[Federal Register: February 19, 2009 (Volume 74, Number 32)]
[Rules and Regulations]
[Page 7747-7776]
[DOCID:fr19fe09-12]

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Part II

Securities and Exchange Commission

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17 CFR Parts 230, 232, 239, and 274

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

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 230, 232, 239, and 274

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

Interactive Data for Mutual Fund Risk/Return Summary

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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

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

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

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

Executive Summary

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

Executive Summary

    The principal elements of the rule amendments we are adopting today
are as follows:
     Open-end management investment companies (``mutual
funds'') \10\ must submit to the Commission a new exhibit with their
risk/return summary information in interactive data format, beginning
with initial registration statements, and post-effective amendments
that are annual updates to effective registration statements that
become effective after January 1, 2011.\11\
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    \10\ An open-end management investment company is an investment
company, other than a unit investment trust or face-amount
certificate company, that offers for sale or has outstanding any
redeemable security of which it is the issuer. See Sections 4 and
5(a)(1) of the Investment Company Act [15 U.S.C. 80a-4 and 80a-
5(a)(1)].
    \11\ We have adjusted the compliance date to provide mutual
funds sufficient time to become familiar with interactive data. See
infra Section II.H. Interactive data will be required as an exhibit
to a registration statement or post-effective amendment thereto that
contains risk/return summary information and to any form of
prospectus filed pursuant to rule 497(c) or (e) under the Securities
Act [17 CFR 230.497(c) or (e)] that contains risk/return summary
information that varies from the registration statement. Interactive
data will not be required as an exhibit to a post-effective
amendment that does not contain risk/return summary information or
to a form of prospectus filed pursuant to rule 497(c) or (e) that
does not contain risk/return summary information that varies from
the registration statement.
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     An interactive data file submitted with a registration
statement must be filed as a post-effective amendment under rule 485(b)
under the Securities Act \12\ and must be filed after effectiveness of
the related filing, but no later than 15 business days after the
effective date of the related filing. An interactive data file required
to be submitted with a form of prospectus filed pursuant to rule 497(c)
or (e) under the Securities Act may be submitted with the filing or
subsequent thereto, but no later than 15 business days after the filing
made pursuant to rule 497.
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    \12\ A post-effective amendment filed under rule 485(b) under
the Securities Act [17 CFR 230.485(b)] may become effective
immediately upon filing. A post-effective amendment may only be
filed under rule 485(b) if it is filed for one or more specified
purposes, including to make non-material changes to the registration
statement.
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     Risk/return summary information in interactive data format
must be provided as an exhibit identified in General Instruction
C.3.(g).(iv) of Form N-1A.\13\
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    \13\ Form N-1A is the form used by mutual funds to register
under the Investment Company Act and to offer securities under the
Securities Act.
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     The rules do not alter the requirements to provide risk/
return summary information with the traditional format filings.\14\
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    \14\ When we extended the voluntary program to the mutual fund
risk/return summary, we stated in the adopting release that the
interactive data submission would be supplemental to filings and not
replace the required traditional electronic format of the
information it contains. We also said that volunteers would be
required to continue to file their traditional electronic filings.
See Part II.A. of Securities Act Release No. 8823 (July 11, 2007)
[72 FR 39290, 39292 (July 17, 2007)].
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     A mutual fund required to provide risk/return summary
information in interactive data format to the Commission also is
required to post that information in interactive data format on its Web
site not later than the end of the calendar day it submitted or was
required to submit the interactive data

