[Federal Register Volume 73, Number 121 (Monday, June 23, 2008)]
[Proposed Rules]
[Pages 35442-35469]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-13356]



[[Page 35441]]

-----------------------------------------------------------------------

Part II





Securities and Exchange Commission





-----------------------------------------------------------------------



17 CFR Parts 230, 232, 239, et al.



Interactive Data for Mutual Fund Risk/Return Summary; Proposed Rule

  Federal Register / Vol. 73, No. 121 / Monday, June 23, 2008 / 
Proposed Rules  

[[Page 35442]]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 230, 232, 239, 270, and 274

[Release Nos. 33-8929, 34-57942, 39-2457, IC-28298; File Number S7-12-
08]
RIN 3235-AK13


Interactive Data for Mutual Fund Risk/Return Summary

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: We are proposing rules requiring mutual funds to provide risk/
return summary information in a form that would improve its usefulness 
to investors. Under the proposed rules, risk/return summary information 
could be downloaded directly into spreadsheets, analyzed in a variety 
of ways using commercial off-the-shelf software, and used within 
investment models in other software formats. Mutual funds would provide 
the risk/return summary section of their prospectuses to the Commission 
and on their Web sites in interactive data format using the eXtensible 
Business Reporting Language (``XBRL''). The interactive data would be 
provided as an exhibit to registration statements. The proposed rules 
are intended not only to make risk/return summary information easier 
for investors to analyze, but also to assist in automating regulatory 
filings and business information processing. Interactive data has the 
potential to increase the speed, accuracy, and usability of mutual fund 
disclosure, and eventually reduce costs. We are also proposing to 
permit investment companies to submit portfolio holdings information in 
our interactive data voluntary program without being required to submit 
other financial information.

DATES: Comments should be submitted on or before August 1, 2008.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml);
     Send an e-mail to [email protected]. Please include 
File Number S7-12-08 on the subject line; or
     Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number S7-12-08. This file number 
should be included on the subject line if e-mail is used. To help us 
process and review your comments more efficiently, please use only one 
method. The Commission will post all comments on the Commission's 
Internet Web site (http://www.sec.gov/rules/proposed.shtml). Comments 
are also available for public inspection and copying in the 
Commission's Public Reference Room, 100 F Street, NE., Washington, DC 
20549, on official business days between the hours of 10 a.m. and 3 
p.m. All comments received will be posted without change; we do not 
edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Alberto H. Zapata, Senior Counsel, or 
Tara R. Buckley, Branch Chief, Office of Disclosure Regulation, 
Division of Investment Management, at (202) 551-6784, U.S. Securities 
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-5720.

SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission 
(``Commission'') is proposing amendments to Rule 485 \1\ under the 
Securities Act of 1933 (``Securities Act''), Rules 11,\2\ 202,\3\ and 
401 \4\ of Regulation S-T, \5\ Rule 8b-33 \6\ under the Investment 
Company Act of 1940 (``Investment Company Act''), and Form N-1A \7\ 
under the Securities Act and the Investment Company Act. We are also 
proposing amendments to proposed Rule 405 of Regulation S-T.\8\
---------------------------------------------------------------------------

    \1\ 17 CFR 230.485.
    \2\ 17 CFR 232.11.
    \3\ 17 CFR 232.202.
    \4\ 17 CFR 232.401.
    \5\ 17 CFR 232.10 et seq.
    \6\ 17 CFR 270.8b-33.
    \7\ 17 CFR 239.15A and 274.11A.
    \8\ See Securities Act Release No. 8924 (May 30, 2008) [73 FR 
32794 (June 10, 2008)] (``Interactive Data Proposing Release'').
---------------------------------------------------------------------------

Table of Contents

I. Introduction and Background
    A. Introduction
    B. Current Filing Technology and Interactive Data
    C. The Commission's Multiyear Evaluation of Interactive Data and 
Overview of Proposed Rules
II. Discussion of the Proposed Amendments
    A. Submission of Risk/Return Summary Information Using 
Interactive Data
    B. Compliance Date
    C. Documents and Information Covered by the Proposed Rules
    D. Filing Period
    E. Web Site Posting of Interactive Data
    F. Accuracy and Reliability of Interactive Data
    G. Required Items
    H. Consequences of Non-Compliance and Hardship Exemption
    I. Changes to the Voluntary Program
III. General Request for Comments
IV. Paperwork Reduction Act
V. Cost/Benefit Analysis
VI. Consideration of Burden on Competition and Promotion of 
Efficiency, Competition, and Capital Formation
VII. Initial Regulatory Flexibility Analysis
VIII. Small Business Regulatory Enforcement Fairness Act
IX. Statutory Authority
X. Text of Proposed Rule and Form Amendments

I. Introduction and Background

A. Introduction

    Over the last several decades, developments in technology and 
electronic data communication have significantly decreased the time and 
cost of filing disclosure documents with us. Technological developments 
also have facilitated greater transparency in the form of easier access 
to, and analysis of, financial reporting and disclosures. Most notably, 
in 1993 we began to require electronic filing on our Electronic Data 
Gathering, Analysis and Retrieval System (``EDGAR'').\9\ Since then, 
widespread use of the Internet has vastly decreased the time and 
expense of accessing disclosure filed with us.
---------------------------------------------------------------------------

    \9\ In 1993, we began to require domestic issuers to file most 
documents electronically. Securities Act Release No. 6977 (Feb. 23, 
1993) [58 FR 14628 (Mar. 18, 1993)]. Electronic filing began with a 
pilot program in 1984. Securities Act Release No. 6539 (June 27, 
1984) [49 FR 28044 (July 10, 1984)].
---------------------------------------------------------------------------

    We continue to update our filing standards and systems as 
technologies improve. These developments assist us in our goal to 
promote efficient and transparent capital markets. For example, since 
2003 we have required electronic filing of certain ownership reports 
filed on Forms 3,\10\ 4,\11\ and 5 \12\ in a format that provides 
interactive data, and recently we adopted similar rules governing the 
filing of Form D.\13\ In addition, recently we have encouraged, and in 
some cases required, open-end management investment companies (``mutual 
funds'') \14\ and

[[Page 35443]]

public reporting companies to provide disclosures and communicate with 
investors using the Internet.\15\ Now, as part of our continuing 
efforts to assist filers as well as investors who use Commission 
disclosures, we propose to require that mutual fund risk/return summary 
information be provided in a format that makes the information 
interactive.
---------------------------------------------------------------------------

    \10\ 17 CFR 249.103 and 274.202.
    \11\ 17 CFR 249.104 and 274.203.
    \12\ 17 CFR 249.105.
    \13\ 17 CFR 239.500.
    \14\ An open-end management investment company is an investment 
company, other than a unit investment trust or face-amount 
certificate company, that offers for sale or has outstanding any 
redeemable security of which it is the issuer. See Sections 4 and 
5(a)(1) of the Investment Company Act [15 U.S.C. 80a-4 and 80a-
5(a)(1)].
    \15\ See, e.g. , Exchange Act Release No. 57172 (Jan. 18, 2008) 
[73 FR 4450 (Jan. 25, 2008)]; Securities Act Release No. 8861 (Nov. 
21, 2007) [72 FR 67790 (Nov. 30, 2007)] (``Summary Prospectus 
Proposing Release''); Exchange Act Release No. 56135 (July 26, 2007) 
[72 FR 42222 (Aug. 1, 2007)]; Exchange Act Release No. 55146 (Jan. 
22, 2007) [72 FR 4148 (Jan. 29, 2007)]; Securities Act Release No. 
8591 (July 19, 2005) [70 FR 44722 (Aug. 3, 2005)].
---------------------------------------------------------------------------

    Our proposal builds on our voluntary filer program, started in 
2005,\16\ that allowed us to evaluate the merits of interactive data. 
The voluntary program allows companies to submit financial statements 
on a supplemental basis in interactive format as exhibits to specified 
filings under the Securities Exchange Act of 1934 (``Exchange Act'') 
and the Investment Company Act.\17\ Over 75 companies have participated 
in the voluntary program. These companies span a wide range of 
industries and company characteristics, and have a total market 
capitalization of over $2 trillion. Companies that participate in the 
program still are required to file their financial statements in 
American Standard Code for Information Interchange (``ASCII'') or 
HyperText Markup Language (``HTML'').\18\
---------------------------------------------------------------------------

    \16\ Securities Act Release No. 8529 (Feb. 3, 2005) [70 FR 6556 
(Feb. 8, 2005)] (``Voluntary Program Adopting Release'').
    \17\ 15 U.S.C. 80a-1 et seq.
    \18\ HTML is a standardized language commonly used to present 
text and other information on Web sites.
---------------------------------------------------------------------------

    In 2007, we extended the program to enable mutual funds voluntarily 
to submit in interactive data format supplemental information contained 
in the risk/return summary section of their prospectuses.\19\ The risk/
return summary contains key information about a fund's investment 
objectives and strategies, costs, risks, and past performance.\20\ 
Approximately 20 mutual funds from a wide variety of fund families have 
submitted risk/return summary information in interactive format.
---------------------------------------------------------------------------

    \19\ Securities Act Release No. 8823 (July 11, 2007) [72 FR 
39290 (July 17, 2007)] (``Risk/Return Voluntary Program Adopting 
Release'').
    \20\ Items 2 and 3 of Form N-1A.
---------------------------------------------------------------------------

    In a recently issued release, we proposed to require companies, 
other than investment companies that are registered under the 
Investment Company Act, business development companies,\21\ and other 
entities that report under the Exchange Act and prepare their financial 
statements in accordance with Article 6 of Regulation S-X, to submit 
financial information to the Commission in interactive data format.\22\ 
In this release, we propose to extend similar requirements to mutual 
fund risk/return summary information.
---------------------------------------------------------------------------

    \21\ Business development companies are a category of closed-end 
investment companies that are not required to register under the 
Investment Company Act. 15 U.S.C. 80a-2(a)(48).
    \22\ See Interactive Data Proposing Release, supra note 8.
---------------------------------------------------------------------------

    The submission of mutual fund risk/return summary information based 
on interactive data would create new ways for investors, analysts, and 
others to retrieve and use the information. For example, users of risk/
return summary information could download cost and performance 
information directly into spreadsheets, analyze it using commercial 
off-the-shelf software, or use it within investment models in other 
software formats. Through interactive data, what is currently static, 
text-based information can be dynamically searched and analyzed, 
facilitating the comparison of mutual fund cost, performance, and other 
information across multiple classes of the same fund and across the 
more than 8,000 funds currently available.\23\
---------------------------------------------------------------------------

    \23\ Investment Company Institute, 2008 Investment Company Fact 
Book, at 15 (2008), available at: http://www.icifactbook.org/pdf/2007_factbook.pdf (as of year-end 2007, there were 8,752 mutual 
funds).
---------------------------------------------------------------------------

    Interactive data also could provide a significant opportunity to 
automate regulatory filings and business information processing, with 
the potential to increase the speed, accuracy, and usability of mutual 
fund disclosure. Such automation could eventually reduce costs. A 
mutual fund that uses a standardized interactive data format at earlier 
stages of its reporting cycle could reduce the need for repetitive data 
entry and, therefore, the likelihood of human error. In this way, 
interactive data may improve the quality of information while reducing 
its cost.
    Also, to the extent investors currently are required to pay for 
access to mutual fund risk/return summary information that has been 
extracted and reformatted into an interactive data format by third-
party sources, the availability of interactive data in Commission 
filings could allow investors to avoid additional costs associated with 
third-party sources.
    We believe that requiring mutual funds to file the risk/return 
summary section of their prospectuses using interactive data format 
would enable investors, analysts, and the Commission staff to capture 
and analyze that information more quickly and at less cost than is 
possible using the same information provided in a static format. Any 
investor with a computer would have the ability to acquire and download 
interactive data that have generally been available only to 
intermediaries and third-party analysts. The proposed interactive data 
requirements would not change what is currently disclosed, but would 
add a requirement to include risk/return summary information in a new 
format as an exhibit. Thus the proposal to require that filers provide 
risk/return summary information using interactive data will not alter 
the disclosure or formatting standards of mutual fund prospectuses, 
which would continue to be available as they are today for those who 
prefer to view the traditional text-based document.
    Throughout this release, we solicit comment on many issues 
concerning the use of interactive data, including specifically whether 
mutual fund risk/return summary information in interactive data format 
should be required as exhibits to Securities Act registration 
statements filed with us. We are seeking comment from investors, mutual 
funds, financial intermediaries, analysts, accountants, and any other 
parties or individuals who may be affected by the use of interactive 
disclosure in Commission filings, and any other members of the public.

B. Current Filing Technology and Interactive Data

    Companies filing electronically are required to file their 
registration statements and periodic reports in ASCII or HTML 
format.\24\ Also, to a limited degree, our electronic filing system 
uses other formats for internal processing and document-type 
identification. For example, our system uses eXtensible Markup Language 
(``XML'') to process reports of beneficial ownership of equity 
securities on Forms 3, 4, and 5 under section 16(a) of the Exchange 
Act.\25\
---------------------------------------------------------------------------

    \24\ Rule 301 of Regulation S-T [17 CFR 232.301] requires 
electronic filings to comply with the EDGAR Filer Manual, and 
Section 5.2 of the EDGAR Filer Manual requires that electronic 
filings be in ASCII or HTML format. Rule 104 of Regulation S-T [17 
CFR 232.104] permits filers to submit voluntarily as an adjunct to 
their official filings in ASCII or HTML unofficial PDF copies of 
filed documents. Unless otherwise stated, we refer to filings in 
ASCII or HTML as traditional format filings.
    \25\ 15 U.S.C. 78p(a).

---------------------------------------------------------------------------

[[Page 35444]]

    Electronic formats such as HTML, XML, and XBRL are open standards 
\26\ that define or ``tag'' data using standard definitions. The tags 
establish a consistent structure of identity and context. This 
consistent structure can be recognized and processed by a variety of 
different software applications. In the case of HTML, the standardized 
tags enable Web browsers to present Web sites' embedded text and 
information in predictable format. In the case of XBRL, software 
applications, such as databases, financial reporting systems, and 
spreadsheets, recognize and process tagged information.
---------------------------------------------------------------------------

    \26\ The term ``open standard'' is generally applied to 
technological specifications that are widely available to the 
public, royalty-free, at minimal or no cost.
---------------------------------------------------------------------------

    XBRL was derived from the XML standard. It was developed and 
continues to be supported by XBRL International, a collaborative 
consortium of approximately 550 organizations representing many 
elements of the financial reporting community worldwide in more than 20 
jurisdictions, national and regional. XBRL U.S., the international 
organization's U.S. jurisdiction representative, is a non-profit 
organization that includes companies, public accounting firms, software 
developers, filing agents, data aggregators, stock exchanges, 
regulators, financial services companies, and industry 
associations.\27\
---------------------------------------------------------------------------

    \27\ XBRL U.S. supports efforts to promote interactive financial 
and business data specific to the U.S.
---------------------------------------------------------------------------

    Risk/return summary information in interactive format requires a 
standard list of tags. These tags are similar to definitions in an 
ordinary dictionary, and they cover a variety of concepts that can be 
read and understood by software applications. For the risk/return 
summary, a mutual fund would use the list of tags for risk/return 
summary information developed by the Investment Company Institute 
(``ICI'').\28\ This list of tags contains descriptive labels, 
authoritative references to Commission regulations where applicable, 
and other elements, all of which provide the contextual information 
necessary for interactive data \29\ to be recognized and processed by 
software.\30\
---------------------------------------------------------------------------

    \28\ Unless stated otherwise, when we refer to the ``list of 
tags for risk/return summary information'' we mean the interactive 
data taxonomy developed by the ICI, including any modifications. We 
anticipate entering into a contract to update the architecture of 
the taxonomy developed by the ICI and conform the taxonomy to any 
changes in the risk/return summary that we adopt pursuant to a 
pending rule proposal. See Summary Prospectus Proposing Release, 
supra note 15.
    The ICI is a national association of the U.S. investment company 
industry. The taxonomy developed by the ICI received acknowledgement 
from XBRL International in June 2007 and is used by mutual funds 
participating in the Commission's voluntary program. The taxonomy is 
available on XBRL International's Web site at: http://www.xbrl.org/Taxonomy/ici/ici-rr-summarydocument-20070516-acknowledged.htm.
    \29\ The proposed rules would define the interactive data 
necessary to create human-readable disclosure as the ``interactive 
data file,'' which would be required with every interactive data 
submission. See Interactive Data Proposing Release, supra note 8 
(proposing new definitions under 17 CFR 232.11). The EDGAR Filer 
Manual would identify any necessary supporting files.
    \30\ For example, contextual information would identify the 
entity to which it relates, usually by using the filer's CIK number. 
A hypothetical filer converting its traditional electronic 
disclosure of total annual fund operating expenses of 0.73% would 
have to create interactive data that identify what the 0.73% 
represents, total annual fund operating expenses, and that the 
number is a percentage. The contextual information would include 
other information as necessary; for example, the date of the 
prospectus to which it relates and the series and class to which it 
applies.
    A mutual fund may issue multiple ``series'' of shares, each of 
which is preferred over all other series in respect of assets 
specifically allocated to that series. Rule 18f-2 under the 
Investment Company Act [17 CFR 270.18f-2]. Each series is, in 
effect, a separate investment portfolio.
    A mutual fund may issue more than one class of shares that 
represent interests in the same portfolio of securities with each 
class, among other things, having a different arrangement for 
shareholder services or the distribution of securities, or both. 
Rule 18f-3 under the Investment Company Act [17 CFR 270.18f-3].
---------------------------------------------------------------------------

    To apply data tags to risk/return summary information, a preparer 
uses commercially available software that guides the preparer in 
mapping information in the risk/return summary, such as line item costs 
in a mutual fund's fee table, to the appropriate tags in the standard 
list. This involves locating an element in the list of tags that 
represents the particular disclosure that is to be tagged. 
Occasionally, because mutual funds have some flexibility in preparing 
the risk/return summary, particularly the narrative portions, it is 
possible that a mutual fund may wish to use a non-standard disclosure 
that is not included in the standard list of tags. In this situation, a 
fund would create a company-specific element, called an extension.
    A mutual fund may choose to tag its own risk/return summary using 
commercially available software, or it may choose instead to outsource 
the tagging process. In the event a mutual fund relies upon a service 
provider to tag the fund's risk/return summary, the mutual fund would 
want to carefully review the tagging done by the service provider in 
order to make sure that the tagged risk/return summary information is 
accurate and consistent with the information the mutual fund presents 
in its traditional format filing.
    Because mutual fund risk/return summary information in interactive 
data format, referred to as the interactive data file, is intended to 
be processed by software applications, the unprocessed interactive data 
is not readable. Thus, viewers are necessary to convert the interactive 
data file to human readable format. Some viewers are similar to Web 
browsers used to read HTML files.
    The Commission's Web site currently provides links to four viewers 
that allow the public to easily read mutual fund and other company 
disclosures submitted using interactive data.\31\ One of these viewers 
allows users to view and compare mutual fund risk/return summary 
information, including investment objectives and strategies, risks, 
costs, and performance, that is submitted in interactive data 
format.\32\ These viewers demonstrate the capability of downloading 
interactive data into software such as Microsoft Excel as well as into 
other applications that are widely available on the Internet. In 
addition, we are aware of other applications under development that may 
provide additional and advanced functionality.
---------------------------------------------------------------------------

    \31\ See viewers available at http://www.sec.gov/xbrl.
    \32\ A mutual fund information viewer for the voluntary program 
is available at: http://a.viewerprototype1.com/viewer.
---------------------------------------------------------------------------

C. The Commission's Multiyear Evaluation of Interactive Data and 
Overview of Proposed Rules

    In 2004, we began assessing the benefits of interactive data and 
its potential for improving the timeliness and accuracy of financial 
disclosure and analysis of Commission filings.\33\ As part of this 
evaluation, we adopted rules in 2005 permitting filers, on a voluntary 
basis, to provide financial disclosure in interactive data format as an 
exhibit to certain filings on our electronic filing system. After more 
than two years of increasing participation, over 75 companies have 
chosen to provide interactive data financial reporting.\34\
---------------------------------------------------------------------------

    \33\ See SEC Announces Initiative to Assess Benefits of Tagged 
Data in Commission Filings, Securities and Exchange Commission Press 
Release, July 22, 2004, available at: http://www.sec.gov/news/press/2004-97.htm.
    \34\ A viewer for this interactive data is available at: http://www.sec.gov/spotlight/xbrl/xbrlwebapp.shtml. This viewer, one of 
several funded by the Commission to demonstrate interactive data, 
maintains a running total of companies and filers submitting data as 
part of the voluntary program. As of April 17, 2008, 78 companies 
had submitted 350 interactive data reports.
---------------------------------------------------------------------------

    In 2007, we extended the program to enable mutual funds voluntarily 
to submit risk/return summary information in interactive data format. 
To date,

[[Page 35445]]

approximately 20 mutual funds have chosen to provide interactive data 
risk/return summaries.\35\
---------------------------------------------------------------------------

    \35\ The mutual fund information viewer contains all mutual fund 
submissions under the voluntary program. As of May 1, 2008, 21 
mutual funds had submitted 33 interactive data reports.
---------------------------------------------------------------------------

    During this time, we have kept informed of technology advances and 
other interactive data developments. We note that several U.S. and 
foreign regulators have begun to incorporate interactive data into 
their financial reporting systems. The Federal Deposit Insurance 
Corporation (``FDIC''), the Federal Reserve, and the Office of the 
Comptroller of the Currency (``OCC'') require the use of XBRL.\36\ As 
of 2006, approximately 8,200 U.S. financial institutions were using 
XBRL to submit quarterly reports to banking regulators.\37\ Countries 
that have required or instituted voluntary or pilot programs for XBRL 
financial reporting include Australia, Belgium, Canada, China, Denmark, 
France, Germany, Ireland, Israel, Japan, Korea, Luxembourg, the 
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Thailand, 
and the United Kingdom.\38\
---------------------------------------------------------------------------

    \36\ Since 2005, the FDIC, Federal Reserve, and the OCC have 
required the insured institutions that they oversee to file their 
quarterly Consolidated Reports of Condition and Income (called 
``Call Reports'') in interactive data format using XBRL. Call 
Reports, which include data about an institution's balance sheet and 
income statement, are used by these federal agencies to assess the 
financial health and risk profile of the financial institution.
    \37\ See Improved Business Process Through XBRL: A Use Case for 
Business Reporting, available at http://www.xbrl.org/us/us/FFIEC%20White%20Paper%2002Feb2006.pdf.
    \38\ See XBRL International Progress Report (November 2007), 
available at http://www.xbrl.org/ProgressReports/2007_11_XBRL_Progress_Report.pdf.
---------------------------------------------------------------------------

