anticipate such a change, and there would be a lesser effect on
competition among funds accordingly.
---------------------------------------------------------------------------

    In addition, the rule amendments that affect the definition of a
``broad-based'' index will affect competition among providers of the
index information that funds include in their performance disclosure.
Specifically, the amendments will define a ``broad-based'' index in a
way that will likely reduce the number of indexes that qualify as an
``appropriate broad-based securities market index'' (and reduce the
number of suppliers of qualifying index licenses to funds) for
disclosure purposes. To the extent that the final rules' change to the
definition affects the index choices of funds, the final rules will
increase the demand for qualifying index licenses. Funds incur costs of
the use of indexes under their licensing agreements with index
providers and a new fund that wishes to use as its broad-based index
one that is not included in the fund complex's current licensing
agreements, or that wishes to change indexes, would incur additional
costs under the licensing agreement.\751\ The amount of these costs
will depend, among other things, on market competition among index
providers.
---------------------------------------------------------------------------

    \751\ See, e.g., ICI Comment Letter (discussing competition
among index providers in relation to the fund index licensing
agreement). According to this commenter, smaller fund complexes with
fewer (or more limited) licensing agreements in place may be more
likely to incur costs of changing indexes or adding an index.
---------------------------------------------------------------------------

    Index-licensing fees could increase if the rule amendment results
in a reduction in the number of index providers producing indexes that
are ``appropriate broad-based securities market indexes'' that is large
enough to permit those index providers to increase their fees or,
alternatively, if the change increases demand by funds to license
indexes and there is limited competition among index providers
producing indexes that are ``appropriate broad-based securities market
indexes.'' For example, one commenter suggested that the market for
indexes is concentrated and that a definition that strongly favors
existing and widely recognized indexes could inhibit entry into the
market for indexes that are acceptable under the regulations, thereby
limiting competition in ways that may lead funds to incur higher index
costs.\752\

However, we believe there will be many providers of indexes that
qualify as ``broad-based'' under the final rules, which will prevent
funds from incurring such higher index costs.\753\
---------------------------------------------------------------------------

    \752\ See, e.g., supra footnote 751. According to this
commenter, the index market is concentrated, and the top three
players are estimated to have a 71 percent share.
    \753\ See supra paragraphs accompanying footnotes 230-232. Under
the definition of a ``broad-based'' index in the final rules, we
anticipate that funds could use multiple currently extant indexes as
the appropriate broad-based securities market index that appears in
their performance disclosure. See also supra footnotes 725-727 and
accompanying text (discussing the costs that will be incurred by
funds that will be required to change their indexes in response to
the final rules).
---------------------------------------------------------------------------

    Finally, we noted earlier in section IV.C.3.b that certain funds
may respond to the final advertising rule amendments by limiting their
advertising of certain fee and expense information. Reduced advertising
of fees and expenses could affect the way in which funds compete for
investor assets, causing funds to focus competition on other
dimensions. At the same time, a reduction in fund advertising could
limit the benefit of competition to investors by reducing the
efficiency with which they are able to make comparisons across funds
and identify the funds that best match their preferences.
    Capital Formation. The rule amendments could lead to an increase in
capital formation. First, to the extent they increase the efficiency of
exchange in markets for funds and other financial products, the rule
amendments could lead to changes in fund investment in these products.
Greater investment in ETFs, mutual funds, and other products, for
example, could lead to increased demand for their underlying
securities. The increased demand for those securities could, in turn,
facilitate capital formation.
    We further note that, to the extent that increased or decreased
investment in these financial products reflects substitution from other
investment vehicles, the effect on capital formation will be attenuated
because this will reduce the net change in the overall amount of
investment in the capital markets.
    The rule amendments may, by lowering the cost of delivering
disclosures to fund shareholders, attract new investors to funds and
increase the amount of capital that is invested through those funds. If
so, the rule amendments could promote capital formation. We are unable
to estimate precisely the magnitude of capital formation effects that
may result from our projected cost savings under the rule amendments
because the magnitude of such effects may be affected by the extent of
pass-through cost savings and by other factors that affect the flow of
investor capital into mutual funds and ETFs, including other components
of fund returns, overall market returns, and returns on investments
other than funds. To the extent that any rule amendments will increase
the transmission cost, we expect the opposite effect to occur.
    The rule amendments are designed to make shareholder reports easier
for shareholders to use and to help investors better understand fees
and expenses through fund advertisements. To the extent that it becomes
easier for investors to use fund disclosures or to understand
investment fees and expenses, the effect may improve retail investors'
understanding about, and confidence in, the market for funds and other
investment products, which may increase participation in this market by
investors that previously avoided it. Such additional entry by new
investors could increase the level of total capital across markets and
increase the demand for new investment products and securities, which
could lower the cost of capital for operating companies, precipitate
capital formation in aggregate across the economy, and facilitate
economic growth. These effects on capital formation will be limited,
however, to the extent that investors rely on sources that are not
affected by the rule amendments for advice in selecting among financial
products. \754\ To the extent that there are any effects on capital
formation, we do not have reason to believe that they will be
significant.
---------------------------------------------------------------------------

    \754\ See also supra footnote 748.
---------------------------------------------------------------------------

E. Reasonable Alternatives

1. More or Less Frequent Disclosure
    The rule amendments will maintain a fund's obligation to transmit
an annual and a semi-annual report to shareholders without affecting
their frequency. Alternatively, we could have required an increase or
reduction in the frequency of reports that funds are required to
transmit to shareholders.
    As one alternative, the Commission could have increased the
required frequency of transmission of reports to shareholders beyond
what will occur under the rule amendments. For example, the Commission
could have required funds to transmit shareholder reports on a
quarterly basis, rather than on a semi-annual basis as would continue
to be the case under the rule amendments. To the extent shareholders
review these additional reports, receiving the reports more frequently
could have kept shareholders better informed about their fund
investments and could have enhanced shareholders' familiarity and
comfort with reviewing shareholder report disclosures, since they would
have encountered such disclosures more frequently. As a result,
investors may have made more informed investment decisions. However,
increasing the frequency of reports would have required greater
allocation of fund resources to preparing and delivering shareholder
reports, which would have increased fund (and shareholder) costs. In
addition, receiving more frequent shareholder reports would have placed
greater demands on shareholder time and attention compared to the
proposal, which could have decreased the likelihood of shareholders
reviewing the reports and relying on them to inform their investment
decisions.\755\
---------------------------------------------------------------------------

    \755\ Existing research notes that individuals exhibit limited
ability to absorb and process information. See supra section IV.C.1;
Richard E. Nisbett & Lee Ross, Human Inference: Strategies and
Shortcomings of Social, Nisbett & Ross (Prentice Hall 1980);
Hirshleifer and Teoh Study, supra footnote 640.
---------------------------------------------------------------------------

    The Commission could also have adopted rule amendments that provide
funds with alternatives to transmitting the semi-annual report, such as
by permitting the requirement to transmit semi-annual reports to be
satisfied by a fund filing certain information on Form N-CSR or by
making information available on a website (either semi-annually or more
frequently). Relative to the rule amendments, funds would have
benefitted from the cost savings associated with no longer being
required to transmit the semi-annual report. Funds also could have
experienced lower costs associated with preparing disclosures,
particularly if the information they were required to provide on
websites largely replicated information that many funds already provide
online in monthly or quarterly fact sheets.\756\ Shareholders could
have benefitted from these cost savings to the extent funds pass them
through. However, shareholders who prefer to receive information more
frequently than annually, as they currently do, would have incurred
costs associated with the reduced frequency of transmission, such as
costs of locating information online instead of in the delivered semi-
annual report. In addition, to the extent we permitted this approach to
be optional for the fund (e.g., funds could either provide certain
information online or transmit semi-annual reports), the alternative
may have led to shareholders in some funds

receiving less direct information than those in other funds.
---------------------------------------------------------------------------

    \756\ See generally supra section II.E.3.
---------------------------------------------------------------------------

2. More or Less Information in Shareholder Reports
    The rule amendments will make the disclosures that funds transmit
to shareholders more concise, without materially changing the overall
amount or scope of information that funds provide to their shareholders
(either in shareholder reports or separately online). The Commission
could have required more (or less) information in fund shareholder
reports and less (or more) information online or upon request only than
under the amendments. We could have further reduced the overall amount
of disclosure that funds are required to prepare and provide, e.g., by
no longer requiring funds to provide disclosure regarding the basis for
the board's approval of investment advisory contracts.
    The benefits of requiring more information to be included in
shareholder reports (with less information online or upon request only)
would have been that fewer investors would need to take any additional
steps needed to access the information online, which would have reduced
the burdens on those investors. However, this alternative also would
have had certain costs. For example, requiring more information in
shareholder reports may have reduced the likelihood that shareholders
review the reports because they may have been more likely to feel
overwhelmed by the length of the reports. Shareholder reports that
include more information than under the rule amendments may also have
made it harder for shareholders to find key information within the
report. Moreover, increasing the length of shareholder reports by
requiring additional content could also have increased the transmission
costs for funds (which could also be passed on to shareholders),
particularly with respect to printing and mailing costs.
    As another alternative, we could have further limited the content
of shareholder reports. This alternative could have resulted in
shareholder reports that are easier for shareholders to review and
could have reduced costs associated with the preparation and
transmission of shareholder reports. However, this alternative may have
reduced the utility of shareholder reports for many if not most
shareholders if the reports did not include the key information those
shareholders have tended to use for the purpose of monitoring their
fund investments or making portfolio decisions. If, as part of this
alternative, we had required funds to provide the information removed
from shareholder reports to shareholders upon request or online, those
shareholders would have faced the burden of requesting the information
or locating it online. If we had instead removed certain disclosure
requirements entirely, the costs to funds of preparing disclosure would
have declined. This approach would, however, have reduced access to
information for all market participants, which may have resulted in
less informed monitoring or investment decisions by shareholders or by
the market professionals they rely on for investment advice.
3. Retaining Rule 30e-3 Flexibility or Implementing Access Equals
Delivery for Open-End Funds Registered on Form N-1A
    The rule amendments will exclude funds registered on Form N-1A from
current rule 30e-3. Under the rule amendments, affected funds will be
required to transmit concise shareholder reports directly to
shareholders in order to meet their transmission obligations. Funds
will not have the flexibility instead to send a notice with information
about the online location of the shareholder report, as is the case
under current rule 30e-3.
    As an alternative, the Commission could have continued to permit
the affected funds to rely on rule 30e-3 to satisfy their shareholder
report transmission obligations (whether by retaining rule 30e-3 or
allowing a fund to choose either to send a rule 30e-3 notice or
streamlined shareholder report). This alternative would have provided
optionality to funds to determine their preferred method for delivering
shareholder reports where shareholders have not expressed a clear
preference for electronic delivery or paper delivery of the report and
could have reduced costs of delivery for some funds compared to the
proposal, such as for those funds that have already begun to prepare to
rely on rule 30e-3. It also could have reduced any shareholder
confusion where funds have notified shareholders of their intent to
rely on rule 30e-3 and of the associated upcoming changes to
shareholder report transmission. However, given that we do not expect
the shareholder reports under the rule amendments to be of a length
that would result in significant delivery cost disparities compared to
the notice that funds must deliver under rule 30e-3, we do not believe
that excluding relevant funds from rule 30e-3 would have significantly
changed the costs of delivery relative to the baseline.\757\ For
instance, the amendments may reduce processing fees associated with
delivering shareholder reports through intermediaries and should not
significantly increase printing and mailing costs. Moreover, we believe
that delivering a concise shareholder report to shareholders may help
them more efficiently monitor their fund investments. This is because
the rule amendments will enable shareholders who would otherwise have
received paper notices under rule 30e-3 (those who have not elected
electronic delivery) to avoid the additional step of finding the report
online.
---------------------------------------------------------------------------

    \757\ See supra sections IV.C.2.a.ii and IV.C.2.b.iii
(discussing our belief that the proposed shareholder reports could
be trifold self-mailers).
---------------------------------------------------------------------------