exhibit to the Commission, whichever is earlier.\15\
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    \15\ The Web site posting requirement applies only to the extent
a mutual fund already maintains a Web site.
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     If a mutual fund does not submit or post interactive data
as required, the fund's ability to file post-effective amendments to
its registration statement under rule 485(b) under the Securities Act
will be automatically suspended until the fund submits and posts the
interactive data as required.
     Mutual funds providing risk/return summary information in
interactive data format are required to use the most recent list of
tags released by XBRL U.S.\16\ as required by Regulation S-T and the
EDGAR Filer Manual.\17\ Mutual funds also are required to tag a limited
number of document and entity identifier elements, such as the form
type and the fund's name. As with interactive data for the risk/return
summary, these document and entity identifier elements must be
formatted using the appropriate list of tags as required by Regulation
S-T and the EDGAR Filer Manual.
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    \16\ The appropriate list of tags for document and entity
identifier elements will be a list released by XBRL U.S., see infra
note 46, and will be required to be used by all issuers required to
submit interactive data.
    \17\ Rule 405 of Regulation S-T directly sets forth the basic
tagging requirements and indirectly sets forth the rest of the
tagging requirements through the requirement to comply with the
EDGAR Filer Manual, which is available on the Commission's Web site
at: http://www.sec.gov/info/edgar/edmanuals.htm. Consistent with
rule 405, the EDGAR Filer Manual contains the technical tagging
requirements. See Interactive Data Adopting Release, supra note 6
(adopting rule 405 of Regulation S-T). Currently, we are in the
process of updating the EDGAR Filer Manual to reflect changes in the
tagging requirements applicable to financial statements. See
Interactive Data Adopting Release, supra note 6. We anticipate that
similar updates to address revisions in the tagging requirements
applicable to fund risk/return summary information and portfolio
holdings will be finalized during 2009.
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     New rule 406T of Regulation S-T \18\ addresses the
liability for an interactive data file and provides that an interactive
data file is:
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    \18\ See Interactive Data Adopting Release, supra note 6
(adopting rule 406T of Regulation S-T).
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    [cir] Subject to the anti-fraud provisions of Section 17(a)(1) of
the Securities Act, Section 10(b) of and rule 10b-5 under the
Securities Exchange Act of 1934 (``Exchange Act''), and Section 206(1)
of the Investment Advisers Act of 1940 (``Investment Advisers Act''),
except as provided below;
    [cir'] Deemed not filed or part of a registration statement or
prospectus for purposes of Sections 11 or 12 of the Securities Act, is
deemed not filed for purposes of Section 18 of the Exchange Act or
Section 34(b) of the Investment Company Act, and otherwise is not
subject to liability under these sections;
    [cir] Deemed filed for purposes of (and, as a result, benefit from)
rule 103 of Regulation S-T; \19\ and
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    \19\ The interactive data file is deemed filed for purposes of
rule 103 of Regulation S-T [17 CFR 232.103] and, as a result, in
general, the mutual fund would not be subject to liability for
electronic transmission errors beyond its control if the mutual fund
corrects the problem through an amendment as soon as reasonably
practicable after the fund becomes aware of the problem. Interactive
data files are deemed filed for purposes of rule 103 regardless of
whether they are eligible for the modified treatment provided by
rule 406T at the time submitted. Rule 406T expressly provides that
interactive data files are deemed filed for purposes of rule 103 to
remove any negative inference that otherwise might be drawn due to
the fact that rule 406T deems interactive data files to be not filed
for other specified purposes.
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    [cir] Subject to liability for a failure to comply with rule 405 of
Regulation S-T,\20\ but shall be deemed to have complied with rule 405
and would not be subject to liability under the anti-fraud provisions
set forth above or under any other liability provision if the
electronic filer:
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    \20\ See supra note 17.
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    [dec222] Makes a good faith attempt to comply with rule 405; and
    [dec222] after the electronic filer becomes aware that the
interactive data file fails to comply with rule 405, promptly amends
the interactive data file to comply with rule 405.
     These liability provisions will apply only until October
31, 2014, and, thereafter, an interactive data file will be subject to
the same liability provisions as the related official filing.
     The voluntary program is being modified to allow for
participation by mutual funds with respect to risk/return summary
information up until January 1, 2011, but continue to permit investment
companies to participate with respect to financial statement
information thereafter. As a result, the voluntary program will
continue after the compliance date of these rule amendments for the
financial statements of investment companies that are registered under
the Investment Company Act, business development companies,\21\ and
other entities that report under the Exchange Act and prepare their
financial statements in accordance with Article 6 of Regulation S-X.
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    \21\ Business development companies are a category of closed-end
investment companies that are not required to register under the
Investment Company Act. See Section 2(a)(48) of the Investment
Company Act [15 U.S.C. 80a-2(a)(48)].
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     Registered investment companies, business development
companies, and other entities that report under the Exchange Act and
prepare their financial statements in accordance with Article 6 of
Regulation S-X are permitted to submit exhibits under the voluntary
program containing a tagged schedule of portfolio holdings without
having to submit other financial information in interactive data
format.
    We intend to monitor implementation and, if necessary, make
appropriate adjustments to the adopted amendments.

I. Introduction and Background

A. Commission Initiatives To Update the Public Disclosure Process

    Over the last several decades, developments in technology and
electronic data communication have facilitated greater transparency in
the form of easier access to, and analysis of, financial reporting and
disclosures. Technological developments also have significantly
decreased the time and cost of filing disclosure documents with us.
Most notably, in 1993 we began to require electronic filing on our
Electronic Data Gathering, Analysis, and Retrieval System
(``EDGAR'').\22\ Since then, widespread use of the Internet has vastly
decreased the time and expense of accessing disclosure filed with us.
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    \22\ In 1993, we began to require domestic issuers to file most
documents electronically. Securities Act Release No. 6977 (Feb. 23,
1993) [58 FR 14628 (Mar. 18, 1993)]. Electronic filing began with a
pilot program in 1984. Securities Act Release No. 6539 (June 27,
1984) [49 FR 28044 (July 10, 1984)].
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    We continue to update our filing standards and systems as
technologies improve, consistent with our goal to promote efficient and
transparent capital markets. Most recently, we unveiled the Interactive
Data Electronic Applications database (``IDEA''), which will initially
supplement and eventually replace EDGAR, and which is designed to take
full advantage of interactive technology in order to provide investors
with better and more useful financial disclosures.\23\ Also, since 2003
we have required electronic filing of certain ownership reports filed
on Forms 3,\24\ 4,\25\ and 5 \26\ in a format that provides interactive
data, and recently we adopted similar rules governing the filing of
Form D.\27\ In addition, recently we have encouraged, and in some cases
required, mutual funds and public reporting companies to provide

