Rule 30e-3 Supporting Statement

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 Rules 30e-1 and 30e-2 under the Investment Company Act require most
funds to send their shareholders annual and semiannual reports containing financial
information on the fund. 4
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.
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 purpose of the rule is to modernize the manner
in which periodic information is made available to investors.

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

17 CFR 270.30e-1 (transmission requirement for management investment companies);
17 CFR 270.30e-2 (transmission requirement for unit investment trusts (“UITs”) that
invest substantially all of their assets in shares of a management investment company).

5

44 U.S.C. 3501 et seq.

3.

Consideration Given to Information Technology

The Commission's electronic filing system (Electronic Data Gathering, Analysis,
and Retrieval System, or “EDGAR”) is designed to automate the filing, processing
and dissemination of disclosure filings. Using the EDGAR system, publicly held
companies generally transmit their filings to the Commission directly over the
Internet. See Rulemaking for EDGAR System, Release No. 33-7855 (April 24,
2000) (part of the modernization of EDGAR). Such automation has increased the
speed, accuracy and availability of information, generating benefits to investors and
financial markets. Although the conditions of rule 30e-3 require certain information
to be sent to shareholders by mail, reliance by funds on rule 30e-3 has in general
increased 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.
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)

Not applicable.

2

8.

Consultation Outside the Agency

The Commission requested public comment on the information collection
requirements in rule 30e-3 before it submitted this request for extension and approval
to the Office of Management and Budget. The Commission’s solicitation of public
comments included estimating and requesting public comments on updated burden
estimates for all information collections under this OMB control number. The
Commission received no comments in response to its request.
9.

Payment or Gift

Not applicable.
10.

Confidentiality

Not applicable.
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 estimate that 13,079 funds could rely on rule 30e-3. 6 Of these funds, we

6

This estimate includes 9,476 mutual funds, 2,243 exchange-traded funds, 651 closed-end
funds, 14 funds that could file registration statements or amendments to registration
statements on Form N-3, and 695 UITs. This estimate is based on data reported on
Form N-CEN filed with the Commission as of November 30, 2021. 9,476 + 2,243 + 651
+ 14 + 695 = 13,079.

3

estimate that 90% (or 11,771 funds) are currently relying on rule 30e-3. 7 With respect
to these 11,771 funds, we estimate that 90% (or 10,594 funds) already post
shareholder reports on their websites for other purposes. For these funds, we estimate
that annual compliance with the posting requirements of rule 30e-3 will require a half
hour burden per fund. For the remaining 1,177 funds, we estimate that funds will
incur 1.5 burden hours per year as a result of the posting requirement. In sum, we
estimate that the posting requirements of rule 30e-3 will impose an average total
annual hour burden of about 7,062.5 hours on applicable funds. 8
We also estimate that each fund will require one hour for each notice. Of this
time, we estimated that 75% of the preparation time required would be incurred by
the fund internally and that 25% of the burden would be carried out by outside
counsel retained by the fund. Accordingly, we estimate that the notice will result in
an average annual hour burden of 1.5 hours per fund each year. 9 In sum, we
estimate that the notice requirements of rule 30e-3 will impose an average total
annual hour burden of about 17,656.5 hours on applicable funds. 10
In total, rule 30e-3 will impose an average total annual hour burden of 24,719
hours on applicable funds. 11 Based on the Commission’s estimate of 24,719 hours

7

We estimate the annual number of responses to be 23,542 (11,771 x 2) because we
believe that funds relying on rule 30e-3 are relying on the rule for the annual report and
(0.5 hours per fund per year × 10,594 funds) + (1.5 hours per
the semiannual report.8
fund per year x 1,177 funds) = 7,062.5 hours.

8

(0.5 hours per fund per year × 10,594 funds) + (1.5 hours per fund per year x 1,177
funds) = 7,062.5 hours.

9

(1 hour per notice × 2 notices per year) × 0.75 proportion internal hour burden = 1.5
hours per fund.

10

1.5 hours per fund per year for the notice × 11,771 funds estimated to rely = 17,656.5
hours per year.

11

7,062.5 hours for the posting requirements + 17,656.5 hours for the notice requirements
= 24,719 hours.

