[Federal Register: February 12, 2007 (Volume 72, Number 28)]
[Proposed Rules]
[Page 6675-6687]
[DOCID:fr12fe07-27]

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Part III

 Securities and Exchange Commission

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17 CFR Parts 232, 239, 270, and 274

 Extension of Interactive Data Voluntary Reporting Program on the EDGAR
System To Include Mutual Fund Risk/Return Summary Information; Proposed
Rule

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 232, 239, 270 and 274

[Release Nos. 33-8781, IC-27697; File Number S7-05-07]
RIN 3235-AJ59

Extension of Interactive Data Voluntary Reporting Program on the
EDGAR System To Include Mutual Fund Risk/Return Summary Information

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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SUMMARY: We are proposing rule amendments to extend the current
interactive data voluntary reporting program to enable mutual funds
voluntarily to submit supplemental tagged information contained in the
risk/return summary section of their prospectuses. A mutual fund
choosing to tag its risk/return summary information also would continue
to file this information in HTML or ASCII format, as currently
required. This extension of the voluntary program is intended to help
us evaluate the usefulness to investors, third-party analysts,
registrants, the Commission, and the marketplace of data tagging and,
in particular, of tagging mutual fund information.

DATES: Comments should be submitted on or before March 14, 2007.

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml.
);     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number S7-05-07 on the subject line; or
     Use the Federal eRulemaking Portal (http://www.regulations.gov
). Follow the instructions for submitting comments.

Paper Comments

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

All submissions should refer to File Number S7-05-07. This file number
should be included on the subject line if e-mail is used. To help us
process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's
Internet Web site (http://www.sec.gov/rules/proposed.shtml). Comments

are also available for public inspection and copying in the
Commission's Public Reference Room, 100 F Street, NE., Washington, DC
20549. All comments received will be posted without change; we do not
edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: If you have questions about the
proposed rules, please contact Alberto H. Zapata, Senior Counsel,
Christopher Kaiser, Branch Chief, or Brent J. Fields, Assistant
Director, Office of Disclosure Regulation, Division of Investment
Management, at<PHONE_NUMBER>, Securities and Exchange Commission, 100
F Street, NE., Washington, DC 20549-5720. If you have questions about
the EDGAR system, please contact Richard Heroux, EDGAR Program Manager,
at<PHONE_NUMBER>, in the Office of Information Technology.

SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission
(``Commission'') is proposing for comment amendments to rules 401 \1\
and 402 \2\ of Regulation S-T \3\, rule 8b-33 \4\ under the Investment
Company Act of 1940 (``Investment Company Act''), and Form N-1A \5\
under the Investment Company Act and the Securities Act of 1933
(``Securities Act'').
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    \1\ 17 CFR 232.401.
    \2\ 17 CFR 232.402.
    \3\ 17 CFR 232.10 et seq.
    \4\ 17 CFR 270.8b-33.
    \5\ 17 CFR 239.15A and 274.11A.
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Table of Contents

I. Background
    A. Interactive Data and XBRL
    B. The Voluntary Program
    C. Tagging of Mutual Fund Information
II. Discussion
    A. Expansion of Voluntary Program Content
    B. Required Disclosure
    C. Liability Issues
    D. The Risk/Return Summary Taxonomy and Software Tools
    E. Effective Date
III. General Request For Comments
IV. Paperwork Reduction Act
V. Cost/Benefit Analysis
VI. Promotion of Efficiency, Competition, and Capital Formation
VII. Initial Regulatory Flexibility Analysis
VIII. Consideration of Impact on the Economy
IX. Statutory Authority
Text of Proposed Rule and Form Amendments

I. Background

A. Interactive Data and XBRL

    For the past several years, the Commission has been evaluating the
expanded use of interactive data tagging as a tool to improve the
timeliness and accessibility of the information contained in filings
with the Commission under the federal securities laws.\6\ Data tagging
uses standard definitions (or data tags) to translate text-based
information into data that is interactive, that is, data that can be
retrieved, searched, and analyzed through automated means.\7\
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    \6\ See SEC to Rebuild Public Disclosure System to Make It
'Interactive', Securities and Exchange Commission Press Release,
Sept. 25, 2006, available at: http://www.sec.gov/news/press/2006/

2006-158.htm (Commission awards contracts totaling $54 million to
transform public company disclosure system to create a dynamic real-
time search tool with interactive capabilities) (``September 25
Press Release''); Commission Announces Interactive Data Roundtable
on New Software to Make Better Information a Reality, Securities and
Exchange Commission Press Release, Sept. 25, 2006, available at:
http://www.sec.gov/news/ press/2006/2006-160.htm; Commission

Announces Roundtable Series Giving Investors and Analysts Better
Financial Data via Internet, Securities and Exchange Commission
Press Release, Mar. 9, 2006, available at: http://www.sec.gov/news/press/2006-34.htm
; SEC Offers Incentives for Companies to File

Financial Reports with Interactive Data, Securities and Exchange
Commission Press Release, Jan. 11 2006, available at: http://www.sec.gov/news/press/2006-7.htm
; SEC Announces Initiative to

Assess Benefits of Tagged Data in Commission Filings, Securities and
Exchange Commission Press Release, July 22, 2004, available at:
http://www.sec.gov/news/press/2004-97.htm.

    \7\ The Commission's Electronic Data Gathering, Analysis, and
Retrieval System (``EDGAR'') has allowed certain tagged data since
its inception, for example, by using Standard Generalized Markup
Language and Extensible Markup Language (``XML'') to tag form-
specific information (such as the form type, central index key, and
file number) that accompanies electronic documents submitted on
EDGAR. More recently, EDGAR has employed HyperText Markup Language
(``HTML'') to format documents and made limited use of XML related
to financial and business information contained within certain EDGAR
submissions.
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    Interactive data has enormous potential to enable investors and
other market participants to analyze and compare data from different
sources more efficiently and effectively and to exchange information
across various software platforms automatically. Through interactive
data, static text-based information can be transformed into dynamic
databases that can readily be searched and analyzed, facilitating the
comparison of information across companies, reporting periods, and
industries. Tagged information can help investors, analysts, and other
users to mine the wealth of information contained in detailed paper
disclosure documents, providing users with the ability to access
precisely the

information in which they are interested and to analyze that data.
    Interactive data also provides a significant opportunity to
automate information processing throughout the business and reporting
cycle, with the potential to increase accuracy and reduce costs. By
ensuring that information is classified properly at each step of the
cycle, and minimizing the need for human intervention and, therefore,
human error, interactive data may improve the quality of information at
decreased cost. These benefits can begin at the time of an initial
transaction and carry forward to the point of disclosure in a
Commission filing and, ultimately, to the use of the disclosed
information by investors and other market participants. At each step in
the process, interactive data offers the potential to replace manual
reentry of information with automated processing of previously tagged
data.
    Tags are standardized through the development of taxonomies, which
are essentially data dictionaries that describe individual items of
information and mathematical and definitional relationships among the
items. As tagging has continued to gain prominence in recent years,
there has been substantial progress in developing data tagging
taxonomies related to a language for the electronic communication of
business and financial data known as eXtensible Business Reporting
Language (``XBRL'').\8\ XBRL was developed as an open source
specification that describes a standard format for tagging financial
and other information to facilitate the preparation, publication, and
analysis of that information by software applications.\9\ XBRL was
developed and continues to be supported by XBRL International, a
collaborative consortium of approximately 450 organizations
representing many perspectives in the financial reporting
community.\10\ Organizations in the consortium include issuers, public
accounting firms, software companies, filing agents, data aggregators,
stock exchanges, regulators, financial services companies, and industry
associations.\11\ XBRL International and its related entities have been
developing standard taxonomies that are designed to classify and define
financial information in accordance with U.S. Generally Accepted
Accounting Principles (``GAAP'') and Commission regulations. The
Commission recently announced that it is contracting with XBRL US,
Inc., the U.S. based arm of XBRL International, to help complete the
writing of XBRL taxonomies that would enable companies in all
industries to file financial reports with the Commission using
XBRL.\12\
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    \8\ See Edward Hand, ``XBRL: The Future of Business Reporting,''
NETWORK COMPUTING, Aug. 31, 2006, available at: http://www.networkcomputing.com/showArticle.jhtml?articleID=192202551&pgno=1
.

    \9\ ``Open Source'' means that the software can be used by
anyone without charge and is being developed in an open and
collaborative setting. For a more detailed discussion about XBRL,
see ``How XBRL Works'' on the XBRL International Web site available
at: http://www.xbrl.org/HowXBRLWorks/.

    \10\ See ``About the Organisation'' page and subpages on the
XBRL International Web site, available at: http://www.xbrl.org/AboutTheOrganisation/
.

    \11\ See ``Member Organisations'' page and subpages on the XBRL
International Web site, available at: http://xbrl.org/viewmembers.aspx
.