    In addition, the Commission could have adopted an access equals
delivery approach as an alternative to the shareholder report delivery
approach we are adopting.\758\ The effect of an access equals delivery
approach would be that funds would post their streamlined shareholder
reports online, without the notice that rule 30e-3 currently requires,
rather than delivering them by email or postal mail to fund
shareholders and their households. One benefit of this approach that
commenters raised involved the potential for a cost reduction (which
would be passed on to fund shareholders).\759\ As discussed above,
commenters discussing this approach raise considerations for any future
initiative on the delivery of fund regulatory materials.\760\ We
anticipate that any further initiative on the delivery of fund
regulatory materials would address these considerations.\761\
---------------------------------------------------------------------------

    \758\ See, e.g., Capital Group Comment Letter (urging adoption
of an access equals delivery approach for shareholder reports and
annual prospectus updates); TIAA Comment Letter (urging an
incremental approach, focusing first on the format and substance of
shareholder reports, urging the adoption of access equals delivery
with respect to all disclosure documents); T. Rowe Price Comment
Letter (recommending access equals delivery for semi-annual
shareholder reports).
    \759\ See, e.g., Capital Group Comment Letter, Federated Hermes
Comment Letter, TIAA Comment Letter, T. Rowe Price Comment Letter.
    \760\ See supra section II.E.2.
    \761\ See, e.g., Marlboro Comment Letter and CFA Comment Letter
(discussing considerations regarding an access equals delivery
approach).
---------------------------------------------------------------------------

4. Limiting the Advertising Rule Amendments to ETFs and Mutual Funds
    The final amendments to the advertising rule will apply to all
registered investment companies and BDCs. The scope of entities
affected by these amendments will therefore be broader than affected by
the other rule

amendments, which apply only to open-end funds, such as mutual funds,
and to ETFs. As an alternative, we could also have limited the scope of
the advertising rule amendments to apply only to open-end funds.
    Under this alternative, the advertising rule amendments would have
applied to a narrower class of entities than under the amendments being
adopted. The effect would have been to reduce both the cost and
benefits of the advertising amendments that are discussed in section
IV.C.3, as these costs and benefits would then accrue only to
shareholders and issuers of the narrowed class of entities, and not to
shareholders and issuers of any entities that would be excluded under
the alternative. In addition, the alternative could have led to a
disparity in the quality of the information that is available to market
participants about funds that would be covered by the advertising rule
amendments under the alternative and the entities that would be outside
its scope. This could have led to reduced comparability and distortions
in investor choice across registered investment companies and BDCs,
relative to the approach the Commission is adopting, which would apply
the standards across all of these entities evenly.
5. Amending Shareholder Report Requirements To Include Variable
Insurance Contracts or Registered Closed-End Funds
    The new approach to funds' shareholder reports under the rule
amendments applies only to funds registered on Form N-1A. Those rule
amendments do not apply to other registered management investment
companies that transmit annual and semi-annual reports under rule 30e-
1.\762\ Alternatively, we could have extended the new approach to
shareholder reports and related rule amendments to other registered
management investment companies, including closed-end funds that
register on Form N-2 and variable annuity separate accounts that
register on Form N-3. Like shareholders in open-end funds registered on
Form N-1A, shareholders in these other funds could have benefitted from
more concise shareholder reports. Several comments on the Proposing
Release suggested that the shareholders of these other funds would
benefit from the layered approach to disclosure under the rule
amendments.\763\ However, the Commission has recently amended the
disclosures that shareholders in these funds receive, as we explained
above and in the proposing release. Specifically, for example, the
recently adopted changes to closed-end fund disclosures include
multiple changes to these funds' shareholder report disclosure.\764\ In
addition, while the recently-adopted changes to the variable contract
disclosure framework are focused more on prospectus disclosure and not
shareholder report disclosure, we anticipate that these amendments
would significantly change investors' experience with variable contract
disclosure.\765\ Before considering any additional or different
disclosure amendments for closed-end funds and variable contracts, we
believe it is necessary to understand funds' and investors' experience
with these new disclosure frameworks for closed-end funds and variable
contracts and assess their impact.
---------------------------------------------------------------------------

    \762\ Although all registered management investment companies
are subject to rule 30e-1, the information a registered management
investment company must include in its shareholder report is
specified in the relevant Investment Company Act registration
statement form (i.e., Form N-1A, Form N-2, or Form N-3).
    \763\ Several commenters suggested that shareholders across fund
types (e.g., closed-end funds and UITs, as well as open-end funds)
have similar informational needs and thus would all likely benefit
from the layered approach to disclosure of the rule amendments. See,
e.g., Tom and Mary Comment Letter; Dechert Comment Letter; CFA
Institute Comment Letter; Donald Comment Letter.
    \764\ See Closed-End Fund Offering Reform Adopting Release,
supra footnote 143, at section II.I.2.a (discussing new annual
report requirements for funds that file a short-form registration
statement), section II.I.2.b (discussing MDFP disclosure that would
appear in registered closed-end funds' annual reports), and section
II.I.5 (discussing enhancements to certain registered closed-end
funds' annual report disclosure).
    \765\ See Variable Contract Summary Prospectus Adopting Release,
supra footnote 9.
---------------------------------------------------------------------------

6. Requiring All Form N-CSR Disclosures To Be Tagged in Inline XBRL
    Under the rule amendments, the shareholder reports will be required
to be tagged in Inline XBRL, but the remainder of Form N-CSR will not.
Alternatively, we could have required all of Form N-CSR to be tagged in
Inline XBRL. Some of the comments on the Proposing Release that
discussed Inline XBRL advocated for this more expansive approach.\766\
Requiring funds to also tag the remaining disclosures on Form N-CSR
would enable more efficient retrieval, aggregation, and analysis of
those disclosures compared to the final rule amendments, under which
the disclosures will remain untagged.\767\ Such a requirement would
also have imposed additional filing preparation costs (specifically,
the costs of applying additional Inline XBRL tags to Form N-CSR) on
funds compared to the final rule amendments.\768\ Because Form N-CSR is
used by both open and closed-end management investment companies to
file shareholder reports, as well as other information, we have
determined to limit the tagging requirements under the final rule
amendments to the content that is the focus of the final rule
amendments (namely, the shareholder reports filed by open-end
management investment companies). We believe the information in these
reports is particularly salient to funds' largely retail shareholder
base, and the benefits of tagging this information likewise will be
beneficial in helping these investors, as well as other market
participants, understand funds' performance and operations. We believe
adding requirements to tag other content filed on Form N-CSR, including
content filed by closed-end management investment companies, merits
further consideration.
---------------------------------------------------------------------------

    \766\ See, e.g., Better Markets Comment Letter; Consumer
Federation of America II Comment Letter; Morningstar Comment Letter;
XBRL US Comment Letter.
    \767\ See supra section IV.C.2.a.i.
    \768\ See supra section IV.C.2.b.iii.
---------------------------------------------------------------------------

V. Paperwork Reduction Act Analysis

A. Introduction

    Certain provisions of the final rules contain ``collection of
information'' requirements within the meaning of the Paperwork
Reduction Act of 1995 (``PRA'').\769\ We are submitting the proposed
collections of information to the Office of Management and Budget
(``OMB'') for review in accordance with the PRA.\770\ The titles for
the existing collections of information are: (1) ``Rule 30e-1 under the
Investment Company Act, Reports to Stockholders of Management
Companies'' (OMB Control No. 3235-0025) (2) ``Form N-CSR, Certified
Shareholder Report under the Exchange Act and under the Investment
Company Act for Registered Management Investment Companies''(OMB
Control No. 3235-0570); (3) ``Rule 482 under the Securities Act of 1933
Advertising by an Investment Company as Satisfying Requirements of
Section 10'' (OMB Control No. 3235-0565); (4) ``Rule 34b-1 under the
Investment Company Act, Sales Literature Deemed to be Misleading'' (OMB
Control No. 3235-0346); (5) ``Rule 433 under the Securities Act of
1933'' (OMB Control No. 3235-0617); (6) ``Rule 30e-3 under the
Investment Company Act, internet Availability of Reports to
Shareholders''

(OMB Control No. 3235-0758); and (7) ``Investment Company Interactive
Data'' (OMB Control No. 3235-0642). An agency may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid OMB control number.
---------------------------------------------------------------------------

    \769\ 44 U.S.C. 3501 through 3521.
    \770\ 44 U.S.C. 3507(d); 5 CFR 1320.11.
---------------------------------------------------------------------------

    The Commission published notice soliciting comments on the
collection of information requirements in the Proposing Release and
submitted the proposed collections of information to OMB for review in
accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. While the
Commission received no comments specifically addressing the estimated
PRA burdens and costs that the Proposing Release described, it did
receive comments discussing the burdens of implementing certain aspects
of the proposal, including the associated collections of information as
defined in the PRA. We discuss these comments below, along with
discussing updated estimates of the collection of information burdens
associated with the amendments to rule 30e-1 under the Investment
Company Act and Form N-CSR. We also discuss the amendments to rule 482
under the Securities Act, rule 34b-1 under the Investment Company Act,
rule 433 under the Securities Act, and rule 30e-3 under the Investment
Company Act, as well as amendments that would affect the existing
Investment Company Interactive Data collection of information.\771\
---------------------------------------------------------------------------

    \771\ In the Proposing Release, we included estimated PRA
burdens and costs associated with the proposed amendments to Form N-
1A. Those proposed amendments addressed fee and risk disclosure as
well as removing a rule 30e-3 legend, which since has been removed
from Form N-1A. See supra section I.B. Because we are not adopting
our proposed amendments to Form N-1A, we have not included PRA
burdens and costs associated with that registration form.
---------------------------------------------------------------------------

B. New Shareholder Report Requirements Under Rule 30e-1

    We have previously estimated that it takes a total of 1,039,868
hours, and involves a total external cost burden of $149,244,791 to
comply with the collection of information associated with rule 30e-
1.\772\ Compliance with the disclosure requirements of rule 30e-1 is
mandatory. Responses to the disclosure requirements are not kept
confidential.
---------------------------------------------------------------------------

    \772\ This estimate is based on the last time the rule's
information collection was submitted for PRA renewal in 2020. The
estimates in the Proposing Release were based on earlier approved
estimates (1,028,658 hours and $147,750,391 external cost burden),
and these earlier approved estimates are reflected in the ``Proposed
Estimates'' section of Table 9 below.
---------------------------------------------------------------------------

    The Commission did not receive public comment regarding the PRA
estimates for rule 30e-1 in the Proposing Release, although it did
receive comments suggesting that certain aspects of the new shareholder
report requirements may be more burdensome than the Commission
estimated at proposal. We have adjusted the proposal's estimated annual
burden hours and total time costs to reflect these comments, to reflect
changes from the proposal (for example, requiring class-specific
shareholder reports), as well as to reflect updated wage rates.
    The table below summarizes our PRA initial and ongoing annual
burden estimates associated with the amendments to rule 30e-1.
BILLING CODE 8011-01-P

[GRAPHIC] [TIFF OMITTED] TR25NO22.033

[GRAPHIC] [TIFF OMITTED] TR25NO22.034

C. Form N-CSR

    In our most recent PRA submission for Form N-CSR, we estimated the
annual compliance burden to comply with the collection of information
requirement of Form N-CSR is 227,137 burden hours with an internal cost
burden of $80,860,772, and an external cost burden estimate of
$5,949,924.\773\ Compliance with the disclosure requirements of Form N-
CSR is mandatory, and the responses to the disclosure requirements are
not kept confidential.
---------------------------------------------------------------------------

    \773\ This estimate is based on the last time the rule's
information collection was submitted for PRA renewal in 2022. The
estimates in the Proposing Release were based on earlier approved
estimates (179,443 hours and $3,129,984 external cost burden), and
these earlier approved estimates are reflected in the ``Proposed
Estimates'' section of Table 10 below.
---------------------------------------------------------------------------

    The Commission did not receive public comment regarding the PRA
estimates for Form N-CSR in the Proposing Release. We have adjusted the
proposal's estimated annual burden hours and total time costs, however,
to reflect updated wage rates.
    The table below summarizes our PRA initial and ongoing annual
burden estimates associated with the amendments to Form N-CSR.

