Document ID: SEC-2009-0232-0001
Agency: sec
Document Type: Rule
Title: Interactive Data for Mutual Fund Risk/Return Summary
Posted Date: 2009-02-19T05:00Z

[Federal Register: February 19, 2009 (Volume 74, Number 32)]
[Rules and Regulations]               
[Page 7747-7776]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19fe09-12]                         

[[Page 7747]]

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Part II

Securities and Exchange Commission

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17 CFR Parts 230, 232, 239, and 274

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

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 230, 232, 239, and 274

[Release Nos. 33-9006, 34-59391, 39-2462, IC-28617; File Number S7-12-
08]
RIN 3235-AK13

 
Interactive Data for Mutual Fund Risk/Return Summary

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: We are adopting rule amendments requiring mutual funds to 
provide risk/return summary information in a form that is intended to 
improve its usefulness to investors. Under the 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 will 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 will be provided as exhibits to 
registration statements and as exhibits to prospectuses with risk/
return summary information that varies from the registration statement. 
The 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 also are 
adopting rules to permit investment companies to submit portfolio 
holdings information in our interactive data voluntary program without 
being required to submit other financial information.

DATES: Effective Date: July 15, 2009. Compliance Date: January 1, 2011. 
Section II.H. of this release contains information on the effective 
date and the compliance date.

FOR FURTHER INFORMATION CONTACT: Brent J. Fields, Assistant Director, 
Office of Disclosure and Review, Mark H. Berman, Senior Special 
Counsel, Office of Special Projects, Tara R. Buckley, Senior Counsel, 
Office of Chief Counsel, Deborah D. Skeens, Senior Counsel, and Alberto 
H. Zapata, Senior Counsel, Office of Disclosure Regulation, Division of 
Investment Management, at (202) 551-6784, Securities and Exchange 
Commission, 100 F Street, NE., Washington, DC 20549-5720.

SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission 
(``Commission'') is adopting amendments to rules 485 \1\ and 497 \2\ 
under the Securities Act of 1933 (``Securities Act''), rules 11,\3\ 
202,\4\ 401,\5\ and 405 \6\ of Regulation S-T,\7\ and Form N-1A \8\ 
under the Securities Act and the Investment Company Act of 1940 
(``Investment Company Act'').\9\
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    \1\ 17 CFR 230.485.
    \2\ 17 CFR 230.497.
    \3\ 17 CFR 232.11.
    \4\ 17 CFR 232.202.
    \5\ 17 CFR 232.401.
    \6\ The Commission recently added new rule 405 to Regulation S-T 
[17 CFR 232.405] in a separate release. See Securities Act Release 
No. 9002 (Jan. 30, 2009) [74 FR 6776 (Feb. 10, 2009)] (``Interactive 
Data Adopting Release'').
    \7\ 17 CFR 232.10 et seq.
    \8\ 17 CFR 239.15A and 274.11A.
    \9\ The Commission proposed these rule and form amendments in 
June 2008. See Securities Act Release No. 8929 (June 10, 2008) [73 
FR 35442 (June 23, 2008)] (``Proposing Release'').
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Table of Contents

Executive Summary

I. Introduction and Backgroud
    A. Commission Initiatives to Update the Public Disclosure 
Process
    B. Current Filing Technology and Interactive Data
II. Discussion
    A. Submission of Risk/Return Summary Information Using 
Interactive Data
    B. Content and Submission Requirements for Interactive Risk/
Return Summary Information
    C. Web Site Posting of Interactive Data
    D. Consequences of Non-Compliance and Hardship Exemption
    E. Interactive Data List of Tags and Commission Viewer
    F. Application of Federal Securities Laws
    G. Changes to the Voluntary Program
    H. Compliance Date
III. Paperwork Reduction Act
IV. Cost/Benefit Analysis
V. Consideration of Burden on Competition and Promotion of 
Efficiency, Competition, and Capital Formation
VI. Final Regulatory Flexibility Analysis
VII. Statutory Authority
Text of Rule and Form Amendments

Executive Summary

    The principal elements of the rule amendments we are adopting today 
are as follows:
     Open-end management investment companies (``mutual 
funds'') \10\ must submit 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 January 1, 2011.\11\
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    \10\ 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)].
    \11\ We have adjusted the compliance date to provide mutual 
funds sufficient time to become familiar with interactive data. See 
infra Section II.H. Interactive data will be required as an exhibit 
to a registration statement or post-effective amendment thereto that 
contains risk/return summary information and to any form of 
prospectus filed pursuant to rule 497(c) or (e) under the Securities 
Act [17 CFR 230.497(c) or (e)] that contains risk/return summary 
information that varies from the registration statement. Interactive 
data will not be required as an exhibit to a post-effective 
amendment that does not contain risk/return summary information or 
to a form of prospectus filed pursuant to rule 497(c) or (e) that 
does not contain risk/return summary information that varies from 
the registration statement.
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     An interactive data file submitted with a registration 
statement must be filed as a post-effective amendment under rule 485(b) 
under the Securities Act \12\ and must be filed after effectiveness of 
the related filing, but no later than 15 business days after the 
effective date of the related filing. An interactive data file required 
to be submitted with a form of prospectus filed pursuant to rule 497(c) 
or (e) under the Securities Act may be submitted with the filing or 
subsequent thereto, but no later than 15 business days after the filing 
made pursuant to rule 497.
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    \12\ A post-effective amendment filed under rule 485(b) under 
the Securities Act [17 CFR 230.485(b)] may become effective 
immediately upon filing. A post-effective amendment may only be 
filed under rule 485(b) if it is filed for one or more specified 
purposes, including to make non-material changes to the registration 
statement.
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     Risk/return summary information in interactive data format 
must be provided as an exhibit identified in General Instruction 
C.3.(g).(iv) of Form N-1A.\13\
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    \13\ 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.
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     The rules do not alter the requirements to provide risk/
return summary information with the traditional format filings.\14\
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    \14\ 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 Securities Act Release No. 8823 (July 11, 2007) 
[72 FR 39290, 39292 (July 17, 2007)].
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     A mutual fund required to provide risk/return summary 
information in interactive data format to the Commission also is 
required to post that information in interactive data format on its Web 
site not later than the end of the calendar day it submitted or was 
required to submit the interactive data

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exhibit to the Commission, whichever is earlier.\15\
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    \15\ The Web site posting requirement applies only to the extent 
a mutual fund already maintains a Web site.
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     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 
will be automatically suspended until the fund submits and posts the 
interactive data as required.
     Mutual funds providing risk/return summary information in 
interactive data format are required to use the most recent list of 
tags released by XBRL U.S.\16\ as required by Regulation S-T and the 
EDGAR Filer Manual.\17\ Mutual funds also are 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 must be 
formatted using the appropriate list of tags as required by Regulation 
S-T and the EDGAR Filer Manual.
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    \16\ The appropriate list of tags for document and entity 
identifier elements will be a list released by XBRL U.S., see infra 
note 46, and will be required to be used by all issuers required to 
submit interactive data.
    \17\ Rule 405 of Regulation S-T directly sets forth the basic 
tagging requirements and indirectly sets forth the rest of the 
tagging requirements through the requirement to comply with the 
EDGAR Filer Manual, which is available on the Commission's Web site 
at: http://www.sec.gov/info/edgar/edmanuals.htm. Consistent with 
rule 405, the EDGAR Filer Manual contains the technical tagging 
requirements. See Interactive Data Adopting Release, supra note 6 
(adopting rule 405 of Regulation S-T). Currently, we are in the 
process of updating the EDGAR Filer Manual to reflect changes in the 
tagging requirements applicable to financial statements. See 
Interactive Data Adopting Release, supra note 6. We anticipate that 
similar updates to address revisions in the tagging requirements 
applicable to fund risk/return summary information and portfolio 
holdings will be finalized during 2009.
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     New rule 406T of Regulation S-T \18\ addresses the 
liability for an interactive data file and provides that an interactive 
data file is:
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    \18\ See Interactive Data Adopting Release, supra note 6 
(adopting rule 406T of Regulation S-T).
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    [cir] Subject to the anti-fraud provisions of Section 17(a)(1) of 
the Securities Act, Section 10(b) of and rule 10b-5 under the 
Securities Exchange Act of 1934 (``Exchange Act''), and Section 206(1) 
of the Investment Advisers Act of 1940 (``Investment Advisers Act''), 
except as provided below;
    [cir'] Deemed not filed or part of a registration statement or 
prospectus for purposes of Sections 11 or 12 of the Securities Act, is 
deemed not filed for purposes of Section 18 of the Exchange Act or 
Section 34(b) of the Investment Company Act, and otherwise is not 
subject to liability under these sections;
    [cir] Deemed filed for purposes of (and, as a result, benefit from) 
rule 103 of Regulation S-T; \19\ and
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    \19\ The interactive data file is 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. Interactive 
data files are deemed filed for purposes of rule 103 regardless of 
whether they are eligible for the modified treatment provided by 
rule 406T at the time submitted. Rule 406T expressly provides that 
interactive data files are deemed filed for purposes of rule 103 to 
remove any negative inference that otherwise might be drawn due to 
the fact that rule 406T deems interactive data files to be not filed 
for other specified purposes.
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    [cir] Subject to liability for a failure to comply with rule 405 of 
Regulation S-T,\20\ but shall be deemed to have complied with rule 405 
and would not be subject to liability under the anti-fraud provisions 
set forth above or under any other liability provision if the 
electronic filer:
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    \20\ See supra note 17.
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    [dec222] Makes a good faith attempt to comply with rule 405; and
    [dec222] after the electronic filer becomes aware that the 
interactive data file fails to comply with rule 405, promptly amends 
the interactive data file to comply with rule 405.
     These liability provisions will apply only until October 
31, 2014, and, thereafter, an interactive data file will be subject to 
the same liability provisions as the related official filing.
     The voluntary program is being modified to allow for 
participation by mutual funds with respect to risk/return summary 
information up until January 1, 2011, but continue to permit investment 
companies to participate with respect to financial statement 
information thereafter. As a result, the voluntary program will 
continue after the compliance date of these rule amendments for the 
financial statements of 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.
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    \21\ Business development companies are a category of closed-end 
investment companies that are not required to register under the 
Investment Company Act. See Section 2(a)(48) of the Investment 
Company Act [15 U.S.C. 80a-2(a)(48)].
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     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 are 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.
    We intend to monitor implementation and, if necessary, make 
appropriate adjustments to the adopted amendments.

I. Introduction and Background

A. Commission Initiatives To Update the Public Disclosure Process

    Over the last several decades, developments in technology and 
electronic data communication have facilitated greater transparency in 
the form of easier access to, and analysis of, financial reporting and 
disclosures. Technological developments also have significantly 
decreased the time and cost of filing disclosure documents with us. 
Most notably, in 1993 we began to require electronic filing on our 
Electronic Data Gathering, Analysis, and Retrieval System 
(``EDGAR'').\22\ Since then, widespread use of the Internet has vastly 
decreased the time and expense of accessing disclosure filed with us.
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    \22\ 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)].
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    We continue to update our filing standards and systems as 
technologies improve, consistent with our goal to promote efficient and 
transparent capital markets. Most recently, we unveiled the Interactive 
Data Electronic Applications database (``IDEA''), which will initially 
supplement and eventually replace EDGAR, and which is designed to take 
full advantage of interactive technology in order to provide investors 
with better and more useful financial disclosures.\23\ Also, since 2003 
we have required electronic filing of certain ownership reports filed 
on Forms 3,\24\ 4,\25\ and 5 \26\ in a format that provides interactive 
data, and recently we adopted similar rules governing the filing of 
Form D.\27\ In addition, recently we have encouraged, and in some cases 
required, mutual funds and public reporting companies to provide

[[Page 7750]]

disclosures and communicate with investors using the Internet.\28\
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    \23\ See SEC Announces Successor to EDGAR Database, Securities 
and Exchange Commission Press Release, Aug. 19, 2008, available at: 
http://www.sec.gov/news/press/2008/2008-179.htm.
    \24\ 17 CFR 249.103 and 274.202.
    \25\ 17 CFR 249.104 and 274.203.
    \26\ 17 CFR 249.105.
    \27\ 17 CFR 239.500.
    \28\ See, e.g., Investment Company Act Release No. 28584 (Jan. 
13, 2009) [74 FR 4546 (Jan. 26, 2009)] (``Summary Prospectus 
Adopting Release''); Exchange Act Release No. 57172 (Jan. 18, 2008) 
[73 FR 4450 (Jan. 25, 2008)]; 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)].
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    In addition, we also implemented a voluntary filer program, started 
in 2005,\29\ that has allowed us to evaluate certain uses 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 Exchange Act and the Investment 
Company Act. Over 100 operating companies 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 participated in the program were still 
required to file their financial statements in American Standard Code 
for Information Interchange (``ASCII'') or HyperText Markup Language 
(``HTML'').\30\ Four mutual fund complexes participated in the 
voluntary program and have submitted financial statement information in 
interactive data format.\31\
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    \29\ Securities Act Release No. 8529 (Feb. 3, 2005) [70 FR 6556 
(Feb. 8, 2005)] (``Voluntary Program Adopting Release'').
    \30\ HTML is a standardized language commonly used to present 
text and other information on Web sites.
    \31\ These four fund complexes made 23 submissions representing 
12 mutual funds.
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    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.\32\ The risk/
return summary contains information about a fund's investment 
objectives and strategies, costs, risks, and past performance.\33\ 
Twenty-five mutual funds from a variety of fund families have submitted 
risk/return summary information in interactive data format. These funds 
represent 15 fund complexes, and consist of a range of fund types, 
including 14 equity funds, two balanced funds, five bond funds, and 
four money market funds. The funds participating in the voluntary 
program also include larger and smaller funds.\34\
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    \32\ Securities Act Release No. 8823 (July 11, 2007) [72 FR 
39290 (July 17, 2007)] (``Risk/Return Voluntary Program Adopting 
Release'').
    \33\ Items 2, 3, and 4 of Form N-1A.
    \34\ Based on industry assets as of September 2008, four of the 
five largest fund complexes have submitted tagged risk/return 
summary information as part of the voluntary filing program. Lipper-
Directors' Analytical Data, Reuters Sept. 2008. As of September 
2008, the two smallest mutual funds participating in the voluntary 
program had net assets of approximately $41 million and $17 million. 
Id.
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    Since the establishment of the voluntary program for mutual fund 
risk/return summary information, the Commission has continued its 
evaluation of interactive data, including interactive data submitted by 
mutual funds. The Commission's evaluation of interactive data has 
included the hosting of three roundtables on the topic of interactive 
data reporting,\35\ as well as the creation, in April 2008 of a viewer 
that allowed investors to read, analyze, and compare the interactive 
risk/return summary data submitted by mutual funds.\36\
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    \35\ See materials available at http://www.sec.gov/spotlight/
xbrl/xbrl-meetings.shtml.
    \36\ As discussed in Section I.B. infra, information in 
interactive data format is intended to be processed by software 
applications and is not readable by humans without a viewer.
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    Additionally, prior to launching the risk/return viewer, Commission 
staff reviewed all of the interactive data files submitted to the 
Commission to help ensure the accuracy of the interactive risk/return 
summary data displayed on the Commission's Web site, and the staff 
communicated with the filers in order to identify and correct any 
technical issues with the submissions.\37\ Further, as noted below, 
Commission staff also surveyed voluntary program participants for 
specific data regarding the costs of preparing and submitting risk/
return summary information in interactive data, including software 
costs and internal and external labor costs.\38\ Six of the 
participating mutual funds responded, providing data in response to 
this voluntary program questionnaire. These six respondents represent 
mutual fund complexes whose assets comprise a range of approximately 
.01% to 12% of all the assets of the mutual funds that will be required 
to submit interactive data.\39\
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    \37\ See infra Section II.E.3. (discussing the Commission's 
risk/return summary interactive data viewer).
    \38\ See Section III. below. Of the 22 mutual funds that 
participated in the voluntary program at the time the Commission 
proposed these amendments, nine were provided questionnaires on the 
details of their cost experience, and six responses were collected 
representing the cost data for ten funds.
    \39\ Based on total mutual fund assets of $10.6 trillion. 
Lipper-Directors' Analytical Data, Reuters Sept. 2008.
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    In a companion release, we recently adopted rules requiring 
companies, other than 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 
financial information to the Commission in interactive data format.\40\ 
In this release, as part of our continuing efforts to assist investors 
who use Commission disclosures, as well as filers of that disclosure, 
we are adopting rule amendments to require that mutual fund risk/return 
summary information be provided in a format that makes the information 
interactive.
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    \40\ Interactive Data Adopting Release, supra, note 6.
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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.\41\ 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.\42\
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    \41\ 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.
    \42\ 15 U.S.C. 78p(a).
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    Electronic formats such as HTML, XML, and XBRL are open standards 
\43\ 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 a predictable format. In the case of XBRL, software 
applications, such as databases, financial reporting systems, and 
spreadsheets, recognize and process tagged information.
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    \43\ The term ``open standard'' is generally applied to 
technological specifications that are widely available to the 
public, royalty-free, at minimal or no cost.
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    XBRL was derived from the XML standard. It was developed and 
continues to be supported by XBRL International, a consortium of 
approximately 550 organizations representing many elements of the 
financial reporting community worldwide in more than 20 jurisdictions, 
national and regional.

