Professional Documents
Culture Documents
Part V
Securities and
Exchange
Commission
17 CFR Parts 232, 239, 270 and 274
Extension of Interactive Data Voluntary
Reporting Program on the Edgar System
to Include Mutual Fund Risk/Return
Summary Information; Final Rule
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39290 Federal Register / Vol. 72, No. 136 / Tuesday, July 17, 2007 / Rules and Regulations
(‘‘Securities Act’’). 6 Analysis, and Retrieval System (‘‘EDGAR’’) has 9 ‘‘Open Source’’ means that the software can be
allowed certain tagged data since its inception, for
example, by using Standard Generalized Markup used by anyone without charge and is being
1 17 CFR 232.401.
Language and Extensible Markup Language developed in an open and collaborative setting. For
2 17 CFR 232.402.
(‘‘XML’’) to tag form-specific information (such as a more detailed discussion about XBRL, see ‘‘How
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3 17 CFR 232.10 et seq. XBRL Works’’ on the XBRL International Web site
the form type, central index key, and file number)
4 17 CFR 270.8b–33.
that accompanies electronic documents submitted available at: http://www.xbrl.org/HowXBRLWorks/.
5 17 CFR 239.15A and 274.11A. 10 See ‘‘About the Organisation’’ page and
on EDGAR. More recently, EDGAR has employed
6 The Commission proposed these amendments in HyperText Markup Language (‘‘HTML’’) to format subpages on the XBRL International Web site,
February 2007. Securities Act Release No. 8781 documents and made limited use of XML related to available at: http://www.xbrl.org/
(Feb. 6, 2007) [72 FR 6676 (Feb. 12, 2007)] financial and business information contained AboutTheOrganisation/.
(‘‘Proposing Release’’). within certain EDGAR submissions. 11 September 25 Press Release, supra note 7.
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Federal Register / Vol. 72, No. 136 / Tuesday, July 17, 2007 / Rules and Regulations 39291
B. The Voluntary Program and Tagging The risk/return summary section of data tagging and, in particular, of
of Mutual Fund Information the mutual fund prospectus contains tagging mutual fund information.
As part of our evaluation of the important information about investment
II. Discussion
potential of interactive data tagging objectives and strategies, risks, and
technology, the Commission adopted costs,17 and tagging this information As part of our ongoing effort to
rules in 2005 instituting a program that could provide powerful tools for evaluate the usefulness of data tagging,
permits filers, on a voluntary basis, to investors. With almost half of all U.S. we are adopting amendments to extend
submit financial information tagged in households owning mutual funds,18 the voluntary program to enable mutual
XBRL format as an exhibit to certain typically to fund their education, funds to submit exhibits containing
filings on the Commission’s Electronic retirement, and other basic needs, tagged risk/return summary information
Data Gathering, Analysis and Retrieval improving the quality of mutual fund attached to EDGAR filings.20 Any
System (‘‘EDGAR’’).12 The Commission disclosure is important to millions of mutual fund may participate, without
adopted the voluntary program to help Americans. Tagging of key mutual fund pre-approval, merely by submitting the
evaluate the usefulness of data tagging information could help to streamline the risk/return summary information in the
and XBRL to registrants, investors, the delivery of mutual fund information and required manner. As we continue to
Commission, and the marketplace.13 In provide investors, analysts, and others gain experience with interactive data,
2006, the Commission initiated an with improved tools to compare funds we will evaluate the benefits of data
interactive data test program, in which based upon, among other things, costs, tagging to investors, analysts, and
companies, including investment investment objectives, strategies, and others. If, in the future, we consider
companies, voluntarily agree to furnish risks. In addition, the risk/return requiring filers to tag the risk/return
financial data in XBRL format for at summary information is largely summary information, that would be the
least one year and provide feedback on narrative in format, and exploring the subject of a separate rulemaking
their experiences, including the costs viability of tagging this information will proposal.
and benefits.14 The data currently provide us with valuable insights as we
assess the potential for tagging other A. Expansion of Voluntary Program
permitted in XBRL exhibits is limited to Content
financial information. primarily narrative information.
The current voluntary program The Commission received eight Currently, the XBRL data furnished
extends to financial information for comment letters on the proposed rule under the voluntary program must
investment companies, including open amendments, including comments from consist of at least one item from a list
end management investment companies software vendors, an accounting firm, a of enumerated mandatory content
(‘‘mutual funds’’).15 In February of this trade association, and several (‘‘Mandatory Content’’), including
year, we proposed amendments to the individuals.19 These commenters financial statements, earnings
voluntary program that would permit generally supported the proposed rules information, and, for registered
mutual funds to tag the information in to extend the interactive data voluntary management investment companies,
the risk/return summary section of their reporting program to the risk/return financial highlights or condensed
prospectuses using a taxonomy summary section of mutual fund financial information.21 We are adding
developed by the Investment Company prospectuses. We are adopting the the risk/return summary information set
Institute (‘‘ICI’’).16 proposed amendments, with minor forth in Items 2 and 3 of Form N–1A as
modifications to address commenters’ a new item of Mandatory Content, with
12 See Securities Act Release No. 8529 (Feb. 3, recommendations. The rule two modifications to our proposal that
2005) [70 FR 6556 (Feb. 8, 2005)] (‘‘XBRL Adopting amendments are intended to help us address commenters’ recommendations.
Release’’); Securities Act Release No. 8496 (Sept. evaluate the usefulness to investors, Our proposal, like the current
27, 2004) [69 FR 59094 (Oct. 1, 2004)] (‘‘XBRL third-party analysts, registrants, the
Proposing Release’’). See also Securities Act Release voluntary program, would have required
No. 8497 (Sept. 27, 2004) [69 FR 59111 (Oct. 1, Commission, and the marketplace of that Mandatory Content ‘‘consist of a
2004)] (concept release soliciting comment on data complete set of information for all
tagging). response to comments received regarding the periods presented in the corresponding
13 XBRL Adopting Release, supra note 12, 70 FR taxonomy development. See Letter from Donald J.
at 6556–57. Boteler, Vice President—Operations and Continuing
official EDGAR filing.’’ 22 First, the
14 January 11 Press Release, supra note 7. For Education, ICI, to Andrew J. Donohue, Director, adopted amendments clarify that, in the
more information about the Commission’s Division of Investment Management (May 18, 2007) case of a Form N 1A filing that includes
interactive data initiatives, see the Commission (‘‘Boteler Letter’’), available at: http://www.sec.gov/ more than one series,23 a filer may tag
Web page ‘‘Spotlight On: Interactive Data and XBRL comments/s7–05–07/s70507–21.pdf. The ICI also
Initiatives,’’ available at: http://www.sec.gov/ indicated that the schema files and reference
a complete set of risk/return summary
spotlight/xbrl.htm. materials for the taxonomy are available at: information for any one or more
15 See SEC XBRL Voluntary Program Extends to http://xbrl.ici.org. series.24 For example, if a filing contains
Investment Companies, Securities and Exchange 17 Items 2 and 3 of Form N–1A [17 CFR 239.15A
information about four series, a filer
Commission Press Release, Aug. 8, 2005, available and 274.11A]. could tag information for one, two,
at: http://www.sec.gov/news/press/2005–112.htm. 18 2007 Investment Company Fact Book, at 57–58,
16 The ICI is a national association of the Investment Company Institute (2007), available at: 20 The amendments do not alter the current
American investment company industry. In March http://www.ici.org/home/2007_factbook.pdf.
2006, the ICI announced an initiative to create a 19 See comment letters of Confluence (Mar. 14, voluntary program as it applies to the furnishing of
taxonomy to cover the risk/return summary XBRL information by non-investment companies.
