Supporting Statement

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Form N-CSR
A. JUSTIFICATION
1. Necessity for the Information Collection
Form N-CSR 1 is a combined reporting form used by registered management
investment companies (“funds”) to file certified shareholder reports under the
Investment Company Act of 1940 (“Investment Company Act”) 2 and the Securities
Exchange Act of 1934 (“Exchange Act”). 3 Specifically, Form N-CSR is to be used
for reports under section 30(b)(2) of the Investment Company Act 4 and section 13(a)
or 15(d) of the Exchange Act, 5 filed pursuant to rule 30b2-1(a) under the Investment
Company Act. 6 Reports on Form N-CSR are to be filed with the Securities and
Exchange Commission (“Commission”) no later than 10 days after the transmission
to stockholders of any report that is required to be transmitted to stockholders under
rule 30e-1 under the Investment Company Act. 7
2. Purpose and Use of the Information Collection
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. The information provided in
reports on Form N-CSR may 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 is also for the use and benefit of investors. The information
filed with the Commission permits the verification of compliance with securities law
requirements and assures the public availability and dissemination of the
information.

1

17 CFR 249.331 and 274.128.

2

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

3

15 U.S.C. 78a et seq.

4

15 U.S.C. 80a-29(b)(2).

5

15 U.S.C. 78m(a) and 78o(d).

6

17 CFR 270.30b2-1(a).

7

17 CFR 270.30e-1.

3. Consideration Given to Information Technology
The Commission’s Electronic Data Gathering, Analysis, and Retrieval
(“EDGAR”) system automates the filing, processing, and dissemination of full
disclosure filings. This automation has increased the speed, accuracy, and
availability of information, generating benefits to investors and financial markets.
Reports on Form N-CSR are filed with the Commission electronically on EDGAR. 8
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. The requirements of Form N-CSR are not generally duplicated
elsewhere.
5. Effect on Small Entities
The Commission reviews all rules periodically, as required by the Regulatory
Flexibility Act, 9 to identify methods to minimize recordkeeping or reporting
requirements affecting small businesses. The current disclosure requirements for
reports on Form N-CSR do not distinguish between small entities and other funds.
The burden on smaller funds, however, to prepare reports on Form N-CSR may be
proportionally greater than for larger funds. The Commission believes, however, that
imposing different requirements on smaller funds would not be consistent with
investor protection and the purposes of certified shareholder reports.
6. Consequences of Not Conducting Collection
Funds are required to file reports on Form N-CSR with the Commission no later
than 10 days after the transmission to stockholders of any report that is required to be
transmitted to stockholders under rule 30e-1 under the Investment Company Act.
Less frequent collection would mean that current information might not be available
to fund investors.
7. Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)
This collection is not inconsistent with 5 CFR 1320.5(d)(2).
8

See rule 101(a)(1)(iii)–(iv) of Regulation S-T [17 CFR 232.101(a)(1)(iii)–(iv)].

9

5 U.S.C. 601 et seq.

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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 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-CSR
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 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 name and job title. 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
The following estimates of average burden hours and costs are made solely for
purposes of the Paperwork Reduction Act of 1995 10 and are not derived from a
comprehensive or even representative survey or study of the cost of Commission

10

44 U.S.C. 3501 et seq.

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rules and forms. Compliance with Form N-CSR is mandatory. Responses to the
collection of information will not be kept confidential.
The current total annual burden hour inventory for Form N-CSR is 172,899
hours. 11 The hour burden estimates for preparing and filing reports on Form N-CSR
are based on the Commission’s experience with the contents of the form. The
number of burden hours may vary depending on, among other things, the complexity
of the filing and whether preparation of the reports is performed by internal staff or
outside counsel.
The Commission’s new estimate of burden hours that will be imposed by Form
N-CSR is as follows:
HOUR BURDEN FOR REPORTS ON FORM N-CSR
Number of funds .................................................................... 11,856 12
Number of filings per fund per year ................................................... 2
Hour burden per fund per filing..................................................... 7.31
Hour burden per fund per year (7.31 hours per
filing × 2 filings per year) ............................................................ 14.62
Additional aggregate annual burden for closed-end funds ............ 750 13
Total annual hour burden ..................................................... 174,085 14
In total, the Commission estimates it will take 174,085 burden hours per year for
all funds to prepare and file reports on Form N-CSR. Based on the Commission’s
estimate of 174,085 burden hours and an estimated wage rate of approximately $324
per hour, 15 the total internal annual cost to registrants of the hour burden for
complying with Form N-CSR requirements is approximately $56 million. 16
11

This estimate is based on the following calculations: 172,899 hours = (11,856
management investment companies x 14.52 hour burden per fund per year) + 750
additional hours for closed-end funds.

12

This estimate is based on the following calculation: 11,856 management investment
companies = (1,594 exchange-traded funds – eight organized as unit investment trusts +
750 closed-end funds + 481 money market funds + 9,039 other mutual funds).

13

This estimate is based on the following calculation: 750 hours = (750 closed-end funds x
1 hour per closed-end fund).

14

This estimate is based on the following calculation: 174,085 hours = 750 hours +
(11,856 funds x 14.62 burden hours per fund per year).

15

The Commission’s estimate concerning the wage rate is based on salary information for
the securities industry compiled by the Securities Industry and Financial Markets
Association. The estimated wage figure is based on published rates for compliance
attorneys and senior programmers, modified to account for an 1,800-hour work year and

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13. Cost to Respondents
Cost burden is the cost of goods and services purchased to prepare and update
filings on Form N-CSR, such as for the services of independent auditors and outside
counsel. The cost burden does not include the hour burden discussed in Item 12
above. Estimates are based on the Commission’s experience with the filing of reports
on Form N-CSR.
We estimate that the annual cost of outside services associated with Form N-CSR
is left unchanged at approximately $132 per fund and the total annual external cost
burden for Form N-CSR is $3,129,984. 17
14. Cost to Federal Government
The annual cost of reviewing and processing disclosure documents, including
new registration statements, post-effective amendments, proxy statements,
shareholder reports, and other filings of investment companies amounted to
approximately $22.9 million in fiscal year 2016, based on the Commission’s
computation of the value of staff time devoted to this activity and related overhead.
15. Change in Burden
The estimated hourly burden associated with Form N-CSR has increased from
172,899 hours to 174,085 hours (an increase of 1,186 hours). This increase is
primarily due to an increase in the estimated hourly burden to prepare and make
each filing. The estimated cost burden associated with Form N-CSR has remained
the same at $3,129,984.
16. Information Collection Planned for Statistical Purposes
The results of any information collection will not be published.

inflation; multiplied by 5.35 to account for bonuses, firm size, employee benefits, and
overhead; and adjusted to account for the effects of inflation, yielding effective hourly
rates of $340 and $308, respectively. See Securities Industry and Financial Markets
Association, Report on Management & Professional Earnings in the Securities Industry
2013. We estimate that compliance attorneys and senior programmers would divide their
time equally, yielding an estimated hourly wage rate of $324. ($340 per hour for
compliance attorneys + $308 per hour for senior programmers) ÷ 2 = $324 per hour.
16

174,085 hours × $324 per hour = $56,403,540 per year.

17

This estimate is based on the following calculation: 11,856 funds x $132 per filing x 2
filings = $3,129,984.

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17. Approval to Omit OMB Expiration Date
The Commission is not seeking approval to not display the expiration date for
OMB approval.
18. Exceptions to Certification Statement for Paperwork Reduction Act
Submission
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.

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