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XBRL U.S., the international organization's U.S. jurisdiction 
representative, is a non-profit organization \44\ that includes 
companies, public accounting firms, software developers, filing agents, 
data aggregators, stock exchanges, regulators, financial services 
companies, and industry associations.\45\
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    \44\ XBRL U.S. is a 501(c)(6) organization. Internal Revenue 
Code Section 501(c)(6) applies to ``Business leagues, chambers of 
commerce, real-estate boards, boards of trade, or professional 
football leagues (whether or not administering a pension fund for 
football players), not organized for profit and no part of the net 
earnings of which inures to the benefit of any private shareholder 
or individual.'' See 26 U.S.C. 501(c)(6).
    \45\ XBRL U.S. supports efforts to promote interactive financial 
and business data specific to the U.S.
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    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 will use the most recent list of tags for risk/
return summary information released by XBRL U.S.\46\ 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 \47\ to be 
recognized and processed by software.\48\
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    \46\ Unless stated otherwise, when we refer to the ``list of 
tags for risk/return summary information'' we mean the interactive 
data list of tags released and maintained by XBRL U.S., including 
any modifications. This list was initially developed by the 
Investment Company Institute (``ICI''), which is a national 
association of the U.S. investment company industry.
    \47\ The rules define the interactive data in machine-readable 
format required to be submitted as the ``interactive data file,'' 
which will be required with every interactive data submission. See 
Interactive Data Adopting Release, supra note 6 (adopting new 
definitions under 17 CFR 232.11).
    \48\ For example, contextual information identifies the entity 
to which it relates, usually by using the filer's Central Index Key 
(``CIK'') number. A hypothetical filer converting its traditional 
electronic disclosure of total annual fund operating expenses of 
0.73% must create interactive data that identifies what the 0.73% 
represents, total annual fund operating expenses, and that the 
number is a percentage. The contextual information includes 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].
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    The initial risk/return summary list of tags received 
acknowledgement from XBRL International in June 2007,\49\ and was used 
by mutual funds participating in the Commission's voluntary program. 
More recently, XBRL U.S. has updated the architecture of the list of 
tags for risk/return summary information and conformed the list of tags 
to changes we recently adopted to the risk/return summary disclosure 
requirements.\50\ The list was recently issued for public comment,\51\ 
and it is expected to be finalized and submitted to XBRL International 
for acknowledgement by the end of January 2009. Related documents, such 
as the architecture and technical guides, also are due to be released 
publicly by the end of January 2009.
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    \49\ The list of tags is available on XBRL International's Web 
site at: http://xbrl.org/Taxonomy/rr-summarydocument-20070516-
acknowledged.htm.
    There are two levels of XBRL tag recognition: (1) 
``Acknowledgement'' is formal recognition that a list of tags 
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 
tag list under review, creation of a number of instance documents, 
and an open review period after acknowledgement. For more 
information regarding the XBRL tag list recognition process, see 
``Taxonomy Recognition Process'' on the XBRL International Web site 
available at: http://www.xbrl.org/TaxonomyRecognition/.
    \50\ See infra Section II.E.1. (discussing the list of tags for 
risk/return summary information); Summary Prospectus Adopting 
Release, supra note 28.
    \51\ XBRL U.S. released the updated list of tags for risk/return 
summary information for public comment on October 21, 2008. The list 
is available on the XBRL U.S. Web site at: http://xbrl.us/
imtaxonomies/Pages/default.aspx. See XBRL U.S. Announces Public 
Review of Data Tags for Mutual Fund Risk/Return Summary and Schedule 
of Investments, available on the XBRL U.S. Web site at: http://
xbrl.us/press/Pages/20081021.aspx. The comment period closed on 
November 24, 2008.
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    Data tags are applied to risk/return summary information by using 
commercially available software that guides a preparer to tag 
information in the risk/return summary, such as line item costs in a 
mutual fund's fee table, with 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 will create a company-specific element, called an extension. 
Alternatively, a mutual fund may choose to outsource the tagging 
process.
    Because mutual fund risk/return summary information in interactive 
data format is intended to be processed by software applications, the 
unprocessed interactive data is not readable by humans. Thus, viewers 
are necessary to convert, or ``render,'' the interactive data file to 
human readable format. Some viewers, for example, may be compared to 
Web browsers that are used to read HTML files.
    The Commission's Web site currently provides links to viewers that 
allow the public to read mutual fund and other company disclosures 
submitted using interactive data. One of these viewers allows users to 
view and compare mutual fund risk/return summary information, including 
investment objectives and strategies, costs, risks, and past 
performance, that is submitted in interactive data format.\52\ These 
viewers are intended to demonstrate the capability of software to 
present interactive data in human-readable form and to provide open 
source software to give developers a free resource they can use as is 
or build upon. As noted above, software also is able to process 
interactive data so as to automate and, as a result, facilitate access 
to and analysis of tagged data. In addition, we are aware of other 
applications under development that may provide additional and advanced 
functionality.\53\
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    \52\ A mutual fund information viewer for the voluntary program 
is available at: http://a.viewerprototype1.com/viewer.
    \53\ A list of interactive data products and service providers 
is available at: http://xbrl.us/Vendors/Pages/default-expand.aspx.
---------------------------------------------------------------------------

II. Discussion

    The Commission received 16 comment letters on the proposed rule 
amendments, including comments from trade associations, fund complexes, 
a data aggregator, technology service providers, and individual 
investors and professionals.\54\ The commenters

[[Page 7752]]

generally supported both the use of technology to better inform mutual 
fund investors and the Commission's goal of providing risk/return 
summary information in interactive data format.\55\ Most commenters, 
however, stated that requiring mutual funds to provide tagged risk/
return summary information is premature.\56\ As discussed below, 
commenters also raised other concerns regarding the proposal, including 
concerns regarding the adequacy of the existing technology necessary to 
create and submit interactive data files,\57\ what information should 
be required to be tagged,\58\ the proposed compliance date,\59\ and the 
potential liability of mutual funds under the federal securities laws 
related to tagged risk/return summary information.\60\
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    \54\ See comment letters of the American Bar Association 
(``ABA'') (Aug. 18, 2008); James J. Angel, Ph.D, C.F.A. (``Angel'') 
(Aug. 4, 2008); Gary J. Coles (``Coles'') (July 25, 2008); Committee 
of Annuity Insurers (``Annuity Insurers'') (July 23, 2008); 
Confluence (Aug. 1, 2008); Data Communiqu[eacute], Inc. (``Data 
Communiqu[eacute]'') (July 31, 2008); Federated Investors, Inc. 
(``Federated'') (Aug. 12, 2008); Robert Gilmore, C.P.A. 
(``Gilmore'') (July 31, 2008); Walter C. Hamscher (``Hamscher'') 
(July 31, 2008); ICI (Aug. 1, 2008); Lipper (July 29, 2008); 
OppenheimerFunds, Inc. (``Oppenheimer'') (Aug. 4, 2008); Lorna A. 
Schnase (``Schnase'') (July 25, 2008); Jay Starkman, C.P.A. 
(``Starkman'') (July 30, 2008); T. Rowe Price Associates, Inc. (``T. 
Rowe Price'') (Aug. 1, 2008); and The Vanguard Group, Inc. 
(``Vanguard'') (Aug. 1, 2008). Comment letters received in response 
to the Proposing Release are available at: http://www.sec.gov/
comments/s7-12-08/s71208.shtml or from our Public Reference Room at 
100 F Street, NE., Washington, DC 20549.
    \55\ Twelve commenters generally supported tagging risk/return 
summary information in interactive data format. See letters of ABA, 
Angel, Annuity Insurers, Confluence, Data Communiqu[eacute], 
Gilmore, Hamscher, ICI, Lipper, Oppenheimer, T. Rowe Price, and 
Vanguard. Three commenters did not support requiring interactive 
disclosure of risk/return summary data. See letters of Federated, 
Schnase, and Starkman. One commenter expressed no explicit opinion 
on the matter. See letter of Coles.
    \56\ See letters of ABA, Confluence, Data Communiqu[eacute], 
Federated, Gilmore, ICI, Oppenheimer, Schnase, T. Rowe Price, and 
Vanguard.
    \57\ See letters of Confluence, Federated, Gilmore, ICI, 
Oppenheimer, Schnase, Starkman, and T. Rowe Price.
    \58\ See letters of ABA, Confluence, Data Communiqu[eacute], 
Federated, and Schnase.
    \59\ See letters of Confluence, Data Communiqu[eacute], 
Federated, Gilmore, ICI, Oppenheimer, Schnase, T. Rowe Price, and 
Vanguard.
    \60\ See letters of ABA, Federated, ICI, Oppenheimer, and 
Schnase.
---------------------------------------------------------------------------

    For the reasons discussed below, we continue to believe that the 
enormous potential of interactive data for enhancing investors' access 
to mutual fund information justifies implementation of this initiative. 
Therefore, we are adopting the proposed amendments with some 
modifications to address commenters' concerns. The rule amendments are 
intended to make risk/return summary information easier for investors 
to analyze and to assist in automating regulatory filings and business 
information processing.

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

    We are adopting, as proposed, rule amendments that require mutual 
funds to submit a complete set of their risk/return summary 
information, set forth in Items 2, 3, and 4 of Form N-1A,\61\ in 
interactive data format.\62\ In addition, mutual funds are 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 new 
requirement for interactive data reporting is intended to be disclosure 
neutral in that we do not intend the rules to result in mutual funds 
providing more, less, or different disclosure for any given disclosure 
item, regardless of whether the format is ASCII, HTML, or XBRL.
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    \61\ Recently, the Commission adopted amendments to Form N-1A, 
see Summary Prospectus Adopting Release, supra note 28, under which 
the risk/return summary information, formerly contained in Items 2 
and 3 of Form N-1A, was reconfigured in Items 2, 3, and 4 of Form N-
1A. We apply the tagging rules to the information required by 
amended Form N-1A.
    \62\ See Item 405(b)(2) of Regulation S-T.
---------------------------------------------------------------------------

    We are adopting these rule amendments because the submission of 
interactive risk/return summary information at this time is an 
important next step in increasing the accessibility of this information 
to mutual fund investors and others. Requiring mutual funds to submit 
the risk/return summary section of their prospectuses using interactive 
data format will 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 and an Internet connection will 
have the ability to acquire and download interactive data that have 
generally been available only to intermediaries and third-party 
analysts. The interactive data rule amendments do not change disclosure 
requirements under the federal securities laws and regulations, but 
will add a requirement to include risk/return summary information in an 
interactive data format as an exhibit. Thus, requiring that filers 
provide risk/return summary information using interactive data will not 
otherwise alter at all the disclosure or formatting standards of mutual 
fund prospectuses. These filings will continue to be available as they 
are today for those who prefer to view the traditional text-based 
document.
    Interactive data can create new ways for investors, analysts, and 
others to retrieve and use the information. For example, users of risk/
return summary information will be able to 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 mutual funds currently available.\63\
---------------------------------------------------------------------------

    \63\ Investment Company Institute, 2008 Investment Company Fact 
Book, at 15 (2008), available at: http://www.icifactbook.org/pdf/
2008_factbook.pdf (as of year-end 2007, there were 8,752 mutual 
funds).
---------------------------------------------------------------------------

    Interactive data also provides an 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 may eventually reduce costs. A mutual fund 
that uses a standardized interactive data format at earlier stages of 
its reporting cycle may 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 may allow 
investors to avoid additional costs associated with third-party 
sources.
    As noted above, although most commenters generally supported the 
concept of interactive disclosure of risk/return summary 
information,\64\ they also asserted that this initiative is 
premature.\65\ In particular, several commenters urged the Commission 
to defer requiring mutual funds to submit interactive risk/return 
summary information because pending Commission proposals related to a 
mutual fund summary prospectus and exchange-traded funds (``ETFs'') 
would change the information in the risk/return summary.\66\ Related to 
those comments, commenters also asserted that: (1) The list of tags for 
risk/return summary information would require updating if the proposed 
changes to the risk/return summary are adopted; (2) the

[[Page 7753]]

list of tags' architecture needed to be updated; and (3) related tools 
are not sufficiently developed.\67\ Commenters also stated that 
implementation is premature because more information needs to be 
collected from the current voluntary program.\68\
---------------------------------------------------------------------------

    \64\ See supra note 55.
    \65\ See supra note 56.
    \66\ See letters of Data Communique, Federated, ICI, 
Oppenheimer, Schnase, T. Rowe Price, and Vanguard. The Commission 
proposed revisions to Form N-1A's risk/return summary disclosure 
requirements as part of two separate rulemaking initiatives. See 
Investment Company Act Release No. 28064 (Nov. 21, 2007) [72 FR 
67790 (Nov. 30, 2007)] (proposing amendments intended to enhance 
mutual fund disclosure of certain key information, including risk/
return summary information, by, among other things, permitting 
mutual funds to provide such information in the form of a summary 
prospectus if certain conditions are satisfied) (``Summary 
Prospectus Initiative''); and Investment Company Act Release No. 
28193 (Mar. 11, 2008) [73 FR 14618 (Mar. 18, 2008)] (proposing 
amendments to the mutual fund risk/return summary to provide certain 
information relating specifically to ETFs) (``ETF Initiative'').
    \67\ See letters of Confluence, Federated, ICI, Oppenheimer, 
Schnase, and T. Rowe Price.
    \68\ See letters of Federated, ICI, and Schnase.
---------------------------------------------------------------------------

    While we are sensitive to these commenters' concerns, they do not 
warrant delay in this important initiative, particularly given recent 
progress related to these comments. First, the Commission recently 
adopted amendments to Form N-1A related to the Summary Prospectus 
Initiative and the ETF Initiative.\69\ These amendments do not 
significantly alter the content requirements of the risk/return summary 
section, consisting of limited modifications to the disclosure in the 
Fee Table.\70\ Mutual funds will not be required to comply with these 
new Form N-1A disclosure requirements until January 1, 2010,\71\ 
providing almost one year for them to revise their disclosure. Second, 
as discussed further below,\72\ revisions to the list of tags for risk/
return summary information to account for these limited disclosure 
changes and revisions to the architecture have been issued for public 
comment and are expected to be finalized by the end of January 2009. 
Again, this will provide mutual funds with substantial time to prepare 
to tag their risk/return summary information. Third, while the 
Commission's current viewer permits the rendering of tagged risk/return 
summary information, progress has been made to develop a more advanced 
tool that will allow issuers to test their tagged exhibits prior to 
submitting them to the Commission.\73\ This upgrade to the viewer will 
be phased in, but should be completed during mid-2009.
---------------------------------------------------------------------------

