

[Federal Register: April 17, 2006 (Volume 71, Number 73)]
[Notices]               
[Page 19762-19763]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17ap06-108]                         

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SECURITIES AND EXCHANGE COMMISSION

 
Submission for OMB Review; Comment Request

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of Filings and Information Services, Washington, DC 
20549

Extension:
    Rule 19a-1, SEC File No. 270-240 and OMB Control No. 3235-0216.

    Notice is hereby given that, pursuant to the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange 
Commission (the ``Commission'') has submitted to the Office of 
Management and Budget requests for extension of the previously approved 
collection of information discussed below.
    Section 19(a) (15 U.S.C. 80a-19(a)) of the Investment Company Act 
of 1940 (the ``Act'') makes it unlawful for any registered investment 
company to pay any dividend or similar distribution from any source 
other than the company's net income, unless the payment is accompanied 
by a written statement to the company's shareholders which adequately 
discloses the sources of the payment. Section 19(a) authorizes the 
Commission to prescribe the form of such statement by rule.
    Rule 19a-1 (17 CFR 270.19a-1) under the Act, entitled ``Written 
Statement to Accompany Dividend Payments by Management Companies,'' 
sets forth specific requirements for the information that must be 
included in statements made pursuant to section 19(a) by or on behalf 
of management companies.\1\ The rule requires that the statement 
indicate what portions of distribution payments are made from net 
income, net profits and paid-in capital. When any part of the payment

[[Page 19763]]

is made from net profits, rule 19a-1 also requires that the statement 
disclose certain other information relating to the appreciation or 
depreciation of portfolio securities. If an estimated portion is 
subsequently determined to be significantly inaccurate, a correction 
must be made on a statement made pursuant to section 19(a) or in the 
first report to shareholders following the discovery of the inaccuracy.
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    \1\ Section 4(3) of the Act [15 U.S.C. 80a-4(3)] defines 
``management company'' as ``any investment company other than a face 
amount certificate company or a unit investment trust.''
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    The purpose of rule 19a-1 is to afford fund shareholders adequate 
disclosure of the sources from which distribution payments are made. 
The rule is intended to prevent shareholders from confusing income 
dividends with distributions made from capital sources. Absent rule 
19a-1, shareholders might receive a false impression of fund gains.
    Based on a review of filings made with the Commission, the staff 
estimates that approximately 3000 portfolios of registered investment 
companies that are management companies may be subject to rule 19a-1 
each year, and that each portfolio on average mails two statements per 
year to meet the requirements of the rule.\2\ The staff further 
estimates that the time needed to make the determinations required by 
the rule and to prepare the statement required under the rule is 
approximately 1.5 hours per statement. The total annual burden for all 
portfolios therefore is estimated to be approximately 9,000 burden 
hours.
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    \2\ A few portfolios make monthly distributions from sources 
other than net income, so the rule requires them to send out a 
statement 12 times a year. Other portfolios never make such 
distributions.
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    The staff estimates that approximately one-third of the total 
annual burden (3,000 hours) would be incurred by a senior 
administrative officer with an average hourly wage rate of 
approximately $158 per hour, and approximately two-thirds of the annual 
burden (6,000 hours) would be incurred by senior clerical staff with an 
average hourly wage rate of $25 per hour.\3\ The staff therefore 
estimates that the aggregate annual cost of complying with the 
paperwork requirements of the rule is approximately $624,000 ((3,000 
hours x $158) + (6,000 hours x $25)).
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    \3\ All hourly rates in this Supporting Statement are derived 
from the average annual salaries reported for employees outside of 
New York City in Securities Industry Association, Management and 
Professional Earnings in the Securities Industry (2003) and 
Securities Industry Association, Office Salaries in the Securities 
Industry (2003).
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    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act, and is not derived from a 
comprehensive or even a representative survey or study of the costs of 
Commission rules. Compliance with the collection of information 
required by rule 19a-1 is mandatory for management companies that make 
written statements to shareholders pursuant to section 19(a) of the 
Act. Responses will not be kept confidential. An agency may not conduct 
or sponsor, and a person is not required to respond to, a collection of 
information unless it displays a currently valid control number.
    General comments regarding the above information should be directed 
to the following persons: (i) Desk Officer for the Securities and 
Exchange Commission, Office of Information and Regulatory Affairs, 
Office of Management and Budget, Room 10102, New Executive Office 
Building, Washington, DC 20503 or e-mail to: 
David_Rostker@omb.eop.gov; and (ii) R. Corey Booth, Director/Chief 

Information Officer, Securities and Exchange Commission, c/o Shirley 
Martinson, 6432 General Green Way, Alexandria, Virginia 22312, or send 
an e-mail to PRA_Mailbox@sec.gov. Comments must be submitted to OMB 
within 30 days of this notice.

    Dated: April 6, 2006.
Nancy M. Morris,
Secretary.
[FR Doc. E6-5685 Filed 4-14-06; 8:45 am]

BILLING CODE 8010-01-P
