[Federal Register Volume 68, Number 29 (Wednesday, February 12, 2003)]
[Notices]
[Pages 7152-7153]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-3491]


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SECURITIES AND EXCHANGE COMMISSION


Comment Request

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

Extension:
    Form N-23C-1--SEC File No. 270-230, OMB Control No. 3235-0230;
    Rule 19a-1--SEC File No. 270-240, OMB Control No. 3235-0216;
    Rule 22d-1--SEC File No. 270-275, OMB Control No. 3235-0310;
    Rule 30b2-1--SEC File No. 270-213, OMB Control No. 3235-0220;
    Form ADV-E--SEC File No. 270-318, OMB Control No. 3235-0361;

    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'') is soliciting comments on the 
collections of information summarized below. The Commission plans to 
submit these existing collections of information to the Office of 
Management and Budget (``OMB'') for extension and approval.
    Section 23(c) of the Investment Company Act of 1940 [15 U.S.C. 80a-
23(c)] (``Investment Company Act'' or ``Act'') prohibits a registered 
closed-end investment company (``closed-end fund'' or ``fund'') from 
purchasing any security it issues except on a securities exchange, 
pursuant to tender offers, or under such other circumstances as the 
Commission may permit by rules or orders designed to ensure that 
purchases are made in a manner that does not unfairly discriminate 
against any holders of the securities to be purchased. Rule 23c-1 [17 
CFR 270.23c-1] under the Act permits a closed-end fund that meets 
certain requirements to repurchase its securities other than on an 
exchange or pursuant to a tender.
    A registered closed-end fund that relies on Rule 23c-1 may purchase 
its securities for cash if, among other conditions set forth in the 
rule, certain conditions are met: (i) Payment of the purchase price is 
accompanied or preceded by a written confirmation of the purchase; (ii) 
the purchase is made at a price not above the market value, if any, or 
the asset value of the security, whichever is lower, at the time of the 
purchase; and (iii) if the security is stock, the issuer has, within 
the preceding six months, informed stockholders of its intention to 
purchase stock of the class by letter or report addressed to all the 
stockholders of the class.
    In addition, the issuer must file with the Commission, on or before 
the tenth day of the month following the date in which the purchase 
occurs, two copies of Form N-23C-1. The form requires the issuer to 
report all purchases it has made during the month, together with a copy 
of any written solicitation to purchase securities under Rule 23c-1 
sent or given during the month by or on behalf of the issuer to ten or 
more persons.
    The purpose of Rule 23c-1 is to protect shareholders of closed-end 
funds from fraud in connection with the repurchase by funds of their 
own securities. The purpose of the rule's requirement that the fund 
file Form N-23C-1 with the Commission is to allow the Commission to 
monitor funds' repurchase of securities as well as any written 
solicitation used by the fund to effect those repurchases, and to make 
that information available to the public. Investors may seek this 
information when determining whether to invest in certain funds.The 
requirement to file Form N-23C-1 applies to a closed-end fund only when 
the fund has repurchased its securities. If the information provided in 
the form were collected less frequently than a month after repurchases 
occur, the Commission and investing public would lack current 
information about closed-end funds that repurchase their own 
securities.
    Commission staff estimates that each year approximately 30 closed-
end funds use the repurchase procedures under Rule 23c-1, and that 
these funds file a total of 180 forms each year. The number of forms 
filed by each fund ranges from 1 to 12 depending on the number of 
months in which the fund repurchases its securities under Rule 23c-1. 
Commission staff estimates that each response requires 1 burden hour to 
prepare and file Form N-23C-1 with a copy of any written solicitation 
to purchase securities under the rule (if necessary).\1\ The total 
annual burden of the rule's paperwork requirements is estimated to be 
180 hours.
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    \1\ The burden hour estimates are based upon consultation with 
lawyers and accountants familiar with the practices of fund boards 
and the staff of investment advisers.
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    Section 19(a) [15 U.S.C. 80a-19(a)] of the Investment Company 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 the statement by rule.
    Rule 19a-1 [17 CFR 270.19a-1] under the Act is entitled: ``Written 
Statement to Accompany Dividend Payments by Management Companies.'' 
Rule 19a-1 sets forth specific requirements for the information that 
must be included in statements made under Section 19(a) by registered 
investment companies. The rule requires that the statement indicate 
what portions of the payment are made from net income, net profits and 
paid-in capital.\2\ When any part of the payment is made from net 
profits, the rule requires that the statement disclose certain other 
information relating to the appreciation or depreciation of portfolio 
securities. If an estimated portion is