2007); Walter S. Hamscher (‘‘Hamscher’’) (Mar. 2, 21 Rule 401(b)(1) of Regulation S–T [17 CFR
information. See Stevens Calls for Greater Use of 2007); Charles S. Hoffman (‘‘Hoffman’’) (Feb. 10,
Internet; Announces Initiative to Develop XBRL 2007); ICI (Mar. 14, 2007); NewRiver, Inc. 232.401(b)(1)].
22 Rule 401(b)(1)(i) of Regulation S–T [17 CFR
Data Tagging Technology, ICI Press Release, Mar. (‘‘NewRiver’’) (Mar. 14, 2007);
20, 2006, available at: http://ici.org/statements/nr/ PricewaterhouseCoopers LLP (‘‘PWC’’) (Mar. 14, 232.401(b)(1)(i)].
2006/06_news_mfimc.html#TopOfPage; ICI Unveils 2007); Rivet Software, Inc. (‘‘Rivet’’) (Mar. 14, 23 A mutual fund may issue multiple ‘‘series’’ of
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Draft XBRL Taxonomy For Public Review, ICI Press 2007); Ayal Rosenthal (‘‘Rosenthal’’) (Mar. 6, 2007). shares, each of which is preferred over all other
Release, Jan. 4, 2007, available at: http:// The ICI contracted with PWC to design and series in respect of assets specifically allocated to
www.ici.org/statements/nr/ construct the risk/return taxonomy, and Hamscher that series. Rule 18f–2 under the Investment
07_news_xbrl_txnmy.html#TopOfPage. was a subcontractor to PWC. The comment letters Company Act [17 CFR 270.18f–2]. Each series is, in
In a letter to the Commission staff, dated May 18, are available on the Commission’s Web site at: effect, a separate investment portfolio.
2007, the ICI advised that the risk/return summary http://www.sec.gov/comments/s7–05–07/ 24 Rule 401(b)(1)(iv) of Regulation S–T [17 CFR
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39292 Federal Register / Vol. 72, No. 136 / Tuesday, July 17, 2007 / Rules and Regulations
three, or four series. Filers who choose We disagree, however, with N–1A.34 Form N–1A filings, which
to tag the information for a particular commenters’ recommendations 32 that contain mutual fund registration
series would be required to tag all the volunteers be permitted to tag the risk/ statements (or amendments thereto), are
information for that series, including the return summary information for less often subject to revision prior to
information for each class of the than all classes for any mutual fund or effectiveness. For this reason, the rules
series.25 Second, we have modified the series selected. Permitting tagged do not permit the submission of a tagged
proposed amendments, which would submissions for less than all the classes exhibit that is related to a registration
have required the information for each of a fund or series would significantly statement or an amendment that is not
class to be separately identified, to impair the Commission’s and users’ yet effective. More specifically, the rules
clarify, as suggested by a commenter,26 ability to evaluate the effectiveness of provide that a tagged exhibit to a Form
that this requirement applies only to the ICI’s risk/return summary taxonomy N–1A filing, whether the filing is an
information that does not relate to all of in tagging class-specific information. In initial registration statement or an
the classes in a series.27 Thus, class- addition, it would limit the ability to amendment thereto, may be submitted
specific information, such as expenses assess the usefulness of the taxonomy in only as an amendment to the filing to
and performance, would be required to facilitating the comparison of class- which the tagged exhibit relates and
be separately identified by class. specific information, such as expenses only after the effective date of such
Information that is not class-specific, and performance, within a fund. filing.35 An exhibit containing tagged
such as investment objectives, would As with all tagged exhibits under the risk/return summary information may
not be required to be separately voluntary program, submissions of be submitted under rule 485(b) of the
identified by class. tagged exhibits containing risk/return Securities Act, which provides for
Three commenters stated that if a summary information will be immediate effectiveness of amendments
mutual fund’s official filing contains supplemental and will not replace the that make non-material changes, and
information for more than one series or required HTML or ASCII version of the will only need to contain the new
class, the fund should be permitted to information called for in Form N–1A. exhibit, a facing page, a signature page,
submit tagged risk/return summary Volunteers will be required to file their a cover letter explaining the nature of
information for one or more, but fewer complete official registration statements the amendment, and a revised exhibit
than all, series or classes.28 One of these to ensure that all investors have access index.
commenters indicated that this to information upon which to base their The voluntary program requires all
approach would provide the broadest investment decisions.33 While tagged volunteers to use the appropriate
possible participation in the voluntary exhibits will be required to reflect the version of a standard taxonomy,
program.29 We agree with these same information contained in the risk/ supplemented with extension
commenters that mutual funds return summary section of the related taxonomies as specified by the EDGAR
volunteering to participate in the official Form N–1A filing, we emphasize Filer Manual. Filers submitting tagged
reporting program that include more that investors and others should risk/return summary information should
than one series in an official filing continue to rely on the official filing not include the risk/return summary
should not be required to tag the rather than the tagged exhibit. taxonomy in their submissions as this
information for all series in the filing. A We are adopting, as proposed, the taxonomy will be stored as a part of the
mutual fund’s series represent separate requirement that mutual funds EDGAR system. Section 5.2.4 of the
portfolios of securities, each with its submitting tagged risk/return summary EDGARLink Filer Manual (Volume II):
own discrete investment objectives and information must include this ‘‘EDGAR Filing’’ will provide
strategies. Each series of a registered information as an exhibit to an instructions and guidance on the
investment company is a distinct amendment to a previous filing on Form preparation, submission, and validation
mutual fund though they are organized of EDGAR-acceptable electronic filings
as part of a single legal entity. As a tagged XBRL documents separately for each series with attached tagged risk/return
of an investment company registrant. See XBRL
result, we have concluded that tagging Proposing Release, supra note 12, 69 FR at 59097 summary information.36 The EDGAR
one or more series should not require n. 49. Under amended rule 8b–33, a mutual fund system upgrade to Release 9.7 is
tagging all the series of a fund. will not be required to submit tagged risk/return scheduled to become available on
summary information in separate documents for August 20, 2007, to, among other things,
Therefore, our rule amendments permit each series or class, provided that the information
mutual funds to submit tagged risk/ is tagged in such a manner that the information may
return summary information for one or be separately identified by series and class. 34 See Rule 401(a) of Regulation S–T [17 CFR
more series in an official filing.30 This 32 See letters from Hamscher, ICI, and PWC, supra 232.401(a)]; rule 8b–33. A mutual fund submitting
note 19. tagged risk/return summary information as an
flexibility should encourage 33 Consistent with the current voluntary program, exhibit to Form N–1A will be required to name each
participation in the voluntary once received by the Commission, the official filing document ‘‘EX–100’’ as specified in the EDGAR
program.31 and the tagged risk/return summary information Filer Manual. We also are adopting a technical
submitted as exhibits to the official filing will amendment to General Instruction B.4.(b) of Form
25 A mutual fund may issue more than one class undergo technical validations. The official filing N–1A to add rule 8b–33 to the list of general
will continue to follow the normal process for provisions that apply to the filing of registration
of shares that represent interests in the same
receipt and acceptance. That is, it will be statements on Form N–1A.
portfolio of securities with each class, among other 35 Rule 401(a); rule 8b–33.
things, having a different arrangement for suspended if it fails its validation criteria. If the
official filing meets its validation criteria, but any 36 Rule 301 of Regulation S–T, the regulation that
shareholder services or the distribution of
securities, or both. Rule 18f–3 under the Investment tagged risk/return summary document submitted as governs the preparation and transmission of
Company Act [17 CFR 270.18f–3]. an exhibit to the official filing fails its own electronic filings on the Commission’s EDGAR
26 See letter from ICI, supra note 19. validation criteria, all tagged documents will be system, requires electronic filings to be prepared in
27 Rule 8b–33 under the Investment Company Act removed and the official filing will be accepted and accordance with the provisions of the EDGAR Filer
disseminated without the tagged documents. The Manual. The Filer Manual contains the technical
[17 CFR 270.8b–33].
