriously impede the
amount of current information available to shareholders and the public about funds and would
prevent the Commission from implementing the regulatory program required by statute.
2.

Information Collection Purpose

The purpose of the collection of information required by rule 30e-1 is to provide fund
shareholders with current information about the operation of their funds in accordance with
Section 30 of the Investment Company Act.

1

15 U.S.C. 80a-1 et seq.

2

15 U.S.C. 80a-29(e).

3

17 CFR 270.30e-1.

3.

Consideration Given to Information Technology

Rule 30e-1 does not require filing of the shareholder report with the Commission, but
instead the transmission of reports to shareholders. Shareholder reports are typically sent in
paper; however, investors may consent to the delivery of electronic versions.
4.

Duplication

To ensure the relevance of the information filed by each fund and to avoid unnecessary
paperwork and duplicative reporting, the Commission has promulgated specific rules and
designed specific forms or items of forms for each type of investment company. 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. The
information required by rule 30e-1 is not generally duplicated elsewhere.
5.

Effect on Small Entities

The current disclosure requirements for shareholder reports do not distinguish between
small entities and other funds. The burden on smaller funds may be greater than for larger funds.
This burden includes the cost of producing, printing, and transmitting the shareholder reports.
The Commission believes, however, that imposing different requirements on smaller investment
companies would not be consistent with investor protection and the purposes of shareholder
reports. 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.

2

6.

Consequences of Less Frequent Collection

The frequency with which information in compliance with rule 30e-1 is collected is
semi-annual, as set out Section 30(e) of the Investment Company Act and rule 30e-1. Less
frequent collection of information would impede the amount of current information provided to
shareholders about their funds.
7.

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

This collection is not inconsistent with 5 CFR 1320.5(d)(2).
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 and 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 rule 30e-1 before it submitted this request for extension and approval to the
Office of Management and Budget. The Commission received no comments in response to its
request.
9.

Payment or Gift

No payment or gift to respondents was provided.
10.

Confidentiality

No assurance of confidentiality was provided.
11.

Sensitive Questions

No questions of a sensitive nature are involved.

3

12.

Burden of Information Collection

Rule 30e-1 under the Investment Company Act of 1940 requires each fund to include in
its shareholder reports the information that is required by the fund’s registration statement form.
Compliance with the disclosure requirements of rule 30e-1 is mandatory. Responses to the
disclosure requirements will not be kept confidential.
We estimate that approximately 2,490 funds, with a total of approximately 10,750
portfolios, respond to rule 30e-1 annually. Based on conversations with fund representatives, we
estimate that it takes approximately 84 hours to comply with the collection of information
associated with rule 30e-1 per portfolio. This time is spent, for example, preparing, reviewing,
and certifying the reports. Accordingly, we calculate the total estimated annual internal burden
of responding to rule 30e-1 to be approximately 903,000 hours. 4
Of the 903,000 hours spent annually to comply with rule 30e-1, the Commission
estimates that:
•

Fifty percent (451,500 hours) are spent by in-house attorneys at an estimated
hourly wage of $378 5, for a total of approximately $170,667,000 per year; 6 and

•

Fifty percent (451,500 hours) are spent by internal intermediate accountants at an
estimated hourly wage of $154, for a total of $69,531,000 per year. 7

4

84 hours per portfolio x 10,750 portfolios = 903,000 hours.

5

The Commission’s estimates concerning the allocation of burden hours and the relevant wage
rates are based on consultations with industry representatives and on salary information for the
securities industry compiled by the Securities Industry and Financial Markets Association. The
estimated wage figures are also based on published rates for in-house attorneys and internal
intermediate accountants, modified to account for an 1800-hour work-year and multiplied by 5.35
to account for bonuses, firm size, employee benefits and overhead, yielding effective hourly rates
of $378 and $154, respectively. See Securities Industry and Financial Markets Association,
Report on Management & Professional Earnings in the Securities Industry 2011.

6

451,500 hours x $378 per hour = $170,667,000.

4

Based on these estimated wage rates, the total cost to the industry of the hour burden for
complying with the annual and semi-annual shareholder report requirements of rule 30e-1 is
approximately $240,198,000. 8
13.

Total Annual Cost Burden

Based on conversations with fund representatives, we estimate that the total cost burden
of compliance with the information collection requirements of rule 30e-1 is approximately
$31,061 per portfolio. This includes, for example, the costs for funds to prepare, print, and mail
the reports. Basing our calculation on the approximately 10,750 portfolios now subject to rule
30e-1, we estimate the annual external cost burden associated with rule 30e-1 to be
approximately $333,905,750. 9
14.

Cost to the Federal Government

The annual cost of reviewing and processing registration statements, post-effective
amendments, proxy statements, shareholder reports, and other filings of investment companies
amounted to approximately $20.5 million in fiscal year 2011, based on the Commission’s
computation of the value of staff time devoted to this activity and related overhead. We note,
however, that shareholder reports are filed with the Commission to comply with the requirements
of Form N-CSR, and not rule 30e-1, which requires the transmission of the reports to
shareholders.

7

451,500 hours x $154 per hour = $69,531,000.

8

$170,667,000 + $69,531,000 = $240,198,000. The cost to the industry is calculated by
multiplying the total annual hour burden by the estimated hourly wage rate.

9

$31,061 per portfolio x 10,750 portfolios = $333,905,750.

5

15.

Changes in Burden

The estimates represent a decrease of 291,532 hours in internal burden and an increase of
$5,461,750 in external costs per year. These changes are due to the increase in the number of
portfolios responding to rule 30e-1 offset by decreases in the estimated per portfolio time and
cost burdens.
16.

Information Collection Planned for Statistical Purposes

The results of any information collected will not be published.
17.

Approval to Omit the OMB Expiration Date

The Commission is not seeking approval to omit the expiration date.
18.

Exceptions to Certification Statement

The Commission is not seeking an exception to the certification statement.
B.

COLLECTION OF INFORMATION EMPLOYING STATISTICAL METHODS
The collection of information will not employ statistical methods.

6