    \69\ These amendments were presented to the Commission at an 
open meeting on November 19, 2008. See Summary Prospectus Adopting 
Release, supra note 28. Form N-1A changes related to both the 
Summary Prospectus Initiative and the ETF Initiative were adopted 
together in the Summary Prospectus Adopting Release.
    In the Summary Prospectus Initiative, we requested comment on 
whether the proposed linking requirements for documents posted on an 
Internet Web site should be modified. See Summary Prospectus 
Initiative, supra note 66. We received one comment on this issue 
opposing the modification of the proposed linking requirements. See 
letter of Data Communique. The linking requirements were adopted as 
proposed. See Summary Prospectus Adopting Release, supra note 28.
    \70\ These amendments include: (1) Requiring mutual funds that 
offer discounts on front-end sales charges for volume purchases (so-
called ``breakpoint discounts'') to include a brief narrative 
disclosure alerting investors to the availability of those 
discounts, see Item 3 of Form N-1A; Instruction 1(b) to Item 3 of 
Form N-1A; (2) revising the parenthetical heading for ``Annual Fund 
Operating Expenses'' in the Fee Table to read ``expenses that you 
pay each year as a percentage of the value of your investment,'' see 
Item 3 of Form N-1A; (3) requiring mutual funds, other than money 
market funds, to include brief disclosure regarding portfolio 
turnover immediately following the fee table example, see 
Instruction 5 to Item 3 of Form N-1A; and (4) permitting mutual 
funds to place two additional captions in the Fee Table directly 
below the ``Total Annual Fund Operating Expenses'' caption in cases 
where there are expense reimbursement or fee waiver arrangements 
that will reduce any fund operating expenses, see Instruction 3(e) 
to Item 3 of Form N-1A. The amendments also require modification for 
ETFs to the narrative explanation preceding the Fee Table to clarify 
that investors may pay brokerage commissions not reflected in the 
Fee Table. Instruction 1(e)(i) and (ii) to Item 3 of Form N-1A.
    \71\ See Summary Prospectus Adopting Release, supra note 28.
    \72\ See infra Section II.E.1. (discussing the list of tags for 
risk/return summary information).
    \73\ See infra Section II.E.3. (discussing the Commission's 
risk/return summary interactive data viewer).
---------------------------------------------------------------------------

    Finally, the Commission has been exploring, via the voluntary 
program, the use of interactive data for several years, including the 
submission of tagged financial information and risk/return summary 
information. Twenty-five mutual funds have submitted over 40 exhibits 
tagged with interactive data, giving the Commission experience in 
adapting to the technology. In addition, over 100 operating companies 
have submitted financial statements tagged in interactive data format. 
Each submission has enabled issuers to gain experience with submitting 
tagged documents and enabled the Commission to refine its technology 
infrastructure to accept and efficiently render these interactive 
exhibits. Moreover, given the extended compliance date discussed below, 
mutual funds will have almost two years to resolve technical issues and 
may continue participating in the voluntary program in the interim to 
gain more experience submitting interactive data.
    In addition to the recommendations to delay this initiative, some 
commenters expressed concern that limiting the interactive data filing 
requirement to only risk/return summary information could lead 
investors to place undue emphasis on this information,\74\ and several 
commenters suggested that the Commission consider expanding this 
tagging requirement to include non-risk/return disclosures in the new 
mutual fund summary prospectus.\75\ Two of these commenters recommended 
that all items in the summary prospectus should be tagged.\76\ We 
believe that implementation of our interactive data initiative should 
begin with the mutual fund risk/return summary, but we will continue to 
evaluate the benefits of tagging all items in the summary prospectus, 
as well as other information.
---------------------------------------------------------------------------

    \74\ See letters of ABA, Data Communique, and Federated. See 
also related discussion concerning commenters' suggestion that 
cautionary legends be permitted, infra Section II.B.
    \75\ See letters of Confluence, Data Communique, and Schnase; 
see also discussion of Summary Prospectus Initiative, supra note 66, 
and Summary Prospectus Adopting Release, supra note 28.
    \76\ See letters of Confluence and Schnase.
---------------------------------------------------------------------------

    Several commenters questioned whether XBRL is the appropriate 
standard format for interactive data disclosure, asserting that it is 
not sufficiently developed at this time.\77\ Specifically, commenters 
asserted that there are a limited number of commercial software 
products that are compatible with XBRL,\78\ and that rendering and 
validating are still expensive and problematic issues.\79\ One 
commenter also expressed concern that endorsing XBRL could have the 
effect of stifling competition for other languages, although this 
commenter acknowledged that she was unaware of other languages that are 
likely to become competitive with XBRL.\80\
---------------------------------------------------------------------------

    \77\ See letters of Gilmore, Schnase, and Starkman.
    \78\ See letter of Starkman.
    \79\ See letter of Gilmore.
    \80\ See letter of Schnase.
---------------------------------------------------------------------------

    While we acknowledge that XBRL is an evolving technology, we 
believe it is the appropriate interactive data format with which to 
supplement ASCII and HTML. Our experience with the voluntary program, 
including feedback from company, accounting, and software communities, 
points to XBRL as the appropriate open standard for the purposes of 
this rule.\81\ XBRL data will 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 create and compare disclosures more easily, the development 
process will likely be hastened by mutual fund disclosure using 
interactive data.
---------------------------------------------------------------------------

    \81\ See note 58 of the Proposing Release, supra note 9.
---------------------------------------------------------------------------

    Several other factors support our views regarding XBRL's broad and 
growing acceptance, internationally as well as in the U.S. For example, 
the Advisory Committee on Improvements to Financial Reporting 
(``CIFiR'') \82\

[[Page 7754]]

presented its final recommendations to the Commission in its final 
report issued in August 2008,\83\ which includes a recommendation that 
the Commission, over the long term, require the filing of financial and 
non-financial information using XBRL once specified conditions are 
satisfied.\84\ We believe that sufficient progress has been made 
regarding each of these conditions.\85\ Also, XBRL has been used by 
other U.S. agencies,\86\ and several foreign securities regulators have 
adopted voluntary or required XBRL reporting.\87\
---------------------------------------------------------------------------

    \82\ 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 open meetings on March 13-14, 2008 and May 2, 
2008, in which it heard reactions from an invited panel of 
participants to CIFiR's proposal regarding required filing of 
financial information using interactive data. Archived Webcasts of 
the meetings are available at http://sec.gov/about/offices/oca/
acifr.shtml. The 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.
    \83\ See Final Report of the Advisory Committee on Improvements 
to Financial Reporting to the United States Securities and Exchange 
Commission (August 1, 2008), (``CIFiR Report''), available at: 
http://www.sec.gov/about/offices/oca/acifr/acifr-finalreport.pdf.
    \84\ Id. at 98. The recommendation appears in chapter 4 of the 
CIFiR Report.
    \85\ See discussion at note 135, and accompanying text, of 
Interactive Data Adopting Release, supra note 6.
    \86\ Since 2005, the Federal Deposit Insurance Corporation 
(``FDIC''), the Board of Governors of the Federal Reserve System, 
and the Office of the Comptroller of the Currency 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.
    \87\ For example, such countries include Canada, China, Israel, 
Japan, Korea, and Thailand.
---------------------------------------------------------------------------

B. Content and Submission Requirements for Interactive Risk/Return 
Summary Information

    We are adopting, as proposed, the requirement that an interactive 
data file must be submitted to the Commission for any registration 
statement or post-effective amendment thereto on Form N-1A that 
includes or amends information provided in response to Items 2, 3, or 
4.\88\ In response to commenters' concerns,\89\ however, we are 
modifying our rules to encompass changes to risk/return summary 
information that mutual funds may make pursuant to rule 497 under the 
Securities Act.\90\ Specifically, in the Proposing Release, we asked 
for comment on whether mutual funds should be required to submit tagged 
risk/return summary information for prospectuses submitted pursuant to 
rule 497 under the Securities Act. Rule 497 sets out general filing 
requirements for fund prospectuses and provides, among other things, 
that funds must file any prospectus that contains information that 
varies from that in the registration statement.\91\ Commenters 
addressing the matter uniformly recommended that updates to interactive 
risk/return summary information should be required when such 
information is revised in a filing made pursuant to rule 497 under the 
Securities Act,\92\ asserting that failure to do so could: (1) 
Compromise the integrity of the entire interactive data program; \93\ 
(2) result in a rendered file containing different information from the 
current prospectus, potentially leading to liability; \94\ and (3) 
result in investors accessing stale tagged data.\95\
---------------------------------------------------------------------------

    \88\ See rule 405(b)(2) of Regulation S-T; General Instruction 
C.3.(g).(i) of Form N-1A. We are also adopting technical amendments 
to rule 405 that reflect this requirement. As previously noted, rule 
405 of Regulation S-T directly sets forth the basic tagging 
requirements and indirectly sets forth the rest of the tagging 
requirements through the requirement to comply with the EDGAR Filer 
Manual. Consistent with rule 405, the EDGAR Filer Manual will 
contain the detailed tagging requirements.
    \89\ See infra note 96 and accompanying discussion.
    \90\ 17 CFR 230.497.
    \91\ Specifically, (1) rule 497(c) under the Securities Act 
requires mutual funds to file, within five days after the effective 
date of a registration statement or the commencement of a public 
offering after the effective date of a registration statement, 
whichever occurs later, ten copies of each form of prospectus and 
form of statement of additional information (``SAI'') used after the 
effective date; and (2) rule 497(e) under the Securities Act 
provides that, after the effective date of a registration statement, 
no prospectus that purports to comply with Section 10 of the 
Securities Act [15 U.S.C. 77j] or SAI that varies from any form of 
prospectus or form of SAI filed pursuant to rule 497(c) shall be 
used until filed with the Commission.
    \92\ See letters of Data Communiqu[eacute], ICI, and Schnase.
    \93\ See letter of Data Communiqu[eacute].
    \94\ See letter of ICI.
    \95\ See letter of Schnase.
---------------------------------------------------------------------------

    We agree with commenters' concerns that failure to include changes 
to risk/return summary information in filings made pursuant to rule 497 
could result in investors and others accessing outdated interactive 
data. For that reason we are modifying the proposed rules, in response 
to the commenters' recommendations, to require that an interactive data 
file must be submitted to the Commission for any form of prospectus 
filed pursuant to rule 497(c) or (e) under the Securities Act that 
includes information provided in response to Items 2, 3, or 4 that 
varies from the registration statement.\96\
---------------------------------------------------------------------------

    \96\ See General Instruction C.3.(g).(ii) of Form N-1A. We also 
revised paragraphs (c) and (e) of rule 497 to clarify that mutual 
funds must, if applicable pursuant to General Instruction C.3.(g) of 
Form N-1A, include an interactive data file.
---------------------------------------------------------------------------

    We also are adopting, as proposed, the requirement that an 
interactive data file to a Form N-1A filing, whether the filing is an 
initial registration statement or a post-effective amendment thereto, 
must be submitted as an amendment to the registration statement to 
which the interactive data file relates and 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.\97\ Our requirement that the interactive data file 
be submitted 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 can be submitted under rule 485(b) of 
the Securities Act, which provides for immediate effectiveness of 
amendments that make non-material changes, and will 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.
---------------------------------------------------------------------------

    \97\ See General Instruction C.3.(g).(i) to Form N-1A.
---------------------------------------------------------------------------

    To address the inclusion of tagged risk/return summary information 
submitted with rule 497 filings discussed above, our amendments provide 
that tagged risk/return summary exhibits must be submitted with or 
after the filing of a form of prospectus pursuant to rule 497(c) or (e) 
under the Securities Act. The tagged exhibits may be submitted 
concurrently with the rule 497 filing or up to 15 business days 
subsequent to the filing made pursuant to rule 497.\98\ Similar to the 
submissions under rule 485(b), the 15 business days is intended to 
provide funds adequate

[[Page 7755]]

time to prepare their interactive data exhibits.
---------------------------------------------------------------------------

    \98\ See General Instruction C.3.(g).(ii) to Form N-1A. Pursuant 
to the EDGAR Filer Manual, mutual funds should include an 
interactive data file as an exhibit (EX-101) contained in an EDGAR 
497 submission. Funds submitting their exhibit subsequent to their 
initial rule 497 filing should make a second EDGAR 497 submission 
that includes (1) a 497 document (this 497 document may, in 
accordance with rule 411 under the Securities Act, incorporate by 
reference the first rule 497 filing and should include the accession 
number of that first rule 497 filing), and (2) any related 
interactive data exhibit.
---------------------------------------------------------------------------

    We also are adopting, as proposed, the requirement that an 
interactive data file be submitted as an exhibit to Form N-1A, but also 
include a modification to address submissions made with rule 497 
filings, providing that an interactive data file must be submitted as 
an exhibit to the filing made pursuant to rule 497.\99\ Similar to the 
voluntary program, the rules require that the information contained in 
the risk/return summary section in the traditional format filing be the 
same as in the interactive data format.\100\ We have not changed this 
equivalency standard for risk/return summary information provided in 
interactive data format as required by the rules. As proposed, we also 
are adopting the requirement that an interactive data file 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.\101\ 
However, information that is not class-specific, such as investment 
objectives, is not required to be separately identified by class.
---------------------------------------------------------------------------

    \99\ See General Instruction C.3.(g).(iv) of Form N-1A.
    \100\ See rule 405(b)(2) of Regulation S-T.
    \101\ See General Instruction C.3.(g).(iv) of Form N-1A.
---------------------------------------------------------------------------

    The rules do not eliminate or alter existing substantive disclosure 
requirements for risk/return summary information. The rules also do not 
eliminate or alter existing ASCII or HTML filing requirements. We 
believe investors and other users may wish to obtain an electronic or 
printed copy of the entire registration statement in ASCII or HTML, 
either in addition to or instead of disclosure formatted using 
interactive data. To clarify the intent of the rules, we have included 
an instruction to rule 405 of Regulation S-T stating that the rules 
require a disclosure format, but do not change substantive disclosure 
requirements.\102\ The rules also 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.\103\
---------------------------------------------------------------------------

    \102\ See Interactive Data Adopting Release, supra note 6 
(adopting Preliminary Note 2 to rule 405).
    \103\ See rule 405(b)(2) of Regulation S-T.
---------------------------------------------------------------------------

    As noted previously, several commenters expressed concern that 
tagging only a fund's risk/return summary information may give such 
information too much emphasis, and may encourage some investors to act 
on incomplete information.\104\ These commenters suggested that 
registrants be permitted to include a legend similar to that required 
as part of the voluntary program, cautioning investors, before making 
an investment decision, to read and consider the full prospectus or 
other filing from which the information was taken.\105\ Because we 
believe it is inappropriate for the interactive data files to alter or 
differ from the information included in the related official filing, we 
have not included any provision permitting the inclusion of additional 
cautionary language in the interactive data file. Pursuant to 
commenters' recommendations, however, we intend to modify the 
Commission's interactive data viewer to include a legend recommending 
that users review a fund's full prospectus.\106\ This legend on the 
viewer serves a similar goal as the tagged cautionary language within 
an interactive data file.\107\
---------------------------------------------------------------------------

    \104\ See letters of ABA, Federated, ICI, Oppenheimer, and 
Schnase.
    \105\ Id.
    \106\ See infra Section II.E.3. (discussing the Commission's 
risk/return summary interactive data viewer).
    \107\ The Commission encourages third-party viewers also to 
include this legend, however, we note that the liability provisions 
we have adopted attach only to interactive data as viewed on the 
Commission's viewer. See infra Section II.F. (discussing liability).
---------------------------------------------------------------------------

    While one commenter asserted that interactive data should be 
embedded in HTML filings,\108\ two other commenters stated that such a 
requirement should be deferred until embedding technology is 
sufficiently developed.\109\ We agree that 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 rules will 
treat interactive data as part of the official filing, instead of as 
only a supplement as is the case in the voluntary program.\110\
---------------------------------------------------------------------------

    \108\ See letter of Hamscher.
    \109\ See letters of Data Communiqu[eacute] and Schnase.
    \110\ As further discussed below in Section II.F., however, for 
a specified period, interactive data generally will be deemed not 
filed for purposes of specified liability provisions.
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C. Web Site Posting of Interactive Data

    In the Proposing Release, we proposed to require that each mutual 
fund provide the same interactive data that would be required to be 
provided to the Commission on its Web site, if it has one. Several 
commenters opposed this requirement,\111\ with some asserting that 
posting interactive data files on the Web without a tool to convert 
them to viewable format may confuse and frustrate investors.\112\
---------------------------------------------------------------------------

    \111\ See letters of ABA, ICI, Schnase, Starkman, T. Rowe Price, 
and Vanguard.
    \112\ See letters of ICI and T. Rowe Price.
---------------------------------------------------------------------------

    We continue to believe that interactive data, consistent with our 
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 improved access to and 
usability of the data, promoting its awareness and use. Encouraging 
widespread accessibility to mutual funds' risk/return summary 
information furthers our mission to promote fair, orderly, and 
efficient markets, and facilitates capital formation. Web site 
availability of the interactive data will encourage its widespread 
dissemination, contributing to lower access costs for users. We 
therefore are adopting the requirement that each mutual fund provide 
its interactive data files on the fund's Web site, if it has one.\113\ 
The interactive data is required to be posted on a fund's Web site no 
later than the end of the calendar day it is submitted to the 
Commission or is required to be submitted to the Commission, whichever 
is earlier.\114\ As proposed, funds would have been required to post 
the interactive data on their Web sites by the end of the business day 
on the earlier of the date the interactive data is submitted or is 
required to be submitted to the Commission. In order to make it easier 
for mutual funds to satisfy the posting requirement by providing 
several more hours in which to comply but still have the posted 
information available in a timely manner, the rule amendments, as 
adopted, will require posting by the end of the calendar rather than 
business day specified.
---------------------------------------------------------------------------