    We also have kept informed of relevant advances and developments by 
hosting roundtables on the topic of interactive data reporting,\39\ 
creating the Commission's Office of Interactive Disclosure,\40\ and 
meeting with international securities regulators to discuss, among 
other items, timetables for implementation of interactive data 
initiatives for financial reporting.\41\ Also, staff of the Commission 
have attended meetings of the Advisory Committee on Improvements to 
Financial Reporting (``CIFiR'') in which the committee discussed 
proposals for financial reporting using interactive data.\42\ We also 
have reviewed written statements and public comments received by CIFiR 
on its XBRL developed proposal.\43\
---------------------------------------------------------------------------

    \39\ See materials available at http://www.sec.gov/spotlight/xbrl/xbrl-meetings.shtml.
    \40\ See SEC Announces New Unit to Lead Global Move to 
Interactive Data, Securities and Exchange Commission Press Release, 
October 9, 2007, available at: http://www.sec.gov/news/press/2007/2007-213.htm.
    \41\ See Chairman Cox, Overseas Counterparts Meet to Discuss 
Interactive Data Timetable, Securities and Exchange Commission Press 
Release, November 9, 2007, available at: http://www.sec.gov/news/press/2007/2007-227.htm.
    \42\ The Commission established CIFiR to examine the U.S. 
financial reporting system, with the goals of reducing unnecessary 
complexity and making information more useful and understandable for 
investors. See SEC Establishes Advisory Committee to Make U.S. 
Financial Reporting System More User-Friendly for Investors, 
Securities and Exchange Commission Press Release, June 27, 2007, 
available at http://www.sec.gov/news/press/2007/2007-123.htm.
    CIFiR conducted an open meeting on March 14, 2008, in which it 
heard reactions from an invited panel of participants to CIFiR's 
developed proposal regarding required filing of financial 
information using interactive data. An archived Webcast of the 
meeting is available at http://sec.gov/about/offices/oca/cifir.shtml. The March 14, 2008 panelists presented their views and 
engaged with CIFiR members regarding issues relating to requiring 
interactive data tagged financial statements, including tag list and 
technological developments, implications for large and small public 
companies, needs of investors, necessity of assurance and 
verification of such tagged financial statements, and legal 
implications arising from such tagging. Also, CIFiR has provided to 
the Commission an interim progress report that contains a developed 
proposal that the Commission, over the long term, require the filing 
of financial information using interactive data once specified 
conditions are satisfied. See Progress Report of the Advisory 
Committee on Improvements to the Financial Reporting to the United 
States Securities and Exchange Commission (Feb. 14, 2008) 
(``Progress Report''), available at http://www.sec.gov/about/offices/oca/acifr/acifr-pr-021408-final.pdf.
    \43\ The XBRL developed proposal appears in chapter 4 of the 
Progress Report. Written statements of panelists at the March 14, 
2008 meeting and public comments received on the Progress Report are 
available at http://sec.gov/comments/265-24/265-24.shtml.
---------------------------------------------------------------------------

    Building on our experience monitoring the voluntary program and our 
participation in the other initiatives described above, we are now 
proposing rules to require mutual funds to provide risk/return summary 
information using interactive data as an exhibit to their registration 
statements filed on Form N-1A.\44\ Interactive data would be required 
to be provided on a mutual fund's Web site \45\ and with the fund's 
Securities Act registration statements and post-effective amendments 
thereto.\46\ We believe this has the potential to provide advantages 
for the investing public by making risk/return summary information more 
accessible, timely, inexpensive, and easier to analyze.
---------------------------------------------------------------------------

    \44\ Form N-1A is the form used by mutual funds to register 
under the Investment Company Act and to offer securities under the 
Securities Act.
    \45\ The proposed Web site posting requirement would apply only 
to the extent a mutual fund already maintains a Web site.
    \46\ Interactive data would be required as an exhibit to a 
Securities Act registration statement or post-effective amendment 
thereto that contains risk/return summary information. Interactive 
data would not be required as an exhibit to a post-effective 
amendment that does not contain risk/return summary information.
---------------------------------------------------------------------------

    By enabling mutual funds to further automate their disclosure 
processes, interactive data may eventually help funds improve the speed 
at which they generate information, while reducing the cost of filing 
and potentially increasing the accuracy of the data. For example, with 
standardized interactive data tags, registration statements may require 
less time for information gathering and review. Also, standardized 
interactive data tagging may enhance the ability of a fund's in-house 
professionals to identify and correct errors in the fund's registration 
statements filed in traditional electronic format. Mutual funds also 
may gain benefits not directly related to risk/return summary 
information disclosures. For example, mutual fund families that use 
interactive data may be able to compile information more quickly and 
potentially more reliably both for internal purposes and for 
communications with financial intermediaries, third party information 
providers, and the public. However, we recognize that at the outset, 
mutual funds would most likely prepare their interactive data as an 
additional step after their prospectuses have been prepared.
    The principal elements of the proposal are as follows:
     Mutual funds would provide to the Commission a new exhibit 
with their risk/return summary information in interactive data format, 
beginning with initial registration statements, and post-effective 
amendments that are annual updates to effective registration 
statements, that become effective after December 31, 2009.\47\
---------------------------------------------------------------------------

    \47\ The proposed schedule is premised on the rules being 
adopted this fall in time for mutual funds to implement this 
schedule, and could be adjusted depending on when the Commission 
adopts any final rules.
---------------------------------------------------------------------------

     Mutual funds providing risk/return summary information in 
interactive data format would be required to use the most recent list 
of tags released by XBRL U.S. as required by the EDGAR Filer Manual. 
Mutual funds also would be required to tag a limited number of document 
and entity identifier elements, such as the form type and the fund's 
name. As with interactive data for the risk/return summary, these 
document and entity identifier elements would be formatted using the 
appropriate list of tags as required by the EDGAR Filer Manual.\48\
---------------------------------------------------------------------------

    \48\ The appropriate list of tags for document and entity 
identifier elements would be a list released by XBRL U.S. and would 
be required to be used by all issuers required to submit interactive 
data.

---------------------------------------------------------------------------

[[Page 35446]]

     A mutual fund required to provide risk/return summary 
information in interactive data format to the Commission also would be 
required to post that information in interactive data format on its Web 
site on the earlier of the date that the interactive data is submitted 
to the Commission or is required to be submitted to the Commission.
     The proposed rules would not alter the requirements to 
provide risk/return summary information with the traditional format 
filings.\49\
---------------------------------------------------------------------------

    \49\ When we extended the voluntary program to the mutual fund 
risk/return summary, we stated in the adopting release that the 
interactive data submission would be supplemental to filings and not 
replace the required traditional electronic format of the 
information it contains. We also said that volunteers would be 
required to continue to file their traditional electronic filings. 
See Part II.A. of the Risk/Return Voluntary Program Adopting 
Release, supra note 19, 72 FR at 39292.
---------------------------------------------------------------------------

     Risk/return summary information in interactive data format 
would be provided as exhibits identified in General Instruction C.3.(g) 
of Form N-1A.
     Viewable interactive data as displayed through software 
available on the Commission's Web site, and to the extent identical in 
all material respects to the corresponding portion of the traditional 
format filing, would be subject to all the same liability provisions of 
the federal securities laws as the corresponding data in the 
traditional format filing.
     Data in the interactive data file submitted to us 
generally would be subject to the federal securities laws in a manner 
similar to that of the voluntary program and, as a result, would be
    [cir] Deemed not filed for purposes of specified liability 
provisions; and
    [cir] Protected from liability for failure to comply with the 
proposed tagging and related requirements if the interactive data file 
either
    [squf] Met the requirements; or
    [squf] Failed to meet those requirements, but the failure occurred 
despite the mutual fund's good faith and reasonable effort, and the 
mutual fund corrected the failure as soon as reasonably practicable 
after becoming aware of it.
     The proposed rules would require the risk/return summary 
information and document and entity identifier elements to be tagged 
according to Regulation S-T and the EDGAR Filer Manual.\50\
---------------------------------------------------------------------------

    \50\ Proposed Rule 405 of Regulation S-T would directly set 
forth the basic tagging requirements and indirectly set forth the 
rest of the tagging requirements through the requirement to comply 
with the EDGAR Filer Manual. Consistent with proposed Rule 405, the 
Filer Manual would contain the technical tagging requirements. See 
Interactive Data Proposing Release, supra note 8 (proposing Rule 405 
of Regulation S-T).
---------------------------------------------------------------------------

     Each interactive data submission would be required to be 
filed as a post-effective amendment under Rule 485(b) under the 
Securities Act \51\ and would be required to be filed after 
effectiveness of the related filing, but no later than 15 business days 
after the effective date of the related filing.
---------------------------------------------------------------------------

    \51\ Rule 485(b) under the Securities Act provides for immediate 
effectiveness of amendments to registration statements that make 
certain non-material and other changes.
---------------------------------------------------------------------------

     If a mutual fund does not submit or post interactive data 
as required, the fund's ability to file post-effective amendments to 
its registration statement under Rule 485(b) under the Securities Act 
would be automatically suspended until the fund submits and posts the 
interactive data as required.
     We anticipate that the voluntary program would be 
modified, if the proposed rules are adopted, to exclude participation 
by mutual funds with respect to risk/return summary information but 
continue to permit investment companies to participate with respect to 
financial statement information. As a result, the voluntary program 
would continue for the financial statements of investment companies 
that are registered under the Investment Company Act, business 
development companies, and other entities that report under the 
Exchange Act and prepare their financial statements in accordance with 
Article 6 of Regulation S-X.
     Registered investment companies, business development 
companies, and other entities that report under the Exchange Act and 
prepare their financial statements in accordance with Article 6 of 
Regulation S-X would be permitted to submit exhibits under the 
voluntary program containing a tagged schedule of portfolio holdings 
without having to submit other financial information in interactive 
data format.

II. Discussion of the Proposed Amendments

A. Submission of Risk/Return Summary Information Using Interactive Data

    The ICI's risk/return summary list of tags received acknowledgement 
from XBRL International in June 2007.\52\ The Commission anticipates 
entering into a contract to update the architecture of the list of tags 
and conform the list of tags to any changes in the risk/return summary 
that we adopt pursuant to a pending rule proposal.\53\
---------------------------------------------------------------------------

    \52\ The list of tags is available on XBRL International's Web 
site at: http://www.xbrl.org/Taxonomy/ici/ici-rr-summarydocument-20070516-acknowledged.htm.
    There are two levels of XBRL taxonomy recognition: (1) 
``Acknowledgement'' is formal recognition that a taxonomy complies 
with XBRL specifications, including testing by a defined set of 
validation tools; and (2) ``approval'' is a formal recognition 
requiring more detailed quality assurance and testing, including 
compliance with official XBRL guidelines for the type of taxonomy 
under review, creation of a number of instance documents, and an 
open review period after acknowledgement. For more information 
regarding the XBRL taxonomy recognition process, see ``Taxonomy 
Recognition Process'' on the XBRL International Web site available 
at: http://www.xbrl.org/TaxonomyRecognition/.
    \53\ See Summary Prospectus Proposing Release, supra note 15.
---------------------------------------------------------------------------

    Interactive data risk/return summary information using the list of 
tags for risk/return summary information has been submitted voluntarily 
to us by approximately 20 mutual funds. In recent years, there has been 
a growing development of software products for users of interactive 
data, as well as of applications to assist companies, including mutual 
funds, to tag their disclosures using interactive data.\54\ The growing 
number of software applications available to preparers and consumers is 
helping make interactive data increasingly useful to both retail and 
institutional investors, as well as to other participants in the U.S. 
and global capital markets. On this basis, we believe interactive data, 
and in particular the XBRL standard, have become widespread and that 
the list of tags for risk/return summary information is now 
sufficiently advanced to require that mutual funds provide their risk/
return summary information in interactive data format.
---------------------------------------------------------------------------

    \54\ See SEC's Office of Interactive Disclosure Urges Public 
Comment as Interactive Data Moves Closer to Reality for Investors, 
Securities and Exchange Commission Press Release, Dec. 5, 2007, 
available at: http://www.sec.gov/news/press/2007/2007-253.htm. A 
list of interactive data products and service providers is available 
at: http://xbrl.us/Vendors/Pages/default-expand.aspx.
---------------------------------------------------------------------------

    As discussed in more detail below, our proposed rules would require 
all mutual funds to submit interactive data with any registration 
statement or post-effective amendment on Form N-1A that includes or 
amends risk/return summary information.\55\ We anticipate that the 
first required submissions would be for initial registration statements 
and post-effective amendments that are annual updates to effective 
registration statements and that become effective after December 31, 
2009.
---------------------------------------------------------------------------

    \55\ See proposed General Instruction C.3.(g) to Form N-1A.
---------------------------------------------------------------------------

    We are proposing that mutual funds be required to provide the same 
risk/return summary information in interactive data format that mutual

[[Page 35447]]

funds have been providing in the voluntary program.\56\ In addition, 
funds would be required to provide document and entity identifier tags, 
such as the form type and the fund's name. As was the case in the 
voluntary program, the proposed requirement for interactive data 
reporting is intended to be disclosure neutral. We do not intend the 
rules to result in mutual funds providing more, less, or different 
disclosure for a given disclosure item depending upon the format, 
whether ASCII, HTML, or XBRL.
---------------------------------------------------------------------------

    \56\ See proposed General Instruction C.3.(g) to Form N-1A.
---------------------------------------------------------------------------

    We propose to continue requiring the existing electronic formats 
now used in filings because we believe it is necessary to monitor the 
usefulness of interactive data reporting to investors and the cost and 
ease of providing interactive data before attempting further 
integration of the interactive data format. However, the proposed rules 
would treat viewable interactive data as displayed through software 
available on the Commission's Web site, and interactive data 
generally,\57\ as part of the official filing, instead of a supplement 
as is the case in the voluntary program. Further evaluation will be 
useful with respect to the availability of inexpensive, sophisticated 
interactive data viewers. Currently there are many software providers 
and financial printers that are developing interactive data viewers. We 
anticipate that these will become widely available and increasingly 
useful to investors.
---------------------------------------------------------------------------

    \57\ As further discussed below in Part II.F, interactive data 
generally would be deemed not filed for purposes of specified 
liability provisions.
---------------------------------------------------------------------------

    We expect that the open standard feature of XBRL format will 
facilitate the development of applications and software, and that some 
of these applications may be made available to the public for free or 
at a relatively low cost. The expected continued improvement in this 
software would give the public increasingly useful ways to view and 
analyze mutual fund risk/return summary information. After evaluating 
the use of the new interactive data technologies, software, and list of 
tags, we may consider proposing rules to eliminate the filing of risk/
return summary information in ASCII or HTML format. Or we may consider 
proposing rules to require a filing format that integrates ASCII or 
HTML with XBRL.
    We believe XBRL is the appropriate interactive data format with 
which to supplement ASCII and HTML. Our experience with the voluntary 
program and feedback from company, audit, and software communities 
point to XBRL as the appropriate open standard for the purposes of this 
rule. As a derivative of the XML standard, XBRL data would be 
compatible with a wide range of open source and proprietary XBRL 
software applications. As discussed above, many XBRL-related products 
exist for analysts, investors, filers, and others to more easily create 
and compare disclosures; still others are in development, and that 
process would likely be hastened by mutual fund disclosure using 
interactive data. Comments on our 2004 concept release and proposed 
rules in 2004 and 2007 generally supported interactive data and XBRL in 
particular.\58\ Several other factors support our views regarding 
XBRL's broad and growing acceptance, internationally as well as in the 
U.S. For example, as noted above, in addition to the use of XBRL by 
other U.S. agencies,\59\ several foreign securities regulators have 
adopted voluntary or required XBRL financial reporting.\60\ We 
understand that several U.S. public and private companies use XBRL in 
connection with financial reporting or analysis.
---------------------------------------------------------------------------

    \58\ Securities Act Release No. 8497 (Sept. 27, 2004) [69 FR 
59111 (Oct. 1, 2004)] (``Concept Release''); Securities Act Release 
No. 8496 (Oct. 1, 2004) [69 FR 59094 (Oct. 1, 2004)]; Securities Act 
Release No. 8781 (Feb. 6, 2007) [72 FR 6676 (Feb. 12, 2007)]. See, 
e.g., letter from Deloitte & Touche LLP (Nov. 11, 2004) regarding 
the Voluntary Program Adopting Release, supra note 16; and letter 
from PR Newswire Association LLC (Nov. 11, 2004) regarding the 
Concept Release; and letters from Charles S. Hoffman (Feb. 10, 
2007); ICI (Mar. 14, 2007); NewRiver, Inc. (Mar. 14, 2007); 
PricewaterhouseCoopers LLP (Mar. 14, 2007); and Ayal Rosenthal (Mar. 
6, 2007) regarding extending the voluntary program to allow funds to 
submit tagged risk/return summaries.
    We also note that financial statement participants in the 
voluntary program provided positive feedback with respect to 
possible mandatory XBRL. For example, the vast majority of voluntary 
program participants that submitted responses and views to a 
questionnaire answered in the affirmative to the question ``Based on 
your experience to date, do you think it would be advisable for the 
Commission to continue to explore the feasibility and desirability 
of the use of interactive data on a more widespread and, possibly, 
mandated basis?'' See question V.f in the Interactive Data Voluntary 
Program Questionnaire available at http://www.sec.gov/cgi-bin/XBRL_Questionnaire.
    \59\ See note 36 above. Also we note CIFiR's support of XBRL as 
referenced above in Part I.C.
    \60\ For example, such countries include Canada, China, Israel, 
Japan, Korea, and Thailand.
---------------------------------------------------------------------------

    Request for Comment:
     Should we adopt rules that require each mutual fund's 
risk/return summary information to be provided in interactive data 
format? What are the principal factors that should be considered in 
making this decision? Is it useful to users of risk/return summary 
information to continue to have, in addition to interactive data, 
duplicate, human-readable risk/return summary information in ASCII or 
HTML format?
     What opportunities exist to improve the display of risk/
return summary information prepared using interactive data? How should 
these affect any continued requirement to file ASCII- or HTML-formatted 
risk/return summary information? For example, if the technology is 
sufficiently developed, should we propose rules to encourage or require 
a format that embeds interactive data tags in HTML so that risk/return 
summary information can be viewed in a browser? How should these affect 
any continued requirement to file ASCII- or HTML-formatted risk/return 
summary information? What obstacles exist to making such improvements 
in the display of XBRL information?
     Is it appropriate to require mutual funds to provide 
interactive data using XBRL? Alternatively, in place of such a 
requirement, should the Commission instead wait to see whether 
interactive data disclosure by mutual funds is voluntarily adopted? 
Without a requirement, would the development of products for producing 
and using interactive data from mutual funds meet the needs of 
investors, third party information providers, and others who seek 
interactive data? Would a large percentage of mutual funds provide 
interactive data voluntarily, and following the same standard, if not 
required to do so?
     If we do not adopt the proposed rules and instead wait to 
see whether mutual funds on their own expand their use of interactive 
data, would such data be less comparable among mutual funds? Is there a 
``network effect,'' such that interactive data would not be useful 
unless many or all mutual funds provide their risk/return summary 
information using interactive data? Would the development of software 
for retail investors to obtain and make use of such data be slowed 
without a requirement that mutual funds provide interactive data?
     What advantages are there to investors having the mutual 
fund responsible for preparing risk/return summary information in 
interactive data format, as opposed to a model in which third parties 
independently prepare the information in interactive format and charge 
a fee for it?
     Do commenters agree that compared to filings using ASCII 
and HTML, interactive data would require less manually-transferred 
data? If so, do commenters believe that the proposed rules would result 
in less human error and therefore contribute to reduced costs?

[[Page 35448]]

     If we require interactive data disclosure and the proposed 
rules result in more effective and efficient disclosure with reduced 
human error and cost, would fees charged by financial printers or other 
service providers be likely reduced to reflect such lower costs?
     If we adopt rules requiring interactive data disclosure of 
risk/return summary information, is the XBRL standard the one that we 
should use? Are any other standards becoming more widely used or 
otherwise superior to XBRL? What would the advantages of any such other 
standards be over XBRL?
     Is the XBRL format for interactive data sufficiently 
developed to require its use at this time? If not, what indicators 
should we use to determine when it has become sufficiently developed to 
require its use?
     Are vendors likely to develop and make commercially 
available software applications or Internet products that will be able 
to deliver the functionality of interactive data to retail investors?
     How important is it that many different types of viewers 
with varying levels of sophistication and functionality be available to 
investors? In addition to the free viewer provided on the SEC Web site, 
are there likely to be other such products available at low or no cost?
     If we require risk/return summary information in 
interactive data format, what are the principal challenges facing the 
eventual integration of such reporting with the current filing formats, 
ASCII and HTML, so that filing in all three formats would no longer be 
necessary?