[[Page 7153]]

subsequently determined to be significantly inaccurate, a correction 
must be made on a statement made under Section 19(a) or in the first 
report to shareholders following the discovery of the inaccuracy. The 
purpose of Rule 19a-1 is to afford fund shareholders adequate 
disclosure of the sources from which dividend payments are made.
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    \2\ Rule 19a-1 requires, among other things, that every written 
statement made under Section 19 of the Act by or on behalf of a 
management company clearly indicate what portion of the payment per 
share is made from the following sources: net income for the current 
or preceding fiscal year, or accumulated undistributed net income, 
or both, not including in either case profits or losses from the 
sale of securities or other properties; accumulated undistributed 
net profits from the sale of securities or other properties; and 
paid-in surplus or other capital source.
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    The Commission staff estimates that approximately 8,400 portfolios 
of management companies may be subject to Rule 19a-1 each year.\3\ The 
total average annual burden for Rule 19a-1 per portfolio is estimated 
to be approximately 30 minutes.\4\ The total annual burden for all 
portfolios is therefore estimated to be approximately 4,200 burden 
hours.
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    \3\ The Commission staff estimates that there are approximately 
3,800 registered investment companies that are ``management 
companies'' as defined by the Act, and each may have one or more 
separate portfolios that report dividends to shareholders. The 
Commission's records indicate that those 3,800 management companies 
have approximately 8,400 portfolios that report paying dividends, 
and so may be subject to Rule 19a-1.
    \4\ According to respondents, no more than approximately 15 
minutes is needed to make the determinations required by the rule 
and include the required information in the shareholders' dividend 
statements. The Commission staff estimates that, on average, each 
portfolio mails two notices per year to meet the requirements of the 
rule, for an average total annual burden of approximately 30 
minutes.
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    Rule 22d-1 [17 CFR 270.22d-1] under the Act provides registered 
investment companies that issue redeemable securities an exemption from 
Section 22(d) of the Investment Company Act to the extent necessary to 
permit scheduled variations in or elimination of the sales load on fund 
securities for particular classes of investors or transactions, 
provided certain conditions are met. The rule imposes an annual burden 
per series of a fund of approximately 15 minutes, so that the total 
annual burden for the approximately 6,100 series of funds that might 
rely on the rule is estimated to be 1,525 hours.
    Rule 30b2-1 [17 CFR 30b2-1] under the Investment Company Act 
requires the filing of four copies of every periodic or interim report 
transmitted by or on behalf of any registered investment company to its 
stockholders.\5\ This requirement ensures that the Commission has 
information in its files to perform its regulatory functions and to 
apprise investors of the operational and financial condition of 
registered investment companies.\6\
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    \5\ Most filings are made via the Commission's electronic filing 
system; therefore, paper filings under Rule 30b2-1 occur only in 
exceptional circumstances. Electronic filing eliminates the need for 
multiple copies of filings.
    \6\ Annual and periodic reports to the Commission become part of 
its public files and, therefore, are available for use by 
prospective investors and stockholders.
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    It is estimated that approximately 3,700 registered management 
investment companies are required to send reports to stockholders at 
least twice annually. In addition, under recently proposed amendments 
to Rule 30b2-1, if adopted, each registered investment company would be 
required to file with the Commission new form N-CSR, certifying the 
financial statements. The annual burden of filing the reports is 
included in the burden estimate of form N-CSR.
    Form ADV-E [17 CFR 279.8] is the cover sheet for accountant 
examination certificates filed pursuant to Rule 206(4)-2 under the 
Investment Advisers Act by investment advisers retaining custody of 
client securities or funds. Registrants each spend approximately three 
minutes, annually, complying with the requirements of the form.
    The estimate of average burden hours is made solely for the 
purposes of the Paperwork Reduction Act. The estimate is not derived 
from a comprehensive or even a representative survey or study of the 
costs of Commission rules and forms.
    Written comments are invited on: (a) Whether the collections of 
information is necessary for the proper performance of the functions of 
the Commission, including whether the information has practical 
utility; (b) the accuracy of the Commission's estimate of the burdens 
of the collections of information; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burdens of the collections of information on respondents, 
including through the use of automated collection techniques or other 
forms of information technology. Consideration will be given to 
comments and suggestions submitted in writing within 60 days of this 
publication.
    Please direct your written comments to Kenneth A. Fogash, Acting 
Associate Executive Director/CIO, Office of Information Technology, 
Securities and Exchange Commission, 450 5th Street, NW., Washington, DC 
20549.

    Dated: February 5, 2003.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-3491 Filed 2-11-03; 8:45 am]
BILLING CODE 8010-01-P