[GRAPHIC] [TIFF OMITTED] TR25NO22.035

D. Rule 482

    In our most recent Paperwork Reduction Act submission for rule 482,
the Commission estimated the annual burden to comply with rule 482's
information collection requirements to be 212,927 hours, with a time
cost of $74,098,735, and with no annual

external cost burden.\774\ Compliance with the requirements of rule 482
is mandatory, and responses to the information collections are not kept
confidential.
---------------------------------------------------------------------------

    \774\ This estimate is based on the last time the rule's
information collection was submitted for PRA renewal in 2020. The
estimates in the Proposing Release were based on earlier approved
estimates (278,161 hours, with internal time costs of $76,702,896
and no external cost burden), and these earlier approved estimates
are reflected in the ``Proposed Estimates'' section of Table 11
below.
---------------------------------------------------------------------------

    For purposes of estimating the burden of the final rules
amendments, we estimate that 38,013 responses to rule 482 are filed
annually.\775\ We estimate that approximately 96% of these rule 482
responses provide fee and expense figures in qualifying advertisements
and would, therefore, be required to comply with the final rule
amendments regarding such information (for example, ensuring that the
fee and expense figures are presented in accordance with the prominence
and timeliness requirements in the amendments to rule 482). Similarly,
we estimate that 96% of the responses to rule 482 (i.e., 36,492
responses) provide advertisements that include information regarding a
fund's total annual expenses and would, therefore, have to comply with
the final rule amendments regarding such information.
---------------------------------------------------------------------------

    \775\ The Commission estimates that there was a total of 41,953
responses to rule 482 that either were filed with FINRA or with the
Commission in 2021. Of those, the Commission estimates that 1,124
were responses from closed-end funds and BDCs, and that 2,816 were
responses from variable insurance contracts. The number of responses
filed with the SEC is based on the average number of responses filed
with the Commission from 2019-2021. The Commission assumes that,
moving forward, closed-end funds and BDCs will choose to use free
writing prospectuses under rule 433, and also that variable
insurance contracts will not be subject to the amendments to rule
482. Therefore, we exclude closed-end funds, BDCs, and variable
insurance contracts from the total responses to rule 482 for
purposes of this estimate. The exclusion of variable insurance
contracts represents a change from the PRA estimate at proposal.
---------------------------------------------------------------------------

    The Commission did not receive public comment regarding the PRA
estimates for rule 482 in the Proposing Release. We have adjusted the
proposal's estimated annual burden hours and total time costs, however,
to reflect updated wage rates and adjustments to our estimates of the
number of responses that would be affected by the final rule
amendments.
    The table below summarizes our PRA initial and ongoing estimates
for the internal burdens associated with the amendments to rule 482:

[GRAPHIC] [TIFF OMITTED] TR25NO22.036

E. Rule 34b-1

    To apply the same fee and expense-related requirements consistently
across all registered investment company and BDC advertisements and
supplemental sales literature, we are amending rule 34b-1 in a manner
that mirrors our amendments to rule 482.\776\
---------------------------------------------------------------------------

    \776\ See supra section II.G.
---------------------------------------------------------------------------

    For purposes of estimating the burden of the final rules
amendments, we estimate that 7,509 responses to rule 34b-1 are filed
annually.\777\ We estimate that approximately 96% of the rule 34b-1
responses provide fee and expense figures in qualifying advertisements
and would, therefore, be required to comply with the final rule
amendments regarding such information. Similarly, we estimate that 96%
of the responses to rule 34b-1 (i.e., 7,209 responses) provide
advertisements that include information regarding a fund's total annual
expenses and would, therefore, have to comply with the final rule
amendments regarding such information. Compliance with the requirements
of rule 34b-1 is mandatory, and the responses to the information
collections are not kept confidential.
---------------------------------------------------------------------------

    \777\ The Commission estimates that there was a total of 8,227
total responses to rule 34b-1 that either were filed with FINRA or
with the Commission in 2021. (The estimated number of responses in
the Proposing Release was significantly lower because the responses
filed with FINRA were inadvertently omitted.) Of those, the
Commission estimates that 718 were responses from variable insurance
contracts. The number of responses filed with the SEC is based on
the average number of responses filed with the Commission from 2019-
2021. The Commission assumes that variable insurance contracts will
not be subject to the amendments to rule 34b-1. Therefore, we
exclude variable insurance contracts from the total responses to
rule 34b-1 for purposes of this estimate. We have subtracted these
718 responses from the estimate of 8,227 total responses to estimate
the responses to rule 34b-1 for purposes of calculating the burden
estimate of the final rule amendments (8,227-718 = 7,509). The
exclusion of variable insurance contracts also represents a change
from the PRA estimate at proposal.
---------------------------------------------------------------------------

    In our most recent Paperwork Reduction Act submission for rule 34b-
1, we estimated the annual compliance burden to comply with the
collection of information requirement in rule 34b-1 is 46,278 hours,
with an internal cost burden of $13.8 million.\778\ There is no annual
external cost burden attributed to rule 34b-1.
---------------------------------------------------------------------------

    \778\ This estimate is based on the last time the rule's
information collection was submitted for PRA renewal in 2021. The
estimates in the Proposing Release were based on earlier approved
estimates (26,008 hours, with internal time costs of $73,000,000 and
no external cost burden), and these earlier approved estimates are
reflected in the ``Proposed Estimates'' section of Table 12 below.
---------------------------------------------------------------------------

    The Commission did not receive public comment regarding the PRA
estimates for rule 34b-1 in the Proposing Release. We have adjusted the
proposal's estimated annual burden hours and total time costs, however,
to reflect updated wage rates and adjustments to our estimates of the
number of responses that would be affected by the final rule
amendments.
    The table below summarizes the estimates for internal burdens
associated with the new requirements under the final amendments to rule
34b-1.

[GRAPHIC] [TIFF OMITTED] TR25NO22.037

[GRAPHIC] [TIFF OMITTED] TR25NO22.038

F. Rule 433

    We are amending rule 433 to require a registered closed-end fund or
BDC free writing prospectus to comply with the content, presentation,
and timeliness requirements of the final amendments to rule 482, as
applicable, if the free writing prospectus includes fee and expense
information.\779\ As a result, regardless of whether a registered
closed-end fund or BDC advertisement uses rule 482 or rule 433, the
advertisement will be subject to the same requirements regarding fee
and expense information.\780\ Compliance with the requirements of rule
433 is mandatory, and the responses to the information collections are
not kept confidential.
---------------------------------------------------------------------------

    \779\ See supra section II.G.
    \780\ See supra footnote 775 (noting that, for purposes of the
PRA for rule 482, we excluded responses from closed-end funds, BDCs,
and variable contracts).
---------------------------------------------------------------------------

    In our most recent Paperwork Reduction Act submission for rule 433,
we estimated the annual compliance burden to comply with the collection
of information requirement rule 433 is 6,391 hours, at a time cost of
$7,668,800, and an external cost burden estimate of $7,669,017. As part
of the rulemaking that accompanied that Paperwork Reduction Act
submission, we also estimated that there will be 791 closed-end funds
and BDCs filing approximately 4,271 free writing prospectuses.
    For purposes of this PRA analysis, we estimate that there will be
791 closed-end funds and BDCs filing approximately 4,479 free writing
prospectuses annually. We estimate that approximately 96% of the 4,479
responses provide fee and expense figures in free writing prospectuses
and will, therefore, be required to comply with the final rule
amendments regarding such information.\781\ Similarly, we estimate that
96% of these responses (i.e., 4,300 responses) will include information
regarding a fund's total annual expenses and will, therefore, have to
comply with the final rule amendments regarding such information.
---------------------------------------------------------------------------

    \781\ Our estimate of the internal ongoing burdens is based on
our most recent PRA submission. See Closed-End Fund Offering Reform
Adopting Release, supra footnote 143. We are assuming, however, that
the rule and rule and form amendments that the Commission adopted in
that release will increase the prevalence of the use of free writing
prospectuses by BDCs and registered closed-end funds. The transition
to the rule and rule and forms amendments adopted in that release is
continuing to occur because although certain of the closed-end fund
offering reform rule and rule and form amendments became effective
on August 1, 2021, their compliance dates are not until 2023.
---------------------------------------------------------------------------

    The Commission did not receive public comment regarding the PRA
estimates for rule 433 in the Proposing Release. We have adjusted the
proposal's estimated annual burden hours and total time costs, however,
to reflect updated wage rates and adjustments to our estimates of the
number of responses that would be affected by the final rule
amendments.
    The table below summarizes the estimated ongoing internal burdens
associated with this new requirement under rule 433:

[GRAPHIC] [TIFF OMITTED] TR25NO22.039

G. Rule 30e-3

    We are amending the scope of rule 30e-3 to exclude investment
companies registered on Form N-1A.\782\ Because this amendment would
decrease the number of funds that would be able to rely on rule 30e-3,
we are updating the PRA analysis for rule 30e-3 to account for any
burden decrease that would result from this decrease in respondents. We
are not updating the rule 30e-3 PRA analysis in any other respect.
Reliance on the rule is voluntary; however, compliance with the rule's
conditions is mandatory for funds relying on the rule. Responses to the
information collections are not kept confidential.
---------------------------------------------------------------------------

    \782\ See supra section II.E.
---------------------------------------------------------------------------

    In our most recent PRA submission for rule 30e-3, we estimated for
this rule a total hour burden of 24,719 hours, with a total annual
external cost burden of $81,926,160.\783\ The table below summarizes
our PRA estimates associated with the final amendments to the scope of
rule 30e-3. The Commission did not receive public comment regarding the
PRA estimates for the proposed amendments to rule 30e-3 in the
Proposing Release. We have adjusted the proposal's estimated annual
burden hours and total time costs, however, to reflect updated wage
rates.
---------------------------------------------------------------------------

    \783\ This estimate is based on the last time the rule's
information collection was submitted for PRA renewal in 2022. The
estimates in the Proposing Release were based on earlier approved
estimates (28,758 hours and $79,031,220 external cost burden). Of
those costs, at proposal the Commission estimated that 24,459.4
hours, at a time cost of $8,674,306, and an external cost of
$69,965,020, were attributed to the compliance costs of open-end
funds registered on Form N-1A.
[GRAPHIC] [TIFF OMITTED] TR25NO22.040

H. Investment Company Interactive Data

    We are adopting new requirements for funds to tag shareholder
report contents required by Item 27A of amended Form N-1A in Inline
XBRL. While the requirement to tag the contents of a fund's shareholder
report is new, funds subject to this new requirement are otherwise
currently required to tag certain disclosures in Inline XBRL.\784\ Our
PRA estimates reflect the fact that the funds affected by this
amendment are familiar with Inline XBRL and will have more limited
implementation costs than would be estimated for funds tagging
disclosure for the first time.
---------------------------------------------------------------------------

    \784\ See supra footnotes 571 and 572 and accompanying text
discussing current Inline XBRL requirements for funds.
---------------------------------------------------------------------------

    In our most recent PRA submission for Investment Company
Interactive Data, we estimated a total aggregate annual hour burden of
252,684 hours, and a total aggregate annual external cost burden of
$15,449,450.\785\ Compliance with the interactive data requirements is
mandatory, and the responses will not be kept confidential.
---------------------------------------------------------------------------

    \785\ This estimate is based on the last time this information
collection was approved in 2022.
---------------------------------------------------------------------------

    The table below summarizes our PRA estimates for the initial and
ongoing annual burdens associated with the amendments to require
tagging shareholder reports, as well as Regulation S-T.

[GRAPHIC] [TIFF OMITTED] TR25NO22.041

BILLING CODE 8011-01-C

VI. Final Regulatory Flexibility Act Analysis

    The Commission has prepared the following Final Regulatory
Flexibility Analysis (``FRFA'') in accordance with section 604 of the
Regulatory Flexibility Act (``RFA'').\786\ It relates to: the final
amendments to funds' annual and semi-annual report requirements, new
Form N-CSR requirements, and new website availability requirements; the
final investment company advertising rule amendments; final amendments
to require that funds tag their shareholder reports in Inline XBRL; and
the final technical and conforming amendments. An Initial Regulatory
Flexibility Analysis (``IRFA'') was prepared in accordance with the RFA
and included in the Proposing Release.\787\
---------------------------------------------------------------------------

    \786\ 5 U.S.C. 604.
    \787\ See Proposing Release, supra footnote 8, at section V.
---------------------------------------------------------------------------

A. Need for and Objectives of the Rule and Form Amendments

    The Commission is adopting new rule, rule amendments, and form
amendments that create a simplified disclosure framework for mutual
funds and exchange-traded funds to highlight key information for
investors. Under the final rules, fund investors will continue to
receive fund prospectuses in connection with their initial investment
in a fund, as they do today. On an ongoing basis thereafter, the
investors will receive more concise and visually engaging annual and
semi-annual reports designed to highlight information that we believe
is particularly important for retail shareholders to assess and monitor
their ongoing fund investments. The final rule amendments promotes a
layered disclosure framework that complements the shareholder report by
continuing to make available additional information that may be of
interest to some investors, including the fund's financial statements.
The information will be available online, reported on Form N-CSR, and
delivered to an investor on request, free of charge. The final rules
would also provide funds the flexibility to make electronic versions of
their shareholder reports more user-friendly and interactive. We are
also requiring that funds tag their reports to shareholders using
Inline XBRL to provide machine-readable data that retail investors
could use to more efficiently access and evaluate their investments.
    We are also adopting rule amendments that no longer permit mutual
funds and exchange-traded funds required to register on Form N-1A to
rely on rule 30e-3 to satisfy shareholder report transmittal
requirements, in order to promote the provision of consistent
disclosure that we believe is best tailored to investors' informational
needs. To improve fee- and expense-related information more broadly, we
are amending investment company advertising rules to promote more
transparent and balanced statements about investment costs. The
advertising rule amendments affect all

registered investment companies and BDCs.