disclosures and communicate with investors using the Internet.\28\
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    \23\ See SEC Announces Successor to EDGAR Database, Securities
and Exchange Commission Press Release, Aug. 19, 2008, available at:
http://www.sec.gov/news/press/2008/2008-179.htm.
    \24\ 17 CFR 249.103 and 274.202.
    \25\ 17 CFR 249.104 and 274.203.
    \26\ 17 CFR 249.105.
    \27\ 17 CFR 239.500.
    \28\ See, e.g., Investment Company Act Release No. 28584 (Jan.
13, 2009) [74 FR 4546 (Jan. 26, 2009)] (``Summary Prospectus
Adopting Release''); Exchange Act Release No. 57172 (Jan. 18, 2008)
[73 FR 4450 (Jan. 25, 2008)]; Exchange Act Release No. 56135 (July
26, 2007) [72 FR 42222 (Aug. 1, 2007)]; Exchange Act Release No.
55146 (Jan. 22, 2007) [72 FR 4148 (Jan. 29, 2007)]; Securities Act
Release No. 8591 (July 19, 2005) [70 FR 44722 (Aug. 3, 2005)].
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    In addition, we also implemented a voluntary filer program, started
in 2005,\29\ that has allowed us to evaluate certain uses of
interactive data. The voluntary program allows companies to submit
financial statements on a supplemental basis in interactive format as
exhibits to specified filings under the Exchange Act and the Investment
Company Act. Over 100 operating companies participated in the voluntary
program. These companies span a wide range of industries and company
characteristics, and have a total market capitalization of over $2
trillion. Companies that participated in the program were still
required to file their financial statements in American Standard Code
for Information Interchange (``ASCII'') or HyperText Markup Language
(``HTML'').\30\ Four mutual fund complexes participated in the
voluntary program and have submitted financial statement information in
interactive data format.\31\
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    \29\ Securities Act Release No. 8529 (Feb. 3, 2005) [70 FR 6556
(Feb. 8, 2005)] (``Voluntary Program Adopting Release'').
    \30\ HTML is a standardized language commonly used to present
text and other information on Web sites.
    \31\ These four fund complexes made 23 submissions representing
12 mutual funds.
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    In 2007, we extended the program to enable mutual funds voluntarily
to submit in interactive data format supplemental information contained
in the risk/return summary section of their prospectuses.\32\ The risk/
return summary contains information about a fund's investment
objectives and strategies, costs, risks, and past performance.\33\
Twenty-five mutual funds from a variety of fund families have submitted
risk/return summary information in interactive data format. These funds
represent 15 fund complexes, and consist of a range of fund types,
including 14 equity funds, two balanced funds, five bond funds, and
four money market funds. The funds participating in the voluntary
program also include larger and smaller funds.\34\
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    \32\ Securities Act Release No. 8823 (July 11, 2007) [72 FR
39290 (July 17, 2007)] (``Risk/Return Voluntary Program Adopting
Release'').
    \33\ Items 2, 3, and 4 of Form N-1A.
    \34\ Based on industry assets as of September 2008, four of the
five largest fund complexes have submitted tagged risk/return
summary information as part of the voluntary filing program. Lipper-
Directors' Analytical Data, Reuters Sept. 2008. As of September
2008, the two smallest mutual funds participating in the voluntary
program had net assets of approximately $41 million and $17 million.
Id.
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    Since the establishment of the voluntary program for mutual fund
risk/return summary information, the Commission has continued its
evaluation of interactive data, including interactive data submitted by
mutual funds. The Commission's evaluation of interactive data has
included the hosting of three roundtables on the topic of interactive
data reporting,\35\ as well as the creation, in April 2008 of a viewer
that allowed investors to read, analyze, and compare the interactive
risk/return summary data submitted by mutual funds.\36\
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    \35\ See materials available at http://www.sec.gov/spotlight/
xbrl/xbrl-meetings.shtml.
    \36\ As discussed in Section I.B. infra, information in
interactive data format is intended to be processed by software
applications and is not readable by humans without a viewer.
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    Additionally, prior to launching the risk/return viewer, Commission
staff reviewed all of the interactive data files submitted to the
Commission to help ensure the accuracy of the interactive risk/return
summary data displayed on the Commission's Web site, and the staff
communicated with the filers in order to identify and correct any
technical issues with the submissions.\37\ Further, as noted below,
Commission staff also surveyed voluntary program participants for
specific data regarding the costs of preparing and submitting risk/
return summary information in interactive data, including software
costs and internal and external labor costs.\38\ Six of the
participating mutual funds responded, providing data in response to
this voluntary program questionnaire. These six respondents represent
mutual fund complexes whose assets comprise a range of approximately
.01% to 12% of all the assets of the mutual funds that will be required
to submit interactive data.\39\
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    \37\ See infra Section II.E.3. (discussing the Commission's
risk/return summary interactive data viewer).
    \38\ See Section III. below. Of the 22 mutual funds that
participated in the voluntary program at the time the Commission
proposed these amendments, nine were provided questionnaires on the
details of their cost experience, and six responses were collected
representing the cost data for ten funds.
    \39\ Based on total mutual fund assets of $10.6 trillion.
Lipper-Directors' Analytical Data, Reuters Sept. 2008.
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    In a companion release, we recently adopted rules requiring
companies, other than investment companies that are registered under
the Investment Company Act, business development companies, and other
entities that report under the Exchange Act and prepare their financial
statements in accordance with Article 6 of Regulation S-X, to submit
financial information to the Commission in interactive data format.\40\
In this release, as part of our continuing efforts to assist investors
who use Commission disclosures, as well as filers of that disclosure,
we are adopting rule amendments to require that mutual fund risk/return
summary information be provided in a format that makes the information
interactive.
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    \40\ Interactive Data Adopting Release, supra, note 6.
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B. Current Filing Technology and Interactive Data