    \113\ See General Instruction C.3.(g).(i) and (ii) of Form N-1A.
    \114\ See Interactive Data Adopting Release, supra note 6 
(adopting rule 405(g)); rule 405(a). 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 rules, the Web posting would be required at 
any time on the same calendar day that the interactive data exhibit 
to a mutual fund filing is deemed officially filed or required to be 
filed, whichever is earlier.
---------------------------------------------------------------------------

    We also are revising the proposed rule to require that the 
interactive data be posted on a fund's Web site as long as the 
registration statement to which it

[[Page 7756]]

relates remains current.\115\ We believe that such a period strikes an 
appropriate balance between the fund effort needed to post and the 
investor benefit from having access to the posted material through the 
additional source of the mutual fund's Web site. In this regard, we 
note that the interactive data will be available on the Commission's 
Web site.
---------------------------------------------------------------------------

    \115\ See rule 405(a)(4) of Regulation S-T; see also General 
Instruction C.3.(g).(iii) of Form N-1A. 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.
---------------------------------------------------------------------------

    One commenter, who opposed the proposal to require Web site 
posting, recommended that funds instead be required to post a link to 
the Commission's Web site to access the XBRL files.\116\ However, we 
believe that access to the interactive data on mutual fund Web sites 
will enable search engines and other data aggregators to more quickly 
and cheaply aggregate the data and make them available to investors 
because the data will be available directly from the filer, instead of 
through third-party sources that may charge a fee. It could also 
transfer reliability costs of data availability to the public sector by 
reducing the likelihood that investors cannot access the data through 
the Commission's Web site due to down-time for maintenance or to 
increased network traffic. We also believe that the availability of 
interactive data on mutual fund Web sites will make it easier and 
faster for investors to collect information on a particular fund, 
rather than if investors were required to visit separately (for 
example, by hyperlink) and search the Commission's Web site for 
information, particularly if the investor is already searching the 
mutual fund's Web site. Therefore, to help further our goals of 
decreasing user cost and increasing information availability over the 
long term, our rules do not allow mutual funds to comply with the Web 
posting requirement by including a hyperlink to the Commission's Web 
site.
---------------------------------------------------------------------------

    \116\ See letter of Data Communiqu[eacute].
---------------------------------------------------------------------------

    This requirement is 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. We also believe 
that this requirement can provide an incentive for mutual funds to add 
content to or otherwise enhance their Web sites thereby improving 
investor experience. For example, we recently adopted amendments that 
would permit a person to satisfy the mutual fund prospectus delivery 
obligations under the Securities Act by sending or giving key 
information directly to investors in the form of a summary prospectus 
and providing the statutory prospectus on an Internet Web site.\117\ 
Mutual funds may also satisfy certain disclosure obligations by posting 
required disclosures on their Web sites.\118\ In addition, many mutual 
funds provide on their Web sites access to their prospectuses, 
statements of additional information, and other Commission 
filings.\119\ This rule will expand such Web site posting by requiring 
mutual funds with Web sites to post their interactive data as well.
---------------------------------------------------------------------------

    \117\ See Summary Prospectus Adopting Release, supra note 28. 
Upon an investor's request, a mutual fund also would be required to 
send the statutory prospectus to the investor in paper or by e-mail.
    \118\ 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 19, 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).
    \119\ 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 SAI 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.
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D. Consequences of Non-Compliance and Hardship Exemption

    We are adopting, as proposed, a rule amendment providing 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, will be automatically 
suspended.\120\ Any suspension becomes effective at the time that the 
filer fails to meet the requirement to submit or post interactive data 
and terminates as soon as the filer has submitted and posted that data. 
The suspension applies to a failure to submit and post interactive data 
as an exhibit to a registration statement or as an exhibit to a filing 
under rule 497 under the Securities Act.
---------------------------------------------------------------------------

    \120\ See rule 485(c)(3) under the Securities Act.
---------------------------------------------------------------------------

    The suspension applies to post-effective amendments filed after the 
suspension becomes effective, but does not apply to post-effective 
amendments that were filed before the suspension became effective. The 
suspension does not apply to post-effective amendments filed solely for 
purposes of submitting interactive data, which will enable a filer to 
cure its failure to submit interactive data by filing an amendment 
under rule 485(b) and posting the information on its Web site. 
Similarly, a filer may cure a failure to submit an interactive data 
file that is required to be submitted with a rule 497 filing by making 
a subsequent rule 497 filing with the interactive data exhibit and also 
posting the information on its Web site.
    Several commenters opposed this automatic suspension as 
unnecessary, particularly given Commission authority to punish those 
who violate its rules.\121\ Some commenters asserted that it could lead 
to potential penalties for minor violations of the interactive filing 
requirements.\122\ We continue to believe that precluding the use of 
immediate effectiveness of post-effective amendments during any period 
of failure to comply is an appropriate means to direct attention to the 
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. The provision strikes an appropriate 
balance between limiting non-compliant mutual funds from using the 
immediate effectiveness provision, yet also providing an easy remedy to 
diminish any risk of any undue penalty to funds.
---------------------------------------------------------------------------

    \121\ See letters of ABA, Federated, ICI, and Oppenheimer.
    \122\ See letters of Federated and ICI.
---------------------------------------------------------------------------

    We previously proposed conditioning a fund using rule 485(b) upon 
the fund having on file with the Commission a current report on Form N-
SAR.\123\ We ultimately did not adopt that proposal in response to 
commenters' criticisms that the proposal was unnecessary and 
potentially unfair to funds, and their recommendation that the 
Commission rely upon its enforcement remedies to punish late 
filers.\124\ One commenter urged us to take a similar approach related 
to our proposed suspension for failure to comply with the interactive

[[Page 7757]]

data requirements.\125\ Unlike that prior proposal, which linked a 
fund's ability to rely upon rule 485(b) to Form N-SAR, a form separate 
from the registration statement, the suspension that we are adopting 
today relates to a specific requirement in Form N-1A. We believe that 
it is appropriate to link a fund's ability to receive immediate 
effectiveness with a requirement that the fund be current in its filing 
obligations with respect to that form.
---------------------------------------------------------------------------

    \123\ 17 CFR 274.101. See Securities Act Release No. 7015 (Sept. 
21, 1993) [58 FR 50291 (Sept. 27, 1993)].
    \124\ See Securities Act Release No. 7083 (Aug. 17, 2004) [59 FR 
43460 (August 24, 1994)].
    \125\ See letter of Federated.
---------------------------------------------------------------------------

    Several commenters also raised concerns over the language of the 
suspension in proposed rule 485(c), which would apply to any 
``registrant.'' \126\ The commenters asserted that a fund that is part 
of a series fund may be prevented from filing a post-effective 
amendment to its registration statement under rule 485(b) if another 
fund in that series had an issue with an interactive data file.
---------------------------------------------------------------------------

    \126\ See letters of ICI, Oppenheimer, and Schnase.
---------------------------------------------------------------------------

    One of those commenters recommended that, if the proposal is 
adopted, the Commission clarify that ``registrant'' means the specific 
series at issue.\127\ We do not believe that the commenter's 
recommendation is workable. Specifically, multi-series funds are 
generally contained within the same prospectus in a registration 
statement, and post-effective amendments are typically filed 
concurrently for multiple series. In such a case, it is generally 
unworkable to permit automatic effectiveness for certain series while 
prohibiting reliance upon rule 485(b) for other series in the same 
filing. Further, the requirement that a fund's registration statement 
is compliant with its interactive data obligations should apply to all 
of the risk/return summary information in that registration statement, 
and, thus, if a registrant is not current in its obligations, the 
ability to rely upon rule 485(b) should be suspended until remedied.
---------------------------------------------------------------------------

    \127\ See letter of Schnase.
---------------------------------------------------------------------------

    As noted in the Proposing Release, the failure to provide the 
required interactive data submission will not affect a mutual fund's 
ability to incorporate by reference the mutual fund's prospectus or 
statement of additional information (``SAI'') into another document, 
such as the summary prospectus.\128\ We received no comments regarding 
this issue.
---------------------------------------------------------------------------

    \128\ Rule 303(a)(3) of Regulation S-T [17 CFR 232.303(a)(3)] 
restricts the ability of registered investment companies to 
incorporate by reference into an electronic filing documents that 
have not been filed in electronic format. We will not interpret rule 
303 to apply to the failure to file interactive data files.
---------------------------------------------------------------------------

    Consistent with the treatment of other applicable reporting 
obligations, we are adopting, as proposed, a continuing hardship 
exemption for the inability timely to submit electronically interactive 
data. Rule 202 of Regulation S-T provides for continuing hardship 
exemptions.\129\
---------------------------------------------------------------------------

    \129\ Rule 201 of Regulation S-T [17 CFR 232.201] provides for 
temporary hardship exemptions. We are not adopting a temporary 
hardship exemption because our rules provide a mutual fund with a 
15-business day period for submitting the interactive data file for 
a related official 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 Commission or 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.
    As proposed, we are revising rule 202 to provide that a grant of a 
continuing hardship exemption for interactive data will not require a 
paper submission.\130\ 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) will be suspended until it does electronically submit the 
interactive data.\131\ Similarly, we are revising rule 202 to provide 
an essentially mirror-image exemption from the requirement for a mutual 
fund that has a Web site to post the interactive data on its Web 
site.\132\ We did not receive any comments addressing this issue.
---------------------------------------------------------------------------

    \130\ See rule 202 as adopted in Interactive Data Adopting 
Release, supra note 6.
    \131\ Amendment to Note 4 to rule 202 as adopted in Interactive 
Data Adopting Release, supra note 6; rule 485(c)(3).
    \132\ Id.
---------------------------------------------------------------------------

E. Interactive Data List of Tags and Commission Viewer

1. Data Tags
    Under the rule, mutual funds are required to submit their risk/
return summary information in an interactive data file using the most 
recent list of tags released by XBRL U.S. for risk/return summary 
information, as approved for use by the Commission.\133\ Interactive 
data is required for the entirety of the risk/return summary 
information, including information for all series and all classes.\134\
---------------------------------------------------------------------------

    \133\ See Interactive Data Adopting Release, supra note 6 
(adopting amendments to rule 11 of Regulation S-T and adopting new 
rule 405(a)) and amendments to rule 405(a).
    \134\ See General Instruction C.3.(g) of Form N-1A.
---------------------------------------------------------------------------

    The submission also must include any supporting files as prescribed 
by the EDGAR Filer Manual.\135\ Mutual funds are 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 identity identifiers are formatted 
using the appropriate list of tags as required by Regulation S-T and 
the EDGAR Filer Manual.\136\
---------------------------------------------------------------------------

    \135\ As discussed supra note 17, rule 405 of Regulation S-T 
directly sets forth the basic tagging requirements and indirectly 
sets forth the rest of the tagging requirements, which are contained 
in the EDGAR Filer Manual. See Interactive Data Adopting Release, 
supra note 6 (adopting rule 405 of Regulation S-T).
    \136\ Id.
---------------------------------------------------------------------------

    Several commenters asserted that the list of tags for risk/return 
summary information required additional development before the 
Commission mandates filing of risk/return summaries in interactive data 
format.\137\ Three commenters asserted that there are significant 
technical difficulties relating to the current list of tags,\138\ 
noting, for example, that the current tagging software did not provide 
a way to accurately replicate footnotes to the fee table, or special 
symbols such as registered marks.\139\ Commenters further asserted that 
mutual funds would not have sufficient time to resolve these technical 
issues,\140\ to test the final list of tags,\141\ or to review the 
various software options for compliance with the rules.\142\ Several 
commenters also asserted that currently-available tagging software has 
yet to be finalized for use in rendering interactive versions of risk/
return summary information.\143\ These commenters urged that required 
use of the list of tags be delayed until these deficiencies have been 
remedied,\144\ and the list has been acknowledged by XBRL 
International.\145\ One commenter expressed concern that the revisions 
to the list would not be finalized and acknowledged by XBRL 
International in a brief enough time period to allow thorough 
evaluation and

[[Page 7758]]

implementation prior to the proposed compliance date.\146\
---------------------------------------------------------------------------

    \137\ See letters of Federated, Gilmore, ICI, Oppenheimer, 
Schnase, and Vanguard.
    \138\ See letters of Federated, ICI, and Vanguard.
    \139\ See letters of Federated and Vanguard.
    \140\ See letter of Federated.
    \141\ See letter of ICI.
    \142\ See letters of ICI and Oppenheimer.
    \143\ See letters of Federated, Gilmore, ICI, and Oppenheimer.
    \144\ See letters of Federated and Vanguard.
    \145\ See letters of ICI and Schnase.
    \146\ See letter of Oppenheimer.
---------------------------------------------------------------------------

    Given the status of the list of tags for risk/return summary 
information, we do not believe the issues raised by commenters warrant 
delay of the initiative. As previously noted, XBRL U.S. has updated the 
architecture of the list of tags developed by the ICI and conformed the 
list to the changes in the risk/return summary that we adopted as part 
of our Summary Prospectus Initiative.\147\ Among other things, the 
updates are intended to address technical problems, such as the 
difficulty of tagging footnotes that were cited by commenters. It is 
anticipated that these changes related to the architecture and addition 
of new tags will be finalized by the end of January 2009,\148\ almost 
two years before the compliance date for submission of tagged risk/
return summary information. Further, the contract with XBRL U.S. 
requires that the list of tags receive acknowledgement prior to 
finalization.
---------------------------------------------------------------------------

    \147\ See Summary Prospectus Adopting Release, supra note 28.
    \148\ See supra note 51 and accompanying text.
---------------------------------------------------------------------------

    Furthermore, there are a growing number of software applications 
available to preparers and consumers that are designed to help 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, are growing and that the list of tags for 
risk/return summary information is now sufficiently comprehensive to 
require that mutual funds provide their risk/return summary information 
in interactive data format.
    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 summary 
information, we believe that, with the enhancements to the list of tags 
that XBRL U.S. is developing, the list of tags will be sufficiently 
developed to support the interactive data disclosure requirements in 
the rules.
    One of the useful aspects 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, we 
are adopting, as proposed, the rule provision that limits the use of 
extensions to circumstances where the appropriate element does not 
exist in the standard list of tags.\149\ Wherever possible and when a 
standard element is appropriate, preparers are required to change the 
label for an element that exists in the standard list of tags, instead 
of creating a new customized tag.\150\ We received no comments 
concerning this issue.
---------------------------------------------------------------------------

    \149\ Rule 405(c)(1)(iii)(B) as adopted in Interactive Data 
Adopting Release, supra note 6.
    \150\ Rule 405(c)(1)(iii)(A) as adopted in Interactive Data 
Adopting Release, supra note 6.
---------------------------------------------------------------------------

2. Regulation S-T and the EDGAR Filer Manual
    We are adopting, as proposed, the requirement that mutual funds 
provide interactive data in the form of exhibits to the related 
registration statement on Form N-1A, and we are also adopting a 
requirement that mutual funds provide interactive data in the form of 
exhibits to any related form of prospectus filed pursuant to rule 
497(c) or (e) under the Securities Act that includes risk/return 
summary information that varies from the registration statement.\151\ 
Interactive data will be required to comply with our Regulation S-T 
\152\ and the EDGAR Filer Manual. The EDGAR Filer Manual is available 
on our Web site.\153\ It includes technical information for making 
electronic filings with the Commission. Volume II of this manual 
includes guidance on the preparation, submission, and validation of 
interactive data submitted under the voluntary program.\154\
---------------------------------------------------------------------------

    \151\ The requirement to submit interactive data as an exhibit 
appears in General Instruction C.3.(g).(iv) of Form N-1A.
    \152\ Rule 405 of Regulation S-T directly sets forth the basic 
tagging and posting requirements for the XBRL data and requires 
compliance with the EDGAR Filer Manual. Consistent with rule 405, 
the EDGAR Filer Manual contains the detailed tagging requirements.
    \153\ The EDGAR Filer Manual is available at: http://
www.sec.gov/info/edgar/edmanuals.htm.
    \154\ As previously noted, the EDGAR Filer Manual is currently 
being updated to incorporate changes to the tagging requirements 
applicable to financial data and to fund risk/return summary 
information. See supra note 17.
---------------------------------------------------------------------------