    \12\ September 25 Press Release, supra note 6.
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B. The Voluntary Program

    As part of our evaluation of the potential of interactive data
tagging technology, the Commission adopted rules in 2005 instituting a
program that permits filers, on a voluntary basis, to submit specified,
supplemental disclosure tagged in XBRL format as an exhibit to certain
filings on the Commission's Electronic Data Gathering, Analysis and
Retrieval System (``EDGAR'').\13\ The Commission adopted the voluntary
program to help evaluate the usefulness of data tagging and XBRL to
registrants, investors, the Commission, and the marketplace.\14\ In
2006, the Commission initiated an interactive data test program, in
which companies, including investment companies, voluntarily agree to
furnish financial data in XBRL format for at least one year and provide
feedback on their experiences, including the costs and benefits.\15\
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    \13\ Securities Act Release No. 8529 (Feb. 3, 2005) [70 FR 6556
(Feb. 8, 2005)] (``XBRL Adopting Release''). See also Securities Act
Release No. 8496 (Sept. 27, 2004) [69 FR 59094 (Oct. 1, 2004)]
(``XBRL Proposing Release''); Securities Act Release No. 8497 (Sept.
27, 2004) [69 FR 59111 (Oct. 1, 2004)] (concept release soliciting
comment on data tagging).
    \14\ XBRL Adopting Release, supra note 13, 70 FR at 6556.
    \15\ More Companies Join SEC's Program to Use Interactive Data
for Financial Statements, Securities and Exchange Commission Press
Release, June 20, 2006, available at: http://www.sec.gov/news/press/2006/2006-99.htm
; 17 Companies Join SEC Pilot Program to Use

``Interactive Data'' in Financial Reports, Securities and Exchange
Commission Press Release, Mar. 29, 2006, available at: http://www.sec.gov/news/press/2006-43.htm
; SEC Offers Incentives for

Companies to File Financial Reports with Interactive Data,
Securities and Exchange Commission Press Release, Jan. 11, 2006,
available at: http://www.sec.gov/news/press/2006-7.htm. For more

information about the Commission's interactive data initiatives, see
the Commission Web page ``Spotlight On: Interactive Data and XBRL
Initiatives'' available at: http://www.sec.gov/spotlight/xbrl.htm.

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    Under the voluntary program, filers may submit financial
information using XBRL as an exhibit to the filing to which it relates,
an amendment to such filing, or, if the filer is eligible, to a filing
on Form 8-K \16\ or Form 6-K.\17\ The XBRL exhibits submitted in the
voluntary program are supplemental submissions that do not replace the
required American Standard Code for Information Interchange (``ASCII'')
or Hypertext Markup Language (``HTML'') versions of the financial
information they contain.\18\ The data currently permitted in XBRL
exhibits is limited to financial information.
    The voluntary program permits any registrant to participate merely
by submitting an XBRL exhibit in the required manner. XBRL exhibits are
publicly available but are considered furnished rather than filed.\19\
Although XBRL exhibits are required to accurately reflect the
information that appears in the corresponding part of the official
filing, the purpose of submitting XBRL data is to test the related
format and technology and, as a result, investors and others should
continue to rely only on the official version of a filing and not on
the XBRL exhibit in making investment decisions. We have included
cautionary language to this effect on the Commission Web site.\20\
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    \16\ 17 CFR 249.308.
    \17\ 17 CFR 249.306.
    \18\ See EDGAR Filer Manual, Volume II, Section 5.1 (Version 3,
Feb. 2006).
    \19\ See infra note 57 and accompanying text.
    \20\ See ``XBRL Data Submitted in the XBRL Voluntary Program on
EDGAR'' page on the Commission Web site, available at: http://www.sec.gov/Archives/edgar/xbrl.html
.

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C. Tagging of Mutual Fund Information

    The current voluntary program extends to investment companies,
including open-end management investment companies (``mutual
funds'').\21\ Investment companies may presently submit XBRL exhibits
only to Form N-CSR,\22\ the semi-annual filing to submit certified
shareholder reports, or to Form N-Q,\23\ the quarterly report of
portfolio holdings.\24\
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    \21\ See SEC XBRL Voluntary Program Extends to Investment
Companies, Securities and Exchange Commission Press Release, Aug. 8,
2005, available at: http://www.sec.gov/news/press/2005-112.htm.

    \22\ 17 CFR 249.331 and 274.128.
    \23\ 17 CFR 249.332 and 274.130.
    \24\ Voluntary participants must use the standard U.S. GAAP
investment management taxonomy (Version 2.1) approved by XBRL
International. See EDGAR Filer Manual, Volume II, Section <IP_ADDRESS>
(Version 3, Feb. 2006); ``Frequently Asked Questions about the XBRL
Voluntary Filing Program'' page on the Commission Web site,
available at: http://www.sec.gov/info/edgar/xbrlfaq032105.htm.

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    As part of our evaluation of data tagging, the Commission held a

roundtable in June 2006 that focused, in part, on the role of data
tagging and interactive data in improving the quality of mutual fund
disclosures. Representatives from investor groups, the mutual fund
industry, analysts, and others discussed how the Commission could
leverage the power of interactive data and other technology to provide
mutual fund investors with better information.\25\
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    \25\ See Transcript of June 12 Interactive Data Roundtable, June
12, 2006, available at: http://www.sec.gov/spotlight/xbrl/xbrlofficialtranscript0606.pdf
 (``June 12 Roundtable Transcript'');

Webcast Archive of June 12 Interactive Data Roundtable, June 12,
2006, available at: http://www.connectlive.com/events/secxbrl/. See

also Agenda of October 3 Interactive Roundtable, Oct. 3, 2006
available at: http://www.sec.gov/spotlight/xbrl/xbrlroundagenda-100306.htm
; Webcast Archive of October 3 Interactive Data

Roundtable, Oct. 3, 2006, available at: http://www.connectlive.com/events/secinteractivedata100306/
 (``October 3 Roundtable Webcast'')

(second Commission interactive data roundtable, focusing on new
software using interactive data to provide investor-friendly
research tools).
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    Significant discussion at the June roundtable concerned the
importance of providing mutual fund investors with better, more user-
friendly access to key information, such as information about
investment objectives and strategies, risks, and costs.\26\ This key
information is included in the mutual fund prospectus,\27\ but it can
be difficult for investors to extract this key information from lengthy
prospectuses, which often cover multiple funds and contain a wealth of
other information. Much of this information is required to be included
in the risk/return summary section of the prospectus,\28\ and tagging
this information could provide powerful tools for investors.\29\
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    \26\ See Barbara Roper, Director of Investor Protection,
Consumer Federation of America, June 12 Roundtable Transcript, supra
note 25, at 20 & 22. See also Paul G. Haaga, Jr., Executive Vice
President, Capital Research and Management Company, id. at 90;
William D. Lutz, Ph.D., Professor of English, Rutgers University,
id. at 88; Elisse B. Walter, Senior Executive Vice President, NASD,
id. at 40-41.
    \27\ Items 2 and 3 of Form N-1A [17 CFR 239.15A and 274.11A]
(risk/return summary section of the prospectus).
    \28\ Id.
    \29\ See Chairman Christopher Cox, June 12 Roundtable
Transcript, supra note 25, at 8 (``Interactive data, the tagging of
these key facts [in the prospectus] so that they can easily be
identified and extracted[,] offers the possibility of dramatic
improvement over traditional disclosure delivery for mutual fund
investors.''); Paul Schott Stevens, President and Chief Executive
Officer, Investment Company Institute, id. at 72 (``XBRL tagging can
help turn the Risk/Return Summary into an even more powerful tool
than the Commission envisioned when it first adopted it in 1998 as a
way to help investors compare one fund with another through the
standardization of the information and the format in which it's
presented.'').
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    We believe that exploring the tagging of the information in the
risk/return summary section is an important step in our interactive
data program. With almost half of all U.S. households owning mutual
funds,\30\ typically to fund their education, retirement, and other
basic needs, improving the quality of mutual fund disclosure is
important to millions of Americans. Tagging of key mutual fund
information could help to streamline the delivery of mutual fund
information and provide investors, analysts, and others with improved
tools to compare funds based upon, among other things, costs,
investment objectives, strategies, and risks. In addition, the risk/
return summary information is largely narrative in format, and
exploring the viability of tagging this information will provide us
with valuable insights as we assess the potential for tagging other
primarily narrative information.
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    \30\ 2006 Investment Company Fact Book, at 47, Investment
Company Institute (2006), available at: http://www.icifactbook.org/pdf/2006_factbook.pdf
.