    Companies filing electronically are required to file their
registration statements and periodic reports in ASCII or HTML
format.\41\ Also, to a limited degree, our electronic filing system
uses other formats for internal processing and document-type
identification. For example, our system uses eXtensible Markup Language
(``XML'') to process reports of beneficial ownership of equity
securities on Forms 3, 4, and 5 under Section 16(a) of the Exchange
Act.\42\
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    \41\ Rule 301 of Regulation S-T [17 CFR 232.301] requires
electronic filings to comply with the EDGAR Filer Manual, and
Section 5.2 of the EDGAR Filer Manual requires that electronic
filings be in ASCII or HTML format. Rule 104 of Regulation S-T [17
CFR 232.104] permits filers to submit voluntarily as an adjunct to
their official filings in ASCII or HTML unofficial PDF copies of
filed documents. Unless otherwise stated, we refer to filings in
ASCII or HTML as traditional format filings.
    \42\ 15 U.S.C. 78p(a).
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    Electronic formats such as HTML, XML, and XBRL are open standards
\43\ that define or ``tag'' data using standard definitions. The tags
establish a consistent structure of identity and context. This
consistent structure can be recognized and processed by a variety of
different software applications. In the case of HTML, the standardized
tags enable Web browsers to present Web sites' embedded text and
information in a predictable format. In the case of XBRL, software
applications, such as databases, financial reporting systems, and
spreadsheets, recognize and process tagged information.
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    \43\ The term ``open standard'' is generally applied to
technological specifications that are widely available to the
public, royalty-free, at minimal or no cost.
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    XBRL was derived from the XML standard. It was developed and
continues to be supported by XBRL International, a consortium of
approximately 550 organizations representing many elements of the
financial reporting community worldwide in more than 20 jurisdictions,
national and regional.

XBRL U.S., the international organization's U.S. jurisdiction
representative, is a non-profit organization \44\ that includes
companies, public accounting firms, software developers, filing agents,
data aggregators, stock exchanges, regulators, financial services
companies, and industry associations.\45\
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    \44\ XBRL U.S. is a 501(c)(6) organization. Internal Revenue
Code Section 501(c)(6) applies to ``Business leagues, chambers of
commerce, real-estate boards, boards of trade, or professional
football leagues (whether or not administering a pension fund for
football players), not organized for profit and no part of the net
earnings of which inures to the benefit of any private shareholder
or individual.'' See 26 U.S.C. 501(c)(6).
    \45\ XBRL U.S. supports efforts to promote interactive financial
and business data specific to the U.S.
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    Risk/return summary information in interactive format requires a
standard list of tags. These tags are similar to definitions in an
ordinary dictionary, and they cover a variety of concepts that can be
read and understood by software applications. For the risk/return
summary, a mutual fund will use the most recent list of tags for risk/
return summary information released by XBRL U.S.\46\ This list of tags
contains descriptive labels, authoritative references to Commission
regulations where applicable, and other elements, all of which provide
the contextual information necessary for interactive data \47\ to be
recognized and processed by software.\48\
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    \46\ Unless stated otherwise, when we refer to the ``list of
tags for risk/return summary information'' we mean the interactive
data list of tags released and maintained by XBRL U.S., including
any modifications. This list was initially developed by the
Investment Company Institute (``ICI''), which is a national
association of the U.S. investment company industry.
    \47\ The rules define the interactive data in machine-readable
format required to be submitted as the ``interactive data file,''
which will be required with every interactive data submission. See
Interactive Data Adopting Release, supra note 6 (adopting new
definitions under 17 CFR 232.11).
    \48\ For example, contextual information identifies the entity
to which it relates, usually by using the filer's Central Index Key
(``CIK'') number. A hypothetical filer converting its traditional
electronic disclosure of total annual fund operating expenses of
0.73% must create interactive data that identifies what the 0.73%
represents, total annual fund operating expenses, and that the
number is a percentage. The contextual information includes other
information as necessary; for example, the date of the prospectus to
which it relates and the series and class to which it applies.
    A mutual fund may issue multiple ``series'' of shares, each of
which is preferred over all other series in respect of assets
specifically allocated to that series. Rule 18f-2 under the
Investment Company Act [17 CFR 270.18f-2]. Each series is, in
effect, a separate investment portfolio.
    A mutual fund may issue more than one class of shares that
represent interests in the same portfolio of securities with each
class, among other things, having a different arrangement for
shareholder services or the distribution of securities, or both.
Rule 18f-3 under the Investment Company Act [17 CFR 270.18f-3].
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    The initial risk/return summary list of tags received
acknowledgement from XBRL International in June 2007,\49\ and was used
by mutual funds participating in the Commission's voluntary program.
More recently, XBRL U.S. has updated the architecture of the list of
tags for risk/return summary information and conformed the list of tags
to changes we recently adopted to the risk/return summary disclosure
requirements.\50\ The list was recently issued for public comment,\51\
and it is expected to be finalized and submitted to XBRL International
for acknowledgement by the end of January 2009. Related documents, such
as the architecture and technical guides, also are due to be released
publicly by the end of January 2009.
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    \49\ The list of tags is available on XBRL International's Web
site at: http://xbrl.org/Taxonomy/rr-summarydocument-20070516-
acknowledged.htm.
    There are two levels of XBRL tag recognition: (1)
``Acknowledgement'' is formal recognition that a list of tags
complies with XBRL specifications, including testing by a defined
set of validation tools; and (2) ``approval'' is a formal
recognition requiring more detailed quality assurance and testing,
including compliance with official XBRL guidelines for the type of
tag list under review, creation of a number of instance documents,
and an open review period after acknowledgement. For more
information regarding the XBRL tag list recognition process, see
``Taxonomy Recognition Process'' on the XBRL International Web site
available at: http://www.xbrl.org/TaxonomyRecognition/.
    \50\ See infra Section II.E.1. (discussing the list of tags for
risk/return summary information); Summary Prospectus Adopting
Release, supra note 28.
    \51\ XBRL U.S. released the updated list of tags for risk/return
summary information for public comment on October 21, 2008. The list
is available on the XBRL U.S. Web site at: http://xbrl.us/
imtaxonomies/Pages/default.aspx. See XBRL U.S. Announces Public
Review of Data Tags for Mutual Fund Risk/Return Summary and Schedule
of Investments, available on the XBRL U.S. Web site at: http://
xbrl.us/press/Pages/20081021.aspx. The comment period closed on
November 24, 2008.
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    Data tags are applied to risk/return summary information by using
commercially available software that guides a preparer to tag
information in the risk/return summary, such as line item costs in a
mutual fund's fee table, with the appropriate tags in the standard
list. This involves locating an element in the list of tags that
represents the particular disclosure that is to be tagged.
Occasionally, because mutual funds have some flexibility in preparing
the risk/return summary, particularly the narrative portions, it is
possible that a mutual fund may wish to use a non-standard disclosure
that is not included in the standard list of tags. In this situation, a
fund will create a company-specific element, called an extension.
Alternatively, a mutual fund may choose to outsource the tagging
process.
    Because mutual fund risk/return summary information in interactive
data format is intended to be processed by software applications, the
unprocessed interactive data is not readable by humans. Thus, viewers
are necessary to convert, or ``render,'' the interactive data file to
human readable format. Some viewers, for example, may be compared to
Web browsers that are used to read HTML files.
    The Commission's Web site currently provides links to viewers that
allow the public to read mutual fund and other company disclosures
submitted using interactive data. One of these viewers allows users to
view and compare mutual fund risk/return summary information, including
investment objectives and strategies, costs, risks, and past
performance, that is submitted in interactive data format.\52\ These
viewers are intended to demonstrate the capability of software to
present interactive data in human-readable form and to provide open
source software to give developers a free resource they can use as is
or build upon. As noted above, software also is able to process
interactive data so as to automate and, as a result, facilitate access
to and analysis of tagged data. In addition, we are aware of other
applications under development that may provide additional and advanced
functionality.\53\
---------------------------------------------------------------------------