B. Significant Issues Raised by Public Comments

    In the Proposing Release, we requested comment on every aspect of
the IRFA, including the number of small entities that would be affected
by the proposed rule and form amendments, the existence or nature of
the potential impact of the proposals on small entities discussed in
the analysis, and how to quantify the impact of the proposed
amendments. We also requested comment on the proposed compliance
burdens and the effect these burdens would have on smaller entities.
    Although we did not receive comments specifically addressing the
IRFA, one commenter noted the potential impact of an aspect of proposed
rule where funds would be required to include in their annual reports
comparing performance of $10,000 in investment in the fund and in an
appropriate broad-based securities market index over a 10 year period.
The commenter stated that the cost for smaller fund complexes to change
or add an additional index may be higher than for other funds.\788\
Smaller funds may have fewer licensing agreements and thus may incur
costs associated with this requirement, which may hinder competition
for smaller funds.\789\ As discussed above, the definition of the term
``appropriate broad-based securities market index'' in the management's
discussion of fund performance section of the shareholder report could
result in additional costs to funds, in the form of index-licensing
fees and the costs of updating disclosure for funds that change the
broad-based index they include in their performance disclosure in
response to this requirement.
---------------------------------------------------------------------------

    \788\ See ICI Comment Letter.
    \789\ See supra footnote 215 (discussing commenters arguing that
the proposed broad-based index requirement would impose additional
licensing fees on funds, with one commenter (ICI) stating that
smaller funds with fewer (or more limited) licensing agreements in
place may be more likely to incur these costs).
---------------------------------------------------------------------------

C. Small Entities Subject to the Rule

    For purposes of Commission rulemaking in connection with the
Regulatory Flexibility Act, an investment company is a small entity if,
together with other investment companies in the same group of related
investment companies, it has net assets of $50 million or less as of
the end of its most recent fiscal year.\790\ Commission staff estimates
that, as of June 2022, approximately 43 open-end funds (including 11
ETFs), 31 closed-end funds, and 11 BDCs are small entities.
---------------------------------------------------------------------------

    \790\ 17 CFR 270.0-10(a). Recognizing the growth in assets under
management in investment companies since rule 0-10(a) was adopted,
the Commission plans to revisit the definition of a small entity in
rule 0-10(a).
---------------------------------------------------------------------------

D. Projected Reporting, Recordkeeping, and Other Compliance
Requirements

    The new rule and form amendments will impact current reporting,
recordkeeping, and other compliance requirements for funds, including
those considered to be small entities.
1. Annual and Semi-Annual Reports
    We are adopting tailored disclosure requirements for funds' annual
and semi-annual reports to help shareholders focus on key information
that we believe is most useful for assessing and monitoring fund
investments on an ongoing basis, including information about a fund's
expenses, portfolio holdings, and performance. Among other things,
shareholder reports will be revised to include new disclosures (such as
material changes and fund statistics in annual reports), simplify
certain disclosures (such as MDFP in annual reports), and remove
certain disclosures (such as financial statements currently found in
semi-annual and annual reports).\791\ We also are adopting amendments
to improve the design of funds' shareholder reports by encouraging
funds to use features that promote effective communications (e.g.,
tables, charts, bullet lists, question-and-answer formats) and
permitting funds to use technology to enhance an investor's
understanding of material in electronic versions of shareholder
reports.
---------------------------------------------------------------------------

    \791\ See supra section II.A.2.
---------------------------------------------------------------------------

    We estimate that approximately 43 funds are small entities that are
required to prepare and transmit shareholder reports under the final
rules.\792\ We expect the final rules to result in some initial
implementation costs but, going forward, will reduce the burdens
associated with these existing disclosure requirements related to
shareholder reports. We estimate that preparing amended annual report
disclosure will cost $27,432 for each fund, including small entities in
its first year of compliance, and $3,810 for each subsequent year.\793\
We further estimate that preparing amended semi-annual report
disclosure will cost $13,716 for each fund, including small entities,
in its first year of compliance, and $1,905 for each subsequent
year.\794\
---------------------------------------------------------------------------

    \792\ See text following supra footnote 790.
    \793\ See supra footnote 722 and accompanying text.
    \794\ See supra footnote 723 and accompanying text.
---------------------------------------------------------------------------

2. New Form N-CSR and Website Availability Requirements
    We are adopting a layered disclosure framework that complements the
amended shareholder report requirements by continuing to make available
to investors' additional, less retail-focused information, including
the fund's financial statements. This additional information, which we
believe will primarily benefit financial professionals and other
investors who desire more in-depth information, will be available
online, reported on Form N-CSR, and delivered to an investor on
request, free of charge.\795\ This new Form N-CSR disclosure also will
need to be available on the website specified on the cover page or at
the beginning of the fund's annual report and delivered in paper or
electronically upon request, free of charge.\796\
---------------------------------------------------------------------------

    \795\ See supra section II.C.3.
    \796\ See supra section II.C.3.
---------------------------------------------------------------------------

    We estimate that approximately 43 funds are small entities will be
required to comply with the new Form N-CSR and website availability
requirements.\797\ We further estimate that complying with the new Form
N-CSR and website availability requirements will cost $6,858 for each
fund, including small entities, in its first year of compliance, and
$1,905 for each subsequent year.\798\
---------------------------------------------------------------------------

    \797\ See supra footnote 790 and accompanying text.
    \798\ See supra footnote 732 and accompanying text.
---------------------------------------------------------------------------

3. Amendments to Scope of Rule 30e-3
    Subject to conditions, rule 30e-3 generally permits investment
companies to satisfy shareholder report transmission requirements by
making these reports and other materials available online and providing
a notice of the reports' online availability instead of directly
mailing the report (or emailing an electronic version of the report) to
shareholders. We are amending the scope of rule 30e-3 to exclude
investment companies registered on Form N-1A, which will be
transmitting tailored shareholder reports under the final rules. This
amendment to the scope of the rule is designed to help ensure that all
investors in these funds experience the anticipated benefits of the new
disclosure framework.\799\
---------------------------------------------------------------------------

    \799\ See supra section II.E.

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

4. Investment Company Advertising Rules
    We are amending the Commission's investment company advertising
rules (for purposes of this release, Securities Act rules 482, 156, and
433 and Investment Company Act rule 34b-1) to promote transparent and
balanced presentations of fees and expenses in investment company
advertisements.\800\ As investment companies increasingly compete and
market themselves on the basis of costs, we are concerned that
investment company advertisements may mislead investors by creating an
inaccurate impression of the costs associated with an investment.\801\
The advertising rule amendments generally apply to any investment
company, including mutual funds, ETFs, registered closed-end funds, and
BDCs.
---------------------------------------------------------------------------

    \800\ See supra section II.G.
    \801\ See id.
---------------------------------------------------------------------------

    Specifically, we are amending Securities Act rules 433 and 482 and
Investment Company Act rule 34b-1 to promote transparent and balanced
presentations of fees and expenses in investment company
advertisements. We also are amending Securities Act rule 156 to provide
factors an investment company should consider to determine whether
representations about the fees and expenses associated with an
investment in the fund could be materially misleading.
    We estimate that 43 open-end funds (including 11 ETFs), 31 closed-
end funds, and 11 BDCs are small entities that will be affected by our
final amendments to investment company advertising rules. As discussed
above, we estimate that compliance with these final amendments will
cost $5,715 for each advertisement, including small entities, in the
first year, and $1,905 per year for each subsequent year.\802\
---------------------------------------------------------------------------

    \802\ See supra footnote 744 and 745 and accompanying text.
---------------------------------------------------------------------------

5. Inline XBRL Data Tagging
    We are adopting requirements for funds to tag the shareholder
report contents in Inline XBRL, which will make shareholder report
disclosure more readily available and easily accessible for
aggregation, comparison, filtering, and other analysis.\803\ This
requirement is a change from the proposed rule, which did not propose
to require funds to tag the shareholder reports or other aspects of
Form N-CSR in Inline XBRL. This aspect of our final rules is in keeping
with the Commission's ongoing efforts to implement reporting and
disclosure reforms that take advantage of the benefits of advanced
technology to modernize the fund reporting and disclosure regime and,
among other things, to help investors and other market participants
better assess different funds. The Inline XBRL data tagging requirement
generally apply to any investment company, including mutual funds,
ETFs, registered closed-end funds, and BDCs.
---------------------------------------------------------------------------

    \803\ See supra section II.H.
---------------------------------------------------------------------------

    We estimate that 43 open-end funds (including 11 ETFs), 31 closed-
end funds, and 11 BDCs are small entities are small entities that will
be affected by our final rule requiring the tagging of shareholder
report information. As discussed above, we estimate that compliance
with these final rules will cost $6,858 for each shareholder report,
including small entities, in the first year.\804\ Consistent with
similar tagging requirements, we estimate no ongoing burden, as this is
already incorporated into the current burden estimate for funds that
are complying with requirements to tag disclosures using Inline
XBRL.\805\
---------------------------------------------------------------------------

    \804\ See supra footnote 730 and accompanying text.
    \805\ See id.
---------------------------------------------------------------------------

E. Agency Action To Minimize Effect on Small Entities

    The RFA directs the Commission to consider significant alternatives
that would accomplish our stated objective, while minimizing any
significant economic impact on small entities. We considered the
following alternatives for small entities in relation to our proposal:
(1) establishing different reporting, recordkeeping, and other
compliance requirements or frequency, to account for resources
available to small entities; (2) exempting funds that are small
entities from the proposed reporting, recordkeeping, and other
compliance requirements, to account for resources available to small
entities; (3) clarifying, consolidating, or simplifying the compliance
requirements under the final rules for small entities; and (4) using
performance rather than design standards.
    As discussed above, our final rules: (1) amend the shareholder
report content and disclosure requirements; (2) amend to the scope of
rule 30e-3 to exclude UIT separate accounts and funds registered on
Form N-1A; (3) rescind rule 30e-1(d) (which currently permits a fund to
transmit a copy of its prospectus or SAI in place of its shareholder
report under certain conditions); (4) require that funds tag their
reports in Inline XBRL; (5) amends the advertising rules for funds,
including BDCs; and (6) amends Form N-CSR. Collectively, these
amendments are designed to tailor the disclosures that funds provide by
using layered disclosure principles to create a new disclosure
framework designed to meet the informational needs of different
investors (i.e., initial investors versus existing shareholders, and
retail investors versus those who desire more information). The final
amendments are designed to focus on key information different investors
must to make informed investment decisions and, for existing
shareholders, to assess and monitor their fund investments. In
addition, our final rules amend investment company advertising rules to
promote transparent and balanced presentations of fees and expenses in
investment company advertisements. We are also adopting final rules
requiring funds to tag their shareholder reports using Inline XBRL to
provide machine-readable data that retail investors could use to more
efficiently access and evaluate their investments.
    We do not believe it would be appropriate to establish different
reporting, recordkeeping, and other compliance requirements or
frequency, to account for resources available to small entities. Small
entities currently follow the same requirements that large entities do
when preparing, transmitting, and filing shareholder reports; preparing
and sending or giving prospectuses to investors; and preparing
investment company advertisements and supplemental sales literature. If
the final rules included different requirements for small funds, it
could raise investor protection concerns for investors in small funds
to the extent that investors in small funds would not receive the same
disclosures as investors in larger funds.
    For example, to the extent that small funds may have fewer
resources to invest in investor education or marketing materials,
investors in small funds may have fewer opportunities outside of
regulatory disclosures to obtain key information needed to make
informed investment decisions and assess and monitor their fund
investments. For this reason, it is important that the regulatory
disclosures that small funds provide to investors are consistent in
terms of content and frequency with the disclosures that larger funds
provide to investors, so that all investors have the tools they need to
meet their informational needs. More generally, the disclosure
requirements we are adopting are tailored to meet the informational
needs of different groups of investors, and to implement a layered
disclosure framework that would benefit all