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    As noted above, XBRL International has approved an investment
management XBRL U.S. GAAP financial reporting taxonomy.\31\ That
taxonomy generally does not extend to the information in the risk/
return summary section. In March 2006, the Investment Company Institute
(the ``ICI'') \32\ announced an initiative to create a taxonomy to
cover the risk/return summary information in the prospectus.\33\ The
ICI recently released its draft risk/return summary taxonomy and
announced that it would provide a 45-day period for public review and
comment.\34\ We are proposing amendments to the voluntary program that
would, if adopted, permit mutual funds to tag the information in the
risk/return summary section of their prospectuses using the taxonomy
developed by the ICI.
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    \31\ Supra note 24.
    \32\ The ICI is a national association of the American
investment company industry.
    \33\ Stevens Calls for Greater Use of Internet; Announces
Initiative to Develop XBRL Data Tagging Technology, ICI Press
Release, Mar. 20, 2006, available at: http://ici.org/statements/nr/06_news_mfimc.html#TopOfPage
; Remarks of Paul Schott Stevens,

President and Chief Executive Officer, Investment Company Institute,
at the Mutual Funds and Investment Management Conference, Mar. 20,
2006, available at: http://ici.org/statements/remarks/06_mfimc_stevens_spch.html#TopOfPage
; Statement of the Investment Company

Institute at the June 12, 2006 Interactive Data Roundtable,
available at: http://www.sec.gov/news/press/4-515/ici050906.pdf.

    \34\ ICI Unveils Draft XBRL Taxonomy For Public Review,
Investment Company Institute Press Release, Jan. 4, 2007, available
at: http://www.ici.org/home/07_news_xbrl_txnmy.html#TopOfPage.

The taxonomy, as well as instructions for commenting on the
taxonomy, are available at http://members.ici.org/xbrl. See also

Statements of SEC Chairman Christopher Cox and Division of
Investment Management Director Andrew Donohue Regarding the
Investment Company Institute's Mutual Fund Interactive Data
Taxonomy, Securities and Exchange Commission Press Release, Jan. 4,
2007, available at: http://www.sec.gov/news/press/2007/2007-2.htm.

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II. Discussion

    As part of our ongoing effort to evaluate the usefulness of data
tagging, we are proposing amendments to extend the voluntary program to
enable mutual funds to submit exhibits containing tagged risk/return
summary information attached to EDGAR filings.\35\ We expect to permit
any mutual fund to participate, without pre-approval, merely by
submitting the risk/return summary information in the required manner.
As we continue to gain experience with interactive data, we will
evaluate the benefits of data tagging to investors, analysts, and
others. If, in the future, we consider requiring filers to tag the
risk/return summary information, that would be the subject of a
separate rulemaking proposal.
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    \35\ The proposed amendments, if adopted, would not alter the
voluntary program as it applies to the furnishing of XBRL
information by non-investment companies.
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A. Expansion of Voluntary Program Content

    Currently, the XBRL data furnished under the voluntary program must
consist of at least one item from a list of enumerated mandatory
content (``Mandatory Content''), including financial statements,
earnings information, and, for registered management investment
companies, financial highlights or condensed financial information.\36\
This may be accompanied by one or more related items from a list of
optional content, including (1) audit opinions; (2) interim review
reports; (3) reports of management on the financial statements; (4)
certifications; (5) management's discussion and analysis of financial
condition and results of operations; (6) management's discussion and
analysis or plan of operation; (7) operating and financial review and
prospects; and (8) management's discussion of fund performance.\37\
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    \36\ Rule 401(b)(1) of Regulation S-T [17 CFR 232.401(b)(1)].
    \37\ Rule 401(b)(2) of Regulation S-T [17 CFR 232.401(b)(2)].
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    We propose to add the risk/return summary information set forth in
Items 2 and 3 of Form N-1A as a new item of Mandatory Content.\38\ As
with all tagged exhibits under the voluntary program, submissions of
tagged exhibits containing risk/return summary

information would be supplemental and would not replace the required
HTML or ASCII version of the information called for in Form N-1A.
Volunteers would be required to file their complete official
registration statements to ensure that all investors have access to
information upon which to base their investment decisions.\39\ While
tagged exhibits would be required to reflect the same information
contained in the risk/return summary section of the related official
Form N-1A filing, we emphasize that investors and others should
continue to rely on the official filing rather than the tagged exhibit.
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    \38\ Proposed rule 401(b)(1)(iv).
    \39\ Consistent with the current voluntary program, once
received by the Commission, the official filing and the tagged risk/
return summary information submitted as exhibits to the official
filing would undergo technical validations. The official filing
would continue to follow the normal process for receipt and
acceptance. That is, it would be suspended if it fails its
validation criteria. If the official filing meets its validation
criteria, but any tagged risk/return summary document submitted as
an exhibit to the official filing fails its own validation criteria,
all tagged documents would be removed and the official filing would
be accepted and disseminated without the tagged documents. The
volunteer would be notified of the submission problem with the
tagged documents. If the official filing failed to meet the required
receipt and acceptance process and was suspended for any reason, any
tagged risk/return summary information submitted with the official
filing would also be suspended.
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    Any mutual fund submitting tagged risk/return summary information
would be required to include this information as an exhibit to an
amendment to a previous filing on Form N-1A.\40\ Form N-1A filings,
which contain mutual fund registration statements (or amendments
thereto), differ from the other filings used in the voluntary program
in that they are often subject to revision prior to effectiveness. For
this reason, the proposed rules would not permit the submission of a
tagged exhibit that is related to a registration statement or an
amendment that is not yet effective. More specifically, the proposed
rules would provide that a tagged exhibit to a Form N-1A filing,
whether the filing is an initial registration statement or an amendment
thereto, could be submitted only as an amendment to the filing to which
the tagged exhibit relates and only after the effective date of such
filing.\41\ An exhibit containing tagged risk/return summary
information could be submitted under rule 485(b) of the Securities Act,
which provides for immediate effectiveness of amendments filed to make
non-material changes and for certain other purposes, and would only
need to contain the new exhibit, a facing page, a signature page, a
cover letter explaining the nature of the filing, and a revised exhibit
index. Filers submitting tagged risk/return summary information should
not include the ICI taxonomy in their submissions as this taxonomy will
be stored as a part of the EDGAR system.
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    \40\ See proposed rule 401(a) of Regulation S-T; proposed rule
8b-33. A mutual fund submitting tagged risk/return summary
information as an exhibit to Form N-1A would be required to name
each document ``EX-100'' as specified in the EDGAR Filer Manual.
Proposed rule 8b-33. We also propose a technical amendment to
General Instruction B.4.(b) of Form N-1A to add rule 8b-33 to the
list of general provisions that apply to the filing of registration
statements on Form N-1A.
    \41\ Proposed rule 401(a); see also proposed rule 8b-33.
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    Similar to the current voluntary program, volunteers would be free
to submit tagged risk/return summary information regularly or from time
to time, and volunteers could stop and start as they choose.
Participating in the voluntary program would not create a continuing
obligation for a volunteer to submit tagged risk/return summary
information as an exhibit to a subsequent post-effective amendment. A
volunteer would, however, be required to amend any tagged risk/return
summary exhibits that do not comply with the content and format
requirements of rule 401, e.g., because they do not reflect the same
information as the corresponding official filing.\42\
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    \42\ XBRL Adopting Release, supra note 13, 70 FR at 6559 n. 48.
See rule 401(c)(1) (requires tagged exhibits to reflect the same
information as corresponding official filing).
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    We also propose amendments that will require investment companies
to tag information in a manner that will permit the information for
each class \43\ to be separately identified.\44\ Currently, rule 8b-33
under the Investment Company Act requires that investment companies
participating in the voluntary program submit tagged documents in a
manner that will permit the information for each series of an
investment company registrant \45\ and each contract of an insurance
company separate account \46\ to be separately identified.\47\ We
propose to amend this rule to require that investment companies submit
tagged documents in a manner that will permit the information for each
class to be separately identified because expense and performance
information in the risk/return summary is class-specific.\48\
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    \43\ A mutual fund may issue more than one class of shares that
represent interests in the same portfolio of securities with each
class, among other things, having a different arrangement for
shareholder services or the distribution of securities, or both.
Rule 18f-3 under the Investment Company Act [17 CFR 270.18f-3].
    \44\ Proposed rule 8b-33.
    \45\ A mutual fund may issue multiple ``series'' of shares, each
of which is preferred over all other series in respect of assets
specifically allocated to that series. Rule 18f-2 under the
Investment Company Act [17 CFR 270.18f-2]. Each series is, in
effect, a separate investment portfolio.
    \46\ Variable annuity contracts and variable life insurance
contracts are issued through insurance company separate accounts.
    \47\ Rule 8b-33 under the Investment Company Act [17 CFR 270.8b-
33].
    \48\ We have previously indicated that rule 8b-33 would require
investment companies to submit tagged XBRL documents separately for
each series of an investment company registrant. See XBRL Proposing
Release, supra note 13, 69 FR at 59097 n. 49. Under proposed amended
rule 8b-33, a mutual fund would not be required to submit tagged
risk/return summary information in separate documents for each
series or class, provided that the information is tagged in such a
manner that the information may be separately identified by series
and class.
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    The amendments we are proposing also would provide mutual funds
with an additional option to submit tagged financial highlights or
condensed financial information. Currently, mutual funds may submit
this information as an exhibit to Form N-CSR.\49\ The proposals, if
adopted, also would permit mutual funds to submit their financial
highlights or condensed financial information as a tagged exhibit to an
amendment to the Form N-1A filing to which the information relates.\50\
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    \49\ Rule 401(a) and (b)(1)(iii) of Regulation S-T [17 CFR
401(a) and (b)(1)(iii)] (permitting financial highlights or
condensed financial information set forth in Item 8(a) of Form N-1A
to be submitted as Mandatory Content); rule 8b-33. Mutual funds must
include their financial highlights or condensed financial
information in every annual and semi-annual report transmitted to
shareholders. Items 22(b)(2) and (c)(2) of Form N-1A (requiring
annual or semi-annual reports to include the information required by
Item 8(a) of Form N-1A). Mutual funds must include a copy of their
annual or semi-annual report transmitted to shareholders with their
Form N- CSR filed with the Commission. Item 1 of Form N-CSR.
    \50\ Proposed rule 8b-33 (permitting tagged exhibits under the
voluntary program to be submitted on Form N-1A); Item 8(a) of Form
N-1A (requiring mutual funds to provide financial highlights
information); rule 401(a) and (b)(1)(iii) of regulation S-T
(permitting information set forth in Item 8(a) of Form N-1A as
Mandatory Content under the voluntary program).
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    We request comment on the proposed expansion of the voluntary
program to include risk/return summary information.
     Is it beneficial to tag mutual fund risk/return summary
information? Is this portion of the mutual fund prospectus an
appropriate place to begin evaluating the tagging of non-financial
information? Is there other mutual fund information that should be
included in the voluntary program?
     What effect would tagged data have on investors',
analysts', and other users' ability to analyze mutual funds' risk/
return summary disclosure? Would tagged risk/return summary information
have an effect on the usefulness of disclosure in Commission filings?
     We are not proposing to amend that portion of rule
401(b)(1) that currently