    \52\ A mutual fund information viewer for the voluntary program
is available at: http://a.viewerprototype1.com/viewer.
    \53\ A list of interactive data products and service providers
is available at: http://xbrl.us/Vendors/Pages/default-expand.aspx.
---------------------------------------------------------------------------

II. Discussion

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

generally supported both the use of technology to better inform mutual
fund investors and the Commission's goal of providing risk/return
summary information in interactive data format.\55\ Most commenters,
however, stated that requiring mutual funds to provide tagged risk/
return summary information is premature.\56\ As discussed below,
commenters also raised other concerns regarding the proposal, including
concerns regarding the adequacy of the existing technology necessary to
create and submit interactive data files,\57\ what information should
be required to be tagged,\58\ the proposed compliance date,\59\ and the
potential liability of mutual funds under the federal securities laws
related to tagged risk/return summary information.\60\
---------------------------------------------------------------------------

    \54\ See comment letters of the American Bar Association
(``ABA'') (Aug. 18, 2008); James J. Angel, Ph.D, C.F.A. (``Angel'')
(Aug. 4, 2008); Gary J. Coles (``Coles'') (July 25, 2008); Committee
of Annuity Insurers (``Annuity Insurers'') (July 23, 2008);
Confluence (Aug. 1, 2008); Data Communiqu[eacute], Inc. (``Data
Communiqu[eacute]'') (July 31, 2008); Federated Investors, Inc.
(``Federated'') (Aug. 12, 2008); Robert Gilmore, C.P.A.
(``Gilmore'') (July 31, 2008); Walter C. Hamscher (``Hamscher'')
(July 31, 2008); ICI (Aug. 1, 2008); Lipper (July 29, 2008);
OppenheimerFunds, Inc. (``Oppenheimer'') (Aug. 4, 2008); Lorna A.
Schnase (``Schnase'') (July 25, 2008); Jay Starkman, C.P.A.
(``Starkman'') (July 30, 2008); T. Rowe Price Associates, Inc. (``T.
Rowe Price'') (Aug. 1, 2008); and The Vanguard Group, Inc.
(``Vanguard'') (Aug. 1, 2008). Comment letters received in response
to the Proposing Release are available at: http://www.sec.gov/
comments/s7-12-08/s71208.shtml or from our Public Reference Room at
100 F Street, NE., Washington, DC 20549.
    \55\ Twelve commenters generally supported tagging risk/return
summary information in interactive data format. See letters of ABA,
Angel, Annuity Insurers, Confluence, Data Communiqu[eacute],
Gilmore, Hamscher, ICI, Lipper, Oppenheimer, T. Rowe Price, and
Vanguard. Three commenters did not support requiring interactive
disclosure of risk/return summary data. See letters of Federated,
Schnase, and Starkman. One commenter expressed no explicit opinion
on the matter. See letter of Coles.
    \56\ See letters of ABA, Confluence, Data Communiqu[eacute],
Federated, Gilmore, ICI, Oppenheimer, Schnase, T. Rowe Price, and
Vanguard.
    \57\ See letters of Confluence, Federated, Gilmore, ICI,
Oppenheimer, Schnase, Starkman, and T. Rowe Price.
    \58\ See letters of ABA, Confluence, Data Communiqu[eacute],
Federated, and Schnase.
    \59\ See letters of Confluence, Data Communiqu[eacute],
Federated, Gilmore, ICI, Oppenheimer, Schnase, T. Rowe Price, and
Vanguard.
    \60\ See letters of ABA, Federated, ICI, Oppenheimer, and
Schnase.
---------------------------------------------------------------------------