investors. Permitting different disclosure requirements for small funds
would result in small fund investors not experiencing the anticipated
benefits of the new tailored disclosure framework. Furthermore, uniform
prospectus fee and risk disclosure requirements allow all investors to
compare funds reporting the same information on the same frequency, and
help all investors to make informed investment decisions based upon
those comparisons.
    Similarly, we do not believe it would be appropriate to exempt
small funds from the final amendments. As discussed above, our
contemplated disclosure framework will be disrupted if investors in
smaller funds received different disclosures than investors in larger
funds. We believe that investors in all funds should benefit from the
Commission's disclosure amendments, not just investors in large funds.
    We do not believe that clarifying, consolidating, or simplifying
the compliance requirements under the final amendments for small funds
would permit us to achieve our stated objectives. Many of the
amendments we are adopting are based on existing rules or disclosure
frameworks. We anticipate that building on existing regulatory
frameworks and concepts should help to ease certain compliance burdens
for funds, including small funds. For example, many of our amendments
to fund shareholder reports and Form N-CSR largely reframe existing
disclosure requirements to tailor disclosures to the informational
needs of different investors, as opposed to requiring new disclosures
for which funds would need to generate and develop reporting and
compliance procedures for the first time.
    Finally, we do not believe it would be appropriate to use
performance rather than design standards. As discussed above, we
believe the regulatory disclosures that small funds provide to
investors should be consistent with the disclosures provided to
investors in larger entities. Our disclosure requirements are tailored
to meet the informational needs of different investors, and to
implement a layered disclosure framework. We believe all fund investors
should experience the anticipated benefits of the new tailored
disclosure framework.

VII. Statutory Authority

    The Commission is adopting the rules and forms contained in this
document under the authority set forth in the Securities Act,
particularly, section 19 thereof [15 U.S.C. 77a et seq.], the Exchange
Act, particularly, sections 13, 23, and 35A thereof [15 U.S.C. 78a et
seq.], the Investment Company Act, particularly, sections 8, 24, 30,
and 38 thereof [15 U.S.C. 80a et seq.], and 44 U.S.C. 3506, 3507.

List of Subjects

17 CFR Part 200

    Administrative practice and procedure, Organization and functions
(Government agencies).

17 CFR Parts 230, 232 and 239

    Reporting and recordkeeping requirements, Securities.

17 CFR Part 240

    Brokers, Reporting and recordkeeping requirements, Securities.

17 CFR Parts 270, 274, and 249

    Investment companies, Reporting and recordkeeping requirements,
Securities.

VIII. Text of Proposed Rules and Form Amendments

    For reasons set forth in the preamble, title 17, chapter II of the
Code of Federal Regulations is amended as follows:

PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND
REQUESTS

Subpart N--Commission Information Collection Requirements Under the
Paperwork Reduction Act: OMB Control Numbers

0
1. The authority citation for subpart N of part 200 continues to read
as follows:

    Authority:  44 U.S.C. 3506; 44 U.S.C. 3507.

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

0
2. The authority citation for part 230 continues to read in part as
follows:

    Authority: 15 U.S.C. 77b, 77b note, 77c, 77d, 77f, 77g, 77h,
77j, 77r, 77s, 77z-3, 77sss, 78c, 78d, 78j, 78l, 78m, 78n, 78o, 78o-
7 note, 78t, 78w, 78ll(d), 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a-
30, and 80a-37, and Pub. L. 112-106, sec. 201(a), sec. 401, 126
Stat. 313 (2012), unless otherwise noted.
* * * * *

0
3. Amend Sec.  230.156 by adding paragraph (b)(4) to read as follows:

Sec.  230.156  Investment company sales literature.

* * * * *
    (b) * * *
    (4) Representations about the fees or expenses associated with an
investment in the fund could be misleading because of statements or
omissions made involving a material fact, including situations where
portrayals of the fees and expenses associated with an investment in
the fund omit explanations, qualifications, limitations, or other
statements necessary or appropriate to make the portrayals not
misleading.
* * * * *

0
4. Amend Sec.  230.433 by adding paragraph (c)(3) to read as follows:

Sec.  230.433  Conditions to permissible post-filing free writing
prospectuses.

* * * * *
    (c) * * *
    (3) A free writing prospectus with respect to securities of a
registered closed-end investment company or a business development
company that includes fee or expense information must comply with
paragraphs (i) and (j) of Sec.  230.482 (Rule 482), as applicable.
* * * * *

0
5. Amend Sec.  230.482 by adding paragraphs (i) and (j) to read as
follows:

Sec.  230.482  Advertising by an investment company as satisfying
requirements of section 10.

* * * * *
    (i) Advertisements including fee or expense figures. An
advertisement that provides fee or expense figures for an investment
company must include the following:
    (1) The maximum amount of any sales load, or any other nonrecurring
fee, and the total annual expenses without any fee waiver or expense
reimbursement arrangement, based on the methods of computation
prescribed by the investment company's registration statement form
under the 1940 Act or under the Act for a prospectus and presented at
least as prominently as any other fee or expense figure included in the
advertisement; and
    (2) The expected termination date of a fee waiver or expense
reimbursement arrangement, if the advertisement provides total annual
expenses net of fee waiver or expense reimbursement arrangement
amounts.
    (j) Timeliness of fee and expense information. Fee and expense
information contained in an advertisement must be as of the date of the
investment company's most recent prospectus or, if the company no
longer has an effective registration statement under the Act, as of the
date of its most recent annual shareholder report, except that a
company may provide more current information if available.

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

0
6. The general authority citation for part 232 continues to read, in
part, as follows:

    Authority: 15 U.S.C. 77c, 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, 7201 et seq.; and 18 U.S.C. 1350,
unless otherwise noted.
* * * * *

0
7. Amend Sec.  232.405 by revising (b)(2)(i) as follows:
    (b) * * *
    (2) * * *
    (i) Items 2, 3, and 4 of Sec. Sec.  239.15A and 274.11A of this
chapter (Form N-1A), as well as any information provided in response to
Item 27A(b)-(h) of Form N-1A included in any report to shareholders
filed on Sec. Sec.  249.331 and 274.128 of this chapter (Form N-CSR);

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

0
8. The general authority citation for part 239 is revised to read as
follows:

    Authority: 15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3,
77sss, 78c, 78l, 78m, 78n, 78o(d), 78o-7 note, 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, 80a-37, and sec. 71003 and sec. 84001, Pub. L. 114-
94, 129 Stat. 1321, unless otherwise noted.
* * * * *

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

0
9. The authority for part 270 continues to read in part as follows:

    Authority: 15 U.S.C. 80a-1 et seq., 80a-34(d), 80a-37, 80a-39,
and Pub. L. 111-203, sec. 939A, 124 Stat. 1376 (2010), unless
otherwise noted.
* * * * *
    Section 270.30e-1 is also issued under 15 U.S.C. 77f, 77g, 77h,
77j, 77s, 78l, 78m, 78n, 78o(d), 78w(a), 80a-8, 80a-29, and 80a-37.
* * * * *

0
10. Amend Sec.  270.30a-2 by:
0
a. In paragraph (a), removing the reference to ``the form specified in
Item 12(a)(2) of Form N-CSR'' and adding in its place the reference
``the form specified in Item 18(a)(2) of Form N-CSR''; and
0
b. In paragraph (b), removing the reference to ``Item 12(b) of Form N-
CSR'' and adding in its place the reference to ``Item 18(b) of Form N-
CSR.''

0
11. Amend Sec.  270.30e-1 by:
0
a. Removing paragraph (d);
0
b. Redesignating paragraphs (b) and (c) as paragraphs (c) and (d);
0
c. Adding a new paragraph (b); and
0
d. Revising newly redesignated paragraphs (c) and (d) and paragraph
(f)(2)(ii)(F).
    The addition and revisions read as follows:

Sec.  270.30e-1  Reports to stockholders of management companies.

* * * * *
    (b)(1) To satisfy its obligations under section 30(e) of the 1940
Act, an open-end management investment company registered on Form N-1A
(Sec. Sec.  239.15A and 274.11A of this chapter) also must:
    (i) Make certain materials available on a website, as described
under paragraph (b)(2) of this section; and
    (ii) Deliver certain materials upon request, as described under
paragraph (b)(3) of this section.
    (2) The following website availability requirements are applicable
to an open-end management investment company registered on Form N-1A
(Sec. Sec.  239.15A and 274.11A of this chapter).
    (i) The company must make the disclosures required by Items 7
through 11 of Form N-CSR (Sec. Sec.  249.331 and 274.128 of this
chapter) publicly accessible, free of charge, at the website address
specified at the beginning of the report to stockholders under
paragraph (a) of this section, no later than 60 days after the end of
the fiscal half-year or fiscal year of the company until 60 days after
the end of the next fiscal half-year or fiscal year of the company,
respectively. The company may satisfy the requirement in this paragraph
(b)(2)(i) by making its most recent report on Form N-CSR publicly
accessible, free of charge, at the specified website address for the
time period that this paragraph (b)(2)(i) specifies.
    (ii) Unless the company is a money market fund under Sec.  270.2a-
7, the company must make the company's complete portfolio holdings, if
any, as of the close of the company's most recent first and third
fiscal quarters, after the date on which the company's registration
statement became effective, presented in accordance with the schedules
set forth in Sec. Sec.  210.12-12 through 210.12-14 of this chapter
(Regulation S-X), which need not be audited. The complete portfolio
holdings required by this paragraph (b)(2)(ii) must be made publicly
accessible, free of charge, at the website address specified at the
beginning of the report to stockholders under paragraph (a) of this
section, not later than 60 days after the close of the of the first and
third fiscal quarters until 60 days after the end of the next first and
third fiscal quarters of the company, respectively.
    (iii) The website address relied upon for compliance with this
section may not be the address of the Commission's electronic filing
system.
    (iv) The materials that are accessible in accordance with paragraph
(b)(2)(i) or (ii) of this section must be presented on the website in a
format, or formats, that are convenient for both reading online and
printing on paper.
    (v) Persons accessing the materials specified in paragraph
(b)(2)(i) or (ii) of this section must be able to permanently retain,
free of charge, an electronic version of such materials in a format, or
formats, that meet the requirements of paragraph (b)(2)(iv) of this
section.
    (vi) The requirements set forth in paragraphs (b)(2)(i) through (v)
of this section will be deemed to be met, notwithstanding the fact that
the materials specified in paragraphs (b)(2)(i) and (ii) of this
section are not available for a time in the manner required by
paragraphs (b)(2)(i) through (v) of this section, provided that:
    (A) The company has reasonable procedures in place to ensure that
the specified materials are available in the manner required by
paragraphs (b)(2)(i) through (v) of this section; and
    (B) The company takes prompt action to ensure that the specified
materials become available in the manner required by paragraphs
(b)(2)(i) through (v) of this section, as soon as practicable following
the earlier of the time at which it knows or reasonably should have
known that the materials are not available in the manner required by
paragraphs (b)(2)(i) through (v) of this section.
    (vii) The materials specified in paragraph (b)(2)(i) or (ii) of
this section may either be separately available for each series of a
fund, or the materials may be grouped by the types of materials and/or
by series, so long as the grouped information:
    (A) Is presented in a format designed to communicate the
information effectively;
    (B) Clearly distinguishes the different types of materials and/or
each series (as applicable); and
    (C) Provides a means of easily locating the relevant information
(including, for example, a table of contents that includes hyperlinks
to the specific materials and series).
    (3) The following requirements to deliver certain materials upon
request are applicable to an open-end management investment company
registered on Form N-1A (Sec. Sec.  239.15A and 274.11A of this
chapter).