B. Compliance Date

    The proposed rules would require all mutual funds to submit 
interactive data with any registration statement or post-effective 
amendment on Form N-1A that includes or amends risk/return summary 
information.\61\ If the rules are adopted by this fall, we anticipate 
that the first required submissions would be for initial registration 
statements and post-effective amendments that are annual updates to 
effective registration statements \62\ and that become effective after 
December 31, 2009. We are sensitive to concerns that undue expense and 
burden should not accompany the adoption of required interactive data 
reporting. We therefore propose limitations on liability applicable to 
the interactive data file, as well as a 15-business-day period for 
making interactive data submissions after effectiveness of the related 
filing.\63\
---------------------------------------------------------------------------

    \61\ See proposed General Instruction C.3.(g) to Form N-1A.
    \62\ Section 10(a)(3) of the Securities Act [15 U.S.C. 
77j(a)(3)] generally requires that when a prospectus is used more 
than nine months after the effective date of the registration 
statement, the information in the prospectus must be as of a date 
not more than sixteen months prior to such use. The effect of this 
provision is to require mutual funds to update their prospectuses 
annually to reflect current cost, performance, and other financial 
information. A mutual fund updates its registration statement by 
filing a post-effective amendment to the registration statement.
    \63\ We discuss more fully at Part II.F liability related to 
required submissions of interactive data in general and the 
continuation of some of the limitations on liability used in the 
voluntary program in particular.
---------------------------------------------------------------------------

    Mutual funds under the proposed rules would be required to convert 
their risk/return summary information into an interactive data file 
using the list of tags for risk/return summary information, as approved 
for use by the Commission.\64\ The submission also would be required to 
include any supporting files as prescribed by the EDGAR Filer Manual. 
Interactive data would be required for the entirety of the risk/return 
summary information, including information for all series and all 
classes.\65\
---------------------------------------------------------------------------

    \64\ See Interactive Data Proposing Release, supra note 8 
(proposing amendments to Rule 11 of Regulation S-T and proposing new 
Rule 405(a)) and proposed amendments to proposed Rule 405(a).
    \65\ Proposed General Instruction C.3.(g) of Form N-1A.
---------------------------------------------------------------------------

    As noted above, we anticipate deferring the requirement for 
submission of risk/return summary information in interactive data 
format for all mutual funds until after December 31, 2009. We also 
anticipate that the voluntary program, with its limitations on 
liability, will remain available to mutual funds until December 31, 
2009, for purposes of submitting risk/return summary information in 
interactive data format. We believe that this period of almost two 
years from now will give mutual funds, including those that have not 
previously participated in the voluntary program, adequate opportunity 
to test interactive data submissions so that they may be fully prepared 
to file risk/return summary information in interactive data format 
after December 31, 2009.
    Our multiyear experience with interactive data has helped us 
understand the extent to which a mutual fund would incur additional 
costs to create and submit its existing disclosures in interactive data 
format. Based on that experience, we believe that the process of 
converting a mutual fund's existing ASCII or HTML risk/return summary 
information into interactive data would not impose a significant burden 
or cost. Mutual funds could choose to tag their risk/return summary 
information using available software without using outside services or 
consultants; alternatively, they could rely on financial printers, 
consultants, and software companies for assistance, although they would 
retain ultimate responsibility for both their risk/return summary 
information and their tagged data. As discussed in more detail in the 
cost-benefit analysis below,\66\ we believe that the modest first-year 
costs for a mutual fund would decrease in subsequent periods. We also 
believe that these costs would be justified by interactive data's 
benefits.
---------------------------------------------------------------------------

    \66\ See Part V.
---------------------------------------------------------------------------

    We expect that most mutual funds that are part of smaller fund 
families, which generally are disproportionately affected by regulatory 
costs, also would be able to provide their risk/return summary 
information in interactive data format without undue effort or expense. 
While interactive data reporting involves changes in reporting 
procedures mostly in the initial reporting periods, we expect that 
these changes would provide efficiencies in future periods. As a 
result, there may be potential net savings to the mutual fund, 
particularly if interactive data become integrated into the mutual 
fund's disclosure process. While we recognize that requiring 
interactive data risk/return summary information would likely result in 
start-up expenses for smaller mutual fund families, we expect that both 
software and third-party services will be available to help meet the 
needs of smaller mutual fund families. We also intend that the delayed 
compliance date for all mutual funds would permit mutual funds that are 
part of smaller fund families to learn from the experience of funds 
that have participated in the voluntary program and to participate in 
the voluntary program themselves during the almost two-year period 
prior to December 31, 2009. The delayed compliance date would also give 
mutual funds that are part of smaller fund families a significant 
period of time across which to spread first-year data tagging costs.
    We believe that adopting a delayed compliance date of December 31, 
2009, would establish an appropriate and measured timeline, which we 
would be able to monitor and, if necessary, reconsider during the 
continuation of the voluntary program.
    Request for Comment:
     Is the proposed schedule for implementation of interactive 
data tagging appropriate?
     Should we advance the first required interactive data 
submission to be for filings that become effective after June 30, 2009, 
or some other date, rather

[[Page 35449]]

than December 31, 2009? Should we delay the first required interactive 
data submissions until, for example, 2011, 2012, or later? What 
benefits would there be to advancing or delaying implementation of the 
proposed rules? How much lead time do mutual funds need to familiarize 
themselves with interactive data and the process of mapping risk/return 
summary information using the list of tags for risk/return summary 
information?
     Should there be a phase-in to provide mutual funds with 
more time to become familiar with the list of tags for risk/return 
summary information and to encourage potential vendors of interactive 
data products and services to invest in the development and marketing 
of such products? If so, what should the phase-in dates be and what 
funds should be included in each phase? Should we differentiate funds 
based on net assets of the fund, the fund family, or on some other 
basis? Should we, for example, provide a more delayed compliance date 
for mutual funds that are small entities for purposes of the Regulatory 
Flexibility Act, i.e., funds that, together with other investment 
companies in the same group of related investment companies, have net 
assets of $50 million or less as of the end of their most recent fiscal 
year? If we provide a more delayed compliance date for smaller fund 
families, how should we define such a category?
     Is the proposed timing sufficient for mutual funds to 
familiarize themselves with interactive data and the process of mapping 
risk/return summary information using the list of tags for risk/return 
summary information? Is it sufficient for funds that are part of 
smaller fund families, e.g., funds that are small entities for purposes 
of the Regulatory Flexibility Act?
     Should there be a longer lag than proposed for mutual 
funds that are part of smaller fund families, e.g., funds that are 
small entities for purposes of the Regulatory Flexibility Act, to allow 
them to allocate the necessary resources and meet the proposed 
requirements?
     Should mutual funds that are part of smaller fund 
families, e.g., funds that are small entities for purposes of the 
Regulatory Flexibility Act, be subject to the proposed rules at all? 
Should compliance with the proposed rules be solely voluntary for those 
funds?
     Will the rule proposal and the anticipated December 31, 
2009 compliance date sufficiently encourage potential vendors of 
interactive data products and services to invest in the development and 
marketing of such products? If not, what changes should we make to 
encourage developments in the markets for filer and investor products 
related to mutual fund interactive data?

C. Documents and Information Covered by the Proposed Rules

    The proposed rules would require interactive data tagging of a 
mutual fund's risk/return summary information, which is currently 
provided in response to Items 2 and 3 of Form N-1A.\67\ In November 
2007, the Commission proposed to amend Form N-1A.\68\ The amendments, 
if adopted as proposed, would result in the risk/return summary 
information being contained in Items 2, 3, and 4 of Form N-1A. If the 
Commission adopts that proposal, we intend to apply any tagging rules 
we adopt to the items of amended Form N-1A that contain the information 
that is currently contained in Items 2 and 3.
---------------------------------------------------------------------------

    \67\ See proposed Rule 405(b)(2); General Instruction C.3.(g) to 
Form N-1A. We are also proposing technical amendments to proposed 
Rule 405 that reflect this proposed requirement.
    As previously noted, proposed Rule 405 of Regulation S-T would 
directly set forth the basic tagging requirements and indirectly set 
forth the rest of the tagging requirements through the requirement 
to comply with the EDGAR Filer Manual. Consistent with proposed Rule 
405, the EDGAR Filer Manual would contain the detailed tagging 
requirements.
    \68\ See Summary Prospectus Proposing Release, supra note 15, 72 
FR at 67817.
---------------------------------------------------------------------------

    As with the voluntary program, the proposed rules would require 
mutual funds to provide the interactive data in an exhibit.\69\ 
Interactive data would be required for all information in the risk/
return summary, including information for each series and class 
included in a mutual fund's prospectus.\70\ The proposed rules would 
not, however, require interactive data submissions for parts of Form N-
1A other than the risk/return summary information.
---------------------------------------------------------------------------

    \69\ See proposed General Instruction C.3.(g) to Form N-1A; 
proposed Rule 405(a). The Interactive Data File must be named ``EX-
101'' as specified in the EDGAR Filer Manual.
    \70\ See proposed General Instruction C.3.(g) to Form N-1A.
---------------------------------------------------------------------------

    As with the voluntary program, the proposed rules would require 
that the information contained in the risk/return summary section in 
the traditional format filing on Form N-1A be the same as in the 
interactive data format.\71\ Further, the interactive data would have 
to be submitted in a manner that would permit the information for each 
series and any class-specific information, such as expenses and 
performance, to be separately identified by series and class.\72\ 
However, information that is not class-specific, such as investment 
objectives, would not be required to be separately identified by class.
---------------------------------------------------------------------------

    \71\ Proposed Rule 405(b)(2).
    \72\ Proposed General Instruction C.3.(g) to Form N-1A.
---------------------------------------------------------------------------

    To clarify the intent of the rules, we propose to include an 
instruction to proposed Rule 405 of Regulation S-T stating that the 
rules require a disclosure format, but do not change substantive 
disclosure requirements.\73\ The rules also would state clearly that 
the information in interactive data format should not be more or less 
than the information in the ASCII or HTML part of the Form N-1A 
filing.\74\
---------------------------------------------------------------------------

    \73\ See Interactive Data Proposing Release, supra note 8 
(proposing Preliminary Note 2 to proposed Rule 405).
    \74\ Proposed Rule 405(b)(2).
---------------------------------------------------------------------------

    The proposed rules would not eliminate or alter existing filing 
requirements that risk/return summary information be filed in 
traditional format. We believe investors and other users may wish to 
use these electronic formats to obtain an electronic or printed copy of 
the entire registration statement, either in addition to or instead of 
disclosure formatted using interactive data. In addition, we propose to 
no longer require or permit the cautionary disclosure that is used in 
the voluntary program for required interactive data, which states that 
investors should not rely on the interactive data information in making 
investment decisions. We believe that such language would be 
inconsistent with the proposal that interactive data be part of the 
related registration statement.
    We are proposing to require a mutual fund to submit interactive 
data for the risk/return summary information that is contained in any 
filing on Form N-1A that includes or amends information provided in 
response to Items 2 and/or 3.\75\ This would include initial 
registration statements and any post-effective amendment that makes 
changes to the risk/return summary information.\76\
---------------------------------------------------------------------------

    \75\ Proposed General Instruction C.3.(g) to Form N-1A.
    \76\ Revised interactive data would be required with respect to 
post-effective amendments that make changes to the risk/return 
summary information so that the risk/return summary information 
would be the same in both the traditional format filing and the 
interactive data file. If the risk/return summary information is not 
revised in connection with a post-effective amendment, the exhibit 
index would indicate that the interactive data file was already 
provided.
---------------------------------------------------------------------------

    Request for Comment:
     Has the interactive information available through the 
voluntary program been useful? Should we require that more or less 
information be tagged? For example, should the entire risk/return 
summary section of Form N-1A, including the investment objective and

[[Page 35450]]

strategies, risks, costs, and performance information, be required to 
be tagged in interactive data format? Should we apply tagging 
requirements to both narrative information, such as investment 
objectives, and numerical information, such as costs?
     Would investors and other users of risk/return summary 
information find tagged risk/return information useful for analytical 
purposes? Is tagged risk/return summary information that is narrative, 
rather than numerical, useful as an analytical tool?
     Would the availability of interactive data-formatted risk/
return summary information possibly cause competitive pressures on 
mutual funds to choose to make more disclosures than are required by 
Commission regulations? Alternatively, might the availability of tagged 
data possibly cause mutual funds to choose to curtail such disclosures? 
What types of disclosures would those be?
     Once interactive data are provided with a Form N-1A 
filing, should we limit the requirement to provide interactive data for 
amendments to only the amendments that reflect substantive changes from 
or additions to the risk/return summary information? What would the 
benefits and burdens be of revising interactive data that previously 
was provided in connection with a registration statement on Form N-1A 
to reflect changes?
     Do the standards we propose for tagging provide clear 
enough guidance for preparers so that we can expect to achieve 
consistency among filers?
     Should we require that mutual funds tag their document and 
entity \77\ information? Would this information be useful in 
interactive data format?
---------------------------------------------------------------------------

    \77\ See supra note 48.
---------------------------------------------------------------------------

     Should we provide an opportunity for mutual funds to 
submit voluntarily in interactive data format information other than 
that which they would be required to submit as interactive data? If so, 
should we permit such interactive data format information to be subject 
to provisions governing the proposed required filing of interactive 
data? Should we instead permit such interactive data format information 
to be submitted under the voluntary program?
     If we adopt the recently proposed amendments to Form N-
1A,\78\ should we require interactive data format information for the 
risk/return summary? Should we require interactive data format 
information for any additional information contained in the proposed 
summary section of the prospectus? Should the information in the 
proposed summary prospectus be tagged? If so, should all of the 
information required in the summary prospectus be tagged? If not, what 
information in the summary prospectus should be tagged? Should only the 
risk/return information in the summary prospectus be tagged?
---------------------------------------------------------------------------

    \78\ See Summary Prospectus Proposing Release, supra note 15.
---------------------------------------------------------------------------

     When we proposed the summary prospectus, we proposed that 
mutual funds choosing to use a summary prospectus be required to 
provide the summary prospectus, the statutory prospectus, and the 
statement of additional information on the Internet with links that 
would allow persons to move back and forth among the documents.\79\ If 
we were to require information in the prospectus and/or the summary 
prospectus to be submitted in interactive data format, should we adopt 
as proposed or modify the proposed linking requirements? \80\
---------------------------------------------------------------------------

    \79\ See Summary Prospectus Proposing Release, supra note 15, 72 
FR at 67802-03.
    \80\ See Summary Prospectus Proposing Release, supra note 15, 72 
FR at 67803 and 67816 (Proposed Rule 498(f)(2)(ii) and (iii) under 
the Securities Act would require persons accessing documents on the 
Internet to be able to move back and forth between certain specified 
sections of the documents.).
---------------------------------------------------------------------------

     Should the proposed rules eliminate the requirement that 
the risk/return summary information be submitted in traditional format, 
in addition to interactive data format? Should cautionary language from 
the voluntary program be eliminated or modified and, if not, why not?
     Should the proposed rules apply to a prospectus filed 
under Securities Act Rule 497? \81\ If we require interactive data with 
filings that do not currently include exhibits, such as prospectus 
supplements, should we require that the interactive data be provided as 
schedules or exhibits?
---------------------------------------------------------------------------

    \81\ 17 CFR 230.497. Currently, Rule 497 prospectuses do not 
have a provision for exhibits, so additional EDGAR programming would 
be needed.
---------------------------------------------------------------------------

D. Filing Period

    Form N-1A filings, which contain mutual fund registration 
statements (or amendments thereto), are often subject to revision prior 
to effectiveness. For this reason, the proposed rules would not permit 
the submission of an interactive data exhibit that is related to a 
registration statement or a post-effective amendment that is not yet 
effective. More specifically, the proposed rules would provide that an 
interactive data exhibit to a Form N-1A filing, whether the filing is 
an initial registration statement or a post-effective amendment 
thereto, must be submitted as a post-effective amendment to the 
registration statement to which the interactive data relates. Under the 
proposal, the amendment, including the interactive data, must be 
submitted after the related filing becomes effective, but not later 
than 15 business days after the effective date of the related 
filing.\82\ Our proposal that the interactive data exhibit be filed 
within 15 business days is intended both to provide funds with adequate 
time to prepare the exhibit and to make the interactive data available 
promptly. An exhibit containing interactive data format risk/return 
summary information could be submitted under Rule 485(b) of the 
Securities Act, which provides for immediate effectiveness of 
amendments that make non-material changes, and would only need to 
contain the new exhibit, a facing page, a signature page, a cover 
letter explaining the nature of the amendment, and a revised exhibit 
index.
---------------------------------------------------------------------------

    \82\ Proposed General Instruction C.3.(g) of Form N-1A. This 
proposal differs from the voluntary program which does not impose a 
time limit for the filing of interactive data.
---------------------------------------------------------------------------

    Request for Comment:
     Should we require interactive data information to be 
submitted before effectiveness of the related filing, e.g. , at the 
same time that the related filing is made? Or should we, as proposed, 
require interactive data information to be provided only after the 
related filing becomes effective? If so, is 15 business days after the 
effective date of the related filing an appropriate time period for 
filing the interactive data? Should the time period be shorter or 
longer, e.g., 1 day, 5 days, 10 days, 20 days, 30 days? Would it be 
feasible and desirable to require interactive data to be submitted on 
the effective date of the related filing, either for filings that 
become effective automatically and/or for filings that are declared 
effective by the Commission staff? How would different requirements 
regarding the time of filing affect the usefulness of the interactive 
data, the ability of funds to file accurate interactive data, and the 
burdens of filing the data?

E. Web Site Posting of Interactive Data

    We believe interactive data, consistent with our proposed rules, 
should be easily accessible for all investors and other market 
participants. As such disclosure becomes more widely available, 
advances in interactive data software, online viewers, search engines, 
and other Web tools may in turn facilitate access and usability of the 
data. Encouraging widespread accessibility to mutual funds' risk/return 
summary information furthers

[[Page 35451]]

our mission to promote fair, orderly, and efficient markets, and 
facilitates capital formation. We believe Web site availability of the 
interactive data would encourage its widespread dissemination, thereby 
contributing to lower access costs for users. We therefore propose that 
each mutual fund be required to provide the same interactive data on 
its Web site, if it has one, that would be required to be provided to 
the Commission.\83\ The interactive data on a fund's Web site would be 
required by the end of the business day on the earlier of the date that 
the interactive data is submitted to the Commission or is required to 
be submitted to the Commission.\84\
---------------------------------------------------------------------------

    \83\ See proposed General Instruction C.3.(g) to Form N-1A.
    \84\ See Interactive Data Proposing Release, supra note 8 
(proposing Rule 405(f)); proposed Rule 405(a). Proposed Rule 405(a) 
requires posting to a ``corporate'' Web site. For mutual funds, this 
would require posting to the fund's Web site.
    The day the interactive data is submitted electronically to the 
Commission may not be the business day on which it was deemed 
officially filed. For example, a filing submitted after 5:30 p.m. 
generally is not deemed officially filed until the following 
business day. Under the proposed rules, the Web posting would be 
required to be posted at any time on the same day that the 
interactive data exhibit to a Form N-1A filing is deemed officially 
filed or required to be filed, whichever is earlier.
---------------------------------------------------------------------------

    We believe access to the interactive data on fund Web sites would 
enable search engines and other data aggregators to more quickly and 
cheaply aggregate the data and make them available to investors because 
the data would be available directly from the mutual fund, instead of 
through third-party sources that may charge a fee. To help further our 
goals of decreasing user cost and increasing availability, we do not 
propose to allow mutual funds to comply with the Web posting 
requirement by including a hyperlink to the documents available 
electronically on the Commission's Web site.
    We believe this requirement would be consistent with the increasing 
role that mutual fund Web sites perform in supplementing the 
information filed electronically with the Commission by delivering 
risk/return summary information and other disclosure directly to 
investors. For example, we recently proposed amendments that would 
permit a person to satisfy its mutual fund prospectus delivery 
obligations under the Securities Act by sending or giving the key 
information directly to investors in the form of a summary prospectus 
and providing the statutory prospectus on an Internet Web site.\85\ We 
also note that mutual funds may satisfy certain disclosure obligations 
by posting required disclosures on their Web sites.\86\ In addition, 
many mutual funds provide on their Web sites access to their 
prospectuses, statements of additional information, and other 
Commission filings.\87\ This proposal would expand such Web site 
posting by requiring mutual funds with Web sites to post their 
interactive data as well.
---------------------------------------------------------------------------

    \85\ See Summary Prospectus Proposing Release, supra note 15, 72 
FR at 67798-99.
    \86\ See, e.g., Securities Act Release No. 8458 (Aug. 23, 2004) 
[69 FR 52788 (Aug. 27, 2004)] (disclosure regarding portfolio 
managers); Securities Act Release No. 8408 (April 16, 2004) [69 FR 
22300 (April 23, 2004)] (disclosure regarding market timing and 
selective disclosure of portfolio holdings); Securities Act Release 
No. 8393 (Feb. 27, 2004) [69 FR 11244 (Mar. 9, 2004)] (shareholder 
reports and quarterly portfolio disclosure); Securities Act Release 
No. 8188 (Jan. 31, 2003) [68 FR 6564 (Feb. 7, 2003)] (disclosure of 
proxy voting policies and records); Exchange Act Release No. 47262 
(Jan. 27, 2003) [68 FR 5348 (Feb. 3, 2003)] (disclosure of code of 
ethics).
    \87\ Mutual funds filing registration statements are required to 
disclose whether or not they make available free of charge on or 
through their Web site, if they have one, their statement of 
additional information and shareholder reports. Funds that do not 
make their reports available in that manner also must disclose the 
reasons that they do not. See Item 1(b)(1) of Form N-1A.
---------------------------------------------------------------------------

    Request for Comment:
     Should we adopt rules that require each mutual fund to 
post interactive data from its risk/return summary on its Web site, if 
it has one?
     What advantages, if any, would dual Internet and EDGAR 
availability have for individual investors, other users, search 
engines, software developers, and others involved in the extraction and 
processing of risk/return summary data? Would it be helpful if our Web 
site provided the option to download the interactive data submission 
from our Web site or the mutual fund's Web site? Would it add a 
significant burden if a mutual fund were required to submit with its 
interactive data the URL that would link specifically to that 
interactive data as posted on the mutual fund's Web site or, 
alternatively, link to a part of the mutual fund's Web site from which 
there would be easy access to the interactive data as posted there? 
What would facilitate the realization of any advantages of Web site 
posting, for example, the use of a standardized URL for interactive 
data? Would a standardized URL add significant cost to posting?
     Instead of requiring Web site posting, should we require 
that mutual funds disclose in their prospectuses, registration 
statements, shareholder reports, or elsewhere whether or not they 
provide free access to their interactive data on their Web sites and, 
if not, why not?
     What impact would be realized by mutual funds that do not 
currently provide Web sites? Would the proposed rules affect whether 
mutual funds create or maintain Web sites?
     Would Web site posting decrease the time and cost required 
for aggregators of mutual fund disclosure, individual investors, and 
other users to access disclosure formatted using interactive data?
     If we require Web site posting of interactive data, as 
proposed, should we also require that the Web site include language 
stating that the entire registration statement also is available for 
free at the Commission's Web site?