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Federal Register / Vol. 72, No. 136 / Tuesday, July 17, 2007 / Rules and Regulations 39293
enable EDGAR to process tagged risk/ Mutual funds also may continue to versions of funds’ risk/return summary
return summary information when the submit this information as an exhibit to information.
expanded voluntary program becomes Form N–CSR, as currently permitted, The adopted rules, like the proposed
effective. whether or not they submit tagged risk/ rules and consistent with one
Similar to the current voluntary return summary information.43 A commenter’s recommendation,47 do not
program, volunteers will be free to mutual fund submitting tagged risk/ require a Form N–1A filing that
submit tagged risk/return summary return summary information may, but is includes tagged exhibits containing only
information regularly or from time to not required to, submit tagged financial risk/return summary information to
time, and volunteers may stop and start highlights or condensed financial disclose that the information in the
as they choose. Participating in the information. Similarly, a mutual fund exhibits is ‘‘unaudited’’ or
voluntary program will not create a that submits tagged financial highlights ‘‘unreviewed.’’ This disclosure will be
continuing obligation for a volunteer to or condensed financial information required in a Form N 1A filing with
submit tagged risk/return summary may, but is not required to, submit which tagged financial highlights or
information as an exhibit to a tagged risk/return summary condensed financial information is
subsequent post-effective amendment. A information. submitted.48
volunteer will, however, be required to C. Liability Issues
B. Required Disclosure
amend any tagged risk/return summary
exhibits that do not comply with the The Commission is adopting, as The two commenters who addressed
content and format requirements of rule proposed, a requirement that the exhibit liability issues supported the proposal
401, e.g., because they do not reflect the index of any Form N–1A filing that to extend to tagged risk/return summary
same information as the corresponding includes a tagged exhibit disclose that information limited protection from
official filing.37 the purpose of submitting the tagged liability that is similar to the protection
One commenter, while agreeing that exhibit is to test the related format and provided under the current voluntary
participation in the voluntary program technology and, as a result, investors program,49 and we are adopting the
should not create a continuing should not rely on the exhibit in making liability protection as proposed. We are
obligation to submit tagged risk/return investment decisions.44 In addition, we providing this protection because
summary information as an exhibit to a are requiring this disclosure to appear liability remains for the official filing,
subsequent post-effective amendment, within a tagged exhibit, as and because the program is
noted that rendering tools may not be recommended by some commenters.45 experimental, it contains certain
able to detect that tagged data is no We believe that the inclusion of the safeguards, and the program should not
longer current.38 The commenter cautionary disclosure within tagged unnecessarily deter volunteers from
encouraged the Commission to consider risk/return summary exhibits may help participating.
to alert investors and other users that Under the current voluntary program,
whether additional safeguards, such as
the exhibits should not be relied on in tagged exhibits are not deemed filed for
the option to withdraw tagged exhibits,
making investment decisions. We are purposes of Section 18 of the Securities
should be made available to ensure that
modifying the proposed rule to require Exchange Act of 1934 (‘‘Exchange
there is no liability to funds or harm to
that the disclosure be included within Act’’) 50 or Section 34(b) of the
investors if rendering tools utilize
the exhibits as a tagged data element.46 Investment Company Act,51 or
outdated information. As we noted in
The ICI indicated in its comment letter otherwise subject to the liability of these
response to similar comments when the sections.52 In addition, the current rules
voluntary program rules were initially that an element could be added to the
risk/return summary taxonomy for the also provide more general relief from
adopted, submissions to EDGAR cannot, liability under the securities laws,
as a practical matter, be withdrawn after display of this disclosure and has now
done so. We encourage parties that are including the Securities Act, the
public dissemination.39 In order to Exchange Act, the Trust Indenture Act
address questions of potential harm to developing rendering tools for the risk/
return summary taxonomy to make use of 1939, and the Investment Company
investors and liability to mutual funds, Act, for information in a tagged exhibit
the rules provide for cautionary of this data tag in order to display the
cautionary disclosure in rendered that complies with the content and
disclosures 40 and liability protections.41 format requirements of the voluntary
The amendments we are adopting program to the extent that the
will, as proposed, provide mutual funds set forth in Item 8(a) of Form N–1A as Mandatory
Content under the voluntary program). information in the corresponding
with the option to submit tagged 43 Rule 401(a) and (b)(1)(iii) (permitting financial portion of the official EDGAR filing was
financial highlights or condensed highlights or condensed financial information set not materially false or misleading.53
financial information as a tagged exhibit forth in Item 8(a) of Form N–1A to be submitted as The amendments we are adopting, as
to an amendment to the Form N 1A Mandatory Content); rule 8b–33. Mutual funds must
proposed, extend the liability protection
filing to which the information relates.42 include their financial highlights or condensed
financial information in every annual and semi-
47 See letter from ICI, supra note 19.
annual report transmitted to shareholders. Items
37 See rule 401(c)(1) of Regulation S–T [17 CFR 22(b)(2) and (c)(2) of Form N–1A (requiring annual 48 Rule 401(d)(1)(i) of Regulation S–T [17 CFR
232.401(c)(1)] (requires tagged exhibits to reflect the or semi-annual reports to include the information 232.401(d)(1)(i)].
same information as corresponding official filing); required by Item 8(a) of Form N–1A). Mutual funds 49 See letters from ICI and PWC, supra note 19.
XBRL Adopting Release, supra note 12, 70 FR at must include a copy of their annual or semi-annual 50 15 U.S.C. 78r.
6559 n. 48. report transmitted to shareholders with their Form 51 15 U.S.C. 80a–33(b).
38 See letter from ICI, supra note 19.
N–CSR filed with the Commission. Item 1 of Form 52 Rule 402(a)(1) under Regulation S–T [17 CFR
39 XBRL Adopting Release, supra note 12, 70 FR N–CSR. 232.402(a)(1)]. Further, because the tagged
at 6559. 44 Rule 401(d)(1)(ii) and (d)(2)(i) of Regulation S–
documents are not filed under the Exchange Act,
40 See infra Section II.B. T [17 CFR 232.401(d)(1)(ii) and (d)(2)(i)]. Rule they are not incorporated by reference into
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41 See infra Section II.C. 483(a) of Regulation C [17 CFR 230.483(a)] requires, registration statements filed under the Securities
42 Rule 8b–33 (permitting tagged exhibits under among other things, that a registration statement of Act or prospectuses they contain. These protections
the voluntary program to be submitted on Form N– a registered investment company ‘‘contain an apply regardless of whether the documents are
1A); Item 8(a) of Form N–1A (requiring mutual exhibit index, which should immediately precede exhibits to a document otherwise incorporated by
funds to provide financial highlights information); the exhibits filed with such registration statement.’’ reference into a filing.