    In addition to both Regulation S-T, which includes the rules we are 
adopting, 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.
3. Commission Viewer
    Some commenters asserted that the Commission's mutual fund viewer 
required more development before the Commission requires filings in 
interactive data format.\155\ Specifically, commenters expressed 
concern that the viewer was too narrow and uncomfortable to read,\156\ 
that filers in the voluntary program were unable to view an interactive 
data exhibit prior to submitting the exhibit,\157\ and that existing 
viewers, including the Commission's, do not display the tagged files 
consistently.\158\
---------------------------------------------------------------------------

    \155\ See letters of ICI, Oppenheimer, Schnase, Starkman, and 
Vanguard.
    \156\ See letter of Starkman.
    \157\ See letter of Vanguard.
    \158\ See letter of ICI.
---------------------------------------------------------------------------

    While, as discussed above, the Commission's current viewer permits 
the rendering of tagged risk/return summary information, we are in the 
process of implementing changes to develop a more advanced tool that 
should address many of these concerns. The upgraded viewer will permit 
filers to conduct test filings and view rendered documents prior to 
submitting their exhibits. We expect these upgrades to be completed 
during mid-2009.
    Further evaluation will be useful with respect to the availability 
of inexpensive and sophisticated interactive data viewers. Currently 
software providers are developing interactive data viewers, and we 
anticipate that these will become widely available and increasingly 
useful to investors.
    As noted previously, commenters also expressed concern about the 
potential risks to investors of providing them with only the risk/
return summary without a reference to the additional information that 
is contained in the registration statement.\159\ In order to avoid 
confusion, three of these commenters suggested that the viewable 
interactive data be accompanied by a cautionary legend encouraging 
investors to read and consider the full prospectus or other filing from 
which the

[[Page 7759]]

information is taken.\160\ Specifically, one commenter suggested that 
the viewable interactive data be accompanied by a cautionary legend 
similar to that required to be included in fund advertisements by rule 
482 under the Securities Act.\161\ We agree that it is appropriate to 
place context on the information presented in the viewer, and to 
encourage investors to review a fund's prospectus. Accordingly, we will 
include language within any rendered risk/return summary information on 
the Commission's upgraded mutual fund viewer to: (1) Inform users that 
the information is derived from a portion of the fund's prospectus; (2) 
explain that the prospectus contains additional information about the 
mutual fund; and (3) state that a fund's prospectus should be read 
carefully before investing.
---------------------------------------------------------------------------

    \159\ See letters of ABA, Federated, ICI, Oppenheimer, and 
Schnase. See also discussion at Section II.B. supra, note 104 and 
accompanying text.
    \160\ See letters of ABA, ICI, and Schnase.
    \161\ See letter of ICI. See also rule 482(b)(1) under the 
Securities Act [17 CFR 230.482]. Rule 482(b)(1) requires a mutual 
fund advertisement to include a statement that ``[a]dvises an 
investor to consider the investment objectives, risks, and charges 
and expenses of the investment company carefully before investing; 
explains that the prospectus contains this and other information 
about the investment company; identifies a source from which an 
investor may obtain a prospectus; and states that the prospectus 
should be read carefully before investing.''
---------------------------------------------------------------------------

    Commenters also raised concerns about potential liability under the 
federal securities laws relating to rendered interactive data 
filings.\162\ These concerns are addressed in Section II.F., below.
---------------------------------------------------------------------------

    \162\ See letters of ABA, ICI, Oppenheimer, and Schnase.
---------------------------------------------------------------------------

F. Application of Federal Securities Laws

    Complete, accurate, and reliable disclosures are essential to 
investors and the proper functioning of the securities markets. Our 
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 Commission's application of technology, market forces, 
and the liability provisions of the federal securities laws, help 
further those goals.
    New rule 406T of Regulation S-T \163\ addresses the liability for 
an interactive data file and provides that an interactive data file is:
---------------------------------------------------------------------------

    \163\ See Interactive Data Adopting Release, supra note 6 
(adopting rule 406T of Regulation S-T).
---------------------------------------------------------------------------

     Subject to the anti-fraud provisions of Section 17(a)(1) 
of the Securities Act, Section 10(b) of and rule 10b-5 under the 
Exchange Act, and Section 206(1) of the Investment Advisers Act except 
as provided below;
     Deemed not filed or part of a registration statement or 
prospectus for purposes of Sections 11 or 12 of the Securities Act, is 
deemed not filed for purposes of Section 18 of the Exchange Act or 
Section 34(b) of the Investment Company Act, and otherwise is not 
subject to liability under these sections;
     Deemed filed for purposes of rule 103 of Regulation S-T; 
and
     Subject to liability for a failure to comply with rule 405 
of Regulation S-T, but shall be deemed to have complied with rule 405 
and would not be subject to liability under the anti-fraud provisions 
set forth above or under any other liability provision if the 
electronic filer:
    [cir] Makes a good faith attempt to comply with rule 405; and
    [cir] After the electronic filer becomes aware that the interactive 
data file fails to comply with rule 405, promptly amends the 
interactive data file to comply with rule 405.
    In regard to correcting an interactive data file, the Commission 
added the term ``promptly'' to the list of defined terms in Rule 11 
under Regulation S-T.\164\ Rule 11 defines ``promptly'' as ``as soon as 
reasonably practicable under the facts and circumstances at the time.'' 
The definition is followed by a non-exclusive safe harbor. The safe 
harbor generally provides that a correction made by the later of 24 
hours or 9:30 a.m. on the next business day after the filer becomes 
aware of the need for the correction is deemed promptly made. If a fund 
fails to comply with the safe harbor, the fund still may have corrected 
promptly depending on the applicable facts and circumstances.
---------------------------------------------------------------------------

    \164\ See Interactive Data Adopting Release, supra note 6 
(amending Rule 11).
---------------------------------------------------------------------------

    As adopted, the liability provisions of new Rule 406T will apply 
only until October 31, 2014. We believe that limiting the modified 
application of the federal securities laws to a specified period 
improves the balance between avoiding unnecessary cost and expense and 
encouraging accuracy in regard to interactive data because it 
recognizes that issuers and service providers likely will grow 
increasingly skilled at and comfortable with the tagging requirements.
    Except for the period limitation, this provision is substantially 
the same as the proposed treatment of interactive data files under the 
proposed rules.\165\ In the Proposing Release, the Commission sought 
comment on this topic, and commenters generally supported limiting the 
liability of mutual funds for good faith errors in tagging or 
formatting interactive data submissions.\166\ As adopted, however, we 
include a provision that, after October 31, 2014, these liability 
provisions will no longer apply and an interactive data file will be 
subject to the same liability provisions as the related official 
filing.\167\ We adopt this provision because we believe, over time, 
information in interactive data should be subject to the same liability 
as all other information in a fund's filing. The provision, however, 
provides funds with protections over a substantial period to become 
comfortable with ensuring the accuracy of their interactive data files.
---------------------------------------------------------------------------

    \165\ See Proposing Release, supra note 9 (proposing rule 406).
    \166\ See letters of ABA, Angel, ICI, and Schnase.
    \167\ See rule 406T(d) of Regulation S-T.
---------------------------------------------------------------------------

    As proposed, rule 406 of Regulation S-T also provided that the 
usual liability provisions of the federal securities laws would apply 
to human-readable interactive data that is identical in all material 
respects to the corresponding data in the traditional format filing 
\168\ as displayed by a viewer that the Commission provides. Commenters 
raised substantial concerns over this proposal, including: (1) Seeking 
clarification of the liability applicable to situations not intended to 
be addressed explicitly by the proposed rules, such as for errors 
arising as a result of the Commission's interactive data rendering 
software,\169\ or as a result of comparative applications provided by 
either the Commission or a third party; \170\ (2) requesting 
clarifications that funds should not be held responsible for 
information converted into viewable form by non-Commission 
viewers,\171\ or for interactive data posted on fund Web sites; \172\ 
and (3) requesting that a mutual fund be able to incorporate by 
reference the fund's full prospectus and SAI into the viewable 
interactive data exhibit.\173\
---------------------------------------------------------------------------

    \168\ As proposed, the human-readable interactive data would 
have been 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.
    \169\ See letter of ABA.
    \170\ See letter of Oppenheimer.
    \171\ See letters of ABA, ICI, and Oppenheimer.
    \172\ See letters of ABA and ICI.
    \173\ See letters of Federated, ICI, and Schnase. One commenter 
noted that the risk/return summary information in a prospectus is 
subject to liability under Sections 11 or 12 of the Securities Act, 
but only in connection with the full prospectus in which it is 
contained, and the SAI that is typically incorporated therein. See 
letter of ICI. The commenter asserted that it would not be 
appropriate to isolate the risk/return summary information from the 
context of the entire registration statement and impose liability.

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[[Page 7760]]

    In response to commenters' concerns we believe that interactive 
data in viewable form are best addressed in relation to interactive 
data files and traditional concepts of liability. Interactive data in 
viewable form that are displayed on the Commission's Web site will 
reflect the related interactive data file and, as a result, such 
interactive data in viewable form should be treated in the same manner 
as the related interactive data file in regard to a fund's failure to 
correctly tag an interactive data file that results in a failure of the 
interactive data in viewable form to reflect the related official 
filing. Interactive data in viewable form that are displayed on other 
Web sites would be subject to general anti-fraud principles applicable 
to republication of another person's statements.\174\ Consistent with 
traditional concepts of liability, a fund could not be liable twice for 
a failure that occurs in both an interactive data file and the related 
interactive data in viewable form.
---------------------------------------------------------------------------

    \174\ These general anti-fraud principles relate to, among other 
areas, aiding and abetting, control persons, entanglement, and 
adoption.
---------------------------------------------------------------------------

    We believe that this change is appropriate to address commenters' 
concerns and provide certainty as to the parameters of their liability 
related to interactive data. We also believe that it is appropriate 
given other protections that investors will receive related to the 
interactive data, including that 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 of the Exchange Act and, 
in the appropriate circumstance, to Section 11 of the Securities Act.
    In the Interactive Data Adopting Release, we elaborate further upon 
interactive data in viewable form and our decision not to impose any 
separate liability for such data.\175\ Given that the rules do not 
include such provisions, we do not address further commenters' requests 
for clarification related to liability for rendered documents. Further, 
we do not believe it is needed to provide funds with the ability to 
incorporate by reference into rendered documents, given that liability 
is not imposed separately upon interactive data in viewable form.
---------------------------------------------------------------------------

    \175\ See Interactive Data Adopting Release, supra note 6.
---------------------------------------------------------------------------

    In the Proposing Release, we did not propose to permit or require 
cautionary legends for interactive risk/return summary information. 
Several commenters expressed concern about the potential consequences 
of investor reliance on incomplete information.\176\ Two commenters 
suggested that the Commission require viewable interactive risk/return 
disclosures to include a cautionary disclosure similar to the legend we 
recently required for the new mutual fund summary prospectus, which 
advises investors where to locate additional information about the fund 
in the fund's prospectus and SAI, and permits a fund to incorporate 
certain information by reference into the summary prospectus.\177\ As 
noted in Section II.E. above, we agree with commenters that it is 
appropriate to alert investors about the availability of additional 
information in a fund's prospectus. Therefore, we will include 
cautionary language on the Commission's mutual fund viewer encouraging 
investors to review a fund's full prospectus.
---------------------------------------------------------------------------

    \176\ See letters of ABA, Federated, ICI, Oppenheimer, and 
Schnase.
    \177\ See letters of ICI and Schnase; see also Summary 
Prospectus Adopting Release, supra note 28.
---------------------------------------------------------------------------

    We believe, however, that attempting to place in interactive data 
legends of the type suggested would be impracticable because 
interactive data will often be accessed in its machine-readable form 
and, even if it were accessed in viewable form, might not be accessed 
in a place where the legend would appear. As to a legend that states 
people should not rely on the interactive data in particular, such a 
legend would be inappropriate because there is no reason the data 
should not be reliable and, were it not reliable, it would have little 
value.\178\
---------------------------------------------------------------------------

    \178\ We reach a different conclusion regarding a tagged legend 
in the voluntary program and continue to require such legends to 
provide investors with limited additional notice because that 
information is not part of the official filing and was intended for 
experimental submissions.
---------------------------------------------------------------------------

    We are adopting, as proposed, the requirement that an interactive 
data file consist of ``no more and no less'' than the corresponding 
risk/return summary information in the related official filing.\179\ 
One commenter expressed concern that submitting interactive risk/return 
summary information for multiple funds may confuse some investors who 
seek data about only a single fund.\180\ However, as a result of our 
Summary Prospectus Initiative, multiple fund prospectuses must present 
the summary information for each fund sequentially and not integrate 
the information for more than one fund.\181\ Since risk/return summary 
information for multiple funds will no longer be permitted to be 
combined in the prospectus, this information will also, in accordance 
with rule 405, be presented separately in interactive format. In view 
of this requirement, interactive risk/return summary information for 
multiple funds should be as easy for investors to locate and understand 
as similar information for a single-fund prospectus.
---------------------------------------------------------------------------

    \179\ Rule 405(b)(2) of Regulation S-T.
    \180\ See letter of ICI.
    \181\ See Summary Prospectus Adopting Release, supra note 28.
---------------------------------------------------------------------------

    To assist mutual funds in ensuring the accuracy of their XBRL 
filings, we plan, in the future, to make available to mutual funds the 
opportunity to make a test submission with the Commission to create 
viewable interactive data.\182\ If the validation system finds an 
error, it will advise the filer of the nature of the error and whether 
the error was major or minor. As occurs in the voluntary program, a 
major error in an interactive data exhibit that is part of a live 
filing will cause the exhibit to be held in suspense in the electronic 
filing system. The rest of the filing will be accepted and disseminated 
if there are no major errors outside of the interactive data exhibit. 
If that happens, the filer will 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 is part of a 
live filing will not prevent the interactive data exhibit from being 
accepted and disseminated together with the rest of the filing if there 
are no major errors in the rest of the filing. We believe it is 
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.
---------------------------------------------------------------------------

    \182\ The EDGAR Filer Manual addresses test submissions 
primarily at Section 6.6.5 of Volume II.
---------------------------------------------------------------------------

    The rule does not require mutual funds 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.\183\ We are

[[Page 7761]]

taking this approach after considering various factors, including:
---------------------------------------------------------------------------

    \183\ With respect to registration statements, SAS 37 (AU 
Section 711) was issued in April 1981 to address the auditor's 
responsibilities in connection with filings under the federal 
securities statutes. With respect to our rule, an auditor will not 
be required to apply AU Section 711 to the interactive data provided 
as an exhibit in a fund's registration statement, or to the viewable 
interactive data.
---------------------------------------------------------------------------

     Commenters' views;
     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., XBRL International, and 
Commission resources for preparers of tagged data; \184\
---------------------------------------------------------------------------

    \184\ An example of Commission resources includes the EDGAR 
Filer Manual.
---------------------------------------------------------------------------

     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 practices 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.