requires that Mandatory Content ``consist of a complete set of
information for all periods presented in the corresponding official
EDGAR filing.'' Should mutual funds that submit tagged risk/return
summary information be required to tag all of the information in the
risk/return summary section of the corresponding official filing or
should they be permitted to tag some, but not all, of the information?
For example, if a fund's official filing contains information for more
than one series or class, should the fund be permitted to submit tagged
risk/return summary information for fewer than all of the series and
classes? As another example, should a mutual fund be permitted to tag
discrete portions of the risk/return summary information, such as cost
and performance information, while not tagging others, such as
narrative information?
     Should mutual funds be permitted to submit tagged risk/
return information related to registration statements or post-effective
amendments that are not yet effective? Would this raise any liability
issues? If mutual funds are permitted to submit tagged risk/return
summary information prior to effectiveness, what safeguards would be
appropriate? For example, should funds be required to submit revised
tagged documents if there are any changes (or any material changes) to
the risk/return summary disclosure in the effective registration
statement or amendment and/or should there be additional required
disclosure to specifically caution investors and others that the
information may differ from that in the effective filing?
     The proposed amendments would not create a continuing
obligation for a volunteer to submit tagged risk/return summary
information as an exhibit to a subsequent post-effective amendment.
When a mutual fund that has submitted tagged risk/return summary
information amends its registration statement, should we require the
fund to submit updated tagged risk/return summary information? Should
it depend on the materiality of the amendments? How would a requirement
to update tagged exhibits affect participation in the voluntary
program? If we do not impose a continuing obligation to update tagged
exhibits, should we require additional disclosure or other safeguards?
     Will the proposed amendment to rule 8b-33, providing that
investment companies must tag information in a manner that will permit
the information for each class to be separately identified, raise any
issues with respect to any investment company information that may be
tagged under the voluntary program? Should we specify that only risk/
return summary information must be tagged in a manner that will permit
the information for each class to be separately identified? Will the
risk/return summary taxonomy in its current state of development permit
the information for each series and class to be separately identified?
If not, how should it be modified to permit this?
     Should mutual funds be required to submit separate tagged
risk/return summary exhibits for each series or class? Instead, should
they be permitted to submit exhibits that combine multiple series or
classes of the same registrant, provided that the information is tagged
in such a manner that the information may be separately identified by
series and class?
     We plan to permit all filers on Form N-1A to submit
documents containing tagged risk/return summary information as exhibits
to their official Form N-1A filings so long as they comply with the
requirements of the voluntary program. Should we limit participation,
such as by size or type of mutual fund? If so, what should be the
criteria for participating? If so, why?
     What steps can we take to encourage mutual funds to
participate in the expanded voluntary program?

B. Required Disclosure

    Under the current voluntary program, any official filing with which
tagged exhibits are submitted must disclose that the purpose of
submitting the tagged exhibits is to test the related format and
technology and, as a result, investors should not rely on the exhibits
in making investment decisions.\51\ We are proposing that this
disclosure be required in the exhibit index of any Form N-1A filing
that includes a tagged exhibit.\52\
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    \51\ Rule 401(d)(1)(ii) of Regulation S-T [17 CFR
232.401(d)(1)(ii)].
    \52\ Proposed rule 401(d)(2)(i). Rule 483(a) of Regulation C [17
CFR 230.483(a)] requires, among other things, that a registration
statement of a registered investment company ``contain an exhibit
index, which should immediately precede the exhibits filed with such
registration statement.''
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    The current voluntary program also requires any official filing
with which tagged exhibits are submitted to disclose that the
information contained in the exhibits is ``unaudited'' or
``unreviewed.'' \53\ We are proposing to require this disclosure in a
Form N-1A filing with which tagged financial highlights or condensed
financial information is submitted. We are not proposing to require
this disclosure in a Form N-1A filing when the tagged exhibits to the
filing contain only risk/return summary information because this
information is not ordinarily audited or reviewed by an independent
auditor.\54\
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    \53\ Rule 401(d)(1)(i) of Regulation S-T [17 CFR
232.401(d)(1)(i)].
    \54\ Proposed rule 401(d)(1)(i).
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    We request comment on the proposed cautionary disclosures that
would be required to accompany the submission of tagged information
that accompanies a Form N-1A filing.
     Should we require the disclosure concerning whether the
information is ``unaudited'' or ``unreviewed'' to accompany exhibits
containing tagged risk/return summary information?
     Is additional or different language necessary for the
cautionary disclosures?
     Is the exhibit index to a Form N-1A filing the appropriate
place for the cautionary disclosures?

C. Liability Issues

    We propose to extend to tagged risk/return summary information
limited protection from liability that is similar to the protection
provided under the current voluntary program. As is the case with the
current program, we would provide this protection because liability
remains for the official filing, and the program is experimental,
contains certain safeguards, and should not unnecessarily deter
volunteers from participating.
    Currently, tagged exhibits are not deemed filed for purposes of
Section 18 of the Securities Exchange Act of 1934 (``Exchange Act'')
\55\ or Section 34(b) of the Investment Company Act,\56\ or otherwise
subject to the liability of these sections.\57\ In addition, the
current rules also provide more general relief from liability under the
securities laws, including the Securities Act, the Exchange Act, the
Trust Indenture Act of 1939, and the Investment Company Act, for
information in a tagged exhibit that complies with the content and
format requirements of the voluntary program to the extent that the
information in the corresponding portion of the official EDGAR filing
was not materially false or misleading.\58\
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    \55\ 15 U.S.C. 78r.
    \56\ 15 U.S.C. 80a-33(b).
    \57\ Rule 402(a)(1) under Regulation S-T [17 CFR 232.402(a)(1)].
Further, because the tagged documents are not filed under the
Exchange Act, they are not incorporated by reference into
registration statements filed under the Securities Act or
prospectuses they contain. These protections apply regardless of
whether the documents are exhibits to a document otherwise
incorporated by reference into a filing.
    \58\ Rule 402(b) of Regulation S-T [17 CFR 232.402(b)].
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    Unlike the filings currently included in the voluntary program,
Form N-1A is

a registration form under both the Securities Act and the Investment
Company Act; and volunteers submitting tagged exhibits to that form
also could face potential registration statement liability under the
Securities Act. As a result, we propose to extend the liability
protection under the voluntary program to include Section 11 of the
Securities Act.\59\ Specifically, we propose to amend rule 402(a) to
provide that tagged exhibits are not deemed filed for purposes of
Section 11 or otherwise subject to the liabilities of that section. In
addition, we propose to amend rule 402(a) to state explicitly that
tagged exhibits are not part of any registration statement to which
they relate.\60\ We will continue to caution users on the Commission's
Web site that documents submitted under the voluntary program should
not be relied upon for making investment decisions, and users should
continue to rely on the company's official filing.\61\
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    \59\ In addition, the current provisions of rule 402(a) would
apply to tagged risk/return summary information. In particular, a
tagged exhibit on Form N-1A would not be deemed incorporated by
reference into another filing, regardless of whether the tagged
exhibit is an exhibit to a document otherwise incorporated by
reference into another filing. Rule 402(a)(2) under Regulation S-T
[17 CFR 232.402(a)(2)]. All other liability and antifraud provisions
of the Securities Act, Exchange Act, and Investment Company Act
would apply. Rule 402(a)(3) under Regulation S-T [17 CFR
232.402(a)(3)]. For example, material misstatements or omissions in
a tagged submission would continue to be subject to liability under
Section 10(b) [15 U.S.C. 78j(b)] and rule 10b-5 [17 CFR 240.10b-5]
under the Exchange Act.
    \60\ Section 11 of the Securities Act applies to ``any part of
the registration statement, when such part became effective.'' The
Commission takes a similar approach with unofficial PDF copies
contained in electronic submissions. See Rule 104(d) of Regulation
S-T [17 CFR 232.104(d)]. Similar to the other protections in the
current voluntary program, Section 11 liability relief, under the
proposed rules, would not extend to the information the official
filing contains.
    \61\ See supra note 20.
---------------------------------------------------------------------------