45 See letters from ICI and PWC, supra note 19.
rule 401(a) and (b)(1)(iii) of Regulation S–T [17 CFR 53 Rule 402(b) of Regulation S–T [17 CFR
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39294 Federal Register / Vol. 72, No. 136 / Tuesday, July 17, 2007 / Rules and Regulations
under the voluntary program to include public review and comment.58 The final avoiding the use of complex
Section 11 of the Securities Act.54 taxonomy was submitted for structures,65 these commenters did not
Specifically, we are amending rule acknowledgement by the ICI to XBRL suggest that the voluntary program
402(a) to provide that tagged exhibits International on May 16, 2007,59 in should be delayed unless the taxonomy
are not deemed filed for purposes of accordance with XBRL International is modified. The ICI has considered the
Section 11 or otherwise subject to the procedures.60 The taxonomy received comments it received on the taxonomy,
liabilities of that section. In addition, we acknowledgement in June 2007.61 The as well as the comments on the
are amending rule 402(a) to state ICI also intends to seek approval of the taxonomy submitted to the Commission,
explicitly that tagged exhibits are not taxonomy in accordance with the and has submitted a letter to the
part of any registration statement to procedures of XBRL International, but Commission’s staff summarizing its
which they relate.55 Finally, the has indicated that requiring the response to the commenters and the
provision in the current rules that taxonomy to be approved prior to use in taxonomy changes that were made.66 In
affords volunteers general relief from the voluntary program could introduce its letter, the ICI asserts that the
liability under the federal securities delay, the length of which is taxonomy is ready for use with the
laws to the extent that the information unpredictable.62 Commission’s interactive data voluntary
in the corresponding portion of the We have concluded that the ICI’s reporting program. In light of the ICI’s
official EDGAR filing was not materially taxonomy is sufficiently developed to consideration of comments related to
false or misleading includes liability permit its use in the voluntary program. the taxonomy, and the comments that
protections under the Securities Act, Three commenters involved in the we received favoring the expansion of
and it will apply to tagged documents taxonomy development process stated the voluntary program to the risk/return
submitted as exhibits on Form N–1A.56 that the risk/return summary taxonomy summary,67 we have concluded that it is
We will continue to caution users on the is sufficiently developed for use in the appropriate to permit use of the
Commission’s Web site that documents voluntary program, noting that the taxonomy in its present state of
submitted under the voluntary program taxonomy was developed through the development. Further, the purpose of
should not be relied upon for making use of a broad working group that was the voluntary program is to test and
investment decisions, and users should given the opportunity to review and evaluate tagging technology, and, as a
continue to rely on the company’s comment on the taxonomy as it was result, we agree with commenters’
official filing.57 developed and that the taxonomy was recommendations that it is not
subjected to a public review and necessary for approval of the taxonomy
D. The Risk/Return Summary
comment period.63 While some to be obtained before permitting
Taxonomy and Software Tools
commenters suggested changes to the volunteers to submit tagged documents.
The taxonomy for tagging the risk/ taxonomy, such as reducing the number As in the current voluntary program,
return summary information was of elements in the taxonomy 64 or filers will be permitted to use
developed by the ICI. Mutual funds will extensions to the risk/return summary
be permitted to submit documents 58 See ICI Unveils Draft XBRL Taxonomy For taxonomy, which are additional tags
containing risk/return summary Public Review, Investment Company Institute Press created by a particular user that further
information that is tagged using the ICI’s Release, Jan. 4, 2007, available at: http:// refine the tags contained in a standard
taxonomy commencing on the effective www.ici.org/statements/nr/
07_news_xbrl_txnmy.html#TopOfPage. See also
taxonomy. Some commenters supported
date of the rules that we are adopting. Statements of SEC Chairman Christopher Cox and permitting the use of at least some
In January 2007, the ICI released a draft Division of Investment Management Director extensions with the risk/return
risk/return summary taxonomy for Andrew Donohue Regarding the Investment summary taxonomy,68 but one
Company Institute’s Mutual Fund Interactive Data commenter opposed the use of
Taxonomy, Securities and Exchange Commission
54 In addition, the current provisions of rule
Press Release, Jan. 4, 2007, available at: http:// extensions to the risk/return summary
402(a) will apply to tagged risk/return summary taxonomy, stating that the extensions
www.sec.gov/news/press/2007/2007–2.htm.
information. In particular, a tagged exhibit on Form
N–1A will not be deemed incorporated by reference
59 See Boteler Letter, supra note 16. would introduce complexity.69 While
into another filing, regardless of whether the tagged 60 XBRL US, Inc., represents the United States to
we recognize that permitting the use of
exhibit is an exhibit to a document otherwise XBRL International. XBRL US, Inc., is responsible extensions to the risk/return summary
incorporated by reference into another filing. Rule for organizing and sponsoring taxonomies from the
402(a)(2) under Regulation S–T [17 CFR United States, including the main accounting taxonomy may affect the ability to
232.402(a)(2)]. All other liability and antifraud standards for United States business reporting. compare or render tagged submissions,
provisions of the Securities Act, Exchange Act, and There are two levels of XBRL taxonomy recognition: we believe that it will be helpful to
Investment Company Act will apply. Rule 402(a)(3) (1) ‘‘acknowledgement’’ is formal recognition that a permit extensions on an unrestricted
under Regulation S–T [17 CFR 232.402(a)(3)]. For taxonomy complies with XBRL specifications,
including testing by a defined set of validation
basis at this time. Experimentation with
example, material misstatements or omissions in a
tagged submission will continue to be subject to tools; and (2) ‘‘approval’’ is a formal recognition extensions will permit the Commission,
liability under Section 10(b) [15 U.S.C. 78j(b)] and requiring more detailed quality assurance and filers, and users of tagged filings to
rule 10b–5 [17 CFR 240.10b–5] under the Exchange testing, including compliance with official XBRL better assess the need for extensions to
Act. guidelines for the type of taxonomy under review,
55 Section 11 of the Securities Act applies to ‘‘any creation of a number of instance documents, and an
the risk/return summary taxonomy and
part of the registration statement, when such part open review period after acknowledgement. For the impact that extensions may have on
became effective.’’ The Commission takes a similar more information regarding the XBRL taxonomy tagged documents.
approach with unofficial PDF copies contained in recognition process, see ‘‘Taxonomy Recognition One commenter recommended that
electronic submissions. See Rule 104(d) of Process’’ on the XBRL International Web site the Commission impose validity testing
Regulation S–T [17 CFR 232.104(d)]. Similar to the available at: http://www.xbrl.org/
TaxonomyRecognition/. on tagged risk/return summary exhibits
other protections in the voluntary program, Section
61 The taxonomy is available on XBRL
11 liability relief will not extend to the information
65 See letter from Rivet, supra note 19.
that the official filing contains. International’s Web site at: http://www.xbrl.org/
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56 Rule 402(b). We are adopting technical Taxonomy/ici/ici-rr-summarydocument-20070516- 66 See Boteler Letter, supra note 16.
amendments to rule 402(b) to replace each reference acknowledged.htm. 67 See letters from Confluence, Hamscher,
62 See letter from ICI, supra note 19. See also Hoffman, ICI, NewRiver, PWC, and Rosenthal,
to ‘‘Item 401’’ with ‘‘Rule 401.’’
57 See ‘‘XBRL Data Submitted in the XBRL letter from Hamscher, supra note 19. supra note 19.
63 See letters from Hamscher, ICI, and PWC, supra 68 See letters from ICI, PWC, and Rivet, supra note
Voluntary Program on EDGAR’’ page on the
Commission Web site, available at: http:// note 19. 19.
www.sec.gov/Archives/edgar/xbrl.html. 64 See letter from NewRiver, supra note 19. 69 See letter from Confluence, supra note 19.