F. Accuracy and Reliability of Interactive Data

1.Voluntary Program
    To help ensure the accuracy of interactive data in the voluntary 
program, the data has undergone validation upon receipt by our 
electronic filing system separate from the normal validation of the 
traditional format filing.\88\ Potential liability also helps ensure 
the accuracy and reliability of the data. Although the voluntary 
program has provided limited protections from liability under the 
federal securities laws,\89\ interactive data in the voluntary program 
are subject to the anti-fraud provisions of the federal securities 
laws. The voluntary program also encourages participants' efforts to 
create accurate and reliable interactive data that is the same as the 
corresponding disclosure in the traditional electronic format filing by 
providing that a participant is not liable for information in its 
interactive data that reflects the same information that appears in the 
corresponding portion of the traditional format filing, to the extent 
that the information in the corresponding portion of the traditional 
format filing was not materially false or misleading. To further 
encourage reasonable efforts to provide accurate interactive data, the 
voluntary program treats interactive data that do not reflect the same 
information as the official version as reflecting the official version 
if the volunteer meets several conditions. The volunteer must have made 
a good faith and reasonable attempt to reflect the same information as 
appears in the traditional format filing and, as soon as reasonably 
practicable after becoming aware of any difference, the volunteer must 
amend

[[Page 35452]]

the interactive data to cause them to reflect the same information.\90\
---------------------------------------------------------------------------

    \88\ If the traditional format filing meets its validation 
criteria, but any interactive data fail their own validation 
criteria, all interactive data are removed and the traditional 
format filing is accepted and disseminated without the interactive 
data file.
    \89\ Rule 402 of Regulation S-T provides these liability 
protections.
    \90\ 17 CFR 232.402(b).
---------------------------------------------------------------------------

2. Use of Technology to Detect Errors
    Complete, accurate, and reliable prospectus and other disclosures 
are essential to investors and the proper functioning of the securities 
markets. Our proposed requirement to submit interactive data with 
mutual fund registration statements is designed to provide investors 
with new tools to obtain, review, and analyze information from mutual 
funds more efficiently and effectively. To satisfy these goals, 
interactive data must meet investor expectations of reliability and 
accuracy. Many factors, including mutual fund policies and procedures 
buttressed by incentives provided by the application of technology by 
the Commission, market forces, and the liability provisions of the 
federal securities laws, help further those goals.
    Building on the validation criteria referenced above for 
interactive data in the voluntary program, we plan to use validation 
software to check interactive data for compliance with many of the 
applicable technical requirements and to help the Commission identify 
data that may be problematic. For example, we expect the validation 
software to:
     Check if required conventions (such as the use of angle 
brackets to separate data) are applied properly for standard and, in 
particular, non-standard special labels and tags;
     Identify, count, and provide the staff with easy access to 
non-standard special labels and tags; \91\
---------------------------------------------------------------------------

    \91\ For example, if a mutual fund uses the words ``redemption 
fees'' as the caption for a value data tagged as ``exchange fees,'' 
the software could flag the filing and bring it to the staff's 
attention.
---------------------------------------------------------------------------

     Identify the use of practices, including some the XBRL 
U.S. Preparers Guide contains, that enhance usability; \92\
---------------------------------------------------------------------------

    \92\ The XBRL U.S. Preparers Guide, available from the XBRL U.S. 
Web site, would provide guidance to facilitate preparing information 
in the interactive data format that we propose to require.
---------------------------------------------------------------------------

     Facilitate comparison of interactive data with disclosure 
in the corresponding traditional format data in the official filing;
     Check for mathematical errors; and
     Analyze the way that mutual funds explain how particular 
facts relate to one another.\93\
---------------------------------------------------------------------------

    \93\ The technology used to show these relationships is known as 
a ``linkbase.''
---------------------------------------------------------------------------

    The availability of interactive data to the staff may also enhance 
its review of mutual fund filings. After the FDIC required submission 
of interactive data, it reported that its analysts were able to 
increase the number of banks they reviewed by 10% to 33%, and that the 
number of bank reports that failed to fully meet filing requirements 
fell from 30% to 0%. These bank reports require information that is 
more structured and less varied than the information we would require. 
As a result, the FDIC's efficiency gains from the use of interactive 
data likely would be greater than ours.
    We believe analysts, individual investors, and others outside the 
Commission that use the interactive data submitted to us also will make 
use of software and other tools to evaluate the interactive data and, 
as a result, market forces will encourage mutual funds to provide 
interactive data that accurately reflects the corresponding traditional 
format data in the traditional format filing. For example, the use of 
non-standard labels or tags (extensions) could introduce errors, but we 
expect the open source and public nature of interactive data and the 
list of tags for risk/return summary information would enable software 
easily to detect and identify any modifications or additions to the 
approved list of tags. We believe such software and other technology 
will be widely available for free or at reasonable cost. Investors, 
analysts, and other users therefore would be able to identify the 
existence and evaluate the validity of any such modifications or 
additions. We also anticipate that mutual funds preparing their 
interactive data and investors, analysts, and other users would use 
such devices to search for and detect any changes made to the standard 
list of tags. Because analysts and other users would rapidly discover 
mistakes or alterations not consistent with the desired use of 
interactive data, mutual funds would have a powerful incentive to 
prepare such data with care and promptly to correct any errors.
    With this proposal, we seek the rapid adoption and use of 
interactive data without imposing unnecessary cost and expense on 
mutual funds. We therefore propose that the interactive data itself 
provided to us generally would be subject to a liability regime under 
the federal securities laws similar to that governing the voluntary 
program. We also propose that viewable interactive data \94\ as 
displayed through software available on the Commission's Web site, as 
described above and further discussed below, would be subject to the 
same liability under the federal securities laws as the corresponding 
portions of the traditional format filing.\95\
---------------------------------------------------------------------------

    \94\ Proposed Rule 11 of Regulation S-T would define viewable 
interactive data as ``Interactive Data in Viewable Form.'' See 
Interactive Data Proposing Release, supra note 8 (proposing Rule 11 
of Regulation S-T). We are proposing technical amendments to include 
references to risk/return summary information in the definition.
    \95\ Proposed Rule 406 of Regulation S-T would set forth the 
liability applicable to interactive data and viewable interactive 
data that is displayed through software available on the 
Commission's Web site. Proposed Rule 406 also would clarify that 
disclosures in the traditional format part of an official filing on 
Form N-1A that contains the information corresponding to the 
interactive data remain subject to the federal securities laws as in 
the past and that nothing in proposed Rule 405 of Regulation S-T 
(setting forth content, format, and other requirements related to 
interactive data) or proposed Rule 406 would affect the liability 
otherwise applicable to the traditional format data. We are not 
proposing to modify proposed Rule 406 as set forth in our recently 
issued release. See Interactive Data Proposing Release, supra note 8 
(proposing Rule 406 of Regulation S-T).
---------------------------------------------------------------------------

    Interactive data would be subject to the following liability-
related provisions:
     Deemed not filed or part of a registration statement or 
prospectus for purposes of sections 11 and 12 of the Securities Act;
     Deemed not filed for purposes of section 18 of the 
Exchange Act and section 34(b) of the Investment Company Act;
     Not otherwise subject to the liabilities of these 
sections;
     Subject to other liability under these Acts for the 
substantive content of the risk/return summary disclosures (as distinct 
from compliance with proposed Rule 405) in the same way and to the same 
extent as the corresponding information in the related traditional 
format official filing.\96\ The content of the risk/return summary 
disclosures refers, for example, to the investment objectives and 
strategies, costs, risks, and past performance. The Rule 405 
requirements generally refer to the process of tagging and formatting 
the content of the risk/return summary for the interactive data file;
---------------------------------------------------------------------------

    \96\ Proposed Rule 11 of Regulation S-T would define ``Related 
Official Filing.'' See Interactive Data Proposing Release, supra 
note 8 (proposing amendments to Rule 11 of Regulation S-T). We are 
proposing technical amendments to the definition.
---------------------------------------------------------------------------

     Deemed filed for purposes of (and, as a result, benefit 
from) Rule 103 of Regulation S-T; \97\ and
---------------------------------------------------------------------------

    \97\ The viewed data would be deemed filed for purposes of Rule 
103 of Regulation S-T [17 CFR 232.103] and, as a result, in general, 
the mutual fund would not be subject to liability for electronic 
transmission errors beyond its control if the mutual fund corrects 
the problem through an amendment as soon as reasonably practicable 
after the fund becomes aware of the problem.
---------------------------------------------------------------------------

     Protected from liability under these Acts for failure to 
comply with the requirements of proposed Rule 405 if the interactive 
data either:
    [cir] Met the requirements of proposed Rule 405 of Regulation S-T; 
or
    [cir] Failed to meet those requirements but the failure occurred 
despite the

[[Page 35453]]

mutual fund's good faith and reasonable effort and the mutual fund 
corrected the failure as soon as reasonably practicable after becoming 
aware of it.
    None of the proposed liability-related provisions for interactive 
data submitted to the Commission, however, would affect the application 
of the anti-fraud provisions under the federal securities laws, whether 
the interactive data is submitted to the Commission or posted on a 
fund's Web site.
    Rule 405 is being proposed, in part, under the Commission's 
authority to specify information required to be submitted to the 
Commission in registration statements. To encourage accurate filing of 
interactive data without fear of making good faith errors, the 
Commission is proposing Rule 406.\98\ Although not expressly addressed 
in proposed Rule 406, the Commission would have the authority to 
enforce compliance with proposed Rule 405 because it has the authority 
to enforce compliance with any of its rules.
---------------------------------------------------------------------------

    \98\ See Interactive Data Proposing Release, supra note 8 
(proposing Rule 406).
---------------------------------------------------------------------------

    We believe these liability-related provisions strike an appropriate 
balance between avoiding unnecessary cost and expense and encouraging 
accuracy in light of the nature of the interactive data to which they 
apply and the additional accuracy incentives that may be provided by 
our validation software and market forces.
    Other aspects of the proposal would supplement the Commission's 
objective of supplying reliable and accurate information to investors. 
First, the risk/return summary information and other disclosures in the 
traditional format related official filing to which the interactive 
data relate would continue to be subject to the usual liability 
provisions of the federal securities laws. For example, the traditional 
format related official filing would continue to be subject to section 
10(b) and Rule 10b-5 \99\ of the Exchange Act and, in the appropriate 
circumstance, to section 11 of the Securities Act.
---------------------------------------------------------------------------

    \99\ 17 CFR 240.10b-5.
---------------------------------------------------------------------------

    Second, we propose that the usual liability provisions of the 
federal securities laws also would apply to human-readable interactive 
data that is identical in all material respects to the corresponding 
data in the traditional format filing \100\ as displayed by a viewer 
that the Commission provides. Under these circumstances, for example, a 
Form N-1A's viewable interactive data would be deemed filed and subject 
to section 11 of the Securities Act and section 34(b) of the Investment 
Company Act, consistent with the liability applicable to the 
corresponding part of the traditional format Form N-1A. In that regard, 
such viewable interactive data disclosure therefore would have exactly 
the same potential liability as the corresponding portions of the 
traditional format filing. We believe applying liability for such 
viewable interactive data displayed through software on the 
Commission's Web site would further investors' interests in filers 
providing accurate interactive data under our proposal.
---------------------------------------------------------------------------

    \100\ The human-readable interactive data would be identical to 
the corresponding data in the traditional format filing if the 
mutual fund complied with the interactive data tagging requirements 
of proposed Rule 405.
---------------------------------------------------------------------------

    We expect that each mutual fund would be in the best position to 
determine the appropriate manner in which to assure the accuracy of the 
interactive data it would be required to submit and the viewable 
interactive data that would result. We also expect that software 
providers and other private sector third parties would help develop 
procedures and tools to help in that regard. As an adjunct to those 
private sector efforts, we plan to make available to mutual funds, on 
an optional basis, the opportunity to help assure accuracy by making a 
test submission with the Commission or using software we provide to 
create viewable interactive data.
    A mutual fund would have the opportunity to submit an interactive 
data exhibit as part of a test submission just as a filer can make test 
submissions today.\101\ The validation system would process the test 
submission with an interactive data exhibit similar to the way it 
processes test submissions today. If it found an error, it would advise 
the filer of the nature of the error and as to whether the error was 
major or minor. As occurs in the voluntary program, a major error in an 
interactive data exhibit that was part of a live filing would cause the 
exhibit to be held in suspense in the electronic filing system while 
the rest of the filing would be accepted and disseminated if there were 
no major errors outside of the interactive data exhibit. If that were 
to happen, the filer would need to revise the interactive data exhibit 
to eliminate the major error and submit the exhibit as an amendment to 
the filing to which it is intended to appear as an exhibit. A minor 
error in an interactive data exhibit that was part of a live filing 
would not prevent the interactive data exhibit from being accepted and 
disseminated together with the rest of the filing if there were no 
major errors in the rest of the filing. We believe it would be 
appropriate to accept and disseminate a filing without the interactive 
data exhibit submitted with it if only the exhibit has a major error, 
in order to disseminate at least as much information at least as timely 
as would have been disseminated were there no interactive data 
requirement.
---------------------------------------------------------------------------

    \101\ The EDGAR Filer Manual addresses test submissions 
primarily at section 6.6.5 of Volume II.
---------------------------------------------------------------------------

    We are not proposing that mutual funds be required to involve third 
parties such as auditors or consultants in the creation of the 
interactive data provided as an exhibit to a mutual fund's Form N-1A 
filing, including assurance. We are taking this approach after 
considering various factors, including:
     The availability of a comprehensive list of tags for risk/
return summary information from which appropriate tags can be selected, 
thus reducing a mutual fund's need to develop new elements;
     The availability of user-friendly software with which to 
create the interactive data file;
     The delayed compliance date, prior to which mutual funds 
may become familiar with the tagging of risk/return summary 
information;
     The availability of interactive data technology 
specifications, and of other XBRL U.S. and XBRL International resources 
for preparers of tagged data;
     The advances in rendering/presentation software and 
validation tools for use by preparers of tagged data that can identify 
the existence of certain tagging errors;
     The expectation that preparers of tagged data will take 
the initiative to develop sufficient internal review procedures to 
promote accurate and consistent tagging; and
     The mutual fund's and preparer's liability for the 
accuracy of the traditional format version of the risk/return summary 
information that will also be provided using the interactive data 
format.
    Request for Comment:
     Do the proposed rules strike an appropriate balance to 
promote the availability of reliable interactive data without imposing 
undue additional costs and burdens? If not, what balance of liability 
will best encourage mutual funds to prepare reliable interactive data 
without subjecting them to undue fear of mis-tagging? How does the 
``extensibility'' of interactive data, i.e. , a mutual fund's ability 
to customize the standard list of tags to correspond more closely to 
the fund's particular risk/return summary information, affect your 
answer?

[[Page 35454]]

     What are the risks to investors under the proposed 
liability rules? Will investors still find the interactive data 
sufficiently reliable to use it?
     Should interactive data be subject to liability if a 
mutual fund does not tag its risk/return summary information in a 
manner consistent with the standards approved by the Commission, 
irrespective of the mutual fund's good faith effort? If the answer is 
yes, what should the mutual fund's liability be for such errors, and 
should liability attach even if the mistake is inadvertent? What if the 
error is the result of negligent tagging practices, but there was no 
affirmative intent to mislead?
     If interactive data are subject to liability as proposed, 
is it necessary or appropriate for viewable interactive data to be 
subject to liability as and to the extent proposed or otherwise? Should 
the answer depend on the degree of liability to which the interactive 
data are subject? Should viewable interactive data be subject to 
liability in a manner or to an extent different than as proposed?
     Should any or all interactive data be deemed filed for 
purposes of Section 34(b) of the Investment Company Act and, if so, 
should it be regardless of compliance with proposed Rule 405 or a 
filer's good faith and reasonable efforts to comply?
     Should the liability for interactive data be exactly the 
same as it is for XBRL-Related Documents under the voluntary program?
     Would software be commercially available and reasonably 
accessible to all required interactive data filers, investors, and 
analysts that would make detection of tagging errors, such as the use 
of inappropriate tags or improper extensions, easy and cost-effective? 
If so, would such monitoring by investors and analysts likely 
discourage the improper use of extensions or negligent conduct in the 
tagging process?
     Would the use of software to search for and detect any 
differences between a mutual fund's interactive data and the 
Commission-approved interactive data tags and other attributes depend 
on the degree of investor interest or analysis by third party 
information providers?
     Should a rule expressly state that the Commission retains 
the authority to enforce compliance with proposed Rule 405?
     Should we require the involvement of auditors, 
consultants, or other third parties in the tagging of data? If 
assurance should be required, what should be its scope, and should any 
such requirement be phased in?
     Should we phase in increasing levels of liability over 
time? Are the proposed limitations on liability necessary and 
appropriate at the outset, for example, the first year that a mutual 
fund is subject to the interactive data requirement, but inappropriate 
at a later time? Should we require that interactive data be subject to 
more liability later?
     Should the validation software, as contemplated, cause an 
interactive data exhibit with a major error to be held in suspense in 
the electronic filing system while the rest of the filing would be 
accepted and disseminated if there were no major errors outside of the 
interactive data exhibit? In that case, should the validation software 
hold the entire filing in suspense or reject or accept the entire 
filing or interactive data exhibit?

G. Required Items

1. Data Tags
    To comply with the proposed rules, mutual funds would be required 
to tag their risk/return summary information using the most recent list 
of tags for mutual fund risk/return summaries, as released by XBRL U.S. 
and required by the EDGAR Filer Manual. The ICI's risk/return summary 
list of tags received acknowledgement from XBRL International in June 
2007. The Commission anticipates entering into a contract to update the 
architecture of the list of tags and conform the list of tags to any 
changes in the risk/return summary that we adopt pursuant to a pending 
rule proposal.\102\
---------------------------------------------------------------------------

    \102\ See Summary Prospectus Proposing Release, supra note 15.
---------------------------------------------------------------------------

    Updates to the list of tags for risk/return summary reporting may 
be posted and available for downloading from time to time to reflect 
changes in the risk/return summary requirements, refinements to the 
list of tags, or for other reasons. To provide mutual funds sufficient 
time to become familiar with any such updates, we anticipate giving 
advance notice before requiring use of an updated list of tags. Based 
on experience to date with the list of tags for risk/return summaries, 
we believe that, with the enhancements to the list of tags that XBRL 
U.S. will be developing, the list of tags will be sufficiently 
developed to support the interactive data disclosure requirements in 
the proposed rules.
    One of the principal benefits of interactive data is its 
extensibility--that is, the ability to add to the standard list of tags 
in order to accommodate unique circumstances in a mutual fund's 
particular disclosures. The use of customized tags, however, may also 
serve to reduce the ability of users to compare similar information 
across mutual funds. In order to promote comparability across funds, 
our proposed rules would limit the use of extensions to circumstances 
where the appropriate element does not exist in the standard list of 
tags.\103\ We also are proposing that wherever possible, preparers 
change the label for an element that exists in the standard list of 
tags, instead of creating a new customized tag.\104\
---------------------------------------------------------------------------

    \103\ Proposed Rule 405(c)(1)(iii)(B) as proposed in Interactive 
Data Proposing Release, supra note 8.
    \104\ Proposed Rule 405(c)(1)(iii)(A) as proposed in Interactive 
Data Proposing Release, supra note 8.
---------------------------------------------------------------------------

    Under Item 401(c) of Regulation S-T, voluntary filers' interactive 
data elements must reflect the same information as the corresponding 
traditional format elements. Further, no data element can be ``changed, 
deleted or summarized'' in the interactive data file.\105\ We do not 
propose to change this equivalency standard for risk/return summary 
information provided in interactive data format as required by the 
proposed rules.\106\
---------------------------------------------------------------------------

    \105\ Proposed Rule 405(c)(2) as proposed in Interactive Data 
Proposing Release, supra note 8
    \106\ Id.
---------------------------------------------------------------------------

    Request for Comment:
     Is our focus on comparability appropriate? Instead of 
stressing ease of risk/return summary comparability, should our rules 
permit greater use of customized data tags?
     Should we codify any other principles to encourage 
comparability without unduly reducing the extensibility of interactive 
data?
2. Regulation S-T and the EDGAR Filer Manual
    We propose to require that mutual funds provide interactive data in 
the form of exhibits to the related registration statement on Form N-
1A.\107\ Interactive data would be required to comply with our 
Regulation S-T \108\ and the EDGAR Filer Manual. The EDGAR Filer Manual 
is available on our Web site. It includes technical information for 
making electronic filings to the Commission. Volume II of this manual 
includes guidance on the preparation, submission, and validation of 
interactive data submitted under the voluntary program. Before adoption 
of our proposed rules, we plan to update

[[Page 35455]]

our manual with additional instructions for filers of interactive data.
---------------------------------------------------------------------------

    \107\ The requirement to submit interactive data as an exhibit 
would appear in proposed General Instruction C.3.(g) of Form N-1A.
    \108\ Proposed Rule 405 of Regulation S-T would directly set 
forth the basic tagging and posting requirements for the XBRL data 
and require compliance with the EDGAR Filer Manual. Consistent with 
proposed Rule 405, the EDGAR Filer Manual would contain the detailed 
tagging requirements.
---------------------------------------------------------------------------

    In addition to both Regulation S-T, which would include the rules 
we are proposing, and the instructions in our EDGAR Filer Manual, 
filers may access other sources for guidance in tagging their financial 
information. These include the XBRL U.S. Preparers Guide; user guidance 
accompanying tagging software; and financial printers and other service 
providers. New software and other forms of third-party support for 
tagging risk/return summary information using interactive data are also 
becoming available.
    Request for Comment:
     What specific guidance should be provided in Regulation S-
T for interactive data filers?
     Does the XBRL U.S. Preparers Guide provide useful guidance 
to promote consistent tagging among various mutual funds?
     Is the user guidance accompanying tagging software, and 
the guidance available from financial printers and other service 
providers, helpful for filers to tag their risk/return summary 
information? What other sources of guidance might prove useful?