G. Changes to the Voluntary Program

    Mutual funds will 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 amending rule 
401 of Regulation S-T to remove risk/return summary information as a 
category of information permitted to be submitted under the voluntary 
program effective after the compliance date for the mandatory 
rules.\185\ This amendment differs from our proposal which would have 
removed the option to file risk/return summary information under the 
voluntary program altogether. This change makes explicitly clear that 
mutual funds may continue to experiment with the submission of risk/
return summary information in interactive data format up until the 
compliance date for these rule amendments. For this same reason, we are 
not adopting proposed changes to rule 8b-33 under the Investment 
Company Act and certain technical amendments to rule 401 of Regulation 
S-T.\186\
---------------------------------------------------------------------------

    \185\ See rule 401(b)(iv).
    \186\ See proposed rule 8b-33; proposed rule 401(b)(1)(iv); 
proposed rule 401(d)(1)(i); and proposed rule 401(d)(2)(i) in the 
Proposing Release, supra note 9.
---------------------------------------------------------------------------

    Further, in order to encourage participation in the voluntary 
program for tagging investment company financial information, we are 
adopting, substantially as proposed, 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.\187\ As with the current 
voluntary program, volunteers will be able to participate merely by 
submitting a tagged Schedule I--Investments in Securities of 
Unaffiliated Issuers (``Schedule I'').\188\ To facilitate this, XBRL 
U.S. developed a list of tags that could be used to tag portfolio 
holdings. On October 21, 2008, XBRL U.S. issued its Schedule of 
Investments Taxonomy for public comment.\189\ The taxonomy is expected 
to be finalized by XBRL U.S. by the end of January 2009.
---------------------------------------------------------------------------

    \187\ Rule 401(b)(1)(v) (designating Schedule I--Investments in 
securities of unaffiliated issuers as mandatory content under the 
voluntary program). The voluntary program will 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 Adopting 
Release, supra note 6 (rule 401(a)).
    \188\ Rule 12-12 of Regulation S-X [17 CFR 210.12-12].
    \189\ See supra note 51.
---------------------------------------------------------------------------

    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 Form N-
1A.\190\ 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.
---------------------------------------------------------------------------

    \190\ Rule 401(b)(1) of Regulation S-T [17 CFR 232.401(b)(1)].
---------------------------------------------------------------------------

    Several commenters asserted that expanding the voluntary program to 
include fund portfolio holdings information was premature.\191\ These 
commenters stated that (1) the information would not be meaningful to 
individual investors; \192\ (2) the taxonomy does not yet exist; \193\ 
and (3) more experience with the technology is necessary before 
expansion of the program.\194\ Given that participants may already 
provide portfolio holdings information as part of their financial 
statements under the voluntary program, we disagree with these 
comments. The expansion of the voluntary program to permit the 
submission of portfolio holdings information simply provides volunteers 
with an alternative to submitting complete financial statement 
information and increases the options for participation in the program. 
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 may be 
even more useful to these various stakeholders if such data is 
interactive.
---------------------------------------------------------------------------

    \191\ See letters of Data Communiqu[eacute], ICI, and Vanguard.
    \192\ See letter of Data Communiqu[eacute].
    \193\ See letter of ICI.
    \194\ See letter of Vanguard.
---------------------------------------------------------------------------

    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.\195\ 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 requiring, as proposed, that this 
disclosure be included in the exhibits submitted pursuant to the 
voluntary program as a tagged data element,\196\ consistent with how 
the cautionary disclosure is presented in risk/return summary exhibits 
under the current voluntary program.
---------------------------------------------------------------------------

    \195\ Rule 401(d)(1)(ii) of Regulation S-T [17 CFR 
232.401(d)(1)(ii)].
    \196\ See rule 401(d)(2).
---------------------------------------------------------------------------

H. Compliance Date

    The rules require all mutual funds to submit interactive data with 
any registration statement or post-effective

[[Page 7762]]

amendment on Form N-1A that includes or amends risk/return summary 
information and with any form of prospectus filed pursuant to rule 
497(c) or (e) under the Securities Act that contains risk/return 
summary information that varies from the registration statement.\197\ 
The first required submissions will be for initial registration 
statements and post-effective amendments that are annual updates to 
effective registration statements \198\ and that become effective after 
January 1, 2011. Further, no mutual fund is required to comply with the 
provision to submit a tagged risk/return summary exhibit with any form 
of prospectus filed pursuant to rule 497(c) or (e) under the Securities 
Act until that fund has first submitted an exhibit with its 
registration statement.
---------------------------------------------------------------------------

    \197\ See General Instruction C.3.(g) to Form N-1A.
    \198\ See supra note 11 and accompanying text.
---------------------------------------------------------------------------

    In the Proposing Release, we asked for comment on an anticipated 
compliance date that would require submissions for initial registration 
statements and post-effective amendments that are annual updates to 
effective registration statements and that become effective after 
December 31, 2009. Commenters generally objected to this compliance 
date, asserting that adoption of the requirement to tag risk/return 
summary information is premature, given that the Commission's pending 
Summary Prospectus Initiative and ETF Initiative would change the 
required information in the risk/return summary.\199\
---------------------------------------------------------------------------

    \199\ See supra note 69 and accompanying text.
---------------------------------------------------------------------------

    Commenters also asserted that the proposed schedule for 
implementation of interactive data tagging should be delayed because it 
did not allow mutual funds sufficient time to resolve outstanding 
technical issues or to review the various options for compliance with 
the rule.\200\ Others asserted that more information is needed to be 
collected from the current voluntary program, including costs and 
benefits.\201\ Two commenters supported phasing in the interactive data 
requirements based on the size of a mutual fund's total net assets, 
with larger funds becoming subject to the rules first.\202\ Finally, 
commenters also noted that implementing tagging of the current risk/
return summary is premature given that the risk/return summary and the 
taxonomy could potentially change as a result of the Summary Prospectus 
Initiative and the ETF Initiative.\203\
---------------------------------------------------------------------------

    \200\ See letters of Federated, ICI, and Oppenheimer.
    \201\ See letters of Federated, ICI, and Schnase.
    \202\ See letters of Data Communiqu[eacute] and Schnase.
    \203\ See letter of ICI, Oppenheimer, T. Rowe Price, and 
Vanguard.
---------------------------------------------------------------------------

    While we believe that these comments warrant a change in the 
compliance date to ensure funds have sufficient time to prepare their 
first risk/return summary submissions in interactive data format, they 
do not justify a substantial delay in implementation of this 
initiative. First, as we discussed above, we recently adopted final 
amendments to Form N-1A in the Summary Prospectus Adopting 
Release,\204\ and, therefore, do not believe those commenter concerns 
warrant delaying implementation of this tagged risk/return summary 
information.\205\
---------------------------------------------------------------------------

    \204\ See supra notes 69 and 70 and accompanying text.
    \205\ These amendments were adopted on November 19, 2008. See 
supra note 69, and Summary Prospectus Adopting Release, supra note 
28.
---------------------------------------------------------------------------

    Second, for the reasons we discussed in Section II.A., we believe 
that the compliance date we are adopting will allow mutual funds 
sufficient time to prepare risk/return summary information in 
interactive data format. As we noted previously, XBRL U.S. has updated 
the list of tags to reflect our most recent revisions to mutual fund 
risk/return disclosure requirements, and has submitted this list for 
public comment, after which it will be submitted for acknowledgment to 
XBRL International. This process should be completed by the end of 
January 2009. Therefore, we believe 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. Further, as discussed above, over the last 
three years the Commission has gained experience with interactive data 
in the voluntary program covering both mutual fund risk/return and 
financial statement information.
    We do, however, recognize that requiring mutual funds to tag their 
risk/return summary information at the same time that they are revising 
their prospectuses for the recent amendments to Form N-1A in the 
Summary Prospectus Adopting Release could result in an unnecessary 
burden. For that reason, we are making a modification to the compliance 
date so that mutual funds have an additional year before they are 
required to submit tagged risk/return summary information. This period 
of almost two years should provide funds with sufficient time to 
prepare the amended disclosures and interactive data submissions based 
on those disclosures.
    While the requirements we recently adopted for interactive 
submission of financial data include a schedule of tiered 
implementation, we believe that mutual fund investors have an important 
interest in having access to interactive risk/return data from all 
funds concurrently. Therefore, we are adopting, as proposed, a single 
compliance date for all mutual funds. We expect that most mutual funds 
that are part of smaller fund families, which generally are 
disproportionately affected by regulatory costs, will 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 will provide 
efficiencies in future periods. As a result, there may be potential 
future 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 will likely result in start-up expenses for all mutual fund 
families, we expect that both software and third-party services will be 
available to help meet the needs of mutual fund families, including 
meeting the unique needs of smaller mutual fund families.
    We are sensitive to concerns expressed by some commenters that 
undue expense and burden may accompany the adoption of required 
interactive data reporting.\206\ We believe that the extended 
compliance date and the proposed 15-business day period for making 
interactive data submissions seem to alleviate these concerns.\207\
---------------------------------------------------------------------------

    \206\ See letters of ICI, Schnase, and Starkman.
    \207\ We discuss more fully supra at Section II.F liability 
related to required submissions of interactive data.
---------------------------------------------------------------------------

    Under the rules we are adopting, the voluntary program is being 
modified to allow for participation by mutual funds with respect to 
risk/return summary information up until January 1, 2011, but continue 
to permit investment companies to participate with respect to financial 
statement information thereafter. Investment companies may submit their 
tagged portfolio holdings information, pursuant to the rules we are 
adopting, at any time after the effective date of these rules, July 15, 
2009. This effective date was chosen to coincide with the release of an 
updated EDGAR Filer Manual which will

[[Page 7763]]

incorporate the new list of tags for portfolio holdings information.
    We intend to monitor implementation and, if necessary, make 
appropriate adjustments to the adopted amendments.

III. Paperwork Reduction Act

A. Reporting and Burden Estimate

    Certain provisions of the rule and form amendments contain 
``collection of information'' requirements within the meaning of the 
Paperwork Reduction Act of 1995 (``PRA'').\208\ The titles for the 
collections of information are: (1) ``Mutual Fund Interactive Data'' 
(OMB Control No. 3235-0642) and (2) ``Voluntary XBRL-Related 
Documents'' (OMB Control No. 3235-0611). We published notice soliciting 
comments on the collection of information requirements in the release 
proposing the amendments \209\ and submitted the proposed collections 
of information to the Office of Management and Budget (``OMB'') for 
review and approval in accordance with 44 U.S.C. 3507(d) and 5 CFR 
1320.11.\210\ OMB has assigned a control number to the collection of 
information for mutual fund interactive data. We received four comments 
on the collection of information requirements \211\ and have revised 
the estimated reporting and cost burdens of the rule and form 
amendments, as discussed below. 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. Because we 
have modified our proposals as described above, we are revising the 
burden estimate for the Mutual Fund Interactive Data collection of 
information. We have submitted a revised request to OMB.
---------------------------------------------------------------------------

    \208\ 44 U.S.C. 3501 et seq.
    \209\ See Proposing Release, supra note 9, 73 FR at 35459.
    \210\ See Proposing Release, supra note 9, 73 FR at 35457-59.
    \211\ See letters of Confluence, ICI, Schnase, and Starkman.
---------------------------------------------------------------------------

    The title for the new collection of information for submitting 
risk/return summary information in interactive data format that the 
amendments establish is ``Mutual Fund Interactive Data''. 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 amendments 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 will continue 
to be required to be submitted to the Commission in traditional format 
under existing disclosure requirements. Compliance with the amendments 
is mandatory beginning with initial registration statements and post-
effective amendments that are annual updates to effective registration 
statements that become effective after January 1, 2011.\212\
---------------------------------------------------------------------------

    \212\ See supra Section II.H.
---------------------------------------------------------------------------

    The title for the collection of information for submitting 
portfolio holdings in interactive data format is ``Voluntary XBRL-
Related Documents''. The amendments will 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 these 
amendments is voluntary.

B. 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 \213\ 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, corresponds to the risk/return summary information now 
required by Form N-1A and is required to appear in exhibits to Form N-
1A, exhibits to prospectuses with risk/return summary information that 
varies from the registration statement, and on mutual funds' Web sites.
---------------------------------------------------------------------------

    \213\ 17 CFR 239.15A; 17 CFR 274.11A.
---------------------------------------------------------------------------

    In the Proposing Release, we estimated that each mutual fund would 
submit one interactive data document as an exhibit to a registration 
statement or a post-effective amendment thereto on Form N-1A that 
includes or amends information provided in response to Items 2 or 
3.\214\ We estimated in the Proposing Release 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.\215\ Therefore, we estimated the average annual burden over a 
three-year period to be approximately 12 hours.\216\
---------------------------------------------------------------------------

    \214\ This information is now contained in Items 2, 3, and 4. 
See supra note 61.
    \215\ The average burden hours for the first and subsequent 
submissions were calculated using data collected from a voluntary 
program participant questionnaire. See infra Section IV.
    \216\ (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.
---------------------------------------------------------------------------

    In response to commenters' concerns, however, we are modifying our 
rules to include changes to risk/return summary information that mutual 
funds are permitted to make pursuant to rule 497 under the Securities 
Act.\217\ Based on a limited, random, non-statistical survey by 
Commission staff of filings made pursuant to rule 497, we estimate that 
5% of mutual funds, or approximately 443 funds,\218\ will make changes 
to risk/return summary information in filings submitted pursuant to 
rule 497. Based on estimates of 8,856 mutual funds each submitting one 
interactive data document as an exhibit to a registration statement or 
post-effective amendment thereto \219\ and 443 mutual funds submitting 
an additional interactive data document as an exhibit to a filing 
pursuant to rule 497, each incurring 12 hours per year on average, we 
estimate that, in the aggregate, interactive data adoption will result 
in an additional 111,588 burden hours for all mutual funds for each of 
the first three years.\220\ Converted into dollars, this amounts to 
approximately $23,768,244.\221\
---------------------------------------------------------------------------

    \217\ See supra notes 90 through 95 and accompanying text.
    \218\ 5% x 8,856 mutual funds = approximately 443 mutual funds.
    \219\ This estimate is based on an analysis by the Division of 
Investment Management staff of publicly available data.
    \220\ (8,856 mutual funds + 443 mutual funds) x 12 incremental 
burden hours per mutual fund = 111,588 burden hours.
    \221\ This cost increase is estimated using an estimated hourly 
wage rate of $213.00 ((111,588 burden hours) x ($213.00 hourly wage 
rate) = $23,768,244 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 and Financial Markets 
Association, Report on Management & Professional Earnings in the 
Securities Industry 2007 (Sept. 2007) (``SIFMA 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 per 
hour (($270 x .25) + ($194 x .75)).
---------------------------------------------------------------------------

    One commenter challenged the estimates provided in the Proposing 
Release, asserting that the sample of voluntary program participants is 
too small and consists mostly of large fund

[[Page 7764]]

complexes.\222\ We note that the 22 participants in the voluntary 
program at that time included both larger and smaller funds, and, 
therefore, the estimates derived from our experiences with this program 
reflect burdens incurred by funds of varying sizes.\223\ Of these 22 
funds, six funds, representing a range of fund complex sizes, provided 
data in response to the voluntary program questionnaire concerning 
internal and external costs of preparing and submitting interactive 
risk/return summary information.\224\
---------------------------------------------------------------------------

    \222\ See letter of Schnase.
    \223\ As we noted above in Section I.A., to date 25 funds have 
participated in the voluntary program. However, at the time of our 
Proposing Release, only 22 funds had submitted interactive data 
risk/return summary information.
    \224\ The average burden hours for the first and subsequent 
submissions were calculated using data collected from six responses 
to a voluntary program participant questionnaire from mutual funds 
that participated in the voluntary program. See infra Section IV.A.
---------------------------------------------------------------------------

    We further estimate, as we did in the Proposing Release, that 
mutual funds will require an average of approximately 1 burden hour to 
post interactive data to their Web sites. Based on estimates of 8,856 
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 will result in an additional 8,856 burden 
hours for all mutual funds.\225\ Converted into dollars, this amounts 
to approximately $2,214,000.\226\
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    \225\ 8,856 mutual funds x 1 burden hour per mutual fund = 8,856 
burden hours.
    \226\ ($250 x 1 hour x 8,856 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 infra Section IV.A.
---------------------------------------------------------------------------

    One commenter asserted that the Commission's cost estimates may be 
vastly understated because they omit the much larger cost of converting 
fund Web sites to XBRL compatibility.\227\ This commenter did not 
provide any specific cost estimates to support this assertion. 
Complying with the Web site posting requirement, however, does not 
require conversion of the fund's Web site infrastructure.
---------------------------------------------------------------------------

    \227\ See letter of Starkman.
---------------------------------------------------------------------------

    We also estimate, as we did in the Proposing Release, that software 
and consulting services will be used by mutual funds for an increase of 
approximately $802 per mutual fund.\228\ Based on the estimate of 8,856 
mutual funds using software and consulting services at an annual cost 
of $802 we estimate that, in the aggregate, the total external costs to 
the industry will be approximately $7,098,970.\229\ While one commenter 
asserted that these estimates do not include professional costs from 
outside accountants and lawyers,\230\ we note that this estimate does 
reflect the external cost data provided in response to the voluntary 
program questionnaire. Respondents to the questionnaire universally 
indicated that they did not use the services of outside accountants in 
preparing their interactive data submissions. A few of the respondents 
indicated that they used the services of an outside attorney in 
preparing their interactive data submissions, however, only one 
respondent indicated a de minimis expense for such services. A few 
respondents who did not use the services of an outside attorney for 
their voluntary filing did indicate they would work with an outside 
attorney to prepare their interactive data submission upon adoption of 
our rule amendments. These costs were reflected in our estimates in the 
Proposing Release.
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    \228\ For purposes of this estimate, we assumed that the largest 
50 fund complexes will develop software in-house incurring costs of 
$125,000 in the first year. Assuming that the largest 50 fund 
complexes will develop software for use in all of their funds, and 
that their funds encompass 80% of the number of funds (7,085), then 
the average first year cost for those funds will be ($125,000 x 50)/
7,085 = $882. Therefore, for those funds using software developed 
internally, the average 3 year cost will be approximately $827 ($882 
in the first year + $800 in the second year + $800 in the third 
year) / 3 years = approximately $827. The average 3 year cost for 
those funds that use commercial software will 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 $827 and 20% 
of funds incurred costs of $700, the average software and consulting 
cost per mutual fund will be approximately $802. These estimates 
were derived from responses to a voluntary program questionnaire. 
See infra Section IV.A.
    \229\ 8,856 mutual funds x $802 = approximately $7,098,970.
    \230\ See letter of Schnase.
---------------------------------------------------------------------------