    We do not propose to modify the provision that affords volunteers
general relief from liability under the federal securities laws to the
extent that the information in the corresponding portion of the
official EDGAR filing was not materially false or misleading.\62\ That
provision includes liability protections under the Securities Act, and
it would apply to tagged documents submitted as exhibits on Form N-1A.
---------------------------------------------------------------------------

    \62\ Rule 402(b). We are, however, proposing technical
amendments to rule 402(b) to replace each reference to ``Item 401''
with ``Rule 401.'' Proposed rule 402(b).
---------------------------------------------------------------------------

    We request comment on the proposed liability protections for tagged
risk/return summary information.
     Is it necessary or appropriate to extend liability
protection to Section 11 of the Securities Act? Should we modify the
proposed liability provisions in any way?
     Should the tagged risk/return summary information be
considered filed or furnished for purposes of the voluntary program?
Should the tagged risk/return summary documents be deemed not to be
part of any registration statement to which they relate?
     With regard to risk/return summary submissions, are the
proposed liability provisions sufficient to protect volunteers and to
encourage participation in the voluntary program? To encourage
participation in the voluntary program, should liability protections be
increased beyond those proposed? Would investors have sufficient
protection under the proposed amendments? For the protection of
investors, should liability protections be decreased from those
proposed?

D. The Risk/Return Summary Taxonomy and Software Tools

    As discussed above, the taxonomy to tag the risk/return summary
information is being developed by the Investment Company Institute. The
ICI has released the draft risk/return summary taxonomy for public
review and comment, and we expect that the ICI will submit the taxonomy
to XBRL US, Inc., for evaluation and approval in accordance with their
procedures.\63\ In light of the purpose of the voluntary program, which
is to test and evaluate tagging technology, we anticipate permitting
mutual funds to submit documents containing risk/return summary
information that is tagged using the ICI's taxonomy prior to final
approval of the taxonomy by XBRL US, Inc.
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    \63\ XBRL US, Inc., represents the United States to XBRL
International. XBRL US, Inc., is responsible for organizing and
sponsoring taxonomies from the United States, including the main
accounting standards for United States business reporting.
---------------------------------------------------------------------------

    Commercial off-the-shelf products that provide means to view tagged
information in a rendered, or human readable, format and to compare or
analyze tagged information are available. We will assess whether to
provide such software tools on our Web site for use with risk/return
summary information. For example, the Commission Web site currently
provides access to a prototype XBRL Web application that converts
tagged data received in the current voluntary program into rendered
format.\64\ If we do provide rendering or analysis tools, we intend to
include appropriate cautionary language to the effect that investors
should rely only on the information in the official version of a filing
and not on the tagged documents submitted as part of the voluntary
program in making investment decisions. While we may decide to proceed
with the expansion of the voluntary program without providing rendering
or analysis tools, we will continue to evaluate the use of such tools
to aid the investing public.
---------------------------------------------------------------------------

    \64\ See ``Interactive Financial Report Viewer--Preview
Release'' Web page on the Commission Web site, available at: http://www.sec.gov/spotlight/xbrl/xbrlwebapp.htm_____________________________________-

    We request comment on the proposed use of the ICI's risk/return
summary taxonomy and the need for the development of rendering and
other tools.
     Is the taxonomy for risk/return summary information
created by the ICI sufficiently developed that we should permit its use
in the voluntary program? If not, explain what changes or procedural
steps are needed prior to use. What specific criteria should be applied
to determine whether the risk/return summary taxonomy is sufficiently
developed?
     Is there anything related to the process for developing
and approving the risk/return summary taxonomy that should affect its
use or otherwise raise concerns?
     The process for approving a taxonomy as XBRL includes
testing and technical modification. Should the Commission permit use of
a risk/return summary taxonomy in the voluntary program that has not
been acknowledged or approved as XBRL?
     A tagged submission that a volunteer creates can adhere to
either a standard taxonomy or a standard taxonomy with extensions.
Extensions to a standard taxonomy are additional tags defined by a
particular user that further refine the tags contained in the standard
taxonomy. We expect that mutual funds will be permitted to submit
extensions to the standard risk/return summary taxonomy. Given the
narrative format of much risk/return summary information, does tagging
of this information raise particular problems with regard to extensions
or other facets of data tagging? For what purposes would mutual funds
want or need to make use of extensions? Are there sufficient software
tools available to develop extensions to the risk/return summary
taxonomy, if necessary? To what extent would the use of extensions
reduce the comparability among risk/return summary information that is
tagged? Are there any reasons why the use of extensions would be
inappropriate with regard to risk/return summary information?
     What are the advantages and disadvantages of the
Commission providing on its Web site tools to render

the tagged risk/return summary information in human readable form or to
permit users to analyze and compare tagged risk/return summary
information submitted by different mutual funds? If we were to provide
a rendering tool, what, if any, liability or other concerns would be
raised by the fact that the presentation would be different from the
risk/return summary information as presented in a registrant's official
prospectus? What, if any, liability or other concerns would analytical
or comparison tools raise? What, if any, disclaimers would be necessary
to address any liability concerns related to rendering, analytical, or
comparison tools? If we were to provide a rendering tool, would it
hinder the ability of a volunteer to present its tagged risk/return
summary information in as much detail as, and in a manner substantially
similar to, its official filing? If we do not provide rendering,
analytical, or comparison tools, would it hinder participation in the
voluntary program or limit our ability to explore the usefulness of
tagged risk/return summary information?

E. Effective Date

    If we adopt the proposed amendments, we expect the effective date
to be thirty days after publication of the adopting release in the
Federal Register. The Commission requests comment on this proposed
effective date.

III. General Request for Comments

    We request comment not only on the specific issues we discuss in
this release, but on any other approaches or issues that we should
consider in connection with the proposed amendments. We seek comment
from any interested persons, including those required to file
information with us on the EDGAR system, as well as investors,
disseminators of EDGAR data, industry analysts, EDGAR filing agents,
and any other members of the public.

IV. Paperwork Reduction Act

    The proposed rule and form amendments contain ``collection of
information'' requirements within the meaning of the Paperwork
Reduction Act of 1995 (``PRA'').\65\ We are submitting the proposed
collection of information to the Office of Management and Budget
(``OMB'') for review in accordance with 44 U.S.C. 3507(d) and 5 CFR
1320.11. Provision of information under the proposed amendments would
be voluntary and would not be kept confidential. An agency may not
conduct or sponsor, and a person is not required to respond to, an
information collection unless it displays a currently valid OMB control
number.
---------------------------------------------------------------------------

    \65\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    The title for the collection of information is ``Voluntary XBRL-
Related Documents'' (OMB Control No. 3235-0611). The proposed
amendments would extend the current interactive data voluntary
reporting program to enable mutual funds voluntarily to submit tagged
information contained in the risk/return summary section of their
prospectuses on EDGAR as exhibits to Form N-1A filings.

A. Reporting and Cost Burden Estimate

1. The Voluntary Program
    We are proposing to increase the burden associated with the
existing collection of information for Voluntary XBRL-Related Documents
to reflect the proposed amendments, which would extend the current
interactive data voluntary reporting program to enable mutual funds
voluntarily to submit tagged information contained in the risk/return
summary section of their prospectuses on EDGAR as exhibits to Form N-1A
filings. The proposed expansion of the voluntary program would be open
to any mutual fund choosing to participate. We estimate that 10% of the
545 fund complexes that have mutual funds, or 55 fund complexes, would
each submit documents containing tagged risk/return summary information
for one mutual fund.\66\ This estimate is higher than the number of
mutual funds participating in the current voluntary program. However,
we believe that additional mutual funds will participate in the
proposed expanded voluntary program.\67\
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    \66\ In the case of a mutual fund with multiple series, our
estimate treats each series as a separate mutual fund.
    \67\ The ICI has stated that it will launch an educational
effort to encourage mutual funds to use the risk/return summary
taxonomy to tag the information in their EDGAR filings. ICI Details
Project to Extend XBRL to Key Investor Information, Investment
Company Institute Press Release, June 12, 2006, available at: http://www.ici.org/statements/nr/06_news_xbrl.html#TopOfPage
.