    (i) The company (or a financial intermediary through which shares
of the company may be purchased or sold) must send, at no cost to the
requestor and by U.S. first class mail or other reasonably prompt
means, a paper copy of any of the materials specified in paragraph
(b)(2)(i) or (ii) of this section, to any person requesting such a copy
within three business days after receiving a request for a paper copy.
    (ii) The company (or a financial intermediary through which shares
of the company may be purchased or sold) must send, at no cost to the
requestor, and by email or other reasonably prompt means, an electronic
copy of any of the materials specified in paragraph (b)(2)(i) or (ii)
of this section, to any person requesting such a copy within three
business days after receiving a request for an electronic copy. The
requirement to send an electronic copy of the requested materials may
be satisfied by sending a direct link to the online location of the
materials; provided that a current version of the materials is directly
accessible through the link from the time that the email is sent
through the date that is six months after the date that the email is
sent and the email explains both how long the link will remain useable
and that, if recipients desire to retain a copy of the materials, they
should access and save the materials.
    (c) For registered management companies other than open-end
management investment companies registered on Form N-1A, if any matter
was submitted during the period covered by the shareholder report to a
vote of shareholders, through the solicitation of proxies or otherwise,
furnish the following information:
    (1) The date of the meeting and whether it was an annual or special
meeting.
    (2) If the meeting involved the election of directors, the name of
each director elected at the meeting and the name of each other
director whose term of office as a director continued after the
meeting.
    (3) A brief description of each matter voted upon at the meeting
and the number of votes cast for, against or withheld, as well as the
number of abstentions and broker non-votes as to each such matter,
including a separate tabulation with respect to each matter or nominee
for office.
    (i) Instruction 1 to paragraph (c). The solicitation of any
authorization or consent (other than a proxy to vote at a shareholders'
meeting) with respect to any matter shall be deemed a submission of
such matter to a vote of shareholders within the meaning of this
paragraph (c).
    (ii) [Reserved]
    (d) Each report shall be transmitted within 60 days after the close
of the period for which such report is being made.
* * * * *
    (f) * * *
    (2) * * *
    (ii) * * *
    (F) Contain the following prominent statement, or similar clear and
understandable statement, in bold-face type: ``Important Notice
Regarding Delivery of Shareholder Materials''. This statement also must
appear on the envelope in which the notice is delivered. Alternatively,
if the notice is delivered separately from other communications to
investors, this statement may appear either on the notice or on the
envelope in which the notice is delivered;
* * * * *

0
12. Revise Sec.  270.30e-3 to read as follows:

Sec.  270.30e-3  Internet availability of reports to shareholders.

    (a) General. A Fund may satisfy its obligation to transmit a report
required by Sec.  270.30e-1 (``Report'') to a shareholder of record if
all of the conditions set forth in paragraphs (b) through (e) of this
section are satisfied.
    (b) Availability of report to shareholders and other materials. (1)
The following materials are publicly accessible, free of charge, at the
website address specified in the Notice from the date the Fund
transmits the Report as required by Sec.  270.30e-1 until the Fund next
transmits a report required by Sec.  270.30e-1 with respect to the
Fund:
    (i) Current report to shareholders. The Report.
    (ii) Prior report to shareholders. Any report with respect to the
Fund for the prior reporting period that was transmitted to
shareholders of record pursuant to Sec.  270.30e-1.
    (iii) Complete portfolio holdings from reports containing a summary
schedule of investments. If a report specified in paragraph (b)(1)(i)
or (ii) of this section includes a summary schedule of investments
(Sec.  210.12-12B of this chapter) in lieu of Schedule I--Investments
in securities of unaffiliated issuers (Sec.  210.12-12 of this
chapter), the Fund's complete portfolio holdings as of the close of the
period covered by the report, presented in accordance with the
schedules set forth in Sec. Sec.  210.12-12 through 210.12-14 of
Regulation S-X (Sec. Sec.  210.12-12 through 210.12-14 of this
chapter), which need not be audited.
    (iv) Portfolio holdings for most recent first and third fiscal
quarters. The Fund's complete portfolio holdings as of the close of the
Fund's most recent first and third fiscal quarters, if any, after the
date on which the Fund's registration statement became effective,
presented in accordance with the schedules set forth in Sec. Sec.
210.12-12 through 210.12-14 of Regulation S-X [Sec. Sec.  210.12-12
through 210.12-14 of this chapter], which need not be audited. The
complete portfolio holdings required by this paragraph (b)(1)(iv) must
be made publicly available not later than 60 days after the close of
the fiscal quarter.
    (2) The website address relied upon for compliance with this
section may not be the address of the Commission's electronic filing
system.
    (3) The materials that are accessible in accordance with paragraph
(b)(1) of this section must be presented on the website in a format, or
formats, that are convenient for both reading online and printing on
paper.
    (4) Persons accessing the materials specified in paragraph (b)(1)
of this section must be able to retain permanently, free of charge, an
electronic version of such materials in a format, or formats, that meet
the conditions of paragraph (b)(3) of this section.
    (5) The conditions set forth in paragraphs (b)(1) through (4) of
this section shall be deemed to be met, notwithstanding the fact that
the materials specified in paragraph (b)(1) of this section are not
available for a time in the manner required by paragraphs (b)(1)
through (4) of this section, provided that:
    (i) The Fund has reasonable procedures in place to ensure that the
specified materials are available in the manner required by paragraphs
(b)(1) through (4) of this section; and
    (ii) The Fund takes prompt action to ensure that the specified
documents become available in the manner required by paragraphs (b)(1)
through (4) of this section, as soon as practicable following the
earlier of the time at which it knows or reasonably should have known
that the documents are not available in the manner required by
paragraphs (b)(1) through (4) of this section.
    (c) Notice. A paper notice (``Notice'') meeting the conditions of
this paragraph (c) must be sent to the shareholder within 70 days after
the close of the period for which the Report is being made. The Notice
may contain only the information specified by paragraphs (c)(1), (2),
and (3) of this section, and may include pictures, logos, or similar
design elements so long as the design is

not misleading and the information is clear.
    (1) The Notice must be written using plain English principles
pursuant to paragraph (d) of this section and:
    (i) Contain a prominent legend in bold-face type that states ``[An]
Important Report[s] to [Shareholders] of [Fund] [is/are] Now Available
Online and In Print by Request.'' The Notice may also include
information identifying the Fund, the Fund's sponsor (including any
investment adviser or sub-adviser to the Fund), a variable annuity or
variable life insurance contract or insurance company issuer thereof,
or a financial intermediary through which shares of the Fund are held.
    (ii) State that the Report contains important information about the
Fund, including its portfolio holdings and financial statements. The
statement may also include a brief listing of other types of
information contained in the Report.
    (iii) State that the Report is available at the website address
specified in the Notice or, upon request, by mail, and encourage the
shareholder to access and review the Report.
    (iv) Include a website address where the Report and other materials
specified in paragraph (b)(1) of this section are available. The
website address must be specific enough to lead investors directly to
the documents that are required to be accessible under paragraph (b)(1)
of this section, rather than to the home page or a section of the
website other than on which the documents are posted. The website may
be a central site with prominent links to each document. In addition to
the website address, the Notice may contain any other equivalent method
or means to access the Report or other materials specified in paragraph
(b)(1) of this section.
    (v) Provide a toll-free (or collect) telephone number to contact
the Fund or the shareholder's financial intermediary, and:
    (A) Provide instructions describing how a shareholder may request a
paper or email copy of the Report and other materials specified in
paragraph (b)(1) of this section at no charge, and an indication that
the shareholder will not otherwise receive a paper or email copy;
    (B) Explain that the shareholder can at any time elect to receive
print reports in the future and provide instructions describing how a
shareholder may make that election (e.g., by contacting the Fund or by
contacting the shareholder's financial intermediary); and
    (C) If applicable, provide instructions describing how a
shareholder can elect to receive shareholder reports or other documents
and communications by electronic delivery.
    (2) The Notice may include additional methods by which a
shareholder can contact the Fund or the shareholder's financial
intermediary (e.g., by email or through a website), which may include
any information needed to identify the shareholder.
    (3) A Notice may include content from the Report if such content is
set forth after the information required by paragraph (c)(1) of this
section.
    (4) The Notice may not be incorporated into, or combined with,
another document, except that the Notice may incorporate or combine one
or more other Notices.
    (5) The Notice must be sent separately from other types of
shareholder communications and may not accompany any other document or
materials; provided, however, that the Notice may accompany:
    (i) One or more other Notices;
    (ii) A current Statutory Prospectus, Statement of Additional
Information, or Notice of internet Availability of Proxy Materials
under Sec.  240.14a-16 of this chapter;
    (iii) In the case of a Fund held in a separate account funding a
variable annuity or variable life insurance contract, such contract or
the Statutory Prospectus and Statement of Additional Information for
such contract; or
    (iv) The shareholder's account statement.
    (6) A Notice required by this paragraph (c) will be considered
transmitted to a shareholder of record if the conditions set forth in
Sec.  270.30e-1(f), Sec.  240.14a-3(e), or Sec.  240.14c-3(c) of this
chapter are satisfied with respect to that shareholder.
    (d) Plain English requirements. (1) To enhance the readability of
the Notice, plain English principles must be used in the organization,
language, and design of the Notice.
    (2) The Notice must be drafted so that, at a minimum, it
substantially complies with each of the following plain English writing
principles:
    (i) Short sentences;
    (ii) Definite, concrete, everyday words;
    (iii) Active voice;
    (iv) Tabular presentation or bullet lists for complex material,
whenever possible;
    (v) No legal jargon or highly technical business terms; and
    (vi) No multiple negatives.
    (e) Delivery of paper copy upon request. A paper copy of any of the
materials specified in paragraph (b)(1) of this section must be
transmitted to any person requesting such a copy, at no cost to the
requestor and by U.S. first class mail or other reasonably prompt
means, within three business days after a request for a paper copy is
received.
    (f) Investor elections to receive future reports in paper. (1) This
section may not be relied upon to transmit a Report to a shareholder if
the shareholder has notified the Fund (or the shareholder's financial
intermediary) that the shareholder wishes to receive paper copies of
shareholder reports at any time after the Fund has first notified the
shareholder of its intent to rely on the rule or provided a Notice to
the shareholder.
    (2) A shareholder who has notified the Fund (or the shareholder's
financial intermediary) that the shareholder wishes to receive paper
copies of shareholder reports with respect to a Fund will be deemed to
have requested paper copies of shareholder reports with respect to:
    (i) Any and all current and future Funds held through an account or
accounts with:
    (A) The Fund's transfer agent or principal underwriter or agent
thereof for the same ``group of related investment companies'' as such
term is defined in Sec.  270.0-10; or
    (B) A financial intermediary; and
    (ii) Any and all Funds held currently and in the future in a
separate account funding a variable annuity or variable life insurance
contract.
    (g) Delivery of other documents. This section may not be relied
upon to transmit a copy of a Fund's currently effective Statutory
Prospectus or Statement of Additional Information, or both, under the
Securities Act of 1933 (15 U.S.C. 77a et seq.) as otherwise permitted
by paragraph (d) of Sec.  270.30e-1.
    (h) Definitions. For purposes of this section:
    (1) Fund means a management company registered on Form N-2
(Sec. Sec.  239.14 and 274.11a of this chapter) or Form N-3 (Sec. Sec.
239.17a and 274.11b of this chapter) and any separate series of the
management company that is required to transmit a report to
shareholders pursuant to 270.30e-1.
    (2) Statement of Additional Information means the statement of
additional information required by Part B of the applicable
registration form.
    (3) Statutory Prospectus means a prospectus that satisfies the
requirements of section 10(a) of the Securities Act of 1933 (15 U.S.C.
77(j)(a)).

    Note 1 to Sec.  270.30.e-3. For a discussion of how the
conditions and requirements of this rule may apply in the context of
investors holding Fund shares through financial

intermediaries, see Investment Company Release No. 33115 (June 5,
2018).

0
13. Amend Sec.  270.31a-2 by:
0
a. Removing the word ``and'' at the end of paragraph (a)(5);
0
b. In paragraph (a)(6), removing the period and adding ``; and'' in its
place; and
0
c. Adding paragraph (a)(7).
    The addition reads as follows:

Sec.  270.31a-2  Records to be preserved by registered investment
companies, certain majority-owned subsidiaries thereof, and other
persons having transactions with registered investment companies.