H. Consequences of Non-Compliance and Hardship Exemption

    We propose that if a filer does not provide the required 
interactive data submission, or post the interactive data on its Web 
site, by the required due date, the filer's ability to file post-
effective amendments under Rule 485(b), which provides for immediate 
effectiveness of amendments that make non-material and other changes, 
would be automatically suspended.\109\ The suspension would become 
effective at the time that the filer fails to meet the requirement to 
submit or post interactive data and would terminate as soon as the 
filer has submitted and posted that data. The suspension would apply to 
post-effective amendments filed after the suspension becomes effective, 
but would not apply to post-effective amendments that were filed before 
the suspension became effective. The suspension would not apply to 
post-effective amendments filed solely for purposes of submitting 
interactive data, which would enable a filer to cure its failure to 
submit interactive data by filing an amendment under Rule 485(b). We 
believe that precluding the use of immediate effectiveness of post-
effective amendments during any period of failure to comply would 
appropriately direct attention to the proposed interactive data 
requirement without permanently suspending a mutual fund's ability to 
file post-effective amendments under Rule 485(b) once the fund has 
remedied the failure.
---------------------------------------------------------------------------

    \109\ Proposed Rule 485(c)(3).
---------------------------------------------------------------------------

    If the proposed rules are adopted, we anticipate that we would not 
interpret Rule 303,\110\ which restricts the ability of registered 
investment companies to incorporate by reference into an electronic 
filing documents that have not been filed in electronic format, to 
apply to the failure to file Interactive Data Files. Thus, as long as 
the traditional format electronic filing has been made as required, the 
failure to file a required Interactive Data File would not affect a 
mutual fund's ability to incorporate by reference the mutual fund's 
prospectus. For example, if we were to adopt as proposed our proposed 
rules regarding a summary prospectus for mutual funds, we anticipate 
that a mutual fund could incorporate by reference its statutory 
prospectus into its summary prospectus as permitted by those proposed 
rules, notwithstanding the fund's failure to file required interactive 
data.\111\
---------------------------------------------------------------------------

    \110\ Rule 303 of Regulation S-T.
    \111\ See Summary Prospectus Proposing Release, supra note 15.
---------------------------------------------------------------------------

    Consistent with the treatment of other applicable reporting 
obligations, we propose to provide a continuing hardship exemption for 
the inability to timely electronically submit interactive data. Rule 
202 of Regulation S-T provides for continuing hardship exemptions.\112\
---------------------------------------------------------------------------

    \112\ Rule 201 of Regulation S-T provides for temporary hardship 
exemptions. We are not proposing a temporary hardship exemption 
because our proposal would provide a mutual fund with a 15-business 
day period for submitting the interactive data file for a related 
Form N-1A filing.
---------------------------------------------------------------------------

    Rule 202 permits a filer to apply in writing for a continuing 
hardship exemption if information otherwise required to be submitted in 
electronic format cannot be so filed without undue burden or expense. 
If the staff, through authority delegated from the Commission, grants 
the request, the filer must file the information in paper by the 
applicable due date and file a confirming electronic copy if and when 
specified in the grant of the request.
    We propose to revise Rule 202 to provide that a grant of a 
continuing hardship exemption for interactive data would not require a 
paper submission.\113\ If the filer did not electronically submit the 
interactive data by the end of the period for which the exemption was 
granted, the filer's ability to file post-effective amendments under 
Rule 485(b) would be suspended until it did electronically submit the 
interactive data.\114\ Similarly, we propose to revise Rule 202 to 
provide an essentially mirror-image exemption from the proposed 
requirement for a mutual fund that has a Web site to post the 
interactive data on its Web site.\115\
---------------------------------------------------------------------------

    \113\ See Proposed Rule 202 as proposed in Interactive Data 
Proposing Release, supra note 8.
    \114\ Proposed amendment to Note 4 to Rule 202 as proposed in 
Interactive Data Proposing Release, supra note 8; Proposed Rule 
485(c)(3).
    \115\ Id.
---------------------------------------------------------------------------

    Request for Comment:
     Are the consequences for failure to comply with the 
interactive data submission requirements appropriate?
     Should we suspend the ability of a mutual fund to file 
post-effective amendments under Rule 485(b) if it does not comply with 
the proposed rules? Should the proposed rules provide similar treatment 
whether the failure to comply relates to interactive data submission or 
to Web site posting? Should the suspension apply to the particular fund 
that failed to comply, all series of a registrant that failed to 
comply, or all funds of a complex that failed to comply?
     Should the proposed rules treat a mutual fund's compliance 
with interactive data requirements as an express condition to the 
mutual fund's related registration statement or post-effective 
amendment becoming effective?
     Should the failure to file or post interactive data as 
required restrict a mutual fund's ability to incorporate by reference 
the fund's statutory prospectus, including under our proposed rules 
relating to a mutual fund summary prospectus?
     Does our proposed rule strike the correct balance of 
positive and negative consequences when a mutual fund meets its 
requirements to provide traditional format documents but fails to 
provide interactive data?
     Do commenters believe that the proposed revisions to the 
continuing hardship exemption would be sufficient to cover 
unanticipated technical difficulties associated with interactive data? 
If insufficient, why would they be insufficient and how should the 
hardship exemption be tailored to address technical difficulties 
associated with interactive data?
     Should we provide a temporary hardship exemption? If so, 
would six business days be an appropriate period for the temporary 
hardship exemption to apply? \116\ If not, would a shorter or longer 
period be appropriate, and why?
---------------------------------------------------------------------------

    \116\ See Proposed Rule 201 as proposed in Interactive Data 
Proposing Release, supra note 8 (proposing a six-business-day 
temporary hardship exemption for financial statement filers).

---------------------------------------------------------------------------

[[Page 35456]]

I. Changes to the Voluntary Program

    If we adopt rules requiring mutual funds to submit risk/return 
information in interactive data format, we intend that mutual funds 
would no longer be able to submit risk/return summary information in 
interactive data format through the voluntary program after the 
compliance date for the mandatory rules. We are proposing to amend Rule 
8b-33 to remove risk/return summary information as a category of 
information permitted to be submitted under the voluntary program. In 
addition, we are proposing technical amendments to other rules to 
reflect this.\117\
---------------------------------------------------------------------------

    \117\ See proposed Rule 401(a); proposed Rule 401(d)(1)(i); 
proposed Rule 401(d)(2)(i). We are also proposing to delete current 
Rule 401(b)(1)(iv), which provides the option to file risk/return 
summary information under the voluntary program, and to replace it 
with the option to file the portfolio holdings schedule on a stand-
alone basis described below.
---------------------------------------------------------------------------

    Further, in order to encourage participation in the voluntary 
program for tagging investment company financial information, we are 
proposing amendments to enable investment companies that are registered 
under the Investment Company Act, business development companies, and 
other entities that report under the Exchange Act and prepare their 
financial statements in accordance with Article 6 of Regulation S-X to 
submit exhibits containing a tagged schedule of portfolio holdings 
without having to submit other financial information in interactive 
data format.\118\ As with the current voluntary program, volunteers 
could participate, without pre-approval, merely by submitting a tagged 
Schedule I--Investments in Securities of Unaffiliated Issuers 
(``Schedule I'').\119\ To facilitate this, the Commission anticipates 
entering into a contract to develop a list of tags that could be used 
to tag portfolio holdings.
---------------------------------------------------------------------------

    \118\ Proposed Rule 401(b)(1)(iv) (designating Schedule I--
Investments in securities of unaffiliated issuers as mandatory 
content under the voluntary program). If rules requiring interactive 
data financial information are adopted, we anticipate that the 
voluntary program would be modified to permit participation only by 
registered investment companies, business development companies, and 
other entities that report under the Exchange Act and prepare their 
financial statements in accordance with Article 6 of Regulation S-X. 
See Interactive Data Proposing Release, supra note 8 (proposed Rule 
401(a)).
    \119\ Rule 12-12 of Regulation S-X [17 CFR 210.12-12].
---------------------------------------------------------------------------

    Currently, the interactive data furnished under the voluntary 
program must consist of at least one item from a list of enumerated 
mandatory content (``Mandatory Content''), including financial 
statements, earnings information, and, for registered management 
investment companies, financial highlights or condensed financial 
information and risk/return summary information set forth in Items 2 
and 3 of Form N-1A.\120\ We are adding Schedule I information as a 
separate item of Mandatory Content that participants can submit in 
order to give volunteers greater flexibility in tagging fund data.
---------------------------------------------------------------------------

    \120\ Rule 401(b)(1) of Regulation S-T [17 CFR 232.401(b)(1)].
---------------------------------------------------------------------------

    Investors, financial intermediaries, and third party information 
providers, among others, use the portfolio holdings data contained in 
Schedule I to make decisions concerning the purchase and continued 
holding of funds and for other purposes. Portfolio holdings data 
promises to be even more useful to these various stakeholders if this 
data is interactive. In addition, allowing volunteers to submit tagged 
portfolio holdings information without having to submit other financial 
information in interactive data format would increase the range of 
options for participation in the voluntary program and encourage 
increased participation.
    Under the current voluntary program, any official filing with which 
tagged exhibits are submitted must disclose that the financial 
information is ``unaudited'' or ``unreviewed,'' as applicable and that 
the purpose of submitting the tagged exhibits is to test the related 
format and technology and, as a result, investors should not rely on 
the exhibits in making investment decisions.\121\ We believe that this 
cautionary disclosure should also be tagged and included within each 
interactive data exhibit, in order to help alert investors and other 
users that the exhibits should not be relied on in making investment 
decisions. Accordingly, we are proposing that this disclosure be 
required in the exhibits submitted pursuant to the voluntary program as 
a tagged data element,\122\ consistent with how the cautionary 
disclosure is presented in risk/return summary exhibits under the 
current voluntary program.
---------------------------------------------------------------------------

    \121\ Rule 401(d)(1)(ii) of Regulation S-T [17 CFR 
232.401(d)(1)(ii)].
    \122\ See proposed Rule 401(d)(2).
---------------------------------------------------------------------------

    Request for Comment:
     Is allowing the tagging of fund data contained in Schedule 
I separately from other investment company financial information an 
appropriate next step in the voluntary program for investment 
companies? Is there other investment company information that should be 
included in the voluntary program?
     What effect would tagged data have on investors', 
analysts', and other users' ability to analyze investment company 
portfolio holdings? Are there any potential problems related to 
providing investment company portfolio holdings in interactive data 
format? For example, could this facilitate the front-running of 
investment company portfolio transactions or other behavior that could 
harm investors?
     Is the tagging of fund data contained in Schedule I useful 
on a stand-alone basis? Should we instead require a fund that submits 
tagged data for Schedule I to also provide tagged data for Schedules II 
through V,\123\ as Schedules I through V are often presented together 
in fund financial statements? Should we allow funds to tag any or all 
of Schedules I through V in the voluntary program without tagging other 
financial information? Are there particular Schedules, or particular 
combinations of Schedules, that should be permitted to be tagged in the 
voluntary program without tagging other financial information?
---------------------------------------------------------------------------

    \123\ Schedule II--Investments--other than securities, Rule 12-
13 of Regulation S-X [17 CFR 210.12-13]; Schedule III--Investments 
in and advances to affiliates, Rule 12-14 of Regulation S-X [17 CFR 
210.12-14]; Schedule IV--Investments--securities sold short, Rule 
12-12A of Regulation S-X [17 CFR 210.12-12A]; and Schedule V--Open 
option contracts written, Rule 12-12B of Regulation S-X [17 CFR 
210.12-12B].
---------------------------------------------------------------------------

     How would allowing volunteers to submit an interactive 
data exhibit consisting of Schedule I information on a stand-alone 
basis affect participation in the voluntary program? Does the tagging 
of Schedule I information separately from other investment company 
financial information present any technical concerns that would affect 
participation in the voluntary program?
     Should we require cautionary disclosure in the tagged 
schedule of portfolio holdings as a tagged data element?
     Is additional or different language necessary for 
cautionary disclosure?
     Has development of a list of tags for portfolio holdings 
advanced sufficiently to permit tagging of Schedule I on a stand-alone 
basis? If not, what further steps are needed?

III. General Request for Comments

    We request comment on the specific issues we discuss in this 
release, and on any other approaches or issues that we should consider 
in connection with the proposed amendments. We seek comment from any 
interested persons, including those required to file information with 
us on the EDGAR system, as well as investors, disseminators of EDGAR 
data, industry analysts, EDGAR filing agents, and any other members of 
the public.

[[Page 35457]]

IV. Paperwork Reduction Act

    The proposed amendments contain ``collection of information'' 
requirements within the meaning of the Paperwork Reduction Act of 1995, 
or PRA.\124\ The purpose of the proposed amendments is to make risk/
return summary information easier for investors to analyze and to 
assist in automating regulatory filings and business information 
processing. We are submitting the proposed amendments to the Office of 
Management and Budget (OMB) for review in accordance with the PRA.\125\ 
An agency may not conduct or sponsor, and a person is not required to 
respond to, an information collection unless it displays a currently 
valid OMB control number.
---------------------------------------------------------------------------

    \124\ 44 U.S.C. 3501 et seq.
    \125\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
---------------------------------------------------------------------------

    The title for the new collection of information for submitting 
risk/return summary information in interactive data format that the 
proposed amendments would establish is ``Mutual Fund Interactive Data'' 
(OMB Control No. 3235-XXXX). This collection of information relates to 
already existing regulations and forms adopted under the Securities 
Act, the Exchange Act, and the Investment Company Act that set forth 
disclosure requirements for mutual funds and other issuers. The 
proposed amendments, if adopted, would require mutual funds to submit 
their risk/return summary information in interactive data format and 
post it on their Web sites, if any, in interactive data form. The 
specified risk/return summary information already is and would continue 
to be required to be submitted to the Commission in traditional format 
under existing disclosure requirements. Compliance with the proposed 
amendments would be mandatory beginning with initial registration 
statements, and post-effective amendments that are annual updates to 
effective registration statements, that become effective after December 
31, 2009.\126\ The information required to be submitted would not be 
kept confidential by the Commission.
---------------------------------------------------------------------------

    \126\ See Part II.B.
---------------------------------------------------------------------------

    The title for the collection of information for submitting 
portfolio holdings in interactive data format is ``Voluntary XBRL-
Related Documents'' (OMB Control No. 3235-0611). The proposed 
amendments would permit investment companies that are registered under 
the Investment Company Act, business development companies, and other 
entities that report under the Exchange Act and prepare their financial 
statements in accordance with Article 6 of Regulation S-X to submit 
exhibits containing a tagged schedule of portfolio holdings without 
having to submit other financial information in interactive data 
format. Compliance with the proposed amendments would be voluntary. The 
information required to be submitted would not be kept confidential by 
the Commission.

A. Reporting and Burden Estimate

1. Submission of Risk/Return Summary Information Using Interactive Data
    Form N-1A (OMB Control No. 3235-0307) under the Securities Act and 
the Investment Company Act \127\ is used by mutual funds to register 
under the Investment Company Act and to offer their securities under 
the Securities Act. The information required by the new collection of 
information we propose, would correspond to the risk/return summary 
information now required by Form N-1A and would be required to appear 
in exhibits to Form N-1A and on mutual funds' Web sites.
---------------------------------------------------------------------------

    \127\ 17 CFR 239.15A; 17 CFR 274.11A.
---------------------------------------------------------------------------

    Based on estimates from voluntary program participant responses to 
a questionnaire and our experiences with the voluntary program, we 
estimate that interactive data filers would require an average of 
approximately 13 burden hours to tag risk/return summary information in 
the first year, and the same task in subsequent years would require an 
average of approximately 11 hours.\128\ The average annual burden over 
a three-year period is estimated at approximately 12 hours.\129\ Based 
on estimates of 8,810 mutual funds submitting interactive data 
documents,\130\ each incurring 12 hours per year on average, we 
estimate that, in the aggregate, interactive data adoption would result 
in an additional 105,720 burden hours, on average, for all mutual funds 
for each of the first three years.\131\ Converted into dollars, this 
amounts to approximately $22,500,000.\132\
---------------------------------------------------------------------------

    \128\ The average burden hours for the first and subsequent 
submissions were calculated using data collected from 6 responses to 
a voluntary program participant questionnaire from mutual funds that 
participated in the voluntary program. See Part V, infra.
    \129\ (13.33 hours for the first submission + 11.275 hours for 
the second submission + 11.275 hours for the third submission) / 3 
years = approximately 12 hours.
    \130\ This estimate is based on analysis by the Division of 
Investment Management staff of publicly available data.
    \131\ 8,810 mutual funds x 12 incremental burden hours per 
mutual fund = 105,720 burden hours.
    \132\ This cost increase is estimated using an estimated hourly 
wage rate of $213.00 ((105,720 burden hours) x $213.00 hourly wage 
rate = $22,518,360 total incremental internal cost). The estimated 
wage figure is based on published rates for compliance attorneys and 
programmer analysts, modified to account for an 1800-hour work-year 
and multiplied by 5.35 to account for bonuses, firm size, employee 
benefits, and overhead, yielding effective hourly rates of $270 and 
$194, respectively. See Securities Industry Association, Report on 
Management & Professional Earnings in the Securities Industry 2007 
(Sept. 2007) (``SIA Report''). The estimated wage rate was further 
based on the estimate that compliance attorneys would account for 
one quarter of the hours worked and senior system analysts would 
account for the remaining three quarters, resulting in a weighted 
wage rate of $213.00 (($270 x .25) + ($194 x.75)).
---------------------------------------------------------------------------

    We further estimate that mutual funds would require an average of 
approximately 1 burden hour to post interactive data to their Web 
sites. Based on estimates of 8,810 mutual funds posting interactive 
data, each incurring 1 burden hour per year on average, we estimate 
that, in the aggregate, adoption of Web site posting requirements would 
result in an additional 8,810 burden hours for all mutual funds.\133\ 
Converted into dollars, this amounts to approximately $2,200,000.\134\
---------------------------------------------------------------------------

    \133\ 8,810 mutual funds x 1 burden hour per mutual fund = 8,810 
burden hours.
    \134\ ($250 x 1 hour x 8,810 mutual funds). This cost estimate 
is based on informal discussions with a limited number of persons 
believed to be generally knowledgeable about preparing, submitting, 
and posting interactive data. See Part V, infra.
---------------------------------------------------------------------------

    We also estimate that software and consulting services would be 
used by mutual funds for an increase of approximately $803 per mutual 
fund.\135\ Based on the estimate of 8,810 mutual funds using software 
and consulting services at an annual cost of $803 we estimate that, in 
the aggregate, the total external costs to the industry would be 
approximately $7,100,000.\136\
---------------------------------------------------------------------------

    \135\ For purposes of this estimate, we assumed that the largest 
50 fund complexes would develop software in-house incurring costs of 
$125,000 in the first year. Assuming that the largest 50 fund 
complexes would develop software for use in all of their funds, and 
that their funds encompass 80% of the number of funds (7,048), then 
the average first year cost for those funds would be ($125,000 x 
50)/7,048 = $887. Therefore, for those funds using software 
developed internally, the average 3 year cost would be approximately 
$829 ($887 in the first year + $800 in the second year + $800 in the 
third year) / 3 years = approximately $829. The average 3 year cost 
for those funds that use commercial software would be $700 ($500 in 
the first year + $800 in the second year + $800 in the third year) / 
3 years = $700. Assuming 80% of funds incurred costs of $829 and 20% 
of funds incurred costs of $700, the average software and consulting 
cost per mutual fund would be approximately $803. These estimates 
were derived from responses to a voluntary program questionnaire. 
See Part V, infra.
    \136\ 8,810 mutual funds x $803 = approximately $7,100,000.
---------------------------------------------------------------------------

Regulation C and Regulation S-T
    Regulation C (OMB Control No. 3235-0074) describes the procedures 
to be followed in preparing and filing registration statements with the 
Commission. Regulation S-T (OMB Control No. 3235-0424) specifies the

[[Page 35458]]

requirements that govern the electronic submission of documents. The 
proposed changes to these items would add and revise rules under 
Regulations C and S-T. The filing requirements themselves, however, are 
included in Form N-1A and we have reflected the burden for these new 
requirements in the burden estimate for Mutual Fund Interactive Data. 
The rules in Regulations C and S-T do not impose any separate burden.
2. Changes To the Voluntary Program
    We are proposing to decrease the burden associated with the 
existing collection of information for Voluntary XBRL-Related Documents 
to reflect the proposed amendments. If we adopt rules requiring mutual 
funds to submit risk/return information in interactive data format, we 
intend that mutual funds would no longer be able to submit risk/return 
summary information in interactive data format through the voluntary 
program after the compliance date for the mandatory rules.
    When we adopted the amendments to expand the voluntary program to 
enable mutual funds voluntarily to submit risk/return summary 
information in interactive data format, we estimated an increase to the 
existing collection of information for Voluntary XBRL-Related 
Documents.\137\ We estimated that 10% of the approximately 545 fund 
complexes that have mutual funds, or 55 fund complexes, would each 
submit documents containing tagged risk/return summary information for 
one mutual fund.\138\ We further estimated that the initial creation of 
tagged documents containing risk/return summary information would 
require, on average, approximately 110 burden hours per mutual fund, 
and the creation of such tagged documents in subsequent years would 
require an average 10 burden hours per mutual fund. Because the PRA 
estimates represent the average burden over a three-year period, we 
estimated the average hour burden for the submission of tagged 
documents containing risk/return summary information for one mutual 
fund to be approximately 43 hours.\139\
---------------------------------------------------------------------------

    \137\ See Voluntary Program Adopting Release, supra note 16.
    \138\ In the case of a mutual fund with multiple series, our 
estimate treated each series as a separate mutual fund.
    \139\ (110 hours in the first year + 10 hours in the second year 
+ 10 hours in the third year) / 3 years = 43 hours.
---------------------------------------------------------------------------

    Based on the estimates of 55 participants submitting tagged 
documents containing risk/return summary information for one mutual 
fund once per year and incurring 43 hours per submission, we estimated 
that, in the aggregate, the industry would incur an additional 2,365 
burden hours associated with the amendments.\140\ We further estimated 
that 75% of this burden increase, or approximately 1,774 hours, would 
be borne internally by the mutual fund complexes. We estimated that 
this internal burden increase converted to dollars would amount to a 
total annual increase of internal costs of approximately $393,828.\141\
---------------------------------------------------------------------------

    \140\ 55 documents per year x 43 hours per submission = 2,365 
hours.
    \141\ See note 82 of the Voluntary Program Adopting Release, 
supra note 16.
---------------------------------------------------------------------------

    We also estimated that 25% of the burden, or approximately 591 
hours, would be outsourced to external professionals and consultants 
retained by the mutual fund complex at an average cost of $256.00 per 
hour for a total annual increase of approximately $151,296.\142\ In 
addition, we estimated that the cost of licensing software would be 
$333 per participant per year, for a total annual increase of 
$18,315.\143\ Altogether, we estimated the total annual increase in 
external costs related to the amendments would be $169,611.\144\
---------------------------------------------------------------------------

    \142\ See note 83 of the Voluntary Program Adopting Release, 
supra note 16.
    \143\ $333 per participant x 55 participants = $18,315.
    \144\ This annual total consisted of $151,296 in outside 
professional costs plus $18,315 in software costs.
---------------------------------------------------------------------------

    Given that mutual funds would no longer be able to submit risk/
return summary information in interactive data format through the 
voluntary program if the proposed amendments are adopted, we would 
reduce the internal hour burden associated with the voluntary program 
by 1,774 hours and the internal cost burden by $393,828. We would also 
reduce the external cost burden by $169,611.
    We also are proposing amendments to the voluntary program to enable 
investment companies that are registered under the Investment Company 
Act, business development companies, and other entities that report 
under the Exchange Act and prepare their financial statements in 
accordance with Article 6 of Regulation S-X to submit exhibits 
containing a tagged schedule of portfolio holdings without having to 
submit other financial information in interactive data format. As with 
the current voluntary program, volunteers could participate, without 
pre-approval, merely by submitting Schedule I in interactive data 
format.\145\
---------------------------------------------------------------------------

    \145\ Rule 12-12 of Regulation S-X [17 CFR 210.12-12].
---------------------------------------------------------------------------