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

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

    We are adopting, as proposed, rule amendments that require mutual
funds to submit a complete set of their risk/return summary
information, set forth in Items 2, 3, and 4 of Form N-1A,\61\ in
interactive data format.\62\ In addition, mutual funds are required to
provide document and entity identifier tags, such as the form type and
the fund's name. As was the case in the voluntary program, the new
requirement for interactive data reporting is intended to be disclosure
neutral in that we do not intend the rules to result in mutual funds
providing more, less, or different disclosure for any given disclosure
item, regardless of whether the format is ASCII, HTML, or XBRL.
---------------------------------------------------------------------------

    \61\ Recently, the Commission adopted amendments to Form N-1A,
see Summary Prospectus Adopting Release, supra note 28, under which
the risk/return summary information, formerly contained in Items 2
and 3 of Form N-1A, was reconfigured in Items 2, 3, and 4 of Form N-
1A. We apply the tagging rules to the information required by
amended Form N-1A.
    \62\ See Item 405(b)(2) of Regulation S-T.
---------------------------------------------------------------------------

    We are adopting these rule amendments because the submission of
interactive risk/return summary information at this time is an
important next step in increasing the accessibility of this information
to mutual fund investors and others. Requiring mutual funds to submit
the risk/return summary section of their prospectuses using interactive
data format will enable investors, analysts, and the Commission staff
to capture and analyze that information more quickly and at less cost
than is possible using the same information provided in a static
format. Any investor with a computer and an Internet connection will
have the ability to acquire and download interactive data that have
generally been available only to intermediaries and third-party
analysts. The interactive data rule amendments do not change disclosure
requirements under the federal securities laws and regulations, but
will add a requirement to include risk/return summary information in an
interactive data format as an exhibit. Thus, requiring that filers
provide risk/return summary information using interactive data will not
otherwise alter at all the disclosure or formatting standards of mutual
fund prospectuses. These filings will continue to be available as they
are today for those who prefer to view the traditional text-based
document.
    Interactive data can create new ways for investors, analysts, and
others to retrieve and use the information. For example, users of risk/
return summary information will be able to download cost and
performance information directly into spreadsheets, analyze it using
commercial off-the-shelf software, or use it within investment models
in other software formats. Through interactive data, what is currently
static, text-based information can be dynamically searched and
analyzed, facilitating the comparison of mutual fund cost, performance,
and other information across multiple classes of the same fund and
across the more than 8,000 mutual funds currently available.\63\
---------------------------------------------------------------------------

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

    Interactive data also provides an opportunity to automate
regulatory filings and business information processing, with the
potential to increase the speed, accuracy, and usability of mutual fund
disclosure. Such automation may eventually reduce costs. A mutual fund
that uses a standardized interactive data format at earlier stages of
its reporting cycle may reduce the need for repetitive data entry and,
therefore, the likelihood of human error. In this way, interactive data
may improve the quality of information while reducing its cost. Also,
to the extent investors currently are required to pay for access to
mutual fund risk/return summary information that has been extracted and
reformatted into an interactive data format by third-party sources, the
availability of interactive data in Commission filings may allow
investors to avoid additional costs associated with third-party
sources.
    As noted above, although most commenters generally supported the
concept of interactive disclosure of risk/return summary
information,\64\ they also asserted that this initiative is
premature.\65\ In particular, several commenters urged the Commission
to defer requiring mutual funds to submit interactive risk/return
summary information because pending Commission proposals related to a
mutual fund summary prospectus and exchange-traded funds (``ETFs'')
would change the information in the risk/return summary.\66\ Related to
those comments, commenters also asserted that: (1) The list of tags for
risk/return summary information would require updating if the proposed
changes to the risk/return summary are adopted; (2) the

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

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

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

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

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

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

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

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

    While we acknowledge that XBRL is an evolving technology, we
believe it is the appropriate interactive data format with which to
supplement ASCII and HTML. Our experience with the voluntary program,
including feedback from company, accounting, and software communities,
points to XBRL as the appropriate open standard for the purposes of
this rule.\81\ XBRL data will be compatible with a wide range of open
source and proprietary XBRL software applications. As discussed above,
many XBRL-related products exist for analysts, investors, filers, and
others to create and compare disclosures more easily, the development
process will likely be hastened by mutual fund disclosure using
interactive data.
---------------------------------------------------------------------------

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

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

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

    \82\ The Commission established CIFiR to examine the U.S.
financial reporting system, with the goals of reducing unnecessary
complexity and making information more useful and understandable for
investors. See SEC Establishes Advisory Committee to Make U.S.
Financial Reporting System More User-Friendly for Investors,
Securities and Exchange Commission Press Release, June 27, 2007,
available at: http://www.sec.gov/news/press/2007/2007-123.htm.
    CIFiR conducted open meetings on March 13-14, 2008 and May 2,
2008, in which it heard reactions from an invited panel of
participants to CIFiR's proposal regarding required filing of
financial information using interactive data. Archived Webcasts of
the meetings are available at http://sec.gov/about/offices/oca/
acifr.shtml. The panelists presented their views and engaged with
CIFiR members regarding issues relating to requiring interactive
data tagged financial statements, including tag list and
technological developments, implications for large and small public
companies, needs of investors, necessity of assurance and
verification of such tagged financial statements, and legal
implications arising from such tagging.
    \83\ See Final Report of the Advisory Committee on Improvements
to Financial Reporting to the United States Securities and Exchange
Commission (August 1, 2008), (``CIFiR Report''), available at:
http://www.sec.gov/about/offices/oca/acifr/acifr-finalreport.pdf.
    \84\ Id. at 98. The recommendation appears in chapter 4 of the
CIFiR Report.
    \85\ See discussion at note 135, and accompanying text, of
Interactive Data Adopting Release, supra note 6.
    \86\ Since 2005, the Federal Deposit Insurance Corporation
(``FDIC''), the Board of Governors of the Federal Reserve System,
and the Office of the Comptroller of the Currency have required the
insured institutions that they oversee to file their quarterly
Consolidated Reports of Condition and Income (called ``Call
Reports'') in interactive data format using XBRL. Call Reports,
which include data about an institution's balance sheet and income
statement, are used by these federal agencies to assess the
financial health and risk profile of the financial institution.
    \87\ For example, such countries include Canada, China, Israel,
Japan, Korea, and Thailand.
---------------------------------------------------------------------------