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

    Submission of tagged risk/return summary information would not
directly affect the burden of preparing the mutual funds' registration
statements or the registrants' official EDGAR filings. In order to
provide tagged risk/return summary information, a participating mutual
fund would have to tag the risk/return summary section of its
prospectus using the risk/return summary taxonomy and potentially
develop taxonomy extensions and would submit an exhibit to its filing.
Based on our previous estimates and our experience with registrants who
have submitted tagged financial information in the current voluntary
program, we estimate that the initial creation of tagged documents
containing risk/return summary information would require, on average,
approximately 110 burden hours per mutual fund,\68\ and the creation of
such tagged documents in subsequent years would require an average 10
burden hours per mutual fund.\69\ Because the PRA estimates represent
the average burden over a three-year period, we estimate the average
hour burden for the submission of tagged documents containing risk/
return summary information for one mutual fund to be approximately 43
hours.\70\
---------------------------------------------------------------------------

    \68\ In the current voluntary program, we estimated that an
initial set of submissions would require an average of 130 burden
hours, 75% of which (or 97.5 hours) represents the internal burden
hour estimate. See XBRL Adopting Release, supra note 13, at 70 FR
6563; XBRL Proposing Release, supra note 13, 69 FR at 59101. Based
upon our experience with filers who have submitted tagged financial
information in the current voluntary program, we believe that this
burden estimate for submitting an initial set of submissions may
have been too high. See, e.g., Indra K. Nooyi, Chief Executive
Officer, PepsiCo, Inc., October 3 Roundtable Webcast, supra note 25
(initial submission in voluntary program required approximately 60
to 80 total labor hours); John Stantial, Director of Financial
Reporting, United Technologies Corporation, June 12 Roundtable
Transcript, supra note 25, at 160 (initial submission in voluntary
program required about 80 hours of effort). We, therefore, estimate
that the initial creation of tagged documents containing risk/return
summary information would require, on average, approximately 110
burden hours per mutual fund, 75% of which (or 82.5 hours)
represents the internal burden hour estimate. These estimates more
closely approximate the experience of filers in the current
voluntary program.
    \69\ In the current voluntary program, we estimated that each
set of submissions, after the initial set, would take 10 burden
hours. See XBRL Adopting Release, supra note 13, at 70 FR 6563; XBRL
Proposing Release, Supra note 13, 69 FR at 59101. We continue to
believe that this estimate is appropriate.
    \70\ (110 hours in the first year + 10 hours in the second year
+ 10 hours in the third year) / 3 years = 43 hours. While the PRA
requires an estimate based on a hypothetical three years of
participation, a registrant, as noted earlier, could participate in
the expanded voluntary program by submitting tagged risk/return
summary information over a shorter period or even just once as the
registrant chooses.
---------------------------------------------------------------------------

    Based on the estimates of 55 participants submitting tagged
documents containing risk/return summary information for one mutual
fund per year and incurring 43 hours per submission we estimate that,
in the aggregate, the industry would incur an additional 2,365 burden
hours associated with the proposed amendments.\71\ We further estimate
that 75% of this burden increase, or

approximately 1,774 hours, would be borne internally by the mutual fund
complex. We estimate that this internal burden increase converted to
dollars would amount to approximately $384,958.\72\
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    \71\ 55 documents per year x 43 hours per submission = 2,365
hours.
    \72\ This cost increase is estimated by multiplying the increase
in annual internal hour burden (1,774) by the estimated hourly wage
rate of $217.00. The estimated wage figure is based on published
rates for compliance attorneys and programmer analysts outside New
York City, modified to account for an 1800-hour work-year and
multiplied by 5.35 to account for bonuses, firm size, employee
benefits, and overhead, yielding effective hourly rates of $271 and
$199, respectively. See Securities Industry Association, Report on
Management & Professional Earnings in the Securities Industry 2005
(Sept. 2005) (``SIA Report''). The estimated wage rate was further
based on the estimate that compliance attorneys would account for
one quarter of the hours worked and senior system analysts would
account for the remaining three quarters, resulting in a weighted
wage rate of $217.00 (($271 x .25) + ($199 x .75)).
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    We also estimate that 25% of the burden, or approximately 591
hours, would be outsourced to external professionals and consultants
retained by the mutual fund complex at an average cost of $266.25 per
hour for a total annual increase of approximately $157,354.\73\ In
addition, it is our understanding that many participants would also
have annual software licensing costs. We estimate that the cost of
licensing software would be $333 per participant per year, for a total
annual increase of $18,315.\74\ Altogether the total annual increase in
external costs related to the proposed amendment would be $175,669.\75
\
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    \73\ 591 hours x $266.25 per hour = $157,354. The estimated wage
figure is based on published rates for attorneys and senior
programmers outside New York City, modified to account for an 1800-
hour work-year and multiplied by 5.35 to account for bonuses, firm
size, employee benefits, and overhead, yielding effective hourly
rates of $312 and $251, respectively. See SIA Report, supra note 72.
The estimated wage rate was further based on the estimate that
attorneys would account for one quarter of the hours worked and
senior programmers would account for the remaining three quarters,
resulting in a weighted wage rate of $266.25 (($312 x .25) + ($251 x
.75)).
    \74\ $333 per participant x 55 participants = $18,315. The
estimated annual cost of the software comes from our previous
voluntary program estimate PRA. See XBRL Adopting Release, supra
note 13, at 70 FR 6563 and n. 113 That estimate was based on our
discussions with software providers and others familiar with XBRL.
We estimated that the cost of licensing software would range from
$200 to $3,000 each year, with the majority of companies licensing
less complex software in the $200 to $500 range. We set our software
cost estimate at $500, which is the highest cost for the simpler
XBRL software license, and we assumed that the first year license
fee would be waived (based upon our understanding that software
providers indicated that they would provide these products for free
in the initial stages of the voluntary program). Because the PRA
estimates represent the average burden over a three-year period, we
estimated the average burden for software license costs to be $333
per year. Id.
    \75\ This annual total consists of $157,354 in outside
professional costs plus $18,315 in software costs.
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    Our cost estimates are intended to reflect both initial and ongoing
costs over a three-year period. In calculating these costs, we have
tried to take into account, among other things, the current state of
reporting process automation, automation that likely would be
introduced in connection with the initial cost incurred, and the
efficiencies that likely would be realized over the course of three
years.
2. Regulation S-T
    Regulation S-T (OMB Control No. 3235-0424) specifies the
requirements that govern the electronic submission of documents. The
proposed amendments would revise rules under Regulation S-T, but the
associated increase in burden is reflected in the ``Voluntary XBRL-
Related Documents'' collection of information as described above.

B. Request for Comments

    We request comment to evaluate the accuracy of our estimates
pursuant to 44 U.S.C. 3506(c)(2)(B) and solicit comments with regard
to:
     Whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
     Whether our estimate of the burden of the proposed
collection of information is accurate;
     Whether there are ways to enhance the quality, utility,
and clarity of the information to be collected; and
     Whether there are ways to minimize the burden of
collection of information on those who are to respond, including
through the use of automated collection techniques or other forms of
information technology.
    Any member of the public may direct to the Commission any comments
concerning the accuracy of these cost and burden estimates and any
suggestions for reducing them. Persons who desire to submit comments on
the collection of information requirements should direct their comments
to the OMB, Attention: Desk Officer for the Securities and Exchange
Commission, Office of Information and Regulatory Affairs, Washington,
DC 20503, and send a copy of the comments to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549, with reference to File No. S7-05-07. Requests for
materials submitted to OMB by the Commission with regard to this
collection of information should be in writing, refer to File No. S7-
05-07, and be submitted to the Securities and Exchange Commission,
Records Management, Office of Filings and Information Services, 100 F
Street, NE., Washington, DC 20549. Because OMB is required to make a
decision concerning the collection of information between 30 and 60
days after publication, your comments are best assured of having their
full effect if OMB receives them within 30 days of publication.

V. Cost/Benefit Analysis

    The Commission is sensitive to the costs and benefits imposed by
its rules. The goal of the voluntary program is to increase EDGAR's
efficiency and utility and to enhance the usefulness to investors of
the information collected through EDGAR. In order to evaluate data
tagging further, we have proposed amendments to extend the current
interactive data voluntary reporting program to enable mutual funds
voluntarily to submit tagged information contained in the risk/return
summary section of their prospectuses on EDGAR as exhibits to Form N-1A
filings.