    Investors, financial intermediaries, and third party information 
providers, among others, use the portfolio holdings data contained in 
Schedule I to make decisions concerning the purchase and continued 
holding of funds and for other purposes. Portfolio holdings data 
promises to be even more useful to these various stakeholders if this 
data is interactive. In addition, allowing volunteers to submit tagged 
portfolio holdings information without having to submit other financial 
information in interactive data format would increase the range of 
options for participation in the voluntary program and encourage 
increased participation.
    We estimate that 20 registrants would choose to submit a schedule 
of portfolio holdings in interactive data format. We believe that 
investment companies that are registered under the Investment Company 
Act, business development companies, and other entities that report 
under the Exchange Act and prepare their financial statements in 
accordance with Article 6 of Regulation S-X would participate, given 
the flexibility provided by a new option to submit exhibits containing 
just portfolio holdings information in interactive data format.
    Submission of portfolio holdings information in interactive data 
format would not affect the burden of preparing the registrants' 
traditional format filings. In order to provide portfolio holdings 
information in interactive data format, a participating registrant 
would have to tag Schedule I and submit the resulting interactive data 
file as an exhibit to its filing on Form N-CSR or Form N-Q.\146\ The 
Commission anticipates entering into a contract to develop a list of 
tags that could be used to tag portfolio holdings. Based on our 
experience with mutual funds that have submitted risk/return summary 
information in the current voluntary program, we estimate that the 
initial creation of portfolio holdings information in interactive data 
format would require, on average, approximately 12 burden hours per 
registrant,\147\ and the creation of such information in interactive 
data format in subsequent years would require an average 10 burden 
hours per

[[Page 35459]]

registrant.\148\ Because the PRA estimates represent the average burden 
over a three-year period, we estimate the average hour burden for the 
submission of portfolio holdings information in interactive data format 
for one registrant to be approximately 11 hours.\149\
---------------------------------------------------------------------------

    \146\ Form N-CSR [17 CFR 249.331; 17 CFR 274.128]; Form N-Q [17 
CFR 249.332; 17 CFR 274.130].
    \147\ Mutual funds submitting risk/return summary information in 
our voluntary program indicated that an initial submission in the 
voluntary program took approximately 13 hours of labor. Given that 
the submission of portfolio holdings in interactive data format is 
less complex than the submission of risk/return summary information 
in interactive data format but potentially requires the tagging of 
many more individual items, we estimate that the initial creation of 
interactive data files containing portfolio holdings information 
would require, on average, approximately 12 burden hours per 
volunteer.
    \148\ Mutual funds submitting risk/return summary information in 
the current voluntary program indicated that each set of 
submissions, after the initial set, would take approximately 11 
burden hours, or 2 hours less than the initial submission. We 
estimate that the reduction in burden hours for subsequent 
submissions of portfolio holdings information in interactive data 
format would be a similar 2 hour reduction, or approximately 10 
burden hours per volunteer.
    \149\ (12 hours in the first year + 10 hours in the second year 
+ 10 hours in the third year) / 3 years = approximately 11 hours. 
While the PRA requires an estimate based on a hypothetical three 
years of participation, a registrant, as noted earlier, could 
participate in the voluntary program by submitting portfolio 
holdings information in interactive data format over a shorter 
period or even just once as the registrant chooses.
---------------------------------------------------------------------------

    Based on the estimate of 20 registrants submitting interactive data 
files containing portfolio holdings information once each year and 
incurring 11 hours per submission we estimate that, in the aggregate, 
the industry would incur an additional 220 burden hours associated with 
the proposed amendments.\150\ We estimate that this internal burden 
increase converted to dollars would amount to approximately 
$47,000.\151\
---------------------------------------------------------------------------

    \150\ 20 documents per year x 11 hours per submission = 220 
hours. We note that mutual funds submit portfolio holdings 
information to the Commission four times per year. However, for 
purposes of our analysis, we estimate that mutual funds choosing to 
participate in the voluntary program would submit portfolio holdings 
information in interactive data format once each year.
    \151\ This cost increase is estimated by multiplying the 
increase in annual internal hour burden (220) by the estimated 
hourly wage rate of $213.00. See supra note 132.
---------------------------------------------------------------------------

    We also estimate that external professionals and consultants would 
be retained by the registrant for an increase of approximately 
$600.00.\152\ It is our understanding that annual software licensing 
costs generally would be included in the cost of hiring external 
professionals and consultants.\153\ Based on the estimate of 20 
registrants retaining external professionals and consultants at an 
annual cost of $600.00 we estimate that, in the aggregate, the total 
external cost to the industry would be $12,000.\154\
---------------------------------------------------------------------------

    \152\ ($100.00 in the first year + $800.00 in the second year + 
$800.00 in the third year) / 3 years = approximately $600.00. Mutual 
funds participating in our voluntary program for the submission of 
risk/return summary information in interactive data format indicated 
an initial external cost of $100.00 for the hiring of external 
professionals and consultants and projected an annual cost of 
$800.00 for external service providers going forward. The increase 
going forward was due to the fact that a couple of participants 
indicated that their external service provider had waived its fee 
for the initial submission.
    \153\ We note that one respondent spent over $100,000 internally 
to develop software to submit risk/return summary information in 
interactive data format. We did not include this number in our 
calculations as this software was developed solely for purposes of 
submitting risk/return summary information and not for submitting 
financial information in interactive data format. See infra note 
170.
    \154\ 20 registrants submitting interactive data files under the 
voluntary program x $600.00 = $12,000.
---------------------------------------------------------------------------

    As a result of the changes to the voluntary program, we therefore 
estimate a total decrease in internal burden hours of approximately 
1,600 \155\ and a total decrease in internal costs of approximately 
$347,000.\156\ We further estimate a total decrease in external costs 
of approximately $158,000.\157\
---------------------------------------------------------------------------

    \155\ (1,774 hours for the removal of risk/return summary 
information from the voluntary program - 220 hours for the 
submission of schedule of portfolio holdings in interactive data 
format = approximately 1,600 hours.)
    \156\ ($393,828 for the removal of risk/return summary 
information from the voluntary program - $47,000 for the submission 
of schedule of portfolio holdings in interactive data format = 
approximately $347,000.)
    \157\ ($169,611 for the removal of risk/return summary 
information from the voluntary program - $12,000 for the submission 
of schedule of portfolio holdings in interactive data format = 
approximately $158,000.)
---------------------------------------------------------------------------

B. Request for Comments

    We solicit comment on the expected Paperwork Reduction Act effects 
of the proposed amendments, including the following:
     The accuracy of our estimates of the additional burden 
hours that would result from adoption of the proposed amendments;
     Whether the proposed new collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information will have practical 
utility;
     Ways to enhance the quality, utility, and clarity of the 
information to be collected;
     Ways to minimize the burden of the collection of 
information on those who respond, including through the use of 
automated collection techniques or other forms of information 
technology; and
     Any effects of the proposed amendments on any other 
collections of information not previously identified.
    Any member of the public may direct to us any comments concerning 
these burden estimates and suggestions for reducing the burdens. 
Persons submitting comments on the collection of information 
requirements should direct their comments to the OMB, Attention: Desk 
Officer for the Securities and Exchange Commission, Office of 
Information and Regulatory Affairs, Washington, DC 20503, and send a 
copy of the comments to Office of the Secretary, Securities and 
Exchange Commission, 100 F Street, NE., Washington, DC 20549-9303, with 
reference to File No. S7-12-08. Requests for materials submitted to OMB 
by the Commission with regard to these collections of information 
should be in writing, refer to File No. S7-12-08, and be submitted to 
the Securities and Exchange Commission, 100 F Street, NE., Washington, 
DC 20549. OMB is required to make a decision concerning the collection 
of information between 30 and 60 days after publication of this 
release. Consequently, a comment to OMB is best assured of having its 
full effect if OMB receives it within 30 days of publication.

V. Cost/Benefit Analysis

A. Submission of Risk/Return Summary Information Using Interactive Data

    The proposed rules would require submission of interactive data-
formatted risk/return summary information and the posting of such 
information on a mutual fund's Web site, if any. We believe that the 
proposed rules likely would result in the benefits and costs described 
below. We base our belief on an economic analysis of data obtained from 
several sources, including voluntary program participant responses to a 
staff-prepared questionnaire and our experiences with the voluntary 
program.\158\
---------------------------------------------------------------------------

    \158\ The proposed required program, similar to the voluntary 
program, would require use of interactive data in XBRL format.
---------------------------------------------------------------------------

    Interactive data are intended to remove a barrier in the flow of 
information between mutual funds and users of information that is 
conveyed through mutual fund disclosures. This should enable less 
costly dissemination of information and thereby improve the allocation 
of capital. The cost of implementation will depend primarily on the 
costs of transition by mutual funds to the new mode of reporting. The 
magnitudes of these benefits and costs from any individual mutual 
fund's adoption of interactive data reporting will depend on the number 
of other mutual funds that also adopt and on the availability of 
supporting software and other infrastructures that enable analysis of 
the information. To the extent that submitted information allows 
investors to make investment decisions based on market-wide comparison 
and analysis, the value to the investors of the reported information

[[Page 35460]]

tends to increase with the total number of mutual funds adopting the 
regime. Likewise, mutual funds' incentives to report their information 
using interactive data depends on the interest level of the investors 
in this mode of reporting. By mandating implementation, the rule will 
expand the network of adopters and thereby create positive network 
externalities of reported information for the investors.
1. Benefits of Interactive Data Submissions and Web Site Posting
    The proposed rules have the potential to benefit investors both 
directly and by facilitating the exchange of information between mutual 
funds and the third party information providers and other 
intermediaries who receive and process mutual fund disclosures.
Information Access
    Benefits of the proposed rulemaking accrue from the acceleration of 
market-wide adoption of interactive data format reporting. The 
magnitudes of the benefits thus depend on the value to investors of the 
new reporting regime relative to the old reporting regime and on the 
extent to which the mandated adoption speeds up the market-wide 
implementation.
    Requiring mutual funds to file their risk/return summary 
information using the interactive data format would enable investors, 
third party information providers, and the Commission staff to capture 
and analyze that information more quickly and at a lower cost than is 
possible using the same information provided in a static format.\159\ 
Even though the new regime does not require any new information to be 
disclosed or reported, certain benefits accrue when mutual funds use an 
interactive data format to report their risk/return summary 
information. These include the following. Through interactive data, 
what is currently static, text-based information could be dynamically 
searched and analyzed, facilitating the comparison of mutual fund cost, 
performance, and other information across multiple classes of the same 
fund and across the more than 8,000 funds currently available. Any 
investor with a computer would have the ability to acquire and download 
data that have generally been available only to intermediaries and 
third-party analysts. For example, users of risk/return summary 
information could download it directly into spreadsheets, analyze it 
using commercial off-the-shelf software, or use it within investment 
models in other software formats. Also, to the extent investors 
currently are required to pay for access to mutual fund risk/return 
summary information that has been extracted and reformatted into an 
interactive data format by third-party sources, the availability of 
interactive data in Commission filings could allow investors to avoid 
additional costs associated with third-party sources.
---------------------------------------------------------------------------

    \159\ See Part I.
---------------------------------------------------------------------------

    The magnitude of this informational benefit varies, however, with 
the availability of sophisticated tools that will allow investors to 
analyze the information. The growing development of software products 
for users of interactive data is helping to make interactive data 
increasingly useful to both institutional and retail investors.\160\ 
For example, currently there are many software providers and financial 
printers that are developing interactive data viewers. We anticipate 
that these will become widely available and increasingly accessible to 
investors. We expect that the open standard feature of the interactive 
data format will facilitate the development of applications, and 
software, and that some of these applications may be made available to 
the public for free or at a relatively low cost. The continued 
improvement in this software would allow increasingly useful ways to 
view and analyze mutual fund risk/return summary information to help 
investors make more well-informed investment decisions.
---------------------------------------------------------------------------

    \160\ See SEC's Office of Interactive Disclosure Urges Public 
Comment as Interactive Data Moves Closer to Reality for Investors, 
Securities and Exchange Commission Press Release, Dec. 5, 2007, 
available at http://www.sec.gov/news/press/2007/2007-253.htm.
---------------------------------------------------------------------------

    Interactive data also could provide a significant opportunity for 
mutual funds to automate their regulatory filings and business 
information processing, with the potential to increase the speed, 
accuracy, and usability of mutual fund disclosure. This reporting 
regime may in turn reduce filing and processing costs.
    By enabling mutual funds to further automate their disclosure 
processes, interactive data may eventually help funds improve the speed 
at which they generate information. For example, with standardized 
interactive data tags, registration statements may require less time 
for information gathering and review.
    A mutual fund that uses a standardized interactive data format at 
earlier stages of its reporting cycle may also increase the accuracy of 
its disclosure by reducing the need for repetitive data entry that 
could introduce errors and enhancing the ability of a mutual fund's in-
house professionals to identify and correct errors in the fund's 
registration statements filed in traditional electronic format. There 
has been a growing development of software products to assist mutual 
funds to tag their risk/return summary information using interactive 
data helping make interactive data increasingly useful.\161\
---------------------------------------------------------------------------

    \161\ Id.
---------------------------------------------------------------------------

    Mutual funds that automate their regulatory filings and business 
information processing in a manner that facilitates their generation 
and analysis of disclosures could, as a result, realize a reduction in 
costs.
Market Efficiency
    The proposed requirements could benefit investors by making 
financial markets more efficient in regard to the following: \162\
---------------------------------------------------------------------------

    \162\ We believe the benefits will stem primarily from the 
requirement to submit interactive data to the Commission and the 
Commission's disseminating that data. We also believe, however, that 
the requirement that mutual funds with Web sites post the 
interactive data required to be submitted would encourage its 
widespread dissemination thereby contributing to lower access costs 
for users and the related benefits described. We solicit comment in 
Part II.E regarding what advantages dual Commission and Web site 
availability would have.
---------------------------------------------------------------------------

     Capital formation as a result of mutual funds' being in a 
better position to attract shareholders because of greater (less 
costly) awareness on the part of investors of mutual fund risk/return 
summary information; and
     Capital allocation as a result of investors' being better 
able to allocate capital among those mutual funds seeking it because of 
interactive data reporting's facilitating innovations in efficient 
communication of mutual fund risk/return summary information.
More Efficient Capital Formation
    An increase in the efficiency of capital formation is a benefit 
that may accrue to the extent that interactive data reduces some of the 
information barriers that make it costly for mutual funds to find 
appropriate sources of new investors. In particular, smaller mutual 
fund complexes are expected to benefit from enhanced exposure to 
investors. If interactive data risk/return summary reporting increases 
the availability, or reduces the cost of collecting and analyzing, 
mutual fund risk/return summary data, then there could be improved 
coverage of mutual funds in smaller fund complexes by third party 
information providers and commercial data vendors.
    At present, some mutual funds in smaller fund complexes do not 
provide their data to third party information providers.\163\ This may 
reduce the

[[Page 35461]]

likelihood that their data is readily available to investors who use 
commercially available products to assess mutual fund performance. 
Hence, if interactive data reporting increases coverage of mutual funds 
in smaller fund complexes by third party information providers, and 
this increases their exposure to investors, then lower search costs for 
shareholders could result.
---------------------------------------------------------------------------

    \163\ Analysis by Division of Investment Management staff based 
on publicly available data.
---------------------------------------------------------------------------

More Efficient Capital Allocation
    An increase in the efficiency of capital allocation may accrue to 
the extent that interactive data increase the quality of information by 
reducing the cost to access, collect, and analyze mutual fund risk/
return summary information or improve the content of mutual fund-
reported information.\164\ An increase in quality and improvement in 
content could enable investors to better allocate their capital among 
mutual funds.
---------------------------------------------------------------------------

    \164\ In the context of the discussion below, quality refers to 
the ease with which end-users of risk/return summary information can 
access, collect, and analyze the data. This issue is separate from 
the content of mutual fund-reported information.
---------------------------------------------------------------------------

    Information quality in mutual fund markets would likely be higher 
if interactive data reporting were required than if not, leading to 
more efficient capital allocation. As a result of the improved utility 
of information, investors may be able to evaluate various mutual funds, 
thereby facilitating capital flow into their favored investment 
prospects.
    We believe that requiring mutual funds to provide interactive data 
would improve the quality of risk/return summary information available 
to end users, and help spur interactive data-related innovation in the 
supply of mutual fund comparative products, resulting from a potential 
increased competition among suppliers of such products due to lower 
entry barriers as a result of lower data collection costs.
    However, we have considered competing views of the informational 
consequences of interactive data. For example, a requirement to submit 
interactive data information could decrease the marginal benefit of 
collecting information and thus reduce the information quality to the 
extent it reduces third-party incentives to facilitate access to, 
collect, or analyze information. Assuming that markets efficiently 
price the value of information, the amount of information accessed, 
collected (or enhanced), and analyzed will be determined by the 
marginal benefit of doing so.\165\ Lowering information collection 
costs (through a requirement to submit interactive data information) 
should increase this benefit. If this is so, then there should be no 
degradation in the level of information quality as a result of changes 
in third-party provider behavior under an interactive data reporting 
regime. However, if one competitor in the industry can subsidize its 
operations through an alternative revenue stream, both quality and 
competition may suffer.\166\
---------------------------------------------------------------------------

    \165\ Also, we expect that because the proposed rules would 
require the use of the XBRL interactive data standard, XBRL's being 
an open standard would facilitate the development of related 
software, some of which may, as a result, be made available to the 
public for free or at a relatively low cost and provide the public 
alternative ways to view and analyze interactive data information 
provided under our proposed rules.
    \166\ For illustration purposes only, assume that an Internet 
service company develops an interactive data-based tool that easily 
provides mutual fund risk/return summary information for free to all 
subscribers, and it uses this product as a loss leader to increase 
viewership and advertising revenue. If the data provided is of the 
same quality as data provided through subscription to other 
available commercial products, then there should be no informational 
efficiency loss. However, if a data aggregator's providing 
information that improves investor interpretation and goes beyond 
risk/return summary information is possible, but no longer 
profitable to produce for competitors without the subsidy, then 
valuable information production may be lost.
---------------------------------------------------------------------------

    Another potential information consequence of the proposed 
requirements may be changes to the precision and comparability of the 
information disseminated by data service providers since the 
interactive data requirements would shift the source of data formatting 
that allows aggregation and facilitates comparison and analysis from 
end-users to mutual funds submitting interactive data. At present, data 
service providers manually key risk/return summary information into a 
format that allows aggregation. As a result, the data service provider 
makes interpretive decisions on how to aggregate reported items so that 
they can be compared across all mutual funds. Consequently, when a 
subscriber of the commercial product offered by a data service provider 
uses this aggregated data, it can expect consistent interpretation of 
the reported items. In contrast, a requirement for mutual funds to 
submit interactive data information would require the mutual funds to 
independently decide within the confines of applicable requirements 
which ``tag'' best describes each item within the risk/return summary--
perhaps with the help from a filing agent or consultant--lessening the 
amount of interpretation required by data aggregators or end-users of 
the data. Once a tag is chosen, comparison to other funds is 
straightforward. However, since mutual funds have some discretion in 
how to select tags, and can choose extensions (new tags) when they can 
not find an appropriate existing tag, unique interpretations by each 
fund could result in reporting differences from what current data 
service providers and other end-users would have chosen. This view 
suggests that the information disseminated by data aggregators may be, 
on the one hand, less comparable because they have not normalized it 
across mutual funds but, on the other hand, more accurate because the 
risk of human error in the manual keying and interpretation of filed 
information would be eliminated and more precise because it will 
reflect decisions by the mutual funds themselves. Replication of prior 
methods of interpretation still would be possible, however, because 
mutual funds would continue to be required to file risk/return summary 
information in traditional format. As a result, nothing would prohibit 
data aggregators from continuing to provide normalized data. 
Nonetheless, interactive data benefits could diminish if other 
reporting formats are required for clarification in data aggregation.
    The content of mutual fund-reported information may improve 
because, as previously discussed, a mutual fund that uses a 
standardized interactive data format at earlier stages of its 
disclosure cycle may increase the accuracy of its disclosure. In 
contrast, the content of mutual fund-reported information may improve 
or decline to the extent that the interactive data process influences 
what mutual funds disclose. While the proposed requirements to submit 
and post interactive data information are intended to be disclosure 
neutral, it is possible they would affect what is disclosed.\167\
---------------------------------------------------------------------------

    \167\ We solicit comment on whether the proposed requirements 
would affect mutual fund disclosure in Part II.C.
---------------------------------------------------------------------------

2. Costs of Interactive Data Submissions and Web Site Posting
    The primary cost of the rulemaking is the cost of mutual funds' 
implementation of the rule, which includes the costs of submitting and 
posting interactive data. We discuss this cost element extensively 
below. In addition, because the proposed rules would allow an increase 
in the flow of risk/return summary information being reported directly 
to third party information providers and investors, there will be a 
cost of learning on the part of the investors in using and analyzing 
risk/return summary information at the interactive data level.