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Federal Register / Vol. 72, No. 136 / Tuesday, July 17, 2007 / Rules and Regulations 39295
in addition to the tests currently Commission’s Web site will be able to any mutual fund choosing to
performed under the voluntary program, download the tagged risk/return participate. We estimate that 10% of the
but we have determined not to impose summary information to perform their approximately 545 fund complexes that
additional testing at this time.70 The own analysis if they have appropriate have mutual funds, or 55 fund
commenter stated that additional software. Users will continue to be able complexes, will each submit documents
validity testing would improve the to view the official filing in ASCII or containing tagged risk/return summary
quality of tagged exhibits submitted. HTML format, as they can today. information for one mutual fund.76 This
Currently, under the voluntary program, estimate is higher than the number of
validity testing of tagged exhibits E. Effective Date mutual funds participating in the
consists of testing for: (1) Content The effective date of these current voluntary program. However,
validation (i.e., validating for invalid amendments is August 20, 2007, in we believe that additional mutual funds
ASCII characters); (2) document-type order to provide sufficient time to will participate in the expanded
validation (e.g., ensuring that EX– implement EDGAR system changes voluntary program.77
100.INS documents have .xml necessary to provide for risk/return Submission of tagged risk/return
extensions and ‘‘XBRL tags’’); and (3) summary functionality. summary information will not directly
XBRL validation (e.g., ensuring that affect the burden of preparing the
III. Paperwork Reduction Act mutual funds’ registration statements or
exhibits follow appropriate XBRL
standards and are structured according The rule and form amendments the registrants’ official EDGAR filings.
to the taxonomy). We agree that contain ‘‘collection of information’’ In order to provide tagged risk/return
increased validity testing of tagged requirements within the meaning of the summary information, a participating
submissions might improve their Paperwork Reduction Act of 1995 mutual fund will have to tag the risk/
quality. The purpose of the voluntary (‘‘PRA’’).74 Provision of information return summary section of its
program, however, is to test the under the amendments would be prospectus using the risk/return
technology and the taxonomy. We, voluntary and would not be kept summary taxonomy and potentially
therefore, believe that it is premature to confidential. An agency may not develop taxonomy extensions and will
impose additional validity testing upon conduct or sponsor, and a person is not submit an exhibit to its filing. Based on
tagged risk/return summary documents. required to respond to, an information our previous estimates and our
The Commission’s Web site currently collection unless it displays a currently experience with registrants who have
provides access to a prototype XBRL valid Office of Management and Budget submitted tagged financial information
Web application that converts tagged (‘‘OMB’’) control number. in the current voluntary program, we
financial information submitted in the The title for the collection of estimate that the initial creation of
voluntary program into a rendered, or information is ‘‘Voluntary XBRL-Related tagged documents containing risk/return
human readable, format.71 At present, Documents’’ (OMB Control No. 3235– summary information will require, on
our Web site does not provide access to 0611). The rule and form amendments average, approximately 110 burden
any rendering or analytical tools for use expand the current interactive data hours per mutual fund,78 and the
with tagged risk/return summary voluntary reporting program to enable
information. Some commenters favored mutual funds voluntarily to submit 76 In the case of a mutual fund with multiple
a tool on the Commission’s Web site tagged information contained in the series, our estimate treats each series as a separate
that would render tagged risk/return mutual fund.
risk/return summary section of their 77 The ICI is undertaking an educational effort to
summary documents.72 One commenter prospectuses on EDGAR as exhibits to encourage mutual funds to use the risk/return
noted that such a tool could help both Form N–1A filings. We published notice summary taxonomy to tag the information in their
investors and mutual funds to better soliciting comments on the collection of EDGAR filings. ICI Details Project to Extend XBRL
understand and explore the benefits of information requirements in the release to Key Investor Information, Investment Company
Institute Press Release, June 12, 2006, available at:
tagging and could stimulate the proposing the amendments and http://www.ici.org/statements/nr/2006/
development of other, more submitted the proposed collection of 06_news_xbrl.html#TopOfPage.
sophisticated tools for rendering tagged information to OMB for review in One commenter suggested that the Commission
data.73 We agree that the availability of accordance with 44 U.S.C. 3507(d) and offer incentives to encourage volunteers to
rendering and analysis tools will help participate in the expanded voluntary program. See
5 CFR 1320.11.75 OMB pre-approved letter from ICI, supra note 19. Specifically, the
investors and mutual funds, as well as these collection requirements. We commenter suggested that the Commission: (1)
third party users, to evaluate the received no comments on the collection Offer expedited review of mutual fund exemptive
benefits of tagged risk/return summary of information requirements. applications; or (2) offer expedited review of an
data. initial registration statement on Form N–1A or an
We will continue to analyze rendering The Voluntary Program amendment to a registration statement to add a new
fund or series. Id. The Commission did not initially
and other capabilities specifically The amendments, which will expand offer incentives for volunteers to submit tagged
developed for the risk/return summary the current interactive data voluntary information as part of the current voluntary
taxonomy, and we may add these reporting program to enable mutual program. The Commission subsequently offered
expedited review of registration statements and
features to our Web site in the future. funds voluntarily to submit tagged annual reports to volunteers agreeing to participate
The Commission also encourages funds information contained in the risk/return in a test group. See January 11 Press Release, supra
and third parties to develop these tools. summary section of their prospectuses note 7. Volunteers that participate in the test group
Users of EDGAR data on the on EDGAR as exhibits to Form N–1A agree to furnish financial data contained in their
periodic and investment company reports in XBRL
filings, will increase the burden format for at least one year and provide feedback
70 See comment letter from Hoffman, supra note associated with the existing collection on their experiences. Id. At this time, we are not
19. of information for Voluntary XBRL- offering specific incentives to encourage volunteers
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39296 Federal Register / Vol. 72, No. 136 / Tuesday, July 17, 2007 / Rules and Regulations
creation of such tagged documents in We also estimate that 25% of the account, among other things, the current
subsequent years will require an average burden, or approximately 591 hours, state of reporting process automation,
10 burden hours per mutual fund.79 will be outsourced to external automation that likely will be
Because the PRA estimates represent the professionals and consultants retained introduced in connection with the
average burden over a three-year period, by the mutual fund complex at an initial cost incurred, and the efficiencies
we estimate the average hour burden for average cost of $256.00 per hour for a that likely will be realized over the
the submission of tagged documents total annual increase of approximately course of three years.
containing risk/return summary $151,296.83 In addition, it is our
Regulation S–T
information for one mutual fund to be understanding that many participants
approximately 43 hours.80 will also have annual software licensing Regulation S–T (OMB Control No.
Based on the estimates of 55 costs. We estimate that the cost of 3235–0424) specifies the requirements
participants submitting tagged licensing software will be $333 per that govern the electronic submission of
documents containing risk/return participant per year, for a total annual documents. The amendments will revise
summary information for one mutual increase of $18,315.84 Altogether, the rules under Regulation S–T, but the
fund per year and incurring 43 hours total annual increase in external costs associated increase in burden is
per submission, we estimate that, in the related to the amendments will be reflected in the ‘‘Voluntary XBRL-
aggregate, the industry will incur an $169,611.85 Related Documents’’ collection of
additional 2,365 burden hours Our cost estimates are intended to information as described above.
associated with the amendments.81 We reflect both initial and ongoing costs IV. Cost/Benefit Analysis
further estimate that 75% of this burden over a three-year period. In calculating
increase, or approximately 1,774 hours, these costs, we have tried to take into The Commission is sensitive to the
will be borne internally by the mutual costs and benefits imposed by its rules.
fund complex. We estimate that this modified to account for an 1800-hour work-year The goal of the voluntary program is to
internal burden increase converted to and multiplied by 5.35 to account for bonuses, firm increase EDGAR’s efficiency and utility
size, employee benefits, and overhead, yielding and to enhance the usefulness to
dollars will amount to approximately effective hourly rates of $261 and $209,
$393,828.82 respectively. See Securities Industry Association,
investors of the information collected
Report on Management & Professional Earnings in through EDGAR. In order to evaluate
hours) represents the internal burden hour estimate.
the Securities Industry 2006 (Sept. 2006) (‘‘SIA data tagging further, we are adopting
Report’’). The estimated wage rate is further based amendments to extend the current
See XBRL Adopting Release, supra note 12, 70 FR
on the estimate that compliance attorneys would
at 6563; XBRL Proposing Release, supra note 12, 69
account for one quarter of the hours worked and interactive data voluntary reporting
FR at 59101. Based upon our experience with filers program to enable mutual funds
programmer analysts would account for the
who have submitted tagged financial information in
the current voluntary program, we believe that this
remaining three quarters, resulting in a weighted voluntarily to submit tagged information
wage rate of $222.00 (($261 × .25) + ($209 × .75)). contained in the risk/return summary
burden estimate for submitting an initial set of
The wage rates used in the Proposing Release were
submissions may have been too high. See, e.g., based upon the Securities Industry Association, section of their prospectuses on EDGAR
Indra K. Nooyi, Chief Executive Officer, PepsiCo, Report on Management & Professional Earnings in as exhibits to Form N–1A filings.