A. Benefits

    We believe that tagged information may allow more efficient and
effective retrieval, research, and analysis of company information
through automated means. The proposed expansion of the voluntary
program would assist us in assessing whether using interactive data
tags enhances users' ability to analyze and compare mutual fund risk/
return summary information included in mutual funds' filings with the
Commission. The proposed expansion of the voluntary program to include
narrative, non-financial information, such as that contained in the
risk/return summary, also would facilitate our ability to assess
further the technical requirements of processing tagged documents using
EDGAR.
    Currently, a number of companies use computers and data entry staff
to mine risk/return summary information provided by mutual funds on
EDGAR in order to populate databases that are used to package
information for sale to analysts, funds, investors, and others.
Permitting funds to tag risk/return summary information in Commission
filings would aid this data-mining process in that it would identify
points of data at the source, which could reduce the cost to populate
databases and improve the accuracy of that data. Additionally, the
expanded voluntary program may benefit funds and the

public by permitting experimentation with data tagged using the risk/
return summary taxonomy.
    In the future, the availability of potentially more accurate tagged
information about mutual funds could also reduce the cost of research
and analysis and create new opportunities for companies that compile,
provide, and analyze data to produce more value added services.
Enhanced access to tagged information also has the potential to allow
retail investors (or financial advisers assisting such investors) to
perform more personalized and sophisticated analyses and comparisons of
mutual funds, which could result in investors making better informed
investment decisions, and therefore in a more efficient distribution of
assets by investors among different funds. This may, in turn, also
contribute to increased competition among mutual funds and result in a
more efficient allocation of resources among competing investment
products. Although it is not possible to quantify precisely the
beneficial effects of more efficient allocation of investors' assets
and increased competition, they may be significant, given the size of
the mutual fund industry.

B. Costs

    The proposed expansion of the voluntary program would lead to some
additional costs for funds choosing to submit tagged documents
containing risk/return summary information as exhibits to their Form N-
1A filings. For purposes of the PRA, we estimated that the increase in
annual internal burden hours to the industry would be 1,774 hours,
which would amount to approximately $384,958 and that the increase in
annual external costs would amount to approximately $175,669 for a
total estimated increase of $560,627 on an annual basis.\76\
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    \76\ See supra Section IV.A.1.
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    We based these cost estimates upon, among other things, experience
with filers who have submitted tagged financial information in the
current voluntary program.\77\ Due to the ongoing nature of the project
to develop the risk/return summary taxonomy, however, we have limited
data to quantify the cost of implementing the use of interactive data
tags applied to risk/return summary information, and we seek comments
and supporting data on our estimates with regard to the proposed
amendments. In the future, there may be additional costs to current
users of EDGAR data. For example, companies that currently provide
tagging and dissemination of EDGAR data may experience decreased demand
for their services. These entities have developed certain products and
services based on data in EDGAR; many entities disseminate, repackage,
analyze, and sell the information. Allowing mutual funds to submit
tagged risk/return summary information, even voluntarily, may have an
impact on entities providing EDGAR-based services and products. Because
the Commission does not regulate all these entities, it is currently
not feasible to accurately estimate the number or size of these
potentially affected entities. The limited, voluntary nature of the
program will help the Commission assess the effect, if any, on these
entities. Additionally, the availability of mutual fund tagged data on
EDGAR may provide these companies with alternative business
opportunities.
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    \77\ See supra note 68.
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C. Request for Comments

    We request comment on all aspects of this cost-benefit analysis,
including identification of any additional costs or benefits of, or
suggested alternatives to, the proposed rule and form amendments.
Commenters are requested to provide empirical data and other factual
support for their views to the extent possible.

VI. Promotion of Efficiency, Competition, and Capital Formation

    Section 2(c) of the Investment Company Act \78\ and section 2(b) of
the Securities Act \79\ require the Commission, when engaging in
rulemaking that requires it to consider or determine whether an action
is necessary or appropriate in the public interest, to consider, in
addition to the protection of investors, whether the action will
promote efficiency, competition, and capital formation.
---------------------------------------------------------------------------

    \78\ 15 U.S.C. 80a-2(c).
    \79\ 15 U.S.C. 77(b).
---------------------------------------------------------------------------

    The proposed amendments would extend the current interactive data
voluntary reporting program to enable mutual funds voluntarily to
submit tagged information contained in the risk/return summary section
of their prospectuses on EDGAR as exhibits to Form N-1A filings. The
expansion of the voluntary program is intended to help us evaluate the
usefulness to investors, third-party analysts, mutual funds, the
Commission, and the marketplace of data tagging and, in particular, of
tagging mutual fund information. Because compliance with the proposed
amendments would be voluntary, the Commission estimates that the impact
of the proposal would be limited. However, because the tagging of risk/
return summary information has the potential to facilitate analysis of
that information, we believe that the proposed amendments could promote
efficiency by allowing us and others to gain experience with tagged
mutual fund information in Commission filings.
    Further, tagging of the risk/return summary information has the
potential to help streamline the delivery of mutual fund information,
and provide investors and others with improved tools to compare funds
based upon, among other things, costs, investment objectives,
strategies, and risks. We believe that the potential to streamline the
delivery of mutual fund information and to provide investors and others
with improved mutual fund comparison tools could promote efficiency and
competition through more efficient allocation of investments by
investors and more efficient allocation of assets among competing
funds. In the future, companies that currently provide tagging and
dissemination of EDGAR data may experience decreased demand for their
services. The availability of mutual fund tagged data on EDGAR,
however, may provide these companies with alternative business
opportunities. We do not anticipate that the proposed amendments would
have a significant impact on capital formation. Finally, because the
proposals are designed to permit mutual funds to provide information in
a format that we believe would be more useful to investors, we believe
that the proposed amendments are appropriate in the public interest and
for the protection of investors.
    We request comment on whether the proposed amendments, if adopted,
would promote efficiency, competition, and capital formation.
Commenters are requested to provide empirical data and other factual
support for their views if possible.

VII. Initial Regulatory Flexibility Analysis

    We prepared this Initial Regulatory Flexibility Analysis (``IRFA'')
in accordance with the Regulatory Flexibility Act.\80\ The proposed
amendments would extend the current interactive data voluntary
reporting program to enable mutual funds voluntarily to submit tagged
information contained in the risk/return summary section of their
prospectuses on EDGAR as exhibits to Form N-1A filings.
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    \80\ 5 U.S.C. 603 et seq.
---------------------------------------------------------------------------

A. Reasons for, and Objectives of, the Proposals

    The purpose of the proposed amendments is to help us evaluate the

usefulness to investors, third-party analysts, mutual funds, the
Commission, and the marketplace of data tagging and, in particular, of
tagging mutual fund information. We believe the proposed expanded
voluntary program would enable us to further study the extent to which
interactive data tags enhance the comparability of that data, the
usefulness of data tags for dissemination, and our staff's ability to
review and assess the accuracy and adequacy of that data. The proposed
expanded voluntary program would also help us assess the effect of
interactive data tags on the quality and transparency of risk/return
summary information, as well as the compatibility of data tagging with
the Commission's disclosure requirements.
    More specifically, we believe that the proposed expanded voluntary
program would better enable us to study the extent to which interactive
data enhances the:
     Search capability of the EDGAR database to allow more
efficient and effective extraction and analysis of specific data,
     Capability to perform comparisons among mutual funds, and
     Ability to perform analyses of mutual fund data and
whether it would reduce the resources needed for data analysis.

In addition, we believe the proposed expanded voluntary program would
enhance our ability to evaluate the:
     Impact on the staff's ability to review filings on a more
timely and efficient basis,
     Use of tagged data for risk assessment and surveillance
procedures, and
     Compatibility of interactive data with reporting quality,
transparency, and other Commission reporting requirements.

B. Legal Basis

    We are proposing rule and form amendments under the authority set
forth in Sections 5, 6, 7, 10, 19(a), and 28 of the Securities Act and
Sections 6(c), 8, 24(a), 30, and 38 of the Investment Company Act.