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

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

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

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

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

    We also are adopting, as proposed, the requirement that an
interactive data file to a Form N-1A filing, whether the filing is an
initial registration statement or a post-effective amendment thereto,
must be submitted as an amendment to the registration statement to
which the interactive data file relates and must be submitted after the
registration statement or post-effective amendment that contains the
related information becomes effective but not later than 15 business
days after the effective date of that registration statement or post-
effective amendment.\97\ Our requirement that the interactive data file
be submitted within 15 business days is intended both to provide funds
with adequate time to prepare the exhibit and to make the interactive
data available promptly. An exhibit containing interactive data format
risk/return summary information can be submitted under rule 485(b) of
the Securities Act, which provides for immediate effectiveness of
amendments that make non-material changes, and will only need to
contain the new exhibit, a facing page, a signature page, a cover
letter explaining the nature of the amendment, and a revised exhibit
index.
---------------------------------------------------------------------------

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

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

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

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

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

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

    The rules do not eliminate or alter existing substantive disclosure
requirements for risk/return summary information. The rules also do not
eliminate or alter existing ASCII or HTML filing requirements. We
believe investors and other users may wish to obtain an electronic or
printed copy of the entire registration statement in ASCII or HTML,
either in addition to or instead of disclosure formatted using
interactive data. To clarify the intent of the rules, we have included
an instruction to rule 405 of Regulation S-T stating that the rules
require a disclosure format, but do not change substantive disclosure
requirements.\102\ The rules also state clearly that the information in
interactive data format should not be more or less than the information
in the ASCII or HTML part of the Form N-1A filing.\103\
---------------------------------------------------------------------------

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

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

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

    While one commenter asserted that interactive data should be
embedded in HTML filings,\108\ two other commenters stated that such a
requirement should be deferred until embedding technology is
sufficiently developed.\109\ We agree that it is necessary to monitor
the usefulness of interactive data reporting to investors and the cost
and ease of providing interactive data before attempting further
integration of the interactive data format. However, the rules will
treat interactive data as part of the official filing, instead of as
only a supplement as is the case in the voluntary program.\110\
---------------------------------------------------------------------------

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

C. Web Site Posting of Interactive Data

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

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

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

    \113\ See General Instruction C.3.(g).(i) and (ii) of Form N-1A.
    \114\ See Interactive Data Adopting Release, supra note 6
(adopting rule 405(g)); rule 405(a). Rule 405(a) requires posting to
a ``corporate'' Web site. For mutual funds, this would require
posting to the fund's Web site.
    The day the interactive data is submitted electronically to the
Commission may not be the business day on which it was deemed
officially filed. For example, a filing submitted after 5:30 p.m.
generally is not deemed officially filed until the following
business day. Under the rules, the Web posting would be required at
any time on the same calendar day that the interactive data exhibit
to a mutual fund filing is deemed officially filed or required to be
filed, whichever is earlier.
---------------------------------------------------------------------------

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

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

    \115\ See rule 405(a)(4) of Regulation S-T; see also General
Instruction C.3.(g).(iii) of Form N-1A. Section 10(a)(3) of the
Securities Act [15 U.S.C. 77j(a)(3)] generally requires that when a
prospectus is used more than nine months after the effective date of
the registration statement, the information in the prospectus must
be as of a date not more than sixteen months prior to such use. The
effect of this provision is to require mutual funds to update their
prospectuses annually to reflect current cost, performance, and
other financial information. A mutual fund updates its registration
statement by filing a post-effective amendment to the registration
statement.
---------------------------------------------------------------------------

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

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

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

    \117\ See Summary Prospectus Adopting Release, supra note 28.
Upon an investor's request, a mutual fund also would be required to
send the statutory prospectus to the investor in paper or by e-mail.
    \118\ See, e.g., Securities Act Release No. 8458 (Aug. 23, 2004)
[69 FR 52788 (Aug. 27, 2004)] (disclosure regarding portfolio
managers); Securities Act Release No. 8408 (April 19, 2004) [69 FR
22300 (April 23, 2004)] (disclosure regarding market timing and
selective disclosure of portfolio holdings); Securities Act Release
No. 8393 (Feb. 27, 2004) [69 FR 11244 (Mar. 9, 2004)] (shareholder
reports and quarterly portfolio disclosure); Securities Act Release
No. 8188 (Jan. 31, 2003) [68 FR 6564 (Feb. 7, 2003)] (disclosure of
proxy voting policies and records); Exchange Act Release No. 47262
(Jan. 27, 2003) [68 FR 5348 (Feb. 3, 2003)] (disclosure of code of
ethics).
    \119\ Mutual funds filing registration statements are required
to disclose whether or not they make available free of charge on or
through their Web site, if they have one, their SAI and shareholder
reports. Funds that do not make their reports available in that
manner also must disclose the reasons that they do not. See Item
1(b)(1) of Form N-1A.
---------------------------------------------------------------------------

