[Federal Register Volume 68, Number 60 (Friday, March 28, 2003)]
[Notices]
[Page 15249]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-7396]


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SECURITIES AND EXCHANGE COMMISSION


Proposed Collection; Comment Request

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

Extension:
    Rule 12b-1--SEC File No. 270-188, OMB Control No.-3235-0212.

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 [44 U.S.C. 3501], the Securities and Exchange Commission 
(``Commission'') is soliciting public comments on the collection of 
information under the Investment Company Act of 1940 [15 U.S.C. 80a] 
(the ``Act'') summarized below. The Commission plans to submit this 
existing collection of information to the Office of Management and 
Budget (``OMB'') for extension and approval.
    Rule 12b-1 [17 CFR 270.12b-1] under Act the permits a registered 
open-end investment company (``mutual fund'') to distribute its own 
shares and pay the expenses of distribution out of the mutual fund's 
assets provided, among other things, that the mutual fund adopts a 
written plan (``rule 12b-1 plan'') and has in writing any agreements 
relating to the implementation of the rule 12b-1 plan. The rule in part 
requires that (i) the adoption or material amendment of a rule 12b-1 
plan be approved by the mutual fund's directors and shareholders; (ii) 
the board review quarterly reports of amounts spent under the rule 12b-
1 plan; and (iii) the board consider continuation of the rule 12b-1 
plan at least annually. Rule 12b-1 also requires funds relying on the 
rule to preserve for six years, the first two years in an easily 
accessible place, copies of the rule 12b-1 plan, related agreements and 
reports, as well as minutes of board meetings that describe the factors 
considered and the basis for adopting or continuing a rule 12b-1 plan.
    The board and shareholder approval requirements of rule 12b-1 are 
designed to ensure that fund shareholders and directors receive 
adequate information to evaluate and approve a rule 12b-1 plan. The 
requirement of quarterly reporting to the board is designed to ensure 
that the rule 12b-1 plan continues to benefit the fund and its 
shareholders. The recordkeeping requirements of the rule are necessary 
to enable Commission staff to oversee compliance with the rule.
    Based on information filed with the Commission by funds, Commission 
staff estimates that there are 6,217 mutual fund portfolios with rule 
12b-1 plans. As discussed above, rule 12b-1 requires the board of each 
fund with a rule 12b-1 plan to (i) review quarterly reports of amounts 
spent under the plan and (ii) annually consider the plan's continuation 
(which generally is combined with the fourth quarterly review). This 
results in a total number of annual responses per fund of four and an 
estimated total number of industry responses of 24,868 (6,217 fund 
portfolios x 4 annual responses per fund = 24,868 responses).
    Based on conversations with fund industry representatives, 
Commission staff estimates that for each of the 6,217 mutual fund 
portfolios that currently have a rule 12b-1 plan, the average annual 
burden of complying with the rule is 100 hours to maintain the plan. 
This estimate takes into account the time needed to prepare quarterly 
reports to the board of directors, the board's consideration of those 
reports, and the board's annual consideration of the plan's 
continuation. Commission staff therefore estimates that the total 
burden of the rule's paperwork requirements for all funds is 621,700 
hours (6,217 fund portfolios x 100 hours per fund = 621,700 hours).
    The estimate of 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 Commission 
rules.
    If a currently operating fund seeks to (i) adopt a new rule 12b-1 
plan or (ii) materially increase the amount it spends for distribution 
under its rule 12b-1 plan, rule 12b-1 requires that the fund obtain 
shareholder approval. As a consequence, the fund will incur the cost of 
a proxy. Commission staff estimates that three funds per year prepare a 
proxy in connection with the adoption or material amendment of a rule 
12b-1 plan. Commission staff further estimates that the cost of each 
fund's proxy is $15,000. Thus the total annualized cost burden of rule 
12b-1 to the fund industry is $45,000 (3 funds requiring a proxy x 
$15,000 per proxy).
    The collections of information required by rule 12b-1 are necessary 
to obtain the benefits of the rule. Notices to the Commission will not 
be kept confidential. The Commission is seeking OMB approval because 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.
    Written comments are requested on: (a) Whether the proposed 
collections of information are 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 collection of information; (c) ways to enhance the 
quality, utility and clarity of the information collected; and (d) ways 
to minimize the burden of the collection 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: March 20, 2003.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-7396 Filed 3-27-03; 8:45 am]
BILLING CODE 8010-01-P