C. Small Entities Subject to the Proposed Rules

    The proposed expansion of the voluntary program may have an effect
on mutual fund participants in the voluntary program. Under Rule 0-10
under the Investment Company Act, an investment company is a small
entity if it, together with other investment companies in the same
group of related investment companies, has net assets of $50 million or
less as of the end of its most recent fiscal year.\81\ We estimate that
there are approximately 131 mutual funds that meet this definition. A
smaller subset of those issuers may voluntarily submit tagged risk/
return summary information under the voluntary program, but, because
submitting risk/return summary information would be voluntary, we
anticipate that only complexes with sufficient resources would elect to
participate. To date, no small entity mutual funds have elected to
participate in the current voluntary program.
---------------------------------------------------------------------------

    \81\ 17 CFR 270.0-10.
---------------------------------------------------------------------------

D. Reporting, Recordkeeping, and Other Compliance Requirements

    The voluntary program is designed to assist us in assessing the
feasibility of using interactive data on a broader basis. Experience
with the current voluntary program indicates that the cost of
participating in the expanded program, the associated burden on the
EDGAR system, and the possible effect of the expanded voluntary program
on those entities that use the EDGAR data would be minimal.
Nevertheless, the impact of the proposed amendments remains somewhat
speculative at this point.
    No registrant would be required to submit tagged documents under
the proposed extension to the voluntary program. The submission of
tagged risk/return summary information would require a participating
mutual fund to tag the risk/return summary section of its prospectus
using the risk/return summary taxonomy and potentially develop
extensions and to submit exhibits to its filing. Volunteers may also
need to purchase software or retain a consultant to assist in tagging
data. For purposes of the PRA, we estimated that each volunteer,
including small entities, would incur approximately 43 burden hours and
$333 in software costs annually.

E. Duplicative, Overlapping, or Conflicting Federal Rules

    We believe that there are no rules that duplicate, overlap, or
conflict with the proposals.

F. Agency Action to Minimize the Effect on Small Entities

    The Regulatory Flexibility Act directs us to consider significant
alternatives that would accomplish the stated objective, while
minimizing any significant adverse impact on small entities. The
purpose of the proposed amendments is to help us evaluate the
usefulness to investors, third-party analysts, mutual funds, the
Commission, and the marketplace of data tagging and, in particular, of
tagging mutual fund information. Submitting documents containing tagged
risk/return summary information would be entirely voluntary. We have
considered different or simpler procedures for small entities,
including:
     The establishment of different compliance or reporting
requirements or timetables;
     The clarification, consolidation, or simplification of the
proposed requirements;
     The use of performance rather than design standards; and
     Exemption from coverage.
    For tagged data to provide benefits such as ready comparability,
however, the data tagging system cannot have alternative procedures.
Similarly, in order to achieve the benefits of interactive data
tagging, use of a single data tagging technology is necessary. If we
determine to require data tagging in the future, we will look to the
results of the voluntary program, including those of the proposed
expansion of the program to risk/return summary information, to find
alternatives to minimize any burden on small entities. We solicit
comment on how the proposals could be modified to minimize the effect
on small entities.

G. Request for Comments

    We encourage the submission of comments with respect to any aspect
of this Initial Regulatory Flexibility Analysis. In particular, we
request comment on the number of small entities that would be affected
by the proposals; the existence or nature of the potential effect of
the proposals on small entities as discussed in the analysis; how to
quantify the effect of the proposal; and how different procedures, if
necessary, could be provided for small entities while remaining
consistent with our goal to assess tagged data. We ask commenters to
describe the nature of any effect and provide empirical data and other
factual support for their views, if possible. These comments will be
considered in preparing the Final Regulatory Flexibility Analysis, if
the proposals are adopted, and will be placed in the same public file
as comments on the proposal.

VIII. Consideration of Impact on the Economy

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of

1996,\82\ a rule is ``major'' if it results or is likely to result in:
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    \82\ Pub. L. 104-121, Title II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------

     An annual effect on the economy of $100 million or more;
     A major increase in costs or prices for consumers or
individual industries; or
     Significant adverse effects on competition, investment, or
innovation.
    The Commission requests comment on the potential impact of the
proposed amendments on the U.S. economy on an annual basis. Commenters
are requested to provide empirical data to support their views.

IX. Statutory Authority

    The Commission is proposing the rule amendments outlined above
under Sections 5, 6, 7, 10, 19(a), and 28 of the Securities Act [15
U.S.C. 77e, 77f, 77g, 77j, 77s(a), and 77z-3] and Sections 6(c), 8,
24(a), 30, and 38 of the Investment Company Act [15 U.S.C. 80a-6(c),
80a-8, 80a-24(a), 80a-29, and 80a-37].

List of Subjects

17 CFR Parts 232 and 239

    Reporting and recordkeeping requirements, Securities.

17 CFR Parts 270 and 274

    Investment Companies, Reporting and recordkeeping requirements,
Securities.

Text of Proposed Rule and Form Amendments

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

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

    1. The general authority citation for Part 232 is revised to read
as follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77z-3,
77sss(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 78ll, 80a-6(c),
80a-8, 80a-29, 80a-30, 80a-37, and 7201 et seq.; and 18 U.S.C. 1350.
* * * * *
    2. Amend Sec.  232.401 by:
    a. Revising the first sentence of paragraph (a);
    b. Removing the word ``or'' at the end of paragraph (b)(1)(ii);
    c. Removing the period at the end of paragraph (b)(1)(iii) and
adding in its place ``; or'';
    d. Adding new paragraph (b)(1)(iv);
    e. Revising paragraph (d)(1)(i); and
    f. Removing the term ``or 20-F'' and in its place adding ``, 20-F
or N-1A (Sec. Sec.  239.15A and 274.11A of this chapter)'' in paragraph
(d)(2)(i).
    The addition and revisions read as follows:

Sec.  232.401  XBRL-Related Document Submissions.

    (a) An electronic filer that participates in the voluntary XBRL
(eXtensible Business Reporting Language) program may submit XBRL-
Related Documents (Sec.  232.11) in electronic format as an exhibit to:
The filing (other than a Form N-1A filing) to which the XBRL-Related
Documents relate; an amendment to such filing, but, in the case of a
Form N-1A filing, an amendment made only after the effective date of
the Form N-1A filing to which the XBRL-Related Documents relate; or if
the electronic filer is eligible to file a Form 8-K (Sec.  249.308 of
this chapter) or a Form 6-K (Sec.  249.306 of this chapter), a Form 8-K
or a Form 6-K, as applicable, that references the filing to which the
XBRL-Related Documents relate if such Form 8-K or Form 6-K is submitted
no earlier than the date of that filing. * * *
    (b) * * *
    (1) * * *
    (iv) The risk/return summary information set forth in Items 2 and 3
of Form N-1A (Sec.  239.15A and Sec.  274.11A of this chapter).
* * * * *
    (d) * * *
    (1) * * *
    (i) That the financial information contained in the XBRL-Related
Documents is ``unaudited'' or ``unreviewed,'' as applicable (but only
if the mandatory content contained in the XBRL-Related Documents
contains information other than risk/return summary information
submitted under paragraph (b)(1)(iv) of this section);
* * * * *
    3. Revise Sec.  232.402(a)(1) to read as set forth below, and amend
paragraph (b) by removing each reference to ``Item 401'' and adding in
its place ``Rule 401''.

Sec.  232.402  Liability for XBRL-Related Documents.

    (a) * * *
    (1) Are not deemed filed for purposes of section 11 of the
Securities Act (15 U.S.C 77k), section 18 of the Exchange Act (15
U.S.C. 78r), or section 34(b) of the Investment Company Act (15 U.S.C.
80a-33(b)), or otherwise subject to the liabilities of these sections,
and are not part of any registration statement to which they relate;
* * * * *

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

    4. The general authority citation for Part 239 is revised to read
as follows:

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

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

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

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

Sec.  270.8b-33  XBRL-Related Documents.

    A registrant that participates in the voluntary XBRL (eXtensible
Business Reporting Language) program may submit, in electronic format
as an exhibit to a filing on Form N-1A (Sec. Sec.  239.15A and 274.11A
of this chapter), Form N-CSR (Sec. Sec.  249.331 and 274.128 of this
chapter), or Form N-Q (Sec. Sec.  249.332 and 274.130 of this chapter)
to which they relate, XBRL-Related Documents (Sec.  232.11 of this
chapter). A registrant that submits XBRL-Related Documents as an
exhibit to a form must name each XBRL-Related Document ``EX 100'' as
specified in the EDGAR Filer Manual and submit the XBRL-Related
Documents in such a manner that will permit the information for each
series and class of an investment company registrant and each contract
of an insurance company separate account to be separately identified. A
registrant may submit such exhibit with, or in an amendment to, the
Form N-CSR or Form N-Q filing to which it relates, or in an amendment
to the Form N-1A filing to which it relates, in accordance with rule
401 of Regulation S-T (Sec.  232.401).

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

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

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78l, 78m,
78n, 78o(d), 80a-8, 80a-24, 80a-26, and 80a-29, unless otherwise
noted.
* * * * *
    8. Amend General Instruction B.4.(b) of Form N-1A (referenced in
Sec. Sec.  239.15A and 274.11A) by revising ``8b-32 [17

CFR 270.8b-1-270.8b-32]'' to read ``8b-33 [17 CFR 270.8b-1-270.8b-
33]''.

    Note: The text of Form N-1A will not appear in the Code of
Federal Regulations.

    Dated: February 6, 2007.

    By the Commission.
Nancy M. Morris,
Secretary.
[FR Doc. E7-2254 Filed 2-9-07; 8:45 am]

BILLING CODE 8010-01-P