    One commenter also stated that costs for the voluntary program 
participants were low because many fund groups received tagging 
software and services at no cost, which the commenter anticipated would 
not be the case upon the adoption of our rule amendments.\231\ We note, 
however, that our survey data included information from funds that used 
no-cost software and from one fund that created its own software in-
house at great expense.\232\ We believe our cost estimates provide an 
adequate picture of the initial software expenditures for funds to 
comply with our rule amendments.
---------------------------------------------------------------------------

    \231\ See letter of ICI.
    \232\ See infra note 252.
---------------------------------------------------------------------------

    One commenter asserted that automated tagging and filing processes 
would reduce the risk and cost associated with manual processes.\233\ 
We agree that such software tools may help minimize both the burden on 
respondents and the risk of errors in the collection process. While 
this commenter noted that additional software tools would need to be 
introduced in order to allow data to be identified and tagged at its 
source, thereby automating the processing of the risk/return data, we 
expect that the development of such tools is likely to be hastened by 
mutual fund disclosure using interactive data. As noted 
previously,\234\ there is a growing number of software applications 
available to preparers and consumers that are designed to help make 
interactive data increasingly useful to both retail and institutional 
investors.
---------------------------------------------------------------------------

    \233\ See letter of Confluence.
    \234\ See supra Section II.E.
---------------------------------------------------------------------------

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 
requirements that govern the electronic submission of documents. The 
changes to these items that we are adopting will add and revise rules 
under Regulations C and S-T. As we explained in the Proposing Release, 
the additional collection of information burden that will result from 
these changes, however, are included in Form N-1A, and we have 
reflected the burden for these new requirements in the burden estimate 
for the new collection of information ``Mutual Fund Interactive Data.'' 
The rules in Regulations C and S-T do not impose any separate burden.

C. Changes to the Voluntary Program

    We are decreasing the burden associated with the existing 
collection of information for Voluntary XBRL-Related Documents to 
reflect the amendments. Mutual funds will 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.\235\ We estimated that 10% of the approximately 545 fund 
complexes that have mutual funds, or 55 fund complexes, would each 
submit

[[Page 7765]]

documents containing tagged risk/return summary information for one 
mutual fund.\236\ 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.\237\
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    \235\ See Risk/Return Voluntary Program Adopting Release, supra 
note 32.
    \236\ In the case of a mutual fund with multiple series, our 
estimate treated each series as a separate mutual fund.
    \237\ (110 hours in the first year + 10 hours in the second year 
+ 10 hours in the third year) / 3 years = 43 hours.
---------------------------------------------------------------------------

    Based on our previous 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.\238\ 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.\239\
---------------------------------------------------------------------------

    \238\ 55 documents per year x 43 hours per submission = 2,365 
hours.
    \239\ See note 82 of the Risk/Return Voluntary Program Adopting 
Release, supra note 32.
---------------------------------------------------------------------------

    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.\240\ 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.\241\ Altogether, we estimated the total annual increase in 
external costs related to the amendments would be $169,611.\242\
---------------------------------------------------------------------------

    \240\ See note 83 of the Risk/Return Voluntary Program Adopting 
Release, supra note 32.
    \241\ $333 per participant x 55 participants = $18,315.
    \242\ This annual total consisted of $151,296 in outside 
professional costs plus $18,315 in software costs.
---------------------------------------------------------------------------

    Given that mutual funds will no longer be able to submit risk/
return summary information in interactive data format through the 
voluntary program some time after adoption of the amendments, we will 
reduce the internal hour burden associated with the voluntary program 
by 1,774 hours and the internal cost burden by $393,828. We will also 
reduce the external cost burden by $169,611.
    The amendments to the voluntary program also 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 can participate, without pre-approval, merely by 
submitting Schedule I in interactive data format.
    One commenter stated that the cost estimates from the voluntary 
program did not include many, or any, costs associated with tagging 
data other than the risk/return summary, such as portfolio holdings 
information.\243\ We note, however, that the hour and cost burdens for 
voluntary interactive data submissions of portfolio holdings 
information were discussed separately from the hour and cost burdens 
for the submission of risk/return summary information in interactive 
data format in the Proposing Release and also are discussed below.
---------------------------------------------------------------------------

    \243\ See letter of Schnase.
---------------------------------------------------------------------------

    We estimate that 20 registrants will choose to submit a schedule of 
portfolio holdings in interactive data format.\244\ 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 will participate, given the 
flexibility provided by a new option to submit exhibits containing just 
portfolio holdings information in interactive data format.
---------------------------------------------------------------------------

    \244\ This estimate is based on the current level of 
participation in the voluntary program, in which 25 funds have 
submitted interactive risk/return summary information.
---------------------------------------------------------------------------

    Submission of portfolio holdings information in interactive data 
format will 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 will 
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.\245\ A list of 
tags that could be used to tag portfolio holdings is expected to be 
finalized by the end of January 2009. 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 will require, 
on average, approximately 12 burden hours per registrant,\246\ and the 
creation of such information in interactive data format in subsequent 
years will require an average of 10 burden hours per registrant.\247\ 
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.\248\
---------------------------------------------------------------------------

    \245\ Form N-CSR [17 CFR 249.331; 17 CFR 274.128]; Form N-Q [17 
CFR 249.332; 17 CFR 274.130].
    \246\ 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 
will require, on average, approximately 12 burden hours per 
volunteer.
    \247\ 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 will be a similar 2 hour reduction, or approximately 10 
burden hours per volunteer.
    \248\ (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 will incur an additional 220 burden hours associated with 
the proposed amendments.\249\ We estimate

[[Page 7766]]

that this internal burden increase converted to dollars will amount to 
approximately $47,000.\250\
---------------------------------------------------------------------------

    \249\ 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 will submit portfolio holdings 
information in interactive data format once each year.
    \250\ 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 221.
---------------------------------------------------------------------------

    We also estimate that external professionals and consultants will 
be retained by the registrant for an increase of approximately 
$600.00.\251\ It is our understanding that annual software licensing 
costs generally would be included in the cost of hiring external 
professionals and consultants.\252\ 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 will be $12,000.\253\
---------------------------------------------------------------------------

    \251\ ($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 two of the participants 
indicated that each of their external service providers had waived 
its fee for the initial submission.
    \252\ 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 
270.
    We also note that one commenter stated that our estimated costs 
for interactive data software and services were low because many 
fund groups received tagging software and services at no cost. See 
supra note 231 and accompanying text.
    \253\ 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 \254\ and a total decrease in internal costs of approximately 
$347,000.\255\ We further estimate a total decrease in external costs 
of approximately $158,000.\256\
---------------------------------------------------------------------------

    \254\ (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.)
    \255\ ($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.)
    \256\ ($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.)
---------------------------------------------------------------------------

IV. Cost/Benefit Analysis

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

    The interactive data framework that we are adopting has the 
potential 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 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.
    In the Proposing Release, we requested public comment and empirical 
data regarding the costs and benefits of the amendments. Three 
commenters generally expressed concern about the costs of implementing 
the Commission's proposal and the uncertain nature of any cost 
efficiencies or cost savings.\257\ One commenter stated that investors 
will not be helped by the additional costs incurred by mutual funds as 
a result of the proposal and that the required interactive disclosure 
will be static and quickly outdated.\258\ None of these commenters 
provided any specific quantitative data relating to cost estimates.
---------------------------------------------------------------------------

    \257\ See letters of Gilmore, ICI, and Schnase.
    \258\ See letter of Federated.
---------------------------------------------------------------------------

1. Benefits of Interactive Data Submissions and Web Site Posting
    The 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 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 enables 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.\259\ 
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 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. Any 
investor with a computer has 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 
can 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 will allow investors to avoid additional costs associated with 
third-party sources.
---------------------------------------------------------------------------

    \259\ See supra Section II.A.
---------------------------------------------------------------------------

    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

[[Page 7767]]

both institutional and retail investors.\260\ 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 
will allow increasingly useful ways to view and analyze mutual fund 
risk/return summary information to help investors make more well-
informed investment decisions.
---------------------------------------------------------------------------

    \260\ 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 provides 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 
timeliness of, and speed at which they generate information. For 
example, with standardized interactive data tags, registration 
statements may require less time for information gathering and review. 
One commenter expressed some skepticism about the ability of 
interactive data to create internal efficiencies that may ultimately 
result in cost savings.\261\ We continue to believe, however, that 
internal efficiencies may be one of several possible benefits of 
interactive data tagging.
---------------------------------------------------------------------------

    \261\ See letter of ICI.
---------------------------------------------------------------------------

    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 in both the number and capabilities of 
software products and applications to assist mutual funds to tag their 
risk/return summary information using interactive data helping make 
interactive data increasingly useful.\262\
---------------------------------------------------------------------------

    \262\ Id.
---------------------------------------------------------------------------

    Mutual funds that automate their regulatory filings and business 
information processing in a manner that facilitates their generation 
and analysis of disclosures should, as a result, realize a reduction in 
costs.
Market Efficiency
    The requirements may benefit investors by making financial markets 
more efficient in regard to the following: \263\
---------------------------------------------------------------------------

    \263\ 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.
---------------------------------------------------------------------------

     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, as anticipated, 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.\264\ This may 
reduce the likelihood that their data is readily available to investors 
who use commercially available products to assess mutual fund 
performance. 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.
---------------------------------------------------------------------------

    \264\ 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.\265\ An increase in quality and improvement in 
content should enable investors to better allocate their capital among 
mutual funds.
---------------------------------------------------------------------------

    \265\ 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 is likely to be higher 
as a result of interactive data reporting, 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 
is likely to improve the quality of risk/return summary information 
available to end users, and helps 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.\266\ Lowering information collection 
costs (through a requirement to submit interactive data information) 
should

[[Page 7768]]

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.\267\
---------------------------------------------------------------------------

    \266\ Also, we expect that because the rules require the use of 
the XBRL interactive data standard, the open standard nature of XBRL 
will 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.
    \267\ 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 requirements is 
how the precision and comparability of the information disseminated by 
data service providers may change because the interactive data 
requirements will 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, the requirement for mutual funds to 
submit interactive data information will require mutual funds to 
independently decide within the confines of applicable requirements 
which ``tag'' best describes each item within the risk/return summary--
lessening the amount of interpretation required by data service 
providers or end-users of the data. Once a standard tag is chosen, 
comparison to other funds is straightforward. However, because mutual 
funds have some discretion in how to select tags, and can extend the 
taxonomy (create new tags) when an appropriate tag does not exist, 
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 fund-submitted 
information disseminated by data service providers 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 will 
be eliminated and more precise because it will reflect decisions by the 
mutual funds themselves. Replicating prior methods still will be 
possible, however, because mutual funds continue to be required to file 
risk/return summary information in traditional format. As a result, 
nothing prohibits data service providers from continuing to provide 
data in the same manner that they did before. 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 requirements to submit and post 
interactive data information are designed to be disclosure neutral, it 
is possible they may affect what is disclosed.
2. Costs of Interactive Data Submissions and Web Site Posting
    The primary cost of the rule amendments 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 rules 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.
    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 will, based on certain 
assumptions, be as follows:

[[Page 7769]]

     Table--Estimated Direct Costs to Individual Funds of Submitting
       Interactive Data-Formatted Risk/Return Summary Information
------------------------------------------------------------------------
                                                  First      Subsequent
                                               submission    submissions
------------------------------------------------------------------------
Preparation \268\...........................        $2,600        $2,300
Software and consulting services \269\......  \270\ 20,600           800
Web site posting \271\......................           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.\272\ 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 and commenters' 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.\273\
---------------------------------------------------------------------------

    \268\ 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 SIFMA 
Report, supra note 221.
    \269\ 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.
    \270\ 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 is 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.
    \271\ 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.
    \272\ See supra note 270 with respect to the high end of the 
range.
    \273\ 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 to submit and post 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 will 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 the time the Commission proposed these amendments, 22 mutual 
funds had participated in the voluntary program for interactive risk/
return summaries. Of these, nine were provided questionnaires on the 
details of their cost experience, and six responses were collected 
representing the cost data for ten funds.\274\ 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.\275\ The reported costs are calculated 
using responses from the 6 voluntary program participants that provided 
responses. Those six respondents represent mutual fund complexes whose 
assets comprise a range of approximately.01% to 12.00% of all the 
assets of the mutual funds that will be required to submit interactive 
data.\276\
---------------------------------------------------------------------------

    \274\ The questionnaires requested data for one fund; however, 
several questionnaire respondents voluntarily submitted cost 
information for more than one fund.
    \275\ See supra note 221. These estimates are from the 2007 
SIFMA Report, modified to account for an 1,800-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.
    \276\ Based on total mutual fund assets of $10.6 trillion. 
Lipper-Directors' Analytical Data, Reuters Sept. 2008.

[[Page 7770]]

 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    \277\ $127,500
Subsequent submissions:
    Estimated costs.................           $555.00            $5,640
Average reduction in cost:
    From first to second submission.            24.54%      \278\ 95.58%
------------------------------------------------------------------------

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 will change in light of the adoption of the 
rule amendments.
---------------------------------------------------------------------------

    \277\ 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 270.
    \278\ 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.\279\ Until the market of mutual funds that submit 
interactive data information grows substantially larger, 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.
---------------------------------------------------------------------------

    \279\ 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 will be higher 
if the demand for interactive data services increases (from 15 mutual 
fund complexes currently participating in the voluntary program to 
approximately 683 mutual fund complexes \280\ participating) at a 
faster rate than the supply for these same services. More broadly, if 
the interactive data requirement results 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.
---------------------------------------------------------------------------

    \280\ See ICI 2008 Investment Company Fact Book, supra note 63, 
at 14 (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 will 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 January 1, 2011. This delay is designed 
to 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 rule 
amendments will 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 will 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 will reduce 
the cost to populate databases and improve the accuracy of that data. 
Additionally, the changes to the voluntary program will 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 will 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 will allow retail investors (or financial advisers 
assisting such investors) to perform more personalized and 
sophisticated analyses and comparisons of mutual funds and other 
investment options, which will 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

[[Page 7771]]

and increased competition, they may be significant, given the size of 
the mutual fund industry.
    Other benefits resulting from the inclusion of portfolio holdings 
information as a stand-alone item in the voluntary program will 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 benefit is that portfolio holdings 
information submitted in interactive data format will allow automated, 
instantaneous extraction of every investment disclosed in the schedule 
of portfolio holdings. Finally, the investment analysis process may 
become more efficient and effective through the increased use of 
automation and reduced human intervention that should result from the 
use of interactive data.
2. Costs
    The amendments to the voluntary program will lead to some costs for 
filers choosing to submit portfolio holdings information in interactive 
data format. For purposes of the PRA, we estimated that the increase in 
annual internal burden hours to the industry will be approximately 220 
hours, which will amount to an increase in costs of approximately 
$47,000 and that the increase in annual external costs per filer will 
amount to approximately $600 per year for a total estimated increase to 
the industry of approximately $12,000 on an annual basis.\281\
---------------------------------------------------------------------------

    \281\ See infra Section III.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.\282\ Due to 
the fact that no mutual fund has submitted portfolio holdings 
information through the voluntary program, however, we have limited 
data to quantify the cost of implementing the use of interactive data 
tags applied to portfolio holdings information. 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.
---------------------------------------------------------------------------

    \282\ See supra note 268.
---------------------------------------------------------------------------