Inc., Webcast Archive of October 3 Interactive Data the Securities Industry 2005 (Sept. 2005), and the
Roundtable, Oct. 3, 2006, available at: http://www. total internal and external burden increases A. Benefits
connectlive.com/events/secinteractivedata100306/ converted to dollars differs from the estimates in
(initial submission in voluntary program required the Proposing Release due to changes in wage rates
We believe that tagged information
approximately 60 to 80 total labor hours); John in the 2006 SIA Report. may allow more efficient and effective
Stantial, Director of Financial Reporting, United 83 591 hours × $256.00 per hour = $151,296. The retrieval, research, and analysis of
Technologies Corporation, Transcript of June 12
Interactive Data Roundtable, June 12, 2006,
estimated wage figure is based on published rates company information through
for attorneys and senior programmers, modified to automated means. The expansion of the
available at: http://www.sec.gov/spotlight/xbrl/xbrl account for an 1800-hour work-year and multiplied
officialtranscript0606.pdf, at 160 (initial submission by 5.35 to account for bonuses, firm size, employee voluntary program will assist us in
in voluntary program required about 80 hours of benefits, and overhead, yielding effective hourly assessing whether using interactive data
effort). We, therefore, estimate that the initial rates of $292 and $244, respectively. See SIA
creation of tagged documents containing risk/return tags enhances users’ ability to analyze
Report, supra note 82. The estimated wage rate is
summary information will require, on average, further based on the estimate that attorneys will
and compare mutual fund risk/return
approximately 110 burden hours per mutual fund, account for one quarter of the hours worked and summary information included in
75% of which (or 82.5 hours) represents the senior programmers will account for the remaining mutual funds’ filings with the
internal burden hour estimate. These estimates three quarters, resulting in a weighted wage rate of
more closely approximate the experience of filers in Commission. The expansion of the
$256.00 (($292 × .25) + ($244 × .75)).
the current voluntary program. 84 $333 per participant × 55 participants =
voluntary program to include narrative,
79 In the current voluntary program, we estimated
$18,315. The estimated annual cost of the software non-financial information, such as that
that each set of submissions, after the initial set, comes from our previous PRA estimate for the contained in the risk/return summary,
would take 10 burden hours. See XBRL Adopting current voluntary program. See XBRL Adopting
Release, supra note 12, 70 FR at 6563; XBRL
also will facilitate our ability to assess
Release, supra note 12, 70 FR at 6563 and n. 113.
Proposing Release, supra note 12, 69 FR at 59101. That estimate was based on our discussions with
further the technical requirements of
We continue to believe that this estimate is software providers and others familiar with XBRL. processing tagged documents using
appropriate. We estimated that the cost of licensing software will EDGAR.
80 (110 hours in the first year + 10 hours in the
range from $200 to $3,000 each year, with the Currently, a number of companies use
second year + 10 hours in the third year) ÷ 3 years majority of companies licensing less complex
= 43 hours. While the PRA requires an estimate
computers and data entry staff to mine
software in the $200 to $500 range. We set our
based on a hypothetical three years of participation, software cost estimate at $500, which is the highest risk/return summary information
a registrant, as noted earlier, could participate in cost for the simpler XBRL software license, and we provided by mutual funds on EDGAR in
the expanded voluntary program by submitting assumed that the first year license fee will be order to populate databases that are
tagged risk/return summary information over a waived (based upon our understanding that
shorter period or even just once as the registrant
used to package information for sale to
software providers indicated that they will provide
chooses. these products for free in the initial stages of the analysts, funds, investors, and others.
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81 55 documents per year × 43 hours per voluntary program). Because the PRA estimates Permitting funds to tag risk/return
submission = 2,365 hours. represent the average burden over a three-year summary information in Commission
82 This cost increase is estimated by multiplying period, we estimated the average burden for filings will aid this data-mining process
the increase in annual internal hour burden (1,774) software license costs to be $333 per year. Id.
by the estimated hourly wage rate of $222.00. The 85 This annual total consists of $151,296 in in that it will identify points of data at
estimated wage figure is based on published rates outside professional costs plus $18,315 in software the source, which could reduce the cost
for compliance attorneys and programmer analysts, costs. to populate databases and improve the
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Federal Register / Vol. 72, No. 136 / Tuesday, July 17, 2007 / Rules and Regulations 39297
accuracy of that data. Additionally, the which would benefit investors.91 accurately estimate the number or size
expanded voluntary program may Finally, one commenter noted that the of these potentially affected entities.
benefit funds and the public by investment analysis process would The limited, voluntary nature of the
permitting experimentation with data become more efficient and effective program will help the Commission
tagged using the risk/return summary through the increased use of automation assess the effect, if any, on these
taxonomy. and reduced human intervention that entities. In addition, the availability of
In the future, the availability of would result from the use of interactive mutual fund tagged data on EDGAR may
potentially more accurate tagged data.92 provide these companies with
information about mutual funds could alternative business opportunities.
B. Costs
also reduce the cost of research and V. Promotion of Efficiency,
analysis and create new opportunities The expansion of the voluntary
program will lead to some additional Competition, and Capital Formation
for companies that compile, provide,
and analyze data to produce more value costs for funds choosing to submit Section 2(c) of the Investment
added services. Enhanced access to tagged documents containing risk/return Company Act 97and section 2(b) of the
tagged information also has the summary information as exhibits to Securities Act 98 require the
potential to allow retail investors (or their Form N–1A filings. For purposes Commission, when engaging in
financial advisers assisting such of the PRA, we estimated that the rulemaking that requires it to consider
investors) to perform more personalized increase in annual internal burden or determine whether an action is
and sophisticated analyses and hours to the industry will be 1,774 necessary or appropriate in the public
comparisons of mutual funds, which hours, which will amount to interest, to consider, in addition to the
could result in investors making better approximately $393,828 and that the protection of investors, whether the
informed investment decisions, and increase in annual external costs will action will promote efficiency,
therefore in a more efficient distribution amount to approximately $169,611 for a competition, and capital formation.
total estimated increase of $563,439 on The amendments will extend the
of assets by investors among different
an annual basis.93 interactive data voluntary reporting
funds. This may, in turn, also contribute
We based these cost estimates upon, program to enable mutual funds
to increased competition among mutual
among other things, experience with voluntarily to submit tagged information
funds and result in a more efficient
filers who have submitted tagged contained in the risk/return summary
allocation of resources among
financial information in the current section of their prospectuses on EDGAR
competing investment products.
voluntary program.94 Due to the ongoing as exhibits to Form N–1A filings. The
Although it is not possible to quantify
nature of the project to develop the risk/ expansion of the voluntary program is
precisely the beneficial effects of more
return summary taxonomy, however, we intended to help us evaluate the
efficient allocation of investors’ assets have limited data to quantify the cost of usefulness to investors, third-party
and increased competition, they may be implementing the use of interactive data analysts, mutual funds, the
significant, given the size of the mutual tags applied to risk/return summary Commission, and the marketplace of
fund industry. information. In the Proposing Release, data tagging and, in particular, of
In the Proposing Release, we sought we sought comments and supporting tagging mutual fund information.
comments on our cost-benefit data on our cost estimates with regard Because compliance with the
analysis,86 and several commenters to the proposed amendments.95 We did amendments will be voluntary, the
discussed the potential benefits not receive any comments or supporting Commission estimates that the impact of
resulting from the expansion of the data specific to our cost estimates.96 the amendments will be limited.