[[Page 35462]]

    As for the cost of implementation of the rule, based on currently 
available data, we estimate the average direct costs of submitting and 
posting interactive data-formatted risk/return summary information for 
all mutual funds under the proposed rules would, based on certain 
assumptions, be as follows:

 Table.--Estimated Direct Costs of Submitting Interactive Data-Formatted
                     Risk/Return Summary Information
------------------------------------------------------------------------
                                                           Subsequent
                                     First submission     submissions
------------------------------------------------------------------------
Preparation \168\.................             $2,600             $2,300
Software and consulting services         \170\ 20,600                800
 \169\............................
Web site posting \171\............                250                250
                                   -------------------------------------
    Total cost....................             23,450              3,350
------------------------------------------------------------------------

    The above estimates are generated from a limited number of 
voluntary program participant questionnaire responses. In particular, 
these responses provided detail on the actual and projected costs of 
preparing risk/return summary information in interactive data format 
and for purchasing software or related filing agent services. A 
detailed analysis of the costs associated with voluntary program 
participation suggests that the estimated direct cost of submitting 
risk/return summary information in interactive data format falls within 
the range of $735.50 to $127,500 per fund for the first 
submission.\172\ This cost reflects expenditures on interactive data-
related software, consulting or filing agent services used, and the 
market rate for all internal labor hours spent (including training) to 
prepare, review, and submit the first interactive data format risk/
return summary information. The future experiences of individual mutual 
funds regarding risk/return summary information filed in an interactive 
data format still may vary according to the mutual funds' size, 
complexity, and other factors not apparent from the voluntary program 
participant responses. The discussion below summarizes the direct cost 
estimates of compliance regarding risk/return summary submissions based 
on voluntary program participant questionnaire responses and the 
specified assumptions.\173\
---------------------------------------------------------------------------

    \168\ Estimates based on risk/return summary voluntary program 
questionnaire responses. The voluntary program questionnaire 
responses indicated that different filers use different personnel to 
prepare interactive data submissions. We calculated costs for each 
participant based upon the personnel each individual respondent to 
the voluntary program questionnaire indicated it used and the length 
of time it indicated the personnel spent on the preparation. The 
numbers in the table represent the average of all of these 
calculations. The following wage rates were assumed for preparation 
cost estimates: operations specialist--$129; paralegal--$168; senior 
compliance examiner--$180; intermediate business analyst--$183; 
senior accountant--$185; programmer analyst--$194; financial 
reporting manager--$268; and attorney--$295. These estimated wage 
figures are based on published rates for the personnel above, 
modified to account for bonuses, firm size, employee benefits, and 
overhead, yielding the effectively hourly rates above. See SIA 
Report, supra note 132.
    \169\ Software licensing and the use of a consultant can be 
substitutionary--mutual funds can choose to do one or the other, or 
do both--and are thus aggregated.
    \170\ We note that one volunteer expended over $100,000 in 
information technology to develop internal software that applies 
interactive data tags to risk/return summary information. This one 
expenditure by one fund resulted in a higher average software and 
consulting services cost per fund of $20,600 for the first 
submission. Excluding this data, the average software and consulting 
services costs per fund would have been approximately $500.
    While our averages imply that the costs of internally developing 
software are allocated to one fund in the sample, in reality the 
complex that developed the software will likely use that software 
for all of its funds. Thus the development cost could be allocated 
across all funds within that complex rather than to one fund.
    \171\ Voluntary program participants were not required to post 
on their Web sites, if any, the interactive data information they 
submitted. Consequently, the costs of the requirement to post 
interactive data information are not derived from the voluntary 
program participant questionnaire responses or discussed in our 
analysis of those responses. Those costs are, instead, derived from 
informal discussions with a limited number of persons believed to be 
generally knowledgeable about preparing, submitting, and posting 
interactive data.
    \172\ See supra note 170 with respect to the high end of the 
range.
    \173\ The details of this analysis regarding risk/return summary 
information, including the underlying assumptions and other 
considerations related to both the costs and benefits of requiring 
submission of interactive data, are provided following the summary.
---------------------------------------------------------------------------

     Average cost of first submission, excluding the costs of 
Web site posting, from voluntary program questionnaire data is $23,200.
     Projected average cost of subsequent submissions, 
excluding the costs of Web site posting, from voluntary program 
questionnaire data is $3,100.
    This analysis attempts to quantify some of the direct costs that 
mutual funds will incur if we require submission and posting of 
interactive data. Whether mutual funds choose to purchase and learn how 
to use software packages designed for interactive data submissions or 
outsource this task to a third party, internal (labor) resources would 
be required to complete the task. The cost estimates provided here 
using voluntary program participant questionnaire responses shed light 
on the potential dollar magnitude of the costs of requiring interactive 
data submissions.
    At present, there are 22 mutual funds that have participated in the 
voluntary program. Of these, 9 were provided questionnaires on the 
details of their cost experience, and 6 responses were collected by the 
time of this analysis representing the cost data for 10 funds.\174\ The 
table below summarizes the aggregate costs per mutual fund, including 
software and filing agent service costs and an estimated cost for the 
internal labor hours required to prepare and submit the interactive 
data format information. The low and high estimates of the cost for 
internal labor hours were calculated using a variety of billing rates 
corresponding to the job descriptions of internal personnel involved in 
preparing the tagged risk/return summaries.\175\ The reported costs are 
calculated using responses from the six voluntary program participants 
that provided responses. Although there are only 6 voluntary program 
respondents to the questionnaire, those 6 respondents represent mutual 
fund complexes whose assets comprise approximately 26.35% of all the 
assets of the mutual funds that ultimately

[[Page 35463]]

would be required to submit interactive data.\176\
---------------------------------------------------------------------------

    \174\ The questionnaires requested data for one fund; however, 
several questionnaire respondents voluntarily submitted cost 
information for more than one fund.
    \175\ See supra note 168. These estimates are from the 
Securities Industry and Financial Markets Association's Management & 
Professional Earnings in the Securities Industry 2007, modified to 
account for an 1800-hour work year and multiplied by 5.35 to account 
for bonuses, firm size, employee benefits, and overhead. 
Questionnaire respondents apportioned time spent tagging risk/return 
summaries among various job types.
    \176\ Based on total mutual fund assets of $11.8 trillion. 
Lipper-Directors' Analytical Data, Reuters 2008.

Table.--Summary of Illustrative Survey Data on the Direct Cost Estimates
                   for Voluntary Program Participants
------------------------------------------------------------------------
                                     All voluntary program participants
                                                 respondents
                                   -------------------------------------
                                           Low                High
------------------------------------------------------------------------
First submission: Estimated costs.            $735.50     \177\ $127,500
Subsequent submissions: Estimated             $555.00             $5,640
 costs............................
Average reduction in cost from                 24.54%       \178\ 95.58%
 first to second submission.......
------------------------------------------------------------------------

Scalability of Interactive Data-Related Support Services and Technology
    The final cost consideration in this section is the scalability of 
interactive data-related support services and technology. In 
particular, it is unclear how the market for interactive data support 
services and technology may change if the Commission required over 
8,000 mutual funds to submit and post interactive data.
---------------------------------------------------------------------------

    \177\ We note that these costs are higher due to one 
questionnaire respondent who spent significantly more than all other 
respondents to create its own interactive data software in-house. 
See supra note 170.
    \178\ Id.
---------------------------------------------------------------------------

    The roles of each potential kind of service provider within the 
interactive data market are likely to develop further and are not yet 
clear, and there are many potential participants to consider, including 
the software vendors, print/filing agents, and consultants, as well as 
the Commission.\179\ Until the market of mutual funds that submit 
interactive data information grows substantially larger (either by 
requirement or by expansion of the number of volunteers), it is 
difficult to predict how standard solutions will evolve. For example, 
we do not know whether mutual funds will adopt solutions that create 
interactive data submissions using third party software, a so-called 
``bolt-on'' approach, or will seek integrated solutions that enable 
funds to prepare interactive data submissions from their existing 
software. Moreover, filing agents may maintain their role as an 
intermediary by offering interactive data technology or other service 
providers may cause that role to change. Others with technical 
expertise may participate in the technology with unpredictable results.
---------------------------------------------------------------------------

    \179\ In addition, mutual fund complexes with a large number of 
funds may consider developing software in-house since that cost 
could be allocated across all of their funds.
---------------------------------------------------------------------------

    Combining the uncertainty over the source of future interactive 
data services with increased demand for these services could result in 
a new equilibrium market price that is different from what is currently 
reported by voluntary program participants. This price could be higher 
if the demand for interactive data services increases (from 15 mutual 
fund complexes currently participating in the voluntary program to 683 
mutual fund complexes \180\ participating) at a faster rate than the 
supply for these same services. More broadly, if an interactive data 
requirement resulted in clients subscribing for interactive data 
services faster than the rate at which these services can be supplied, 
then a price increase is the natural discriminator in how to allocate 
limited resources.
---------------------------------------------------------------------------

    \180\ Investment Company Institute, 2008 Investment Company Fact 
Book, at 14 (2008), available at: http://www.icifactbook.org/pdf/2008_factbook.pdf (683 fund sponsors).
---------------------------------------------------------------------------

    The submission costs discussed in this section suggest that if 
interactive data is implemented too quickly it could result in higher 
than necessary submission costs if the supply of interactive data-
related resources is constrained, but the effect would likely diminish 
as a market place for interactive data services develops. Hence, this 
concern is mitigated by delaying the requirement that mutual funds 
submit interactive data until December 31, 2009. This delay would allow 
interactive data service suppliers to keep pace with demand.

B. Changes to Voluntary Program

    In order to facilitate further evaluation of data tagging, the 
proposed amendments would enable investment companies that are 
registered under the Investment Company Act, business development 
companies, and other entities that report under the Exchange Act and 
prepare their financial statements in accordance with Article 6 of 
Regulation S-X to submit exhibits containing a tagged schedule of 
portfolio holdings without having to submit other financial information 
in interactive data format.
1. Benefits
    We believe that portfolio holdings information in interactive data 
format may allow more efficient and effective retrieval, research, and 
analysis of registrants' portfolio holdings through automated means. 
The proposed amendments to the voluntary program will assist us in 
assessing whether using interactive data tags enhances users' ability 
to analyze and compare portfolio holdings information included in 
filings with the Commission.
    Currently, a number of companies use computers and data entry staff 
to mine portfolio holdings information provided by mutual funds and 
others in order to populate databases that are used to package 
information for sale to analysts, funds, investors, and others. 
Permitting funds and other entities to tag portfolio holdings 
information in Commission filings will aid this data-mining process in 
that it will identify points of data at the source, which could reduce 
the cost to populate databases and improve the accuracy of that data. 
Additionally, the changes to the voluntary program may benefit funds 
and the public by permitting experimentation with data tagging using 
the new portfolio holdings list of tags when it is created.
    In the future, the availability of potentially more accurate 
information about mutual funds and other entities could also reduce the 
cost of research and analysis and create new opportunities for 
companies that compile, provide, and analyze data to produce more value 
added services. Enhanced access to information submitted in interactive 
data format also has the potential to allow retail investors (or 
financial advisers assisting such investors) to perform more 
personalized and sophisticated analyses and comparisons of mutual funds 
and

[[Page 35464]]

other investment options, which could result in investors making better 
informed investment decisions, and therefore in a more efficient 
distribution of assets by investors among different funds. This may, in 
turn, also contribute to increased competition among mutual funds and 
other entities and result in a more efficient allocation of resources 
among competing investment products. Although it is not possible to 
quantify precisely the beneficial effects of more efficient allocation 
of investors' assets and increased competition, they may be 
significant, given the size of the mutual fund industry.
    Other potential benefits resulting from the inclusion of portfolio 
holdings information as a stand-alone item in the voluntary program 
could include an increase in the accuracy of information and the 
potential for increased timeliness of data that investors use to make 
informed investment decisions. Another potential benefit is that 
portfolio holdings information submitted in interactive data format 
would allow automated, instantaneous extraction of every investment 
disclosed in the schedule of portfolio holdings. Finally, the 
investment analysis process could become more efficient and effective 
through the increased use of automation and reduced human intervention 
that would result from the use of interactive data.
2. Costs
    The proposed amendments to the voluntary program would lead to some 
costs for filers choosing to submit portfolio holdings information in 
interactive data format.\181\ For purposes of the PRA, we estimated 
that the increase in annual internal burden hours to the industry would 
be approximately 220 hours, which would amount to an increase in costs 
of approximately $47,000 and that the increase in annual external costs 
per filer would amount to approximately $600 per year for a total 
estimated increase to the industry of approximately $12,000 on an 
annual basis.\182\
---------------------------------------------------------------------------

    \181\ For purposes of the PRA, we also estimated a reduction in 
burden hours for the voluntary program collection of information, 
due to removal of risk/return summary information from the voluntary 
program. See supra Part IV.A.2.
    \182\ See supra Part IV.A.2.
---------------------------------------------------------------------------

    We based these cost estimates upon, among other things, experience 
with mutual funds who have submitted risk/return summary information in 
interactive data format in the current voluntary program.\183\ Due to 
the ongoing nature of the project to develop the list of tags for 
portfolio holdings, however, we have limited data to quantify the cost 
of implementing the use of interactive data tags applied to portfolio 
holdings information, and we seek comment and supporting data on our 
estimates with regard to the proposed amendments. In the future, there 
may be additional costs to current users of EDGAR data. For example, 
companies that currently provide tagging and dissemination of EDGAR 
data may experience decreased demand for their services. These entities 
have developed certain products and services based on data in EDGAR; 
many entities disseminate, repackage, analyze, and sell the 
information. Allowing filers to submit tagged portfolio holdings 
information, even voluntarily, may have an impact on entities providing 
EDGAR-based services and products. Because the Commission does not 
regulate all these entities, it is currently not feasible to accurately 
estimate the number or size of these potentially affected entities. The 
limited, voluntary nature of the program will help the Commission 
assess the effect, if any, on these entities. Additionally, the 
availability of interactive data on EDGAR may provide these companies 
with alternative business opportunities.
---------------------------------------------------------------------------

    \183\ See supra note 168.
---------------------------------------------------------------------------

C. Comment Solicited

    We solicit comment on all aspects of this cost-benefit analysis, 
including the identification of any additional costs or benefits of, or 
suggested alternatives to, the proposed rules. Commenters are requested 
to provide empirical data and other factual support for their views to 
the extent possible.
    We request comment regarding the costs and benefits to investors, 
mutual funds, third-party information providers, software providers, 
filing agents, and others who may be affected by the proposed rules. We 
are particularly interested in information on the costs and benefits to 
smaller mutual fund complexes.
    In particular, we request comment regarding:
     The differences between start-up costs and the costs of 
providing interactive data on a continuing basis after the initial 
preparation; and
     The cost of Web site posting.

VI. Consideration of Burden on Competition and Promotion of Efficiency, 
Competition, and Capital Formation

    Section 23(a)(2) of the Exchange Act \184\ requires us, when 
adopting rules under the Exchange Act, to consider the impact that any 
new rule would have on competition. In addition, section 23(a)(2) 
prohibits us from adopting any rule that would impose a burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Exchange Act. Furthermore, section 2(b) \185\ of the Securities 
Act, section 3(f) \186\ of the Exchange Act, and section 2(c) \187\ of 
the Investment Company Act require us, when engaging in rulemaking 
where we are required to consider or determine whether an action is 
necessary or appropriate in the public interest, to consider, in 
addition to the protection of investors, whether the action will 
promote efficiency, competition, and capital formation.
---------------------------------------------------------------------------

    \184\ 15 U.S.C. 78w(a)(2).
    \185\ 15 U.S.C. 77b(b).
    \186\ 15 U.S.C. 78c(f).
    \187\ 15 U.S.C. 80a-2(c).
---------------------------------------------------------------------------

A. Submission of Risk/Return Summary Information Using Interactive Data

    The proposals to require mutual funds to submit interactive data to 
the Commission and post it on their Web sites are intended to make 
risk/return summary information easier for investors to analyze while 
assisting in automating regulatory filings and business information 
processing. In particular, we believe that the proposed rules would 
enable investors and others to search and analyze the risk/return 
summary information dynamically; facilitate comparison of mutual fund 
cost, performance, and other information; and, possibly, provide a 
significant opportunity to automate regulatory filings and business 
information processing with the potential to increase the speed, 
accuracy, and usability of risk/return summary disclosure. Further, as 
discussed in detail above, we believe that the proposals may lead to 
more efficient capital formation and allocation.\188\
---------------------------------------------------------------------------

    \188\ See Part V.A.
---------------------------------------------------------------------------

    We understand that private sector businesses such as those that 
access mutual fund information and aggregate, analyze, compare, or 
convert it into interactive format have business models and, as a 
result, competitive strategies that the proposed interactive data 
requirements might affect. Since interactive data technology is 
designed to remove an informational barrier, business models within the 
mutual fund services industry that are currently adapted to traditional 
format document reporting may change, with possible consequences for 
the revenue stream of current product offerings due to the competitive 
effects of such a change.

[[Page 35465]]

The competitive effects may relate to changes in the accessibility of 
risk/return summary information to investors, the nature of the 
information that investors receive, and the potential from new entry or 
innovation in the markets through which mutual fund disclosures are 
transmitted from mutual funds to investors. For example, lower entry 
barriers that result from lower data collection costs may increase 
competition among third-party information providers and help spur 
interactive data-related innovation. It is also possible, however, that 
a requirement to submit interactive data information could decrease the 
marginal benefit of collecting information and thus cause third-party 
information providers to produce information that is less robust to the 
extent the decreased marginal benefit reduces third party incentives to 
facilitate access to, collect, or analyze information. If markets 
efficiently price the value of information, the amount of information 
accessed, collected (or enhanced), and analyzed will be determined by 
the marginal benefit of doing so.\189\ Lowering information collection 
costs (through a requirement to submit interactive data information) 
should increase this benefit. If this is so, then there should be no 
degradation in the level of information quality as a result of changes 
in third-party provider behavior under an interactive data reporting 
regime. However, if one competitor in the industry can subsidize its 
operations through an alternative revenue stream, both quality and 
competition may suffer.
---------------------------------------------------------------------------

    \189\ Also, we expect that because the proposed rules would 
require the use of the XBRL interactive data standard, XBRL's being 
an open standard would facilitate the development of related 
software, some of which may, as a result, be made available to the 
public for free or at a relatively low cost and provide the public 
alternative ways to view and analyze interactive data information 
provided under our proposed rules.
---------------------------------------------------------------------------

    For the reasons described more fully above, we believe the 
liability protections for interactive data would be necessary or 
appropriate in the public interest and consistent with the protection 
of investors. Moreover, the protections would also be consistent with 
the purposes fairly intended by the policy and provisions of the 
Investment Company Act.

B. Changes to the Voluntary Program

    The proposed amendments would no longer allow mutual funds to 
submit risk/return summary information in interactive data format 
through the voluntary program after the compliance date for the 
mandatory rules and would enable investment companies that are 
registered under the Investment Company Act, business development 
companies, and other entities that report under the Exchange Act and 
prepare their financial statements in accordance with Article 6 of 
Regulation S-X to submit exhibits containing a tagged schedule of 
portfolio holdings without having to submit other financial information 
in interactive data format. The changes to the voluntary program are 
intended to help further evaluate the usefulness to investors, third-
party information providers, investment companies, the Commission, and 
the marketplace of interactive data and, in particular, of submitting 
portfolio holdings information in interactive data format. Because 
compliance with the proposed amendments will be voluntary, the 
Commission estimates that the impact of the proposal will be limited. 
However, because the submission of portfolio holdings information in 
interactive data format has the potential to facilitate analysis of 
that information, we believe that the proposed amendments could promote 
efficiency by allowing us and others to gain experience with portfolio 
holdings information in interactive data format.
    Further, submitting portfolio holdings information in interactive 
data format has the potential to help streamline the delivery of 
portfolio holdings information, and provide investors and others with 
improved tools to compare funds and other entities. As with the filing 
of risk/return summary information in interactive data format, we 
believe that the potential to streamline the delivery of portfolio 
holdings information and to provide investors and others with improved 
comparison tools could promote efficiency and competition through more 
efficient allocation of investments by investors and more efficient 
allocation of assets among competing funds and other investment 
products.
    In the future, companies that currently provide tagging and 
dissemination of EDGAR data may experience decreased demand for their 
services. The availability of interactive data on the Commission's 
electronic filing system however, may provide these companies with 
alternative business opportunities. We do not anticipate that the 
proposed amendments would have a significant impact on capital 
formation. Finally, because the proposals are designed to permit mutual 
funds and other entities to provide information in a format that we 
believe would be more useful to investors, we believe that the proposed 
amendments are appropriate in the public interest and for the 
protection of investors.

C. Request for Comment

    We request comment on whether the proposals, if adopted, would 
promote efficiency, competition, and capital formation or have an 
impact or burden on competition. Commenters are requested to provide 
empirical data and other factual support for their views, if possible.

VII. Initial Regulatory Flexibility Analysis

    This Initial Regulatory Flexibility Analysis has been prepared in 
accordance with 5 U.S.C. 603. It relates to proposed amendments that 
would require mutual funds to provide risk/return summary information 
to the Commission and on their Web sites in interactive data format and 
that would enable investment companies and other entities to submit 
exhibits through the voluntary program containing a tagged schedule of 
portfolio holdings without having to submit other financial information 
in interactive data format.

A. Reasons for, and Objectives of, the Proposed Action

Submission of Risk/Return Summary Information Using Interactive Data
    The main purpose of the proposed amendments is to make risk/return 
summary information easier for investors to analyze while assisting in 
automating regulatory filings and business information processing. 
Currently, mutual funds are required to file their registration 
statements in a traditional format that provides static text-based 
information. We believe that providing the risk/return summary 
information these filings contain in interactive data format would:
     Enable investors and others to search and analyze the 
information dynamically;
     Facilitate comparison of mutual fund performance; and
     Possibly provide a significant opportunity to automate 
regulatory filings and business information processing with the 
potential to increase the speed, accuracy, and usability of risk/return 
summary disclosure.
Changes to the Voluntary Program
    The main purpose of the proposed amendments to the voluntary 
program is to help us evaluate the usefulness to investors, third party 
information providers, funds, the Commission, and the marketplace of 
interactive data and, in particular, of submitting portfolio holdings 
information in interactive data format. We believe the proposed

[[Page 35466]]

changes to the voluntary program would enable us to further study the 
extent to which interactive data enhance the comparability of portfolio 
holdings information, the usefulness of interactive data for 
dissemination, and our staff's ability to review and assess the 
accuracy and adequacy of that data. The proposed changes to the 
voluntary program also would help us assess the effect of interactive 
data on the quality and transparency of portfolio holdings information, 
as well as the compatibility of interactive data with the Commission's 
disclosure requirements.
    More specifically, we believe that the proposed changes to the 
voluntary program would better enable us to study the extent to which 
interactive data would:
     Enable investors and others to search and analyze the 
information dynamically;
     Facilitate comparison of portfolio holdings among funds 
and other entities; and
     Possibly provide a significant opportunity to reduce the 
resources needed for data analysis.
    In addition, we believe the proposed changes to the voluntary 
program would enhance our ability to evaluate the:
     Impact on the staff's ability to review filings on a more 
timely and efficient basis,
     Use of interactive data for risk assessment and 
surveillance procedures, and
     Compatibility of interactive data with reporting quality, 
transparency, and other Commission reporting requirements.