    (a) * * *
    (7) Preserve for a period not less than six years, the first two
years in an easily accessible place, any shareholder report required by
Sec.  270.30e-1 (including any version posted on a website or otherwise
provided electronically) that is not filed with the Commission in the
exact form in which it was used.
* * * * *

0
14. Amend Sec.  270.34b-1 by:
0
a. Revising the introductory text and paragraph (b)(3); and
0
b. Adding paragraph (c).
    The revisions and addition read as follows:

Sec.  270.34b-1   Sales literature deemed to be misleading.

    Any advertisement, pamphlet, circular, form letter, or other sales
literature addressed to or intended for distribution to prospective
investors that is required to be filed with the Commission by section
24(b) of the Act [15 U.S.C. 80a-24(b)] (for purposes of paragraph (a)
and (b) of this section, ``sales literature'') will have omitted to
state a fact necessary in order to make the statements made therein not
materially misleading unless the sales literature includes the
information specified in paragraphs (a) and (b) of this section. Any
registered investment company or business development company
advertisement, pamphlet, circular, form letter, or other sales
literature addressed to or intended for distribution to prospective
investors in connection with a public offering (for purposes of
paragraph (c) of this section, ``sales literature'') will have omitted
to state a fact necessary in order to make the statements therein not
materially misleading unless the sales literature includes the
information specified in paragraph (c) of this section.

    Note 1 to Sec.  270.34b-1 Introductory Text:  The fact that the
sales literature includes the information specified in paragraphs
(a) and (b) of this section does not relieve the investment company,
underwriter, or dealer of any obligations with respect to the sales
literature under the antifraud provisions of the Federal securities
laws. For guidance about factors to be weighed in determining
whether statements, representations, illustrations, and descriptions
contained in investment company sales literature are misleading, see
Sec.  230.156 of this chapter.

* * * * *
    (b) * * *
    (3) The requirements specified in paragraph (b)(1) of this section
do not apply to any quarterly, semi-annual, or annual report to
shareholders under Section 30 of the Act [15 U.S.C. 80a-29] containing
performance data for a period commencing no earlier than the first day
of the period covered by the report; nor do the requirements of
paragraphs (d)(3)(ii), (d)(4)(ii), and (g) of Sec.  230.482 of this
chapter apply to any such periodic report containing any other
performance data.
    (c)(1) Except as provided in paragraph (c)(2) of this section:
    (i) In any sales literature that contains fee and expense figures
for a registered investment company or business development company,
include the disclosure required by paragraph (i) of Sec.  230.482 of
this chapter.
    (ii) Any fee and expense information included in sales literature
must meet the timeliness requirements of paragraph (j) of Sec.  230.482
of this chapter.
    (2) The requirements specified in paragraph (c)(1) of this section
do not apply to any quarterly, semi-annual, or annual report to
shareholders under Section 30 of the Act [15 U.S.C. 80a-29] or to other
reports pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 79m or 78o(d)) containing fee and
expense information; nor do the requirements of paragraphs (i) and (j)
of Sec.  230.482 of this chapter or paragraph (c)(3) of Sec.  230.433
of this chapter apply to any such report containing fee and expense
information.

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

0
15. The authority 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, 80a-29, and Pub. L. 111-203,
sec. 939A, 124 Stat. 1376 (2010), unless otherwise noted.
* * * * *

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

0
16. Revise the General Instructions of Form N-1A, and Items 1, 4, 5,
13, 17, and 27 of Form N-1A, and add new Item 27A of Form N-1A
(referenced in Sec. Sec.  239.15A and 274.11A) to read as follows:
* * * * *

General Instructions

* * * * *

C. Preparation of the Registration Statement

* * * * *
(g) Interactive Data File
* * * * *
    (iii) An Interactive Data File is required to be submitted to the
Commission in the manner provided by rule 405 of Regulation S-T for any
information provided in response to Item 27A(b)-(h) of Form N-1A that
is included in any report to shareholders filed on Form N-CSR.
    (iv) The Interactive Data File must be submitted in accordance with
the specifications in the EDGAR Filer Manual, and 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.
* * * * *

Part A--Information Required in a Prospectus

Item 1. Front and Back Cover Pages

    (a) Front Cover Page. Include the following information, in plain
English under rule 421(d) under the Securities Act, on the outside
front cover page of the prospectus:
    (1) The Fund's name and the Class or Classes, if any, to which the
prospectus relates.
    (2) The exchange ticker symbol of the Fund's shares or, if the
prospectus relates to one or more Classes of the Fund's shares,
adjacent to each such Class, the exchange ticker symbol of such Class
of the Fund's shares. If the Fund is an Exchange-Traded Fund, also
identify the principal U.S. market or markets on which the Fund shares
are traded.
    (3) The date of the prospectus.
    (4) The statement required by rule 481(b)(1) under the Securities
Act.
    Instruction. A Fund may include on the front cover page a statement
of its investment objectives, a brief (e.g., one sentence) description
of its operations, or any additional information, subject to the
requirement set out in General Instruction C.3(b).
    (b) Back Cover Page. Include the following information, in plain
English under rule 421(d) under the Securities Act, on the outside back
cover page of the prospectus:

    (1) A statement that the SAI includes additional information about
the Fund, and a statement to the following effect:
    Additional information about the Fund's investments is available in
the Fund's annual and semi-annual reports to shareholders and in Form
N-CSR. In the Fund's annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected
the Fund's performance during its last fiscal year. In Form N-CSR, you
will find the Fund's annual and semi-annual financial statements.
    Explain that the SAI, the Fund's annual and semi-annual reports to
shareholders, and other information such as Fund financial statements
are available, without charge, upon request, and explain how
shareholders in the Fund may make inquiries to the Fund. Provide a
toll-free telephone number for investors to call: to request the SAI;
to request the Fund's annual or semi-annual report; to request the
Fund's financial statements; to request other information about the
Fund; and to make shareholder inquiries. Also, state that the Fund
makes available its SAI, annual and semi- annual reports, and other
information such as Fund financial statements, free of charge, on or
through the Fund's website at a specified address. If the Fund does not
make its SAI and shareholder reports available in this manner, disclose
the reasons why it does not do so (including, where applicable, that
the Fund does not have a website).
Instructions
    1. A Fund may indicate, if applicable, that the SAI, annual and
semi-annual report, Fund financial statements, and other information
are available by email request.
    2. A Fund may indicate, if applicable, that the SAI and other
information are available from a financial intermediary (such as a
broker-dealer or bank) through which shares of the Fund may be
purchased or sold. When a Fund (or financial intermediary through which
shares of the Fund may be purchased or sold) receives a request for the
SAI, the annual report, the semi-annual report, or other information
such as financial statements that the Fund files on Form N-CSR, the
Fund (or financial intermediary) must send the requested document
within 3 business days of receipt of the request, by first-class mail
or other means designed to ensure equally prompt delivery.
    3. A Fund that has not yet been required to deliver an annual or
semi-annual report to shareholders under rule 30e-1 [17 CFR 270.30e-1]
or to file a Form N-CSR report may omit the statements required by this
paragraph regarding the report.
    4. A Money Market Fund may omit the sentence indicating that a
reader will find in the Fund's annual report a discussion of the market
conditions and investment strategies that significantly affect the
Fund's performance during its last fiscal year.
    (2) A statement whether and from where information is incorporated
by reference into the prospectus as permitted by General Instruction D.
Unless the information is delivered with the prospectus, explain that
the Fund will provide the information without charge, upon request
(referring to the telephone number provided in response to paragraph
(b)(1)).
    Instruction. The Fund may combine the information about
incorporation by reference with the statements required under paragraph
(b)(1).
    (3) State that reports and other information about the Fund are
available on the EDGAR Database on the Commission's website at http://www.sec.gov, and that copies of this information may be obtained, after
paying a duplicating fee, by electronic request at the following email
address: [email protected].
    (4) The Fund's Investment Company Act file number on the bottom of
the back cover page in type size smaller than that generally used in
the prospectus (e.g., 8-point modern type).
* * * * *

Item 4. Risk/Return Summary: Investments, Risks, and Performance

* * * * *
    (2) Risk/Return Bar Chart and Table.
* * * * *
    (iii) If the Fund has annual returns for at least one calendar
year, provide a table showing the Fund's (A) average annual total
return; (B) average annual total return (after taxes on distributions);
and (C) average annual total return (after taxes on distributions and
redemptions). A Money Market Fund should show only the returns
described in clause (A) of the preceding sentence. All returns should
be shown for 1-, 5-, and 10- calendar year periods ending on the date
of the most recently completed calendar year (or for the life of the
Fund, if shorter), but only for periods subsequent to the effective
date of the Fund's registration statement. The table also should show
the returns of an appropriate broad-based securities market index as
defined in Instruction 6 to Item 27A(d)(2) for the same periods. A Fund
that has been in existence for more than 10 years also may include
returns for the life of the Fund. A Money Market Fund may provide the
Fund's 7-day yield ending on the date of the most recent calendar year
or disclose a toll-free telephone number that investors can use to
obtain the Fund's current 7-day yield. For a Fund (other than a Money
Market Fund or a Fund described in General Instruction C.3.(d)(iii)),
provide the information in the following table with the specified
captions:

                                          Average Annual Total Returns
                                     (For the periods ended December 31,___)
----------------------------------------------------------------------------------------------------------------
                                                                       5 years (or life of  10 years (or life of
                                                       1 year                 fund)                 fund)
----------------------------------------------------------------------------------------------------------------
Return Before Taxes...........................                  __%                   __%                   __%
Return After Taxes on Distributions...........                  __%                   __%                   __%
Return After Taxes on Distributions and Sale                    __%                   __%                   __%
 of Fund Shares...............................
Index (reflects no deduction for [fees,                         __%                   __%                   __%
 expenses, or taxes]).........................
----------------------------------------------------------------------------------------------------------------

* * * * *
Instructions
* * * * *
    2. Table.
* * * * *
    (b) A Fund may include, in addition to the required broad-based
securities market index, information for one or more other indexes as
permitted by Instruction 7 to Item 27A(d)(2). If an additional index is
included, disclose information about the additional index in the
narrative explanation accompanying the bar chart and table (e.g., by
stating that the information shows how the Fund's performance compares
with the returns of an index

of funds with similar investment objectives).
* * * * *
    4. Change in Investment Adviser. If the Fund has not had the same
investment adviser during the last 10 calendar years, the Fund may
begin the bar chart and the performance information in the table on the
date that the current adviser began to provide advisory services to the
Fund subject to the conditions in Instruction 13 of Item 27A(d)(2).
* * * * *

Item 5. Management

* * * * *
    (b) Portfolio Manager(s). State the name, title, and length of
service (or year service began) of the person or persons employed by or
associated with the Fund or an investment adviser of the Fund who are
primarily responsible for the day-to-day management of the Fund's
portfolio (``Portfolio Manager'').
* * * * *

Item 13. Financial Highlights Information

* * * * *
    4. Ratios/Supplemental Data.
    (a) Calculate ``average net assets'' based on the value of the net
assets determined no less frequently than the end of each month.
    (b) Calculate the Ratio of Expenses to average Net Assets using the
amount of expenses shown in the Fund's statement of operations for the
relevant fiscal period, including increases resulting from complying
with paragraph 2(g) of rule 6-07 of Regulation S-X and reductions
resulting from complying with paragraphs 2(a) and (f) of rule 6-07
regarding fee waivers and reimbursements.
    (c) A Fund that is a Money Market Fund may omit the Portfolio
Turnover Rate.
    (d) Calculate the Portfolio Turnover Rate as follows:
    (i) Divide the lesser amounts of purchases or sales of portfolio
securities for the fiscal year by the monthly average of the value of
the portfolio securities owned by the Fund during the fiscal year.
Calculate the monthly average by totaling the values of portfolio
securities as of the beginning and end of the first month of the fiscal
year and as of the end of each of the succeeding 11 months and dividing
the sum by 13.
    (ii) Exclude from both the numerator and the denominator amounts
relating to all securities, including options, whose maturities or
expiration dates at the time of acquisition were one year or less.
Include all long-term securities, including long-term U.S. Government
securities. Purchases include any cash paid upon the conversion of one
portfolio security into another and the cost of rights or warrants.
Sales include net proceeds of the sale of rights and warrants and net
proceeds of portfolio securities that have been called or for which
payment has been made through redemption or maturity.
    (iii) If the Fund acquired the assets of another investment company
or of a personal holding company in exchange for its own shares during
the fiscal year in a purchase-of-assets transaction, exclude the value
of securities acquired from purchases and securities sold from sales to
realign the Fund's portfolio. Adjust the denominator of the portfolio
turnover computation to reflect these excluded purchases and sales and
disclose them in a footnote.
    (iv) Include in purchases and sales any short sales that the Fund
intends to maintain for more than one year and put and call options
with expiration dates more than one year from the date of acquisition.
Include proceeds from a short sale in the value of the portfolio
securities sold during the period; include the cost of covering a short
sale in the value of portfolio securities purchased during the period.
Include premiums paid to purchase options in the value of portfolio
securities purchased during the reporting period; include premiums
received from the sale of options in the value of the portfolio
securities sold during the period.
    (e) A fund may incorporate by reference the Financial Highlights
Information from Form N-CSR into the prospectus in response to this
Item if the Fund transmits the annual report required by rule 30e-1(b)
with the prospectus or, if the report has been previously delivered
(e.g., to a current shareholder), the Fund includes the statement
required by Item 1(b)(1).
* * * * *