interactive data voluntary reporting In the future, there may be additional However, because the tagging of risk/
program and from interactive data in costs to current users of EDGAR data. return summary information has the
general. Two commenters stated that For example, companies that currently potential to facilitate analysis of that
interactive data will increase the provide tagging and dissemination of information, we believe that the
accuracy of information.87 One EDGAR data may experience decreased amendments could promote efficiency
commenter also noted the potential for demand for their services. These entities by allowing us and others to gain
increased timeliness of critical data that have developed certain products and experience with tagged mutual fund
investors require to make informed services based on data in EDGAR; many information in Commission filings.
investment decisions.88 Another entities disseminate, repackage, analyze, Further, tagging of the risk/return
commenter stated that a prospectus and sell the information. Allowing summary information has the potential
tagged using the risk/return summary mutual funds to submit tagged risk/ to help streamline the delivery of
taxonomy will allow automated, return summary information, even mutual fund information, and provide
instantaneous extraction of every fact voluntarily, may have an impact on investors and others with improved
disclosed in the risk/return summary.89 entities providing EDGAR-based tools to compare funds based upon,
Further, commenters stated that services and products. Because the among other things, costs, investment
allowing funds to file tagged risk/return Commission does not regulate all these objectives, strategies, and risks. We
summary information would serve the entities, it is currently not feasible to believe that the potential to streamline
objective of providing investors with the delivery of mutual fund information
more user-friendly access to key fund 91 See letters from Confluence and PWC, supra
and to provide investors and others with
information.90 Commenters also noted note 19.
92 See letter from PWC, supra note 19. improved mutual fund comparison tools
potential cost savings of interactive data 93 See supra Section III. could promote efficiency and
94 See supra note 78. competition through more efficient
86 See Proposing Release, supra note 6, 72 FR at
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6684.
95 See Proposing Release, supra note 6, 72 FR at allocation of investments by investors
6684. and more efficient allocation of assets
87 See letters from Confluence and Hamscher,
96 One commenter noted that it is difficult to
supra note 19. among competing funds. In the future,
estimate the likely cost of participation in the
88 See letter from PWC, supra note 19.
voluntary program at this time but noted that it may
89 See letter from Hamscher, supra note 19. 97 15 U.S.C. 80a–2(c).
wish to provide cost data to the Commission in the
90 See letters from ICI and PWC, supra note 19. future. See letter from ICI, supra note 19. 98 15 U.S.C. 77b(b).
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39298 Federal Register / Vol. 72, No. 136 / Tuesday, July 17, 2007 / Rules and Regulations
companies that currently provide • Search capability of the EDGAR information will be voluntary, we
tagging and dissemination of EDGAR database to allow more efficient and anticipate that only complexes with
data may experience decreased demand effective extraction and analysis of sufficient resources will elect to
for their services. The availability of specific data, participate. To date, no small entity
mutual fund tagged data on EDGAR, • Capability to perform comparisons mutual funds have elected to participate
however, may provide these companies among mutual funds, and in the current voluntary program.
with alternative business opportunities. • Ability to perform analyses of
mutual fund data and whether it would D. Projected Reporting, Recordkeeping,
We do not anticipate that the
amendments will have a significant reduce the resources needed for data and Other Compliance Requirements
impact on capital formation. Finally, analysis. The voluntary program is designed to
because the amendments are designed In addition, we believe that the assist us in assessing the feasibility of
to permit mutual funds to provide expanded voluntary program will using interactive data on a broader
information in a format that we believe enhance our ability to evaluate the: basis. Experience with the current
will be more useful to investors, we • Impact on the staff’s ability to voluntary program indicates that the
believe that the amendments are review filings on a more timely and cost of participating in the expanded
appropriate in the public interest and efficient basis, program, the associated burden on the
for the protection of investors. • Use of tagged data for risk EDGAR system, and the possible effect
We requested comment on whether assessment and surveillance procedures, of the expanded voluntary program on
the proposed amendments would and those entities that use the EDGAR data
promote efficiency, competition, and • Compatibility of interactive data will be minimal. Nevertheless, the
capital formation. We received no with reporting quality, transparency, impact of the amendments remains
comment on this issue. and other Commission reporting somewhat speculative at this point.
requirements. No registrant will be required to
VI. Final Regulatory Flexibility
B. Significant Issues Raised by Public submit tagged documents under the
Analysis
Comment expansion of the voluntary program.
This Final Regulatory Flexibility The submission of tagged risk/return
Analysis was prepared in accordance In the IRFA for the proposed summary information will require a
with 5 U.S.C. 604 and relates to the amendments, we requested comment on participating mutual fund to tag the
amendments we are adopting that will the number of small entities that would risk/return summary section of its
expand the current interactive data be affected by the proposed prospectus using the risk/return
voluntary reporting program to enable amendments, the existence or nature of summary taxonomy and potentially
mutual funds voluntarily to submit the potential effect of the proposals on develop extensions and to submit
tagged information contained in the small entities, how to quantify the effect exhibits to its filing. Volunteers may
risk/return summary section of their of the proposals, how different also need to purchase software or retain
prospectuses on EDGAR as exhibits to procedures could be provided for small a consultant to assist in tagging data. For
Form N–1A filings. An Initial entities, and we asked commenters to purposes of the PRA, we estimated that
Regulatory Flexibility Analysis provide any empirical data supporting each volunteer, including small entities,
(‘‘IRFA’’), which was prepared in the extent of the impact. We received no would incur approximately 43 burden
accordance with the 5 U.S.C. 603, was comment letters specifically addressing hours and $333 in software costs
published in the release proposing the the IRFA in the Proposing Release; annually.
amendments. however, one commenter suggested that
the Commission could lower the barrier E. Agency Action To Minimize Effect on
A. Need for the Amendments Small Entities
for participation for small funds by
The purpose of the amendments is to providing a ‘‘literal’’ or structured form The Regulatory Flexibility Act directs
help us evaluate the usefulness to using some commonly used software us to consider significant alternatives
investors, third-party analysts, mutual applications.99 that would accomplish the stated
funds, the Commission, and the objective, while minimizing any
marketplace of data tagging and, in C. Small Entities Subject to the Rules
significant adverse impact on small
particular, of tagging mutual fund The expansion of the voluntary entities. The purpose of the
information. We believe that the program may have an effect on mutual amendments is to help us evaluate the
expanded voluntary program will fund participants in the voluntary usefulness to investors, third-party
enable us to study further the extent to program. Under Rule 0–10 under the analysts, mutual funds, the
which interactive data tags enhance the Investment Company Act, an Commission, and the marketplace of
comparability of that data, the investment company is a small entity if data tagging and, in particular, of
usefulness of data tags for it, together with other investment tagging mutual fund information.
dissemination, and our staff’s ability to companies in the same group of related Submitting documents containing
review and assess the accuracy and investment companies, has net assets of tagged risk/return summary information
adequacy of that data. The expanded $50 million or less as of the end of its is entirely voluntary. We have
voluntary program will also help us most recent fiscal year.100 We estimate considered different or simpler
assess the effect of interactive data tags that there are approximately 131 mutual procedures for small entities, including:
on the quality and transparency of risk/ funds that meet this definition. A • The establishment of different
return summary information, as well as smaller subset of those issuers may compliance or reporting requirements or
the compatibility of data tagging with voluntarily submit tagged risk/return timetables;
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the Commission’s disclosure summary information under the • The clarification, consolidation, or
requirements. voluntary program, but, because simplification of the proposed
More specifically, we believe that the submitting risk/return summary requirements;
expanded voluntary program will better • The use of performance rather than
enable us to study the extent to which 99 See letter from Hamscher, supra note 19. design standards; and
interactive data enhances the: 100 17 CFR 270.0–10. • Exemption from coverage.
