Rule 30e-3 supporting statement (final)

OMB CONTROL NUMBER: 3235-0758

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Rule 30e-3
A.

JUSTIFICATION
1.

Necessity for the Information Collection

Section 30(e) of the Investment Company Act of 1940 (“Investment Company
Act”) 1 requires a registered investment company (“fund”) 2 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.3 Rule 30e-3 provides certain funds and unit investment trusts with an
optional method to satisfy shareholder report transmission requirements by making
such reports and certain other materials publicly accessible on a website, as long as
they satisfy certain other conditions of the rule regarding (a) availability of the report
and other materials; (b) notice to investors of the website availability of the report;
and (c) delivery of paper copies of materials upon request. Reliance on the rule is
voluntary. Responses to the disclosure requirements are not kept confidential.
On August 5, 2020, the Commission proposed rule and form amendments that
would modernize the disclosure framework for open-end management investment
companies (“open-end funds”).4 As part of this proposal, the Commission proposed
to amend the scope of rule 30e-3 to exclude open-end funds. The proposed
amendment is designed to ensure that all open-end fund investors would experience
the anticipated benefits of a modified disclosure framework, in which the fund’s
shareholder report would serve a central role to keep shareholders informed.

1

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

2

Unless the context otherwise requires, for ease of reference, throughout this supporting
statement “fund” or “funds,” individually or collectively, refers to registered
management companies (and any separate series thereof) and UITs.

3

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

4

See Tailored Shareholder Reports, Treatment of Annual Prospectus Updates for Existing
Investors, and Improved Fee and Risk Disclosure for Mutual Funds and ExchangeTraded Funds; Fee Information in Investment Company Advertisements, Investment
Company Act Release No. 33963 (Aug. 5, 2020) (“Proposing Release”).

2.

Purpose and Use of the Information Collection

Certain of the provisions of the rule contain “collection of information”
requirements within the meaning on the Paperwork Reduction Act of 1995
(“Paperwork Reduction Act”).5 The rule is intended to modernize the manner in
which periodic information is made available to investors.
3.

Consideration Given to Information Technology

The Commission’s Electronic Data Gathering, Analysis, and Retrieval System
(“EDGAR”) 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. Forms of notices
to shareholders are required to be filed electronically on EDGAR.6 Although the
conditions of rule 30e-3 require certain information to be sent to shareholders by mail,
we expect that reliance by funds on rule 30e-3 would in general increase the extent to
which electronic methods are used to deliver information to shareholders.
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 information required by rule 30e-3 is not generally duplicated
elsewhere.
5.

Effect on Small Entities

The information collection requirements of rule 30e-3 do not distinguish between
small entities and other funds. The burden of the conditions on smaller funds may be
proportionally greater than for larger funds. This burden includes the cost of
preparing, printing, and transmitting notices to shareholders. The Commission
believes, however, that imposing different requirements on smaller investment
companies would not be consistent with investor protection and the purposes of the
rule’s conditions. 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.

5

44 U.S.C. 3501 et seq.

6

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

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6.

Consequences of Not Conducting Collection

Section 30(e) of the Investment Company Act and rules 30e-1 and 30e-2
thereunder require that reports to shareholder be transmitted at least semi-annually.
Less frequent collection would mean that current information would 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.

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 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. Before adopting the proposed
amendments to the scope of rule 30e-3, the Commission will receive and evaluate
public comments on the proposal.
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 does not
collect personally identifiable information (PII). The agency has determined that a
system of records notice (SORN) and privacy impact assessment (PIA) are not
required in connection with the collection of information.
12.

Burden of Information Collection

The following estimates of average burden hours and costs are made solely for
purposes of the Paperwork Reduction Act and are not derived from a comprehensive
or even representative survey or study of the cost of Commission rules and forms.
We are proposing to amend the scope of rule 30e-3 to exclude open-end funds.
Because our proposed amendment would decrease the number of funds that would
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be able to rely on rule 30e-3, we are updating the PRA analysis for rule 30e-3 to
account for any burden decrease that would result from this decrease in respondents.
We are not updating the rule 30e-3 PRA analysis in any other respect.
Under current PRA estimates for rule 30e-3, we estimated that complying
with the information collection requirements of rule 30e-3 would impose an average
total annual hour burden of approximately 28,758 hours on funds that choose to rely
on the rule. 7 Of those costs, we estimated that 25,459 hours, at a time cost of
$8,706,978, were attributed to the compliance costs of open-end funds registered on
Form N-1A. The table below summarizes the revisions to the estimated annual
responses, burden hours, and burden-hour costs based on the proposed amendment
to the scope of rule 30e-3.
Table 1: Summary of Burden Hour and Burden Hour Cost Estimates
for Rule 30e-3
Previously
estimated annual
internal hour
burden
Total annual
burden1

28,758 hours

Updated estimated
annual internal
hour burden

3,299 hours

Previously
estimated annual
internal burden
time cost
$9,835,236

Updated estimated
annual internal time
burden cost

$1,128,258

Notes:
1. The estimated burdens and costs in this table are based on an estimate of 11,367 funds relying on rule 30e-3, of which 10,063
are open-end funds registered on Form N-1A. Thus, the estimated number of respondents for rule 30e-3 under the proposed
amendments is 1,304 (11,367 – 10,063 = 1,304).

13.

Cost to Respondents

Cost burden is the cost of goods and services purchased in connection with
complying with the collection of information requirements of rule 30e-3. The cost
burden does not include the cost of the hour burden discussed in Item 12 above.
Under current PRA estimates for rule 30e-3, we estimated that complying with
the information collection requirements of rule 30e-3 would impose an estimated
external cost burden of $79,031,220 on funds that choose to rely on the rule.8 Of

7

This estimate is based on the last time the rule’s information collection was submitted in
connection with the adoption of rule 30e-3 in 2019.

8

Id.

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those costs, we estimated that an external cost of $69,964,913 was attributed to the
compliance costs of open-end funds registered on Form N-1A. The table below
summarizes these revisions to the estimated external costs based on the proposed
amendment to the scope of rule 30e-3.
Table 2: Summary of External Cost Estimates for Rule 30e-3

Total annual burden1

Previously estimated annual

Updated estimated annual

external cost burden

external cost burden

$79,031,220

$9,066,307

Notes:
1. The estimated burdens and costs in this table are based on an estimate of 11,367 funds relying on rule 30e-3, of which 10,063
are open-end funds registered on Form N-1A. Thus, the estimated number of respondents for rule 30e-3 under the proposed
amendments is 1,304 (11,367 – 10,063 = 1,304).

14.

Costs to Federal Government

The rule does not impose any additional costs on the federal government.
15.

Change in Burden

The proposed amendments to the scope of rule 30e-3 would decrease the total
annual hour burden from 28,758 hours to 3,299 hours (a decrease of 25,459 hours).
The annual external costs would decrease from $79,031,220 to $9,066,307 (a
decrease of $69,964,913). These estimated reductions in burden hours and external
costs would result from excluding open-end funds from the scope of the rule.
16.

Information Collection Planned for Statistical Purposes

The results of any information collected will not be published.
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 for Paperwork Reduction Act Submissions

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

COLLECTIONS OF INFORMATION EMPLOYING
STATISTICAL METHODS

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The collection of information will not employ statistical methods.

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