Form N-CSR (2022) Supporting Statement

Form N-CSR (2022) Supporting Statement.pdf

Form N-CSR under the Securities Exchange Act of 1934 and under the Investment Company Act of 1940, Certified Shareholder Report of Registered Management Investment Companies

OMB: 3235-0570

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OMB CONTROL NUMBER: 3235-0570

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
website (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.

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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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 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 2/5/2020, is
provided as a supplemental document and is also available at
https://www.sec.gov/privacy.

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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
rules and forms. Compliance with Form N-CSR is mandatory. Responses to the
collection of information will not be kept confidential.
In our most recent Paperwork Reduction Act submission for Form N-CSR,
Commission staff estimated the annual compliance burden to comply with the
collection of information requirement of Form N-CSR was 181,167 burden hours
with an internal cost burden of $58,290,932. 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:
Table 1: Summary of Revised Burden Hours for Reports on Form N-CSR
Funds and Filings

Form N-CSR

Annual Time Burden (hours)

Number of Funds
(A)

Number of
Annual Filings
(B)

Number of Total
Filings
(C) = (A) x (B)

Hour Burden per
Fund per filing (D)

Total Annual
Hour Burden
(E) = (C) x (D)

14,654 12

2

29,308

7.75

227,137

In total, the Commission estimates it will take 227,137 burden hours per year for
all funds to prepare and file reports on Form N-CSR. Based on the Commission’s
estimate of burden hours and an estimated wage rate of approximately $356 per

10

44 U.S.C. 3501 et seq.

11

On July 14, 2020, the Office of Management and Budget approved without change a
revision of the currently approved information collection estimate for Form N-CSR
(the “July 2020 estimates”).

12

This estimate is based on the number of registered management companies as
calculated by the filing type: 1,403 N-1A registrants (13,248 funds); 693 N-2
registrants (691 funds); 5 N-3 registrants (14 funds); 417 N-4 registrants (418 funds);
235 N-6 registrants (236 funds); 47 N-8B-2 registrants (47 funds).

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hour, 13 the total internal annual cost to registrants of the hour burden for complying
with Form N-CSR requirements is approximately $81 million. 14
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 approximately $203 15 per fund and the total annual external cost burden for Form
N-CSR is $5,949,524. 16
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
13

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 inflation; multiplied by 5.35 to account for bonuses, firm size, employee benefits,
and overhead. See Securities Industry and Financial Markets Association, Report on
Management & Professional Earnings in the Securities Industry 2013, modified for
2021 by Commission staff. We estimate that compliance attorneys and senior
programmers would divide their time equally, yielding an estimated hourly wage rate
of $356 ($373 per hour for compliance attorneys + $339 per hour for senior
programmers) ÷ 2 = $356 per hour.

14

227,137 hours × $356 per hour = $80,860,772 per year.

15

In the Paperwork Reduction Act extension for Form N-CSR in 2018, the external
cost burden per fund was estimated to be $132. In our most recent Paperwork
Reduction Act submission, the external cost burden increased by $2,069,600 as the
result of amendments requiring hyperlinking. We multiplied the current number of
filings (C) by the previously estimated external cost of $132 per fund = 3,868,656. To
account for the most recent hyperlinking amendment, we added $2,069,600 =
5,938,256. We then divided 5,938,256 by current number of filings (C) = $203 per
fund.

16

This estimate is based on the following calculation: 14,654 funds x $203 per filing x
2 filings = $5,949,524.

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approximately $25.7 million in fiscal year 2020, 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 and external cost associated with Form N-CSR has
increased as follows:
Table 2: Comparison of Current and Revised Burden Hours and External Cost for Reports
on Form N-CSR:
Annual Time Burden (hours)

Form N-CSR

Currently
Approved

Revised
Estimate

181,167

227,137

External Cost Burden (dollars)
Change

Currently
Approved

Revised
Estimate

Change

45,970

$5,199,584

$5,949,524

$749,940

We have revised the estimates to reflect increases in the number of affected
entities, the estimated hourly burden and external cost to prepare and make each
filing. These increases reflect the staff’s determination to revise the manner in which
it calculates these cost estimates.
16. Information Collection Planned for Statistical Purposes
The results of any information collection 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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File Typeapplication/pdf
File TitlePAPERWORK REDUCTION ACT SUPPORTING STATEMENT
File Modified2021-12-15
File Created2021-12-15

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