4

and an estimated wage rate of about $362 per hour, 12 the total annual cost to
registrants of the hour burden for complying with rule 30-3 is about $8.9 million. 13
Table 1 below reflects the revised estimates.

12

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 senior
programmers and compliance attorneys, modified to account for and 1,800-hour work
year; 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 $339 and $373, respectively. See Securities Industry and Financial Markets
Association, Report on Management & Professional Earnings in the Securities Industry
2013. We estimate that senior programmers and compliance attorneys will divide their
time for every hour of senior programming work to two hours of compliance attorney
work, yielding an estimated hourly wage rate of $362. (($339 per hour for senior
programmer) + (2 × $373 per hour for compliance attorney)) ÷ 3 = $362 per hour.

13

24,719 hours per year × $362 per hour = $8,948,278 per year.

5

Table 1: Rule 30e-3 Revised Burden Estimates

Posting
requirements

Annual hours

Wage rate

Internal time cost

External costs

0.5 (90% already

$362

$217 (average)

$0

$362

$543

$76,040,660

posting shareholder
reports) and 1.5
(10% not already
posting)

Notice

1.5

requirements
Printing and

0

$5,885,500

mailing upon
shareholder request
Estimated number

11,771

of funds relying on
rule 30e-3
Revised total

24,719

$8,948,278

$81,926,160

annual burden of
rule 30e-3

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.
We estimate the external cost burden with respect to the notice would include the
costs associated with outside counsel and printing and mailing costs. Accordingly,
we estimate that outside counsel costs associated with the notice will result in an
average cost burden per fund of about $248 each year. 14 In sum, we estimate that the

14

(1 hour per notice × 2 notices per year) × 0.25 proportion external cost × $496 per hour
= $248.

6

outside counsel costs related to the notice requirements of rule 30e-3 will impose an
annual average total cost burden of about $2,919,208 on applicable funds. 15
We also estimate that the external cost burden associated with each notice will be
about $3,106. Therefore, we estimate annual external costs per fund will be $6,212,
as each fund will continue to be required to send two notices per year. In sum, we
estimate that the printing and mailing costs related to the notice requirements of rule
30e-3 will impose an average annual total cost burden of $73,121,452 on applicable
funds. 16 Accordingly, together with the costs associated with outside counsel, we
estimate that the notice requirements of the rule will impose an average annual total
cost burden of $76,040,660. 17
Furthermore, we also estimate that funds may incur external costs in connection
with the requirement to provide a complete shareholder report upon request of a
shareholder. We estimate that the annual costs associated with printing and mailing
these reports would be $500 per fund. Accordingly, we estimate that the aggregate
annual external costs associated with printing and mailing shareholder reports upon
request will be $5,885,500. 18
In total, rule 30e-3 will impose a total annual external cost burden of $81,926,160
on applicable funds. 19
14.

Costs to Federal Government

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

Change in Burden

The estimated total annual burden hours decreased by 4,039, from 28,758 to 24,719
hours. The estimated cost burden increased by $2,894,940, from $79,031,220 to
$81,926,160.

15

$248 per fund per year for the notice × 11,771 funds estimated to rely = $2,919,208 per
year.

16

$6,212 per year per fund for the notice × 11,771 funds expected to rely = $73,121,452 per
year.

17

$2,919,208 outside counsel expenses + $73,121,452 per year printing and mailing
expenses (including processing fees) = $76,040,660 per year.

18

$500 per fund × 11,771 funds estimated to rely = $5,885,500.

19

$76,040,660 for the notice requirements + $5,885,500 for the printing and mailing upon
request requirements = $81,926,160.

7

Table 2: Change in Burden Estimates

Rule

Annual Number of Responses

Annual Time Burden (hours)

Cost Burden (dollars)

Previously

Proposed

Previously

Proposed

Previously

Proposed

approved

estimate

approved

estimate

approved

estimate

22,734

23,542

28,758

24,719

$79,031,220

$81,926,160

Change
808

Change
-4,039

30e-3

16.

Information Collection Planned for Statistical Purposes

Not applicable.
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
Submissions

Not applicable.
B.

COLLECTIONS OF INFORMATION EMPLOYING
STATISTICAL METHODS
Not applicable.

8

Change
$2,894,940