B. Legal Basis

    We are proposing the amendments under sections 5, 6, 7, 10, 19(a), 
and 28 of the Securities Act,\190\ sections 3, 12, 13, 14, 15(d), 
23(a), 35A, and 36 of the Exchange Act,\191\ sections 314 and 319 of 
the Trust Indenture Act \192\ and sections 6(c), 8, 24, 30, and 38 of 
the Investment Company Act.\193\
---------------------------------------------------------------------------

    \190\ 15 U.S.C. 77e, 77f, 77g, 77s(a), and 77z-3.
    \191\ 15 U.S.C. 78c, 78l, 78m, 78n, 78o(d), 78w(a), 78ll, and 
78mm.
    \192\ 15 U.S.C. 77nnn and 77sss.
    \193\ 15 U.S.C. 80a-6(c), 80a-8, 80a-24, 80a-29, and 80a-37.
---------------------------------------------------------------------------

C. Small Entities Subject to the Proposed Rules

    The proposed amendments would affect mutual funds that are small 
entities. For purposes of the Regulatory Flexibility Act, an investment 
company is a small entity if it, together with other investment 
companies in the same group of related investment companies, has net 
assets of $50 million or less as of the end of its most recent fiscal 
year.\194\ Approximately 127 mutual funds registered on Form N-1A meet 
this definition.\195\ All of these mutual funds would become subject to 
the proposed rules to require submission of risk/return summary 
information using interactive data. Regarding the proposed changes to 
the voluntary program, a smaller subset of small entity mutual funds 
may voluntarily submit tagged portfolio holdings information, but, 
because submitting portfolio holdings information would be voluntary, 
we anticipate that only mutual fund complexes with sufficient resources 
would elect to participate. To date, no small entity mutual funds have 
elected to participate in the current voluntary program.
---------------------------------------------------------------------------

    \194\ 17 CFR 270.0-10.
    \195\ This estimate is based on analysis by the Division of 
Investment Management staff of publicly available data as of 
December 2007.
---------------------------------------------------------------------------

D. Reporting, Recordkeeping and Other Compliance Requirements

Submission of Risk/Return Summary Information Using Interactive Data
    All mutual funds subject to the proposed rules would be required to 
submit risk/return summary information to the Commission in interactive 
data format and, if they have a Web site, post the interactive data on 
their Web site. We believe that, in order to submit risk/return summary 
information in interactive data format, mutual funds in general and 
small entities in particular likely would need to prepare and then 
submit the interactive data by expending internal labor hours in 
connection with either or both of
     Purchasing, learning, and using software packages designed 
to prepare risk/return summary information in interactive format; and
     Hiring and working with a consultant or filing agent.

We believe that mutual funds would incur relatively little cost in 
connection with the requirement to post the interactive data on their 
Web site because the requirement applies only to mutual funds that 
already have a Web site.\196\
---------------------------------------------------------------------------

    \196\ The internal labor and external costs required to comply 
with the proposed rules are discussed more fully in Parts IV and V 
above.
---------------------------------------------------------------------------

Changes to the Voluntary Program
    The voluntary program is designed to assist us in assessing the 
feasibility of using interactive data on a broader basis. Experience 
with the current voluntary program indicates that the cost of 
submitting portfolio holdings information in interactive data format, 
the associated burden on the Commission's electronic filing system, and 
the possible effect of the proposed changes to the voluntary program on 
those entities that use the data from the Commission's electronic 
filing system would be minimal.
    No registrant would be required to submit documents in interactive 
data format under the proposed changes to the voluntary program. The 
submission of portfolio holdings information in interactive data format 
would require a participant to tag the portfolio holdings information 
already provided in required disclosures and to submit exhibits to its 
filing. Volunteers may also need to purchase software or retain a 
consultant to assist in creating interactive data exhibits.\197\
---------------------------------------------------------------------------

    \197\ Id.
---------------------------------------------------------------------------

E. Duplicative, Overlapping, or Conflicting Federal Rules

    We believe that the proposed amendments would not duplicate, or 
overlap, or conflict with, other federal rules.

F. Agency Action to Minimize the Effect on Small Entities

    The Regulatory Flexibility Act directs us to consider significant 
alternatives that would accomplish the stated objective, while 
minimizing any significant adverse impact on small entities. In 
connection with the proposed amendments, we considered several 
alternatives, including the following:
     Establishing different compliance or reporting 
requirements or timetables that take into account the resources 
available to small entities;
     Further clarifying, consolidating, or simplifying the 
proposed requirements;
     Using performance rather than design standards; and
     Providing an exemption from the proposed requirements, or 
any part of them, for small entities.
Submission of Risk/Return Summary Information Using Interactive Data
    We believe that, as to small entities, differing compliance, 
reporting or timetable requirements, a partial or complete exemption 
from the proposed requirements, or the use of performance rather than 
design standards would be inappropriate because these approaches would 
detract from the long-term completeness and uniformity of the 
interactive data format risk/return summary information database. Less 
long-term completeness and uniformity would reduce the extent to which 
the proposed requirements would enable

[[Page 35467]]

investors and others to search and analyze the information dynamically; 
facilitate comparison of mutual fund performance; and, possibly, 
provide a significant opportunity to automate regulatory filings and 
business information processing with the potential to increase the 
speed, accuracy, and usability of risk/return summary information 
disclosure. We note, however, that all mutual funds, including small 
entities, would not be subject to the proposed requirements until after 
December 31, 2009.\198\ We solicit comment, however, on whether 
differing compliance, reporting, or timetable requirements, a partial 
or complete exemption, or the use of performance rather than design 
standards would be consistent with our described main goal of making 
risk/return summary information easier for investors to analyze while 
assisting in automating regulatory filings and business information 
processing.
---------------------------------------------------------------------------

    \198\ In this regard, in Part II.B. of this release we note that 
the additional time is intended to permit mutual funds to plan for 
and implement the interactive data reporting process after having 
the opportunity to experiment with the voluntary program. We also 
there solicit comment on the appropriate timetable for smaller 
mutual fund complexes (which would include small entities) and note 
that the additional time also is intended to enable us to monitor 
the voluntary program and, if necessary, make appropriate 
adjustments to the timetable.
---------------------------------------------------------------------------

    We are considering whether further clarifying, consolidating, or 
simplifying the proposed interactive data submission and posting 
requirements would be appropriate. Based in part on our experience with 
the voluntary program, we believe that the proposed requirements are 
sufficiently clear and straightforward (although, we seek comment on 
this).
Changes to the Voluntary Program
    The purpose of the proposed amendments is to help us evaluate the 
usefulness to investors, third party information providers, mutual 
funds and other entities, the Commission, and the marketplace of 
interactive data and, in particular, of submitting portfolio holdings 
information in interactive data format. Submitting documents containing 
portfolio holdings information in interactive data format would be 
entirely voluntary.
    We have considered different or simpler procedures for small 
entities, but for interactive data to provide benefits such as ready 
comparability there cannot be alternative procedures in place for 
different entities. Similarly, in order to achieve the benefits of 
interactive data, use of a single technology is necessary. If we 
determine to require the filing of portfolio holdings information in 
interactive data format in the future, we will look to the results of 
the voluntary program, including those of the proposed changes to the 
voluntary program, to find alternatives to minimize any burden on small 
entities. We solicit comment on how the proposals could be modified to 
minimize the effect on small entities.

G. Solicitation of Comment

    We encourage comments with respect to any aspect of this Initial 
Regulatory Flexibility Analysis. In particular, we request comments 
regarding:
     The number of small entities that may be affected by the 
proposed amendments;
     The existence or nature of the potential impact of the 
proposed amendments on small entities as discussed in this analysis; 
and
     How to quantify the impact of the proposed amendments.
    We ask those submitting comments to describe the nature of any 
impact and provide empirical data supporting the extent of the impact. 
These comments will be considered in the preparation of the Final 
Regulatory Flexibility Analysis, if the proposed amendments are 
adopted, and will be placed in the same public file as comments on the 
proposed amendments themselves.

VIII. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness 
Act of 1996, a rule is ``major'' if it has resulted, or is likely to 
result in:
     An annual effect on the economy of $100 million or more;
     A major increase in costs or prices for consumers or 
individual industries; or
     Significant adverse effects on competition, investment, or 
innovation.
    We request comment on whether our proposals would be a ``major 
rule'' for purposes of SBREFA. We solicit comment and empirical data 
on:
     The potential effect on the U.S. economy on an annual 
basis;
     Any potential increase in costs or prices for consumers or 
individual industries; and
     Any potential effect on competition, investment, or 
innovation.

IX. Statutory Authority

    The Commission is proposing the amendments outlined above under 
sections 5, 6, 7, 10, 19(a), and 28 of the Securities Act [15 U.S.C. 
77e, 77f, 77g, 77j, 77s(a), and 77z-3]; sections 3, 12, 13, 14, 15(d), 
23(a), 35A, and 36 of the Exchange Act [15 U.S.C. 78c, 78l, 78m, 78n, 
78o(d), 78w(a), 78ll, and 78mm]; sections 314 and 319 of the Trust 
Indenture Act [15 U.S.C. 77nnn and 77sss]; and sections 6(c), 8, 24, 
30, and 38 of the Investment Company Act [15 U.S.C. 80a-6(c), 80a-8, 
80a-24, 80a-29, and 80a-37].

List of Subjects

17 CFR Parts 232 and 239

    Reporting and recordkeeping requirements, Securities.

17 CFR Parts 230, 270 and 274

    Investment companies, Reporting and recordkeeping requirements, 
Securities.

Text of Proposed Rule and Form Amendments

    For the reasons set forth above, the Commission proposes to amend 
Title 17, Chapter II of the Code of Federal Regulations as follows:

PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933

    1. The authority citation for Part 230 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77b, 77c, 77d, 77f, 77g, 77h, 77j, 77r, 
77s, 77z-3, 77sss, 78c, 78d, 78j, 78l, 78m, 78n, 78o, 78t, 78w, 
78ll(d), 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a-30, and 80a-37, 
unless otherwise noted.
* * * * *
    2. Amend Sec.  230.485 by adding paragraph (c)(3) to read as 
follows:


Sec.  230.485  Effective date of post-effective amendments filed by 
certain registered investment companies.

* * * * *
    (c) * * *
    (3) A registrant's ability to file a post-effective amendment, 
other than an amendment filed solely for purposes of submitting an 
Interactive Data File, under paragraph (b) of this section is 
automatically suspended if a registrant fails to submit and post on its 
Web site any Interactive Data File exhibit as required by General 
Instruction C.3.(g) of Form N-1A. A suspension under this paragraph 
(c)(3) shall become effective at such time as the registrant fails to 
submit or post an Interactive Data File as required by General 
Instruction C.3.(g) of Form N-1A. Any such suspension, so long as it is 
in effect, shall apply to any post-effective amendment that is filed 
after the suspension becomes effective, but shall not apply to any 
post-effective amendment that was filed before the suspension became 
effective. Any suspension shall apply only to the ability to file a 
post-effective amendment pursuant to paragraph (b) of

[[Page 35468]]

this section and shall not otherwise affect any post-effective 
amendment. Any suspension under this paragraph (c)(3) shall terminate 
as soon as a registrant has submitted and posted to its Web site the 
Interactive Data File as required by General Instruction C.3.(g) of 
Form N-1A.
* * * * *

PART 232--REGULATION S-T--GENERAL RULES AND REGULATIONS FOR 
ELECTRONIC FILINGS

    3. The authority citation for Part 232 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77z-3, 
77sss(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 78ll, 80a-6(c), 
80a-8, 80a-29, 80a-30, 80a-37, and 7201 et seq.; and 18 U.S.C. 1350.
* * * * *
    4. Further amend Sec.  232.11 as published at 73 FR 32827, June 10, 
2008 by revising the definitions of ``Interactive Data in Viewable 
Form'' and ``Related Official Filing'' to read as follows:


Sec.  232.11  Definition of terms used in part 232.

* * * * *
    Interactive Data in Viewable Form. The term Interactive Data in 
Viewable Form means the financial statements, financial statement 
schedules, financial statement footnotes, and, in the case of an open-
end management investment company registered under the Investment 
Company Act of 1940, risk/return summary information that
    (1) Are displayed when an Interactive Data File is converted from 
machine-readable computer code into human-readable text through 
software the Commission provides; and
    (2) Are displayed through such conversion identically in all 
material respects to the corresponding financial statements, financial 
statement schedules, financial statement footnotes, and, in the case of 
an open-end management investment company registered under the 
Investment Company Act of 1940, risk/return summary information in the 
Related Official Filing.
* * * * *
    Related Official Filing. The term Related Official Filing means the 
ASCII or HTML format part of the official filing with which an 
Interactive Data File appears as an exhibit or, in the case of a filing 
on Form N-1A, the ASCII or HTML format part of an official filing that 
contains the information to which an Interactive Data File corresponds.
* * * * *
    5. Further amend Sec.  232.202 as published at 73 FR 32828, June 
10, 2008, by revising Note 4 to read as follows:


Sec.  232.202   Continuing hardship exemption.

* * * * *

    Note 4 to Sec.  232.202: Failure to submit or post, as 
applicable, the Interactive Data File as required by Rule 405 by the 
end of the continuing hardship exemption if granted for a limited 
period of time, will result in ineligibility to use Forms S-3, S-8, 
and F-3 (Sec. Sec.  239.13, 239.16b and 239.33 of this chapter), 
constitute a failure to have filed all required reports for purposes 
of the current public information requirements of Rule 144(c)(1) 
(Sec.  230.144(c)(1) of this chapter), and, pursuant to Rule 
485(c)(3), suspend the ability to file post-effective amendments 
under Rule 485(b) (Sec.  230.485 of this chapter).

    6. Further amend Sec.  232.401 as published at 73 FR 32828, June 
10, 2008, by revising paragraph (a) to read as follows:


Sec.  232.401  XBRL-Related Document submissions.

    (a) Only an electronic filer that is an investment company 
registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et 
seq.), a ``business development company'' as defined in section 
2(a)(48) of that Act, or an entity that reports under the Exchange Act 
and prepares its financial statements in accordance with Article 6 of 
Regulation S-X (17 CFR 210.6-01 et seq.) is permitted to participate in 
the voluntary XBRL (eXtensible Business Reporting Language) program. An 
electronic filer that participates in the voluntary XBRL program may 
submit XBRL-Related Documents (Sec.  232.11) in electronic format as an 
exhibit to: the filing to which the XBRL-Related Documents relate; an 
amendment to such filing, or, if the electronic filer is eligible to 
file a Form 8-K (Sec.  249.308 of this chapter) or a Form 6-K (Sec.  
249.306 of this chapter), a Form 8-K or a Form 6-K, as applicable, that 
references the filing to which the XBRL-Related Documents relate if 
such Form 8-K or Form 6-K is submitted no earlier than the date of that 
filing. The XBRL-Related Documents must comply with the content and 
format requirements of this section, be submitted as an exhibit to a 
form that contains the disclosure required by this section and be 
submitted in accordance with the EDGAR Filer Manual and, as applicable, 
one of Item 601(b)(100) of Regulation S-K (Sec.  229.601(b)(100) of 
this chapter), Item 601(b)(100) of Regulation S-B (Sec.  
228.601(b)(100) of this chapter), Form 20-F (Sec.  249.220f of this 
chapter), Form 6-K or Sec.  270.8b-33 of this chapter.
* * * * *
    7. Amend Sec.  232.401 by revising paragraphs (b)(1)(iv), 
(d)(1)(i), (d)(2) introductory text, and (d)(2)(i) to read as follows:


Sec.  232.401   XBRL-Related Document submissions.

* * * * *
    (b) * * *
    (1) * * *
    (iv) If the electronic filer is an investment company registered 
under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), a 
``business development company'' as defined in Section 2(a)(48) of that 
Act, or an entity that reports under the Exchange Act and prepares its 
financial statements in accordance with Article 6 of Regulation S-X (17 
CFR 210.6-01 et seq.), Schedule I--Investments in Securities of 
Unaffiliated Issuers (Sec.  210.12-12 of this chapter).
* * * * *
    (d) * * *
    (1) * * *
    (i) That the financial information contained in the XBRL-Related 
Documents is ``unaudited'' or ``unreviewed,'' as applicable;
* * * * *
    (2) The disclosures required by paragraph (d)(1) of this section 
must appear within the XBRL-Related Documents as a tagged data element 
and, as applicable, in:
    (i) The exhibit index of a Form 10-K (Sec.  249.310 of this 
chapter), 10-Q (Sec.  249.308a of this chapter), 10 (Sec.  249.210 of 
this chapter), 10-SB (Sec.  249.210b of this chapter), 10-KSB (Sec.  
249.310b of this chapter), 10-QSB (Sec.  249.308b of this chapter) or 
20-F;
* * * * *
    8. Further amend Sec.  232.405 as published beginning at 73 FR 
32828, June 10, 2008 by:
    a. Revising Preliminary Note 1;
    b. Revising paragraph (a);
    c. Redesignating paragraph (b) as paragraph (b)(1) and adding the 
phrase ``If the electronic filer is not an open-end management 
investment company registered under the Investment Company Act of 
1940,'' to the beginning of the paragraph;
    d. Redesignating paragraphs (b)(1) and (b)(2) as paragraphs 
(b)(1)(i) and (b)(1)(ii);
    e. Redesignating Note to paragraph (b) as Note to paragraph (b)(1);
    f. Adding paragraph (b)(2); and
    g. Adding a sentence at the end of the Note to Sec.  232.405.
    The revisions and additions read as follows:

[[Page 35469]]

Sec.  232.405   Interactive Data File submissions and postings.

Preliminary Notes
    1. Sections 405 and 406 of Regulation S-T (Sec. Sec.  232.405 and 
232.406) apply to electronic filers that submit or post Interactive 
Data Files. Item 601(b)(101) of Regulation S-K (Sec.  229.601(b)(101) 
of this chapter), Item 101 of the Instructions as to Exhibits of Form 
20-F (Sec.  249.220f of this chapter), and General Instruction C.3.(g) 
of Form N-1A (Sec. Sec.  239.15A and 274.11A of this chapter) specify 
when electronic filers are required or permitted to submit or post an 
Interactive Data File (Sec.  232.11), as further described below in the 
Note to Section 405.
* * * * *
    (a) Content, Format, Submission and Posting Requirements--General. 
An Interactive Data File (Sec.  232.11) must:
    (1) Comply with the content, format, submission and Web site 
posting requirements of this section;
    (2) Be submitted only by an electronic filer either required or 
permitted to submit an Interactive Data File as specified by Item 
601(b)(101) of Regulation S-K (Sec.  229.601(b)(101) of this chapter), 
Item 101 of the Instructions as to Exhibits of Form 20-F (Sec.  
249.220f of this chapter), or General Instruction C.3.(g) of Form N-1A 
(Sec. Sec.  239.15A and 274.11A of this chapter), as applicable, as an 
exhibit to a form that contains the disclosure required by this 
section;
    (3) Be submitted in accordance with the EDGAR Filer Manual and, as 
applicable, Item 601(b)(101) of Regulation S-K, Item 101 of the 
Instructions as to Exhibits of Form 20-F, or General Instruction 
C.3.(g) of Form N-1A; and
    (4) Be posted on the electronic filer's corporate Web site, if any, 
in accordance with, as applicable, Item 601(b)(101) of Regulation S-K, 
Item 101 of the Instructions as to Exhibits of Form 20-F, or General 
Instruction C.3.(g) of Form N-1A.
    (b)(1) Content--Categories of Information Presented. If the 
electronic filer is not an open-end management investment company 
registered under the Investment Company Act of 1940, * * *
    (i) * * *
    (ii) * * *
    (2) If the electronic filer is an open-end management investment 
company registered under the Investment Company Act of 1940, an 
Interactive Data File must consist of only a complete set of 
information for all periods required to be presented in the 
corresponding data in the Related Official Filing, no more and no less, 
from the risk/return summary information set forth in Items 2 and 3 of 
Form N-1A.
* * * * *

    Note to Sec.  232.405: * * * For an issuer that is an open-end 
management investment company registered under the Investment 
Company Act of 1940, General Instruction C.3.(g) of Form N-1A 
specifies the circumstances under which an Interactive Data File 
must be submitted as an exhibit and be posted to the company's Web 
site, if any.

* * * * *

PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

    9. The authority citation for Part 239 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 
77sss, 78c, 78l, 78m, 78n, 78o(d), 78u-5, 78w(a), 78ll, 78mm, 80a-
2(a), 80a-3, 80a-8, 80a-9, 80a-10, 80a-13, 80a-24, 80a-26, 80a-29, 
80a-30, and 80a-37, unless otherwise noted.
* * * * *

PART 270--RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940

    10. The authority citation for Part 270 continues to read in part 
as follows:

    Authority: 15 U.S.C. 80a-1 et seq., 80a-34(d), 80a-37, and 80a-
39, unless otherwise noted.
* * * * *
    11. Revise Sec.  270.8b-33 to read as follows:


Sec.  270.8b-33   XBRL-Related Documents.

    A registrant that participates in the voluntary XBRL (eXtensible 
Business Reporting Language) program may submit, in electronic format 
as an exhibit to a filing on Form N-CSR (Sec. Sec.  249.331 and 274.128 
of this chapter) or Form N-Q (Sec. Sec.  249.332 and 274.130 of this 
chapter) to which they relate, XBRL-Related Documents (Sec.  232.11 of 
this chapter). A registrant that submits XBRL-Related Documents as an 
exhibit to a form must name each XBRL-Related Document ``EX 100'' as 
specified in the EDGAR Filer Manual and submit the XBRL-Related 
Documents in such a manner that will permit the information for each 
series and, for any information that does not relate to all of the 
classes in a filing, each class of an investment company registrant and 
each contract of an insurance company separate account to be separately 
identified. A registrant may submit such exhibit with, or in an 
amendment to, the filing to which it relates.

PART 274--FORMS PRESCRIBED UNDER THE INVESTMENT COMPANY ACT OF 1940

    12. The authority citation for Part 274 continues to read in part 
as follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78l, 78m, 
78n, 78o(d), 80a-8, 80a-24, 80a-26, and 80a-29, unless otherwise 
noted.
* * * * *
    13. Amend Form N-1A (referenced in Sec. Sec.  239.15A and 274.11A) 
by adding a paragraph (g) to General Instruction C.3.
    The addition is to read as follows:

    Note: The text of Form N-1A does not, and these amendments will 
not, appear in the Code of Federal Regulations.

FORM N-1A

* * * * *

GENERAL INSTRUCTIONS

* * * * *

C. Preparation of the Registration Statement

* * * * *
    3. Additional Matters:
* * * * *
    (g) Interactive Data File. An Interactive Data File (Sec.  232.11 
of this chapter) is required to be submitted to the Commission and 
posted on the Fund's Web site, if any, in the manner provided by Rule 
405 of Regulation S-T (Sec.  232.405 of this chapter) for any 
registration statement or post-effective amendment thereto on Form N-1A 
that includes or amends information provided in response to Items 2 
and/or 3. The Interactive Data File must be submitted as an exhibit to 
Form N-1A and must be named ``EX-101'' as specified in the EDGAR Filer 
Manual and be submitted in such a manner that will permit the 
information for each series and, for any information that does not 
relate to all of the classes in a filing, each class of the Fund to be 
separately identified. The Interactive Data File must be submitted as 
an amendment to the registration statement to which the Interactive 
Data File relates. The amendment must be submitted after the 
registration statement or post-effective amendment that contains the 
related information becomes effective but not later than 15 business 
days after the effective date of that registration statement or post-
effective amendment.

    Dated: June 10, 2008.

    By the Commission.
Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-13356 Filed 6-20-08; 8:45 am]
BILLING CODE 8010-01-P