    Combined with the removal of risk/return summary information from 
the voluntary program, we estimated for PRA purposes that there will be 
a total decrease of 1,600 burden hours which will amount to 
approximately $347,000, and a total decrease in external costs of 
approximately $158,000. Therefore, the total cost decrease to the 
industry for purposes of the PRA for the rule amendments related to the 
voluntary program is $505,000.\283\
---------------------------------------------------------------------------

    \283\ This estimate was derived from previously reported costs 
estimates from the voluntary program.
---------------------------------------------------------------------------

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

    Section 23(a)(2) of the Exchange Act \284\ 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) \285\ of the Securities 
Act, Section 3(f) \286\ of the Exchange Act, and Section 2(c) \287\ of 
the Investment Company Act require the Commission, when engaging in 
rulemaking that requires it 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.
---------------------------------------------------------------------------

    \284\ 15 U.S.C. 78w(a)(2).
    \285\ 15 U.S.C. 77b(b).
    \286\ 15 U.S.C. 78c(f).
    \287\ 15 U.S.C. 80a-2(c).
---------------------------------------------------------------------------

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

    The rule amendments 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. As discussed previously,\288\ we believe that 
these amendments are likely to benefit investors by making financial 
markets more efficient in regard to capital formation by reducing some 
of the information barriers that make it costly for mutual funds to 
find appropriate sources of new investors. Similarly, these 
requirements may enable investors to better allocate their capital 
among mutual funds by reducing the cost to access, collect, and analyze 
mutual fund risk/return summary information and by improving the 
content of fund-reported information available to investors. Since 
lower data collection costs would lower entry barriers for suppliers of 
interactive-data-related fund comparative products, these requirements 
also may result in increased competition among these suppliers, which, 
in turn, would help spur innovation with respect to such products.
---------------------------------------------------------------------------

    \288\ See supra Section IV.A.1.
---------------------------------------------------------------------------

    We requested comment on whether the proposed amendments would 
promote efficiency, competition, and capital formation. One commenter 
asserted that requiring funds to utilize the current list of tags when 
revisions are likely in the near term would be inefficient and 
costly.\289\ As noted above, however, revisions to the list of tags for 
risk/return summary information have been issued for public comment and 
are expected to be finalized by the end of January 2009. Again, this 
will provide mutual funds with substantial time to prepare to tag their 
risk/return summary information. This commenter also stated that its 
members were skeptical that using XBRL for risk/return summary 
information will create internal efficiencies that would ultimately 
result in cost savings.\290\ While the internal efficiencies of 
interactive data for mutual funds are currently unquantified, we 
continue to believe that they may be available to mutual funds. 
Further, as discussed in detail above, we anticipate that the rules may 
lead to more efficient capital formation and allocation.\291\
---------------------------------------------------------------------------

    \289\ See letter of ICI.
    \290\ Id.
    \291\ See supra Section IV.A.1.
---------------------------------------------------------------------------

    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 adopted interactive data 
requirements might affect. Since interactive data technology is 
designed to remove an informational barrier,

[[Page 7772]]

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. 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 increased 
competition from new market entrants could reduce industry profit 
margins, and, as a result, the quality of services may suffer. For 
example, and illustration purposes only, assume that an Internet 
service company develops an interactive data-based tool that easily 
provides 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 and the 
quality of services should not be impaired. However, if the incumbent 
service providers provide a higher quality of information that improves 
investor interpretation beyond risk/return summary information, but 
they find that it is no longer profitable to produce this information 
as a result of subsidized products from inferior providers, then 
valuable information production may be lost.
    For the reasons described more fully above, we believe the 
liability protections for interactive data are necessary or appropriate 
in the public interest and consistent with the protection of investors. 
Moreover, the protections are also consistent with the purposes fairly 
intended by the policy and provisions of the Investment Company Act.

B. Changes to the Voluntary Program

    The amendments 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 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 
amendments is voluntary, the Commission estimates that the impact of 
the amendments 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 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 
amendments will have a significant impact on capital formation. 
Finally, because the amendments are designed to permit mutual funds and 
other entities to provide information in a format that we believe will 
be more useful to investors, we believe that the amendments are 
appropriate in the public interest and for the protection of investors.

VI. Final Regulatory Flexibility Analysis

    This Final Regulatory Flexibility Analysis has been prepared in 
accordance with the Regulatory Flexibility Act.\292\ It relates to the 
amendments we are adopting that will require mutual funds to provide 
risk/return summary information to the Commission and on their Web 
sites in interactive data format and 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.
---------------------------------------------------------------------------

    \292\ 5 U.S.C. 604.
---------------------------------------------------------------------------

A. Need for the Rule

1. Submission of Risk/Return Summary Information Using Interactive Data
    The main purpose of the 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 will:
     Enable investors and others to search and analyze the 
information dynamically;
     Facilitate comparison of mutual fund performance; and
     Provide an opportunity to automate regulatory filings and 
business information processing with the potential to increase the 
speed, accuracy, and usability of risk/return summary disclosure.
2. Changes to the Voluntary Program
    The main purpose of the 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 changes to the voluntary 
program will 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 changes to the voluntary program also will help us assess the 
effect of

[[Page 7773]]

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 changes to the voluntary 
program will better enable us to study the extent to which interactive 
data will:
     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 changes to the voluntary program will 
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. Significant Issues Raised by Public Comment

    In the Proposing Release, we requested comment on the number of 
small entity issuers that may be affected, the existence or nature of 
the potential impact and how to quantify the impact of the amendments. 
Commenters generally supported both the use of technology to better 
inform mutual fund investors and the Commission's goal of providing 
risk/return summary information in an interactive data format, but most 
commenters stated that requiring mutual funds to provide tagged risk/
return summary information at this time is premature.\293\ Two 
commenters suggested that funds should be phased into the mandatory 
interactive data program based on fund size.\294\ As discussed more 
extensively below, however, we do not believe a phase-in or alternate 
procedures for small entities are warranted as such a phase-in would 
detract from the completeness and uniformity of tagged risk/return 
summary information. We continue to believe that the potential of 
interactive data for enhancing investors' access to mutual fund 
information justifies implementation of this initiative at this time.
---------------------------------------------------------------------------

    \293\ See supra notes 55 and 56 and accompanying text.
    \294\ See letters of Data Communiqu[eacute] and Schnase.
---------------------------------------------------------------------------

C. Small Entities Subject to the Rules

    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.\295\ Approximately 127 mutual funds registered on Form N-1A meet 
this definition.\296\ All of these mutual funds will become subject to 
the rules to require submission of risk/return summary information 
using interactive data. A smaller subset of these mutual funds may 
voluntarily submit tagged portfolio holdings information, but, because 
submitting portfolio holdings information will 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.
---------------------------------------------------------------------------

    \295\ 17 CFR 270.0-10.
    \296\ This estimate is based on analysis by the Division of 
Investment Management staff of publicly available data as of 
December 2007.
---------------------------------------------------------------------------

D. Projected Reporting, Recordkeeping and Other Compliance Requirements

1. Submission of Risk/Return Summary Information Using Interactive Data
    All mutual funds subject to the amendments are 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 will 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 will 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.\297\
---------------------------------------------------------------------------

    \297\ The internal labor and external costs required to comply 
with the rules we are adopting are discussed more fully in Sections 
III and IV above.
---------------------------------------------------------------------------

2. 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 will be minimal.
    No registrant will be required to submit documents in interactive 
data format under the changes we are adopting to the voluntary program. 
The submission of portfolio holdings information in interactive data 
format will 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.\298\
---------------------------------------------------------------------------

    \298\ Id.
---------------------------------------------------------------------------

E. 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 amendments, the Commission considered the following 
alternatives: (1) The establishment of different compliance or 
reporting requirements or timetables that take into account the 
resources available to small entities; (2) the clarification, 
consolidation, or simplification of compliance and reporting 
requirements under the amendments for small entities; (3) the use of 
performance rather than design standards; and (4) an exemption from 
coverage of the amendments, or any part thereof, for small entities.
1. 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 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 
amendments will enable investors and others to search and analyze the 
information dynamically; facilitate

[[Page 7774]]

comparison of mutual fund information; and, possibly, provide an 
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 that 
all mutual funds, including small entities, are not required to comply 
with the new requirements until after January 1, 2011.\299\
---------------------------------------------------------------------------

    \299\ In this regard, in Section II.H. 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.
---------------------------------------------------------------------------

2. Changes to the Voluntary Program
    The purpose of the 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 is 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 to find alternatives to minimize any burden on 
small entities.

VII. Statutory Authority

    The Commission is adopting 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 and 274

    Investment Companies, Reporting and recordkeeping requirements, 
Securities.

Text of Rule and Form Amendments

0
For the reasons set forth above, the Commission amends Title 17, 
Chapter II of the Code of Federal Regulations as follows:

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

0
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.
* * * * *

0
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 (Sec. Sec.  239.15A and 274.11A of 
this chapter). 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 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.
* * * * *

0
3. Amend Sec.  230.497 by adding a sentence at the end of paragraphs 
(c) and (e) to read as follows:

Sec.  230.497  Filing of investment company prospectuses--number of 
copies.

* * * * *
    (c) * * * Investment companies filing on Form N-1A must, if 
applicable pursuant to General Instruction C.3.(g) of Form N-1A, 
include an Interactive Data File (Sec.  232.11 of this chapter).
* * * * *
    (e) * * * Investment companies filing on Form N-1A must, if 
applicable pursuant to General Instruction C.3.(g) of Form N-1A, 
include an Interactive Data File (Sec.  232.11 of this chapter).
* * * * *

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

0
4. 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.
* * * * *

0
5. Further amend Sec.  232.11 as published at 74 FR 6813, February 10, 
2009, by revising the definition of ``Related Official Filing'' to read 
as follows:

Sec.  232.11  Definition of terms used in part 232.

* * * * *
    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.
* * * * *

0
6. Further amend Sec.  232.202 as published beginning at 74 FR 6813, 
February 10, 2009, by revising Note 4 to Sec.  232.202 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).

[[Page 7775]]

0
7. Further amend Sec.  232.401 as published at 74 FR 6814, February 10, 
2009, 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 (other than a Form N-1A (Sec.  239.15A and Sec.  
274.11A of this chapter)) to which the XBRL-Related Documents relate; 
an amendment to such filing, but, in the case of a Form N-1A filing, an 
amendment made only after the effective date of the Form N-1A filing to 
which the XBRL-Related Documents relate; 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.
* * * * *

0
8. Amend Sec.  232.401 by:
0
a. Removing ``or'' at the end of paragraph (b)(1)(iii);
0
b. Revising paragraph (b)(1)(iv);
0
c. Adding paragraph (b)(1)(v); and
0
d. Revising paragraph (d)(2), introductory text.
    The addition and revisions read as follows:

Sec.  232.401   XBRL-Related Document submissions.

* * * * *
    (b) * * *
    (1) * * *
    (iv) The risk/return summary information set forth in Items 2, 3, 
and 4 of Form N-1A provided that the filing is submitted prior to 
January 1, 2011, and, in the case of a Form N-1A filing that includes 
more than one series (as that term is used in rule 18f-2(a) under the 
Investment Company Act (Sec.  270.18f-2(a) of this chapter), a filer 
may include in mandatory content complete risk/return summary 
information for any one or more of those series; or
    (v) 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) * * *
    (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:
* * * * *

0
9. Further amend Sec.  232.405 as published beginning at 74 FR 6814, 
February 10, 2009, by:
0
a. Revising Preliminary Note 1;
0
b. Revising paragraphs (a), (b) and (g); and
0
c. Adding a sentence at the end of the Note to Sec.  232.405.
    The revisions and addition read as follows:

Sec.  232.405  Interactive Data File submissions and postings.

    Preliminary Note 1. Sections 405 and 406T of Regulation S-T 
(Sec. Sec.  232.405 and 232.406T) 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), paragraph 101 of the 
Information Not Required to be Delivered to Offerees or Purchasers of 
both Form F-9 (Sec.  239.39 of this chapter) and Form F-10 (Sec.  
239.40 of this chapter), Item 101 of the Instructions as to Exhibits of 
Form 20-F (Sec.  249.220f of this chapter), paragraph B.7 of the 
General Instructions to Form 40-F (Sec.  249.240f of this chapter), 
paragraph C.6 of the General Instructions to Form 6-K (Sec.  249.306 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 in the Note to Sec.  232.405.
* * * * *
    (a) Content, format, submission and posting requirements--General. 
An Interactive Data File 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, paragraph 101 of the Information Not 
Required to be Delivered to Offerees or Purchasers of either Form F-9 
or Form F-10, Item 101 of the Instructions as to Exhibits of Form 20-F, 
paragraph B.7 of the General Instructions to Form 40-F, paragraph C.6 
of the General Instructions to Form 6-K, or General Instruction C.3.(g) 
of Form N-1A, as applicable, as an exhibit to:
    (i) A form that contains the disclosure required by this section; 
or
    (ii) If the electronic filer is not an open-end management 
investment company registered under the Investment Company Act, an 
amendment to a form that contains the disclosure required by this 
section if the amendment is filed no more than 30 days after the 
earlier of the due date or filing date of the form and the Interactive 
Data File is the first Interactive Data File the electronic filer 
submits or the first Interactive Data File the electronic filer submits 
that complies or is required to comply, whichever occurs first, with 
paragraphs (d)(1) through (d)(4), (e)(1), and (e)(2) of this section;
    (3) Be submitted in accordance with the EDGAR Filer Manual and, as 
applicable, Item 601(b)(101) of Regulation S-K, paragraph 101 of the 
Information Not Required to be Delivered to Offerees or Purchasers of 
either Form F-9 or Form F-10, Item 101 of the Instructions as to 
Exhibits of Form 20-F, paragraph B.7 of the General Instructions to 
Form 40-F, paragraph C.6 of the General Instructions to Form 6-K, 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, 
paragraph 101 of the Information Not Required to be Delivered to 
Offerees or Purchasers of either Form F-9 or Form F-10, Item 101 of the 
Instructions as to Exhibits of Form 20-F, paragraph B.7 of the General 
Instructions to Form 40-F, paragraph

[[Page 7776]]

C.6 of the General Instructions to Form 6-K, 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, 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 all of the following 
categories:
    (i) The complete set of the electronic filer's financial statements 
(which includes the face of the financial statements and all 
footnotes); and
    (ii) All schedules set forth in Article 12 of Regulation S-X 
(Sec. Sec.  210.12-01--210.12-29) related to the electronic filer's 
financial statements.

    Note to paragraph (b)(1): It is not permissible for the 
Interactive Data File to present only partial face financial 
statements, such as by excluding comparative financial information 
for prior periods.

    (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, 3, and 4 
of Form N-1A.
* * * * *
    (g) Posting. Any electronic filer that maintains a corporate Web 
site and is required to submit an Interactive Data File must post that 
Interactive Data File on that Web site by the end of the calendar day 
on the earlier of the date the Interactive Data File is submitted or is 
required to be submitted, and, if the electronic filer is not an open-
end management company registered under the Investment Company Act of 
1940, the Interactive Data File must remain accessible on that Web site 
for at least a 12-month period. For an electronic filer 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 period of time for which an Interactive Data File must remain 
accessible on a company's Web site.

    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

0
10. 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 274--FORMS PRESCRIBED UNDER THE INVESTMENT COMPANY ACT OF 1940

0
11. 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.
* * * * *

0
12. Amend Form N-1A (referenced in Sec. Sec.  239.15A and 274.11A) by 
adding a paragraph (g) to General Instruction C.3. 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.
* * * * *
3.
* * * * *
    (g) Interactive Data File.
    (i) 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, 3, or 4. 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.
    (ii) An Interactive Data File 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 for any form of prospectus filed 
pursuant to rule 497(c) or (e) under the Securities Act [17 CFR 
230.497(c) or (e)] that includes information provided in response to 
Items 2, 3, or 4 that varies from the registration statement. The 
Interactive Data File may be submitted with or up to 15 business days 
subsequent to the filing made pursuant to rule 497.
    (iii) An Interactive Data File is required to be posted on the 
Fund's Web site for as long as the registration statement or post-
effective amendment to which the Interactive Data File relates remains 
current.
    (iv) An Interactive Data File must be submitted as an exhibit to 
Form N-1A, under paragraph (i) of this Instruction, or as an exhibit to 
the filing made pursuant to rule 497, under paragraph (ii) of this 
Instruction. The Interactive Data File must 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.

    Dated: February 11, 2009.

    By the Commission.

Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-3359 Filed 2-18-09; 8:45 am]

BILLING CODE 8011-01-P