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Federal Register / Vol. 72, No. 136 / Tuesday, July 17, 2007 / Rules and Regulations 39299
For tagged data to provide benefits ■ c. Removing the phrase ‘‘(§ 239.15A (§ 249.210b of this chapter), 10–KSB
such as ready comparability, however, and § 274.11A of this chapter)’’ in (§ 249.310b of this chapter), 10–QSB
the data tagging system cannot have paragraph (b)(1)(iii); (§ 249.308b of this chapter), 20–F or N–
alternative procedures. Similarly, in ■ d. Removing the period at the end of 1A and, in the case of risk/return
order to achieve the benefits of paragraph (b)(1)(iii) and adding in its summary information submitted under
interactive data tagging, use of a single place ‘‘; or’’; paragraph (b)(1)(iv) of this section,
data tagging technology is necessary. ■ e. Adding new paragraph (b)(1)(iv); within the XBRL-Related Documents as
Additionally, providing structured and a tagged data element;
input forms, as suggested by one ■ f. Revising paragraphs (d)(1)(i) and
* * * * *
commenter,101 is not appropriate at this (d)(2)(i). 3. Revise § 232.402(a)(1) to read as set
time given the cost of deploying and The addition and revisions read as forth below and amend § 232.402(b) by
maintaining such forms and the follows: removing each reference to ‘‘Item 401’’
difficulty of permitting extensions to be § 232.401 XBRL-Related Document and adding in its place ‘‘Rule 401’’.
used with a structured input form. If we submissions.
determine to require data tagging in the § 232.402 Liability for XBRL-Related
(a) An electronic filer that participates Documents.
future, we will look to the results of the in the voluntary XBRL (eXtensible
voluntary program, including those of (a) * * *
Business Reporting Language) program (1) Are not deemed filed for purposes
the expansion of the program to risk/ may submit XBRL-Related Documents
return summary information, in of section 11 of the Securities Act (15
(§ 232.11) in electronic format as an U.S.C. 77k), section 18 of the Exchange
considering alternatives to minimize exhibit to: The filing (other than a Form
any burden on small entities. Act (15 U.S.C. 78r), or section 34(b) of
N–1A (§ 239.15A and § 274.11A of this the Investment Company Act (15 U.S.C.
VII. Statutory Authority chapter) filing) to which the XBRL 80a–33(b)), or otherwise subject to the
Related Documents relate; an liabilities of these sections, and are not
The Commission is adopting the rule amendment to such filing, but, in the
amendments outlined above under part of any registration statement to
case of a Form N 1A filing, an which they relate;
Sections 5, 6, 7, 10, 19(a), and 28 of the amendment made only after the
Securities Act [15 U.S.C. 77e, 77f, 77g, effective date of the Form N–1A filing * * * * *
77j, 77s(a), and 77z–3] and Sections to which the XBRL-Related Documents
6(c), 8, 24(a), 30, and 38 of the PART 239—FORMS PRESCRIBED
relate; or if the electronic filer is eligible UNDER THE SECURITIES ACT OF 1933
Investment Company Act [15 U.S.C. to file a Form 8–K (§ 249.308 of this
80a–6(c), 80a–8, 80a 24(a), 80a–29, and chapter) or a Form 6–K (§ 249.306 of ■ 4. The general authority citation for
80a–37]. this chapter), a Form 8–K or a Form 6– Part 239 is revised to read as follows:
List of Subjects K, as applicable, that references the Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s,
filing to which the XBRL-Related 77z–2, 77z–3, 77sss, 78c, 78l, 78m, 78n,
17 CFR Parts 232 and 239 Documents relate if such Form 8–K or 78o(d), 78u–5, 78w(a), 78ll, 78mm, 80a–2(a),
Reporting and recordkeeping Form 6–K is submitted no earlier than 80a–3, 80a–8, 80a–9, 80a–10, 80a–13, 80a–
requirements, Securities. the date of that filing. * * * 24, 80a–26, 80a–29, 80a–30, and 80a–37,
(b) * * * unless otherwise noted.
17 CFR Parts 270 and 274 (1) * * * * * * * *
(iv) The risk/return summary
Investment Companies, Reporting and
information set forth in Items 2 and 3 of PART 270—GENERAL RULES AND
recordkeeping requirements, Securities.
Form N 1A provided that, in the case of REGULATIONS, INVESTMENT
Text of Rule and Form Amendments a Form N 1A filing that includes more COMPANY ACT OF 1940
than one series (as that term is used in
■ For the reasons set forth above, the rule 18f–2(a) under the Investment ■ 5. The authority citation for Part 270
Commission amends title 17, Chapter II Company Act (§ 270.18f 2(a) of this continues to read in part as follows:
of the Code of Federal Regulations as chapter), a filer may include in Authority: 15 U.S.C. 80a–1 et seq., 80a–
follows: mandatory content complete risk/return 34(d), 80a–37, and 80a–39, unless otherwise
summary information for any one or noted.
PART 232—REGULATION S–T—
more of those series. * * * * *
GENERAL RULES AND REGULATIONS
FOR ELECTRONIC FILINGS * * * * * ■ 6. Revise § 270.8b–33 to read as
(d) * * * follows:
■ 1. The general authority citation for (1) * * *
Part 232 is revised to read as follows: (i) That the financial information § 270.8b–33 XBRL-Related Documents.
contained in the XBRL-Related A registrant that participates in the
Authority: 15 U.S.C. 77f, 77g, 77h, 77j,
Documents is ‘‘unaudited’’ or voluntary XBRL (eXtensible Business
77s(a), 77z–3, 77sss(a), 78c(b), 78l, 78m, 78n,
78o(d), 78w(a), 78ll, 80a–6(c), 80a–8, 80a–29, ‘‘unreviewed,’’ as applicable (but only if Reporting Language) program may
80a–30, 80a–37, and 7201 et seq.; and 18 the mandatory content contained in the submit, in electronic format as an
U.S.C. 1350. XBRL-Related Documents contains exhibit to a filing on Form N–1A
* * * * * information other than risk/return (§§ 239.15A and 274.11A of this
summary information submitted under chapter), Form N–CSR (§§ 249.331 and
■ 2. Amend § 232.401 by: paragraph (b)(1)(iv) of this section); 274.128 of this chapter), or Form N–Q
■ a. Revising the first sentence of
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39300 Federal Register / Vol. 72, No. 136 / Tuesday, July 17, 2007 / Rules and Regulations
‘‘EX 100’’ as specified in the EDGAR filing to which it relates, in accordance ■ 8. Amend General Instruction B.4.(b)
Filer Manual and submit the XBRL with rule 401 of Regulation S–T of Form N 1A (referenced in §§ 239.15A
Related Documents in such a manner (§ 232.401). and 274.11A) by revising ‘‘8b–32 [17
that will permit the information for each CFR 270.8b–1—270.8b–32]’’ to read
series and, for any information that does PART 274—FORMS PRESCRIBED ‘‘8b–33 [17 CFR 270.8b–1—270.8b–33]’’.
not relate to all of the classes in a filing, UNDER THE INVESTMENT COMPANY
Note: The text of Form N–1A will not
each class of an investment company ACT OF 1940 appear in the Code of Federal Regulations.
registrant and each contract of an
insurance company separate account to ■ 7. The authority citation for Part 274 Dated: July 11, 2007.
be separately identified. A registrant continues to read in part as follows: By the Commission.
may submit such exhibit with, or in an Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, Florence E. Harmon,
amendment to, the Form N–CSR or 78c(b), 78l, 78m, 78n, 78o(d), 80a–8, 80a–24, Deputy Secretary.
Form N–Q filing to which it relates, or 80a–26, and 80a–29, unless otherwise noted. [FR Doc. E7–13738 Filed 7–16–07; 8:45 am]
in an amendment to the Form N–1A * * * * * BILLING CODE 8010–01–P
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