Item 17. Management of the Fund

Instructions
* * * * *
    (a) Management Information.
    (1) Provide the information required by the following table for
each director and officer of the Fund, and, if the Fund has an advisory
board, member of the board. Explain in a footnote to the table any
family relationship between the persons listed.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                (1)                            (2)                     (3)                    (4)                    (5)                    (6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Name, Address,.....................  Position(s) Held with.  Term of Office and....  Principal............  Number of Portfolios.  Other Directorships
and Age............................  Fund..................  Length of Time........  Occupation(s) During   in Fund Complex......  Held by Director
(or Year of Birth).................                          Served................   Past 5 Years.         Overseen by Director.
                                                             (or Year Service......
                                                             Began)................
--------------------------------------------------------------------------------------------------------------------------------------------------------

* * * * *

Item 27. Financial Statements

    Include, in a separate section following the responses to the
preceding Items, the financial statements and schedules required by
Regulation S-X. The specimen price-make-up sheet required by
Instruction 4 to Item 23(c) may be provided as a continuation of the
balance sheet specified by Regulation S-X.
Instructions
    1. The statements of any subsidiary that is not a majority-owned
subsidiary required by Regulation S-X may be omitted from Part B and
included in Part C.
    2. In addition to the requirements of rule 3-18 of Regulation S-X
[17 CFR 210.3-18], any Fund registered under the Investment Company Act
that has not previously had an effective registration statement under
the Securities Act must include in its initial registration statement
under the Securities Act any additional financial statements and
condensed financial information (which need not be audited) necessary
to make the financial statements and condensed financial information
included in the registration statement current as of a date within 90
days prior to the date of filing.

Item 27A. Annual and Semi-Annual Shareholder Report

    (a) Annual and Semi-Annual Reports. Every annual shareholder report
required by rule 30e-1 must contain the

information required by paragraphs (b) through (i) of this Item and may
contain the information permitted by paragraph (j) of this Item. Every
semi-annual shareholder report required by rule 30e-1 must contain the
information required by paragraphs (b), (c), (e), (f), (h), and (i) of
this Item, except as otherwise specified in these paragraphs, and may
contain other information permitted or required in annual shareholder
reports (so long as the information that the fund includes at its
option meets the requirements of the relevant paragraph, including any
related instructions, and is not incomplete, inaccurate, or
misleading).
Instructions
    1. For annual shareholder reports, disclose the information
required or permitted by paragraphs (b) through (i) of this Item in the
same order as these items appear below. In an annual shareholder report
that appears on a website or is otherwise provided electronically,
organize the information in a manner that gives each item similar
prominence as that provided by the order prescribed in this
Instruction.
    2. For semi-annual shareholder reports, disclose the information
that must appear in the report pursuant to paragraph (a) of this Item
in the same order as these items appear below. Any other information
permitted in annual shareholder reports, which the Fund chooses to
include in its semi-annual shareholder report pursuant to this Item,
must also be included in the same order as these items appear below.
For example, if a Fund chooses to include the information described in
paragraph (g) in its semi-annual shareholder report, the information in
the Fund's semi-annual report must appear in the following order:
paragraphs (b), (c), (e), (f), (g), (h), and (i). In a semi-annual
shareholder report that appears on a website or electronically,
organize the information in a manner that gives each item similar
prominence as that provided by the order prescribed in this
Instruction.
    3. Do not include information in an annual or semi-annual
shareholder report other than disclosure that Item 27A and its
Instructions require or permit in annual or semi-annual shareholder
reports, as applicable, or as provided by rule 8b-20 under the
Investment Company Act [17 CFR 270.8b-20].
    4. Prepare a separate annual or semi-annual shareholder report for
each Series of a Fund, and if a Series has multiple Classes, prepare a
separate annual or semi-annual shareholder report for each Class within
the Series.
    5. A Fund may not incorporate by reference any information into its
annual or semi-annual shareholder report.
    6. The plain English requirements of rule 421 under the Securities
Act [17 CFR 230.421] apply to the annual and semi-annual shareholder
report. Provide the disclosure in an annual or semi-annual shareholder
report in plain English under rule 421(d) under the Securities Act.
Include white space and use other design features to make the annual or
semi-annual shareholder report easy to read. The annual or semi-annual
shareholder report should be concise and direct. Specifically: (i) use
short sentences and paragraphs; (ii) use definite, concrete, everyday
words; (iii) use active voice; (iv) avoid legal jargon or highly
technical business terms unless clearly explained; (v) avoid multiple
negatives; (vi) use ``you,'' ``we,'' etc. to speak directly to
shareholders; and (vii) use descriptive headers and sub-headers. Do not
use vague or imprecise ``boilerplate.''
    7. If a required disclosure is inapplicable, a Fund may omit the
disclosure from an annual or semi-annual shareholder report. A Fund may
modify a required legend or narrative information if the modified
language contains comparable information.
    8. Funds should use design techniques that promote effective
communication. Funds are encouraged to use, as appropriate, question-
and-answer formats, charts, graphs, tables, bullet lists, and other
graphics or text features to respond to the required disclosures.
    For an annual or semi-annual shareholder report that appears on a
website or is otherwise provided electronically, funds are encouraged
to use online tools (for example, tools that populate discrete sets of
information based on investor selections--e.g., Class-specific
information, performance information over different time horizons, or
the dollar value used to illustrate the Fund's expenses or to populate
the performance line graph, as applicable). The default presentation
must use the value that the applicable form requirement prescribes.
Funds also may include: (i) a means of facilitating electronic access
to video or audio messages, or other forms of information (e.g.,
hyperlink, website address, Quick Response Code (``QR code''), or other
equivalent methods or technologies); (ii) mouse-over windows; (iii)
pop-up boxes; (iv) chat functionality; (v) expense calculators; or (vi)
other forms of electronic media, communications, or tools designed to
enhance an investor's understanding of material in the annual or semi-
annual shareholder report. Any information that is not included in the
annual or semi-annual shareholder report filed on Form N-CSR shall have
the same status, under the Federal securities laws, as any other
website or electronic content that the Fund produces or disseminates.
    9. In an annual or semi-annual shareholder report posted on a
website or otherwise provided electronically, Funds must provide a
means of facilitating access to any information that is referenced in
the annual or semi-annual shareholder report if the information is
available online, including, for example, hyperlinks to the Fund's
prospectus and financial statements. In an annual or semi-annual
shareholder report that is delivered in paper format, Funds may include
website addresses, QR codes, or other means of facilitating access to
such information. Funds must provide a link specific enough to lead
investors directly to the particular information, rather than to the
home page or a section of the fund's website other than on which the
information is posted. The link may be to a central site with prominent
links to the referenced information.
    10. Explanatory or supplemental information included in an annual
or semi-annual shareholder report under Instruction 8 or 9 may not,
because of the nature, quantity, or manner of presentation, obscure or
impede understanding of the information that must be included. When
using interactive graphics or tools, Funds may include instructions on
their use and interpretation.
    11. Unless otherwise indicated, the reporting period for an annual
shareholder report is the Fund's most recent fiscal year, and the
reporting period for a semi-annual shareholder report is the Fund's
most recent fiscal half-year.
    12. The Fund's annual or semi-annual shareholder report may be
accompanied by other materials, but the annual or semi-annual
shareholder report must be given greater prominence than other
materials that accompany the report, with the exception of other
shareholder reports, summary prospectuses or statutory prospectuses
(both as defined in rule 498 under the Securities Act [17 CFR
230.498]), or a notice of internet availability of proxy materials
under rule 14a-6 under the Securities Exchange Act [17 CFR 240.14a-6].
    13. In an annual or semi-annual shareholder report posted on a
website or otherwise provided electronically, Funds may satisfy
legibility requirements applicable to printed

documents by presenting all required information in a format that
promotes effective communication as described in Instruction 8. The
body of every printed annual or semi-annual shareholder report and
other tabular data included therein shall comply with the applicable
legibility of prospectus requirements set forth in rule 420 under the
Securities Act of 1933.
    (b) Cover Page or Beginning of Annual or Semi-Annual Shareholder
Report. Include on the cover page or at the beginning of the annual or
semi-annual shareholder report:
    (1) The Fund's name and the Class, if relevant.
    (2) The exchange ticker symbol of the Fund's shares or, if the
annual or semi-annual shareholder report relates to a Class of the
Fund's shares, its exchange ticker symbol. If the Fund is an Exchange-
Traded Fund, also identify the principal U.S. market or markets on
which the Fund's shares are traded.
    (3) A statement identifying the document as an ``annual shareholder
report'' or a ``semi-annual shareholder report,'' as applicable.
    (4) The following statement:
    This [annual or semi-annual] shareholder report contains important
information about [the Fund] for the period of [beginning date] to [end
date]. You can find additional information about the Fund at [__]. You
can also request this information by contacting us at [__].
    (5) If the annual or semi-annual report includes Material Fund
Changes, as described in paragraph (g) of this Item, include the
following prominent statement, or similar clear and understandable
statement, in bold-face type: ``This report describes changes to the
Fund that occurred during the reporting period.''
Instructions
    1. A Fund may include graphics, logos, and other design or text
features on the cover page or at the beginning of its annual or semi-
annual shareholder report to help shareholders identify the materials
as the Fund's annual or semi-annual shareholder report.
    2. In the statement required under paragraph (b)(5), provide the
toll-free telephone number and, as applicable, email address that
shareholders can use to request additional information about the Fund.
Provide a website address where information about the Fund is
available. The website address must be specific enough to lead
shareholders directly to the materials that are required to be
accessible under rule 30e-1, rather than to the home page or a section
of the website other than on which the materials are posted. The
website may be a central site with prominent links to the materials
that must be accessible under rule 30e-1. In addition to the website
address, a Fund may include other ways an investor can find or request
additional information about the Fund (e.g., QR code, mobile
application).
    (c) Fund Expenses.
    In a table, provide the expenses of an ongoing $10,000 investment
in the Fund during the reporting period. The table must show: (i) the
[Fund or Class Name]; (ii) expenses in dollars paid on a $10,000
investment during the period; and (iii) expenses as a percent of an
investor's investment in the Fund (i.e. expense ratio).
What were the Fund costs for the last [year/six months]?

              (based on a hypothetical $10,000 investment)
------------------------------------------------------------------------
                                                        Costs paid as a
      [Fund or Class Name]        Costs of a $10,000    percentage of a
                                       investment     $10,000 investment
------------------------------------------------------------------------
                                  $.................  %
------------------------------------------------------------------------

Instructions
    1. General.
    (a) Round all percentages in the table to the nearest hundredth of
one percent and round all dollar figures in the table to the nearest
dollar.
    (b) If the Fund is a Feeder Fund, reflect the aggregate expenses of
the Feeder Fund and the Master Fund. In a footnote to the expense
table, state that the expense table reflects the expenses of both the
Feeder and Master Funds.
    (c) If the Fund's annual or semi-annual shareholder report covers a
period of time that is less than the full reporting period of the
annual or semi-annual report, the Fund must include a footnote to the
table to briefly explain that expenses for the full reporting period
would be higher.
    (d) If the disclosed expenses include extraordinary expenses, the
Fund may include a brief footnote to the ``Costs paid as a percentage