Rule 30b1-5 Supporting Statement - 2017

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Rule 30b1-5

A.

JUSTIFICATION
1.

Necessity for the Information Collection

The Investment Company Act of 1940 (“Investment Company Act”) permits the
Commission to require that registered management investment companies file such
information, documents, and reports (other than financial statements) as the Commission
may require to keep reasonably current the information and documents contained in the
company’s registration statement. 1 In 2004, the Commission adopted rule 30b1-5 under
the Investment Company Act to improve the periodic disclosure provided by certain
registered management investment companies to their investors about portfolio
investments. Pursuant to rule 30b1-5, registered management investment companies
other than small business investment companies registered on Form N-5 (“funds”), are
required to file their complete portfolio schedule as of the end of its first and third fiscal
quarters with the Commission on Form N-Q. 2
2.

Purpose and Use of the Information Collection

The purpose of the collection of information required by rule 30b1-5 is to meet
the disclosure requirements of the Investment Company Act and to provide investors with
information necessary to evaluate an interest in the fund by improving the transparency
of information about the fund’s portfolio holdings. The information required to be filed

1

15 U.S.C. 80a-29(b)(1).

2

17 CFR 249.332 and 274.130.

with the Commission permits verification of compliance with securities law requirements
and assures the public availability and dissemination of information.
3.

Consideration Given to Information Technology

The Commission’s electronic filing system (Electronic Data Gathering, Analysis
and Retrieval or “EDGAR”) automates the filing, processing and dissemination of full
disclosure filings. The system permits public companies to transmit filings to the
Commission electronically. This automation has increased the speed, accuracy and
availability of information, generating benefits to investors and financial markets.
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 30b1-5 is not generally duplicated
elsewhere.
5.

Effect on Small Entities

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. The current disclosure requirements under the rule do not
distinguish between small entities and other funds. The burden on smaller funds may be
greater, in proportion to their size, than for larger funds. This burden includes the costs
related to the requirement that funds file their complete portfolio schedules with the
Commission on a quarterly basis. These costs also could include expenses for computer
time, legal and accounting fees, information technology staff, and additional computer
and telephone equipment. The Commission believes, however, that imposing different

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requirements on smaller investment companies would not be consistent with investor
protection and the purposes of the disclosure requirements.
6.

Consequences of Not Conducting Collection

Funds currently file their complete portfolio holdings schedules with the
Commission on a semi-annual basis as part of their shareholder reports. In addition,
funds are required to file their portfolio schedules for the first and third fiscal quarters on
Form N-Q pursuant to the rule. The Commission requires the filing of Form N-Q semiannually for all funds so that it will have current information available for use in
performing inspections of funds, selectively reviewing registration documents, and
conducting studies and other types of analyses necessary to keep the Commission’s
regulatory program for investment companies current with industry conditions. 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 Division of Investment Management staff participate in
an ongoing dialogue with representatives of the fund industry 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 that may
confront the industry.
The Commission requested public comment on the collection of information
required by rule 30b1-5 before it submitted this request for extension and approval to the

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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 will be required under this collection of
information.

The information collection collects basic Personally Identifiable

Information (PII) that may include a signatory’s name and 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 (“PRA”) 3 and are not derived from a
comprehensive or even representative survey or study of the cost of Commission rules
and forms. Compliance with rule 30b1-5 is mandatory for every fund. Responses to the
disclosure requirements will not be kept confidential.

3

44 U.S.C. 3501 et seq.

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We estimate that there are approximately 2,380 funds, with a total of
approximately 11,757 portfolios, that are affected by the rule. Each of those 2,380 funds
is required by rule 30b1-5 to file a complete portfolio holdings schedule via EDGAR on
Form N-Q. For purposes of this PRA analysis, the hour burden associated with the
requirements of rule 30b1-5 has been included in the collection of information
requirements of Form N-Q, rather than the rule. This information collection imposes no
hour burden; however, we are requesting a one hour burden for administrative purposes.
13.

Cost to Respondents

Cost burden is the cost of services purchased to prepare and update rule 30b1-5,
such as for the services of independent auditors, outside counsel, and the costs associated
with purchasing technology or other components used in generating, maintaining, and
disclosing or providing the information. Estimates are based on the Commission’s
experience with the filing of registration forms and shareholder reports.
We estimate that there are approximately 2,380 funds, with a total of
approximately 11,757 portfolios, that are affected by the rule. Each of those 2,380 funds
is required by rule 30b1-5 to file a complete portfolio holdings schedule via EDGAR on
Form N-Q. For purposes of this analysis, the burden associated with the requirements of
rule 30b1-5 has been included in the collection of information requirements of Form
N-Q, rather than the rule, and therefore, the information collection imposes no cost
burden. The cost burden does not include the cost of the hour burden discussed in Item
12 above.

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14.

Cost to the Federal Government

The annual cost of reviewing and processing disclosure documents, including new
registration statements, post-effective amendments, proxy statements, and shareholder
reports of investment companies amounted to approximately $19.5 million in fiscal year
2015, based on the Commission’s computation of the value of staff time devoted to this
activity and related overhead.
15.

Change in Burden

This information collection imposes no hour or cost burdens; however, we are
requesting a one hour burden for administrative purposes. This does not result in a
change to the existing burden.
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 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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