D. Consequences of Non-Compliance and Hardship Exemption

    We are adopting, as proposed, a rule amendment providing that, if a
filer does not provide the required interactive data submission, or
post the interactive data on its Web site, by the required due date,
the filer's ability to file post-effective amendments under rule
485(b), which provides for immediate effectiveness of amendments that
make non-material and other changes, will be automatically
suspended.\120\ Any suspension becomes effective at the time that the
filer fails to meet the requirement to submit or post interactive data
and terminates as soon as the filer has submitted and posted that data.
The suspension applies to a failure to submit and post interactive data
as an exhibit to a registration statement or as an exhibit to a filing
under rule 497 under the Securities Act.
---------------------------------------------------------------------------

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

    The suspension applies to post-effective amendments filed after the
suspension becomes effective, but does not apply to post-effective
amendments that were filed before the suspension became effective. The
suspension does not apply to post-effective amendments filed solely for
purposes of submitting interactive data, which will enable a filer to
cure its failure to submit interactive data by filing an amendment
under rule 485(b) and posting the information on its Web site.
Similarly, a filer may cure a failure to submit an interactive data
file that is required to be submitted with a rule 497 filing by making
a subsequent rule 497 filing with the interactive data exhibit and also
posting the information on its Web site.
    Several commenters opposed this automatic suspension as
unnecessary, particularly given Commission authority to punish those
who violate its rules.\121\ Some commenters asserted that it could lead
to potential penalties for minor violations of the interactive filing
requirements.\122\ We continue to believe that precluding the use of
immediate effectiveness of post-effective amendments during any period
of failure to comply is an appropriate means to direct attention to the
interactive data requirement without permanently suspending a mutual
fund's ability to file post-effective amendments under rule 485(b) once
the fund has remedied the failure. The provision strikes an appropriate
balance between limiting non-compliant mutual funds from using the
immediate effectiveness provision, yet also providing an easy remedy to
diminish any risk of any undue penalty to funds.
---------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

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

    \129\ Rule 201 of Regulation S-T [17 CFR 232.201] provides for
temporary hardship exemptions. We are not adopting a temporary
hardship exemption because our rules provide a mutual fund with a
15-business day period for submitting the interactive data file for
a related official filing.
---------------------------------------------------------------------------

    Rule 202 permits a filer to apply in writing for a continuing
hardship exemption if information otherwise required to be submitted in
electronic format cannot be so filed without undue burden or expense.
If the Commission or the staff, through authority delegated from the
Commission, grants the request, the filer must file the information in
paper by the applicable due date and file a confirming electronic copy
if and when specified in the grant of the request.
    As proposed, we are revising rule 202 to provide that a grant of a
continuing hardship exemption for interactive data will not require a
paper submission.\130\ If the filer did not electronically submit the
interactive data by the end of the period for which the exemption was
granted, the filer's ability to file post-effective amendments under
rule 485(b) will be suspended until it does electronically submit the
interactive data.\131\ Similarly, we are revising rule 202 to provide
an essentially mirror-image exemption from the requirement for a mutual
fund that has a Web site to post the interactive data on its Web
site.\132\ We did not receive any comments addressing this issue.
---------------------------------------------------------------------------

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

E. Interactive Data List of Tags and Commission Viewer

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

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

    The submission also must include any supporting files as prescribed
by the EDGAR Filer Manual.\135\ Mutual funds are required to tag a
limited number of document and entity identifier elements, such as the
form type and the fund's name. As with interactive data for the risk/
return summary, these document and identity identifiers are formatted
using the appropriate list of tags as required by Regulation S-T and
the EDGAR Filer Manual.\136\
---------------------------------------------------------------------------

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

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

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

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

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

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

    Furthermore, there are a growing number of software applications
available to preparers and consumers that are designed to help make
interactive data increasingly useful to both retail and institutional
investors, as well as to other participants in the U.S. and global
capital markets. On this basis, we believe interactive data, and in
particular the XBRL standard, are growing and that the list of tags for
risk/return summary information is now sufficiently comprehensive to
require that mutual funds provide their risk/return summary information
in interactive data format.
    Updates to the list of tags for risk/return summary reporting may
be posted and available for downloading from time to time to reflect
changes in the risk/return summary requirements, refinements to the
list of tags, or for other reasons. To provide mutual funds sufficient
time to become familiar with any such updates, we anticipate giving
advance notice before requiring use of an updated list of tags. Based
on experience to date with the list of tags for risk/return summary
information, we believe that, with the enhancements to the list of tags
that XBRL U.S. is developing, the list of tags will be sufficiently
developed to support the interactive data disclosure requirements in
the rules.
    One of the useful aspects of interactive data is its
extensibility--that is, the ability to add to the standard list of tags
in order to accommodate unique circumstances in a mutual fund's
particular disclosures. The use of customized tags, however, may also
serve to reduce the ability of users to compare similar information
across mutual funds. In order to promote comparability across funds, we
are adopting, as proposed, the rule provision that limits the use of
extensions to circumstances where the appropriate element does not
exist in the standard list of tags.\149\ Wherever possible and when a
standard element is appropriate, preparers are required to change the
label for an element that exists in the standard list of tags, instead
of creating a new customized tag.\150\ We received no comments
concerning this issue.
---------------------------------------------------------------------------

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

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

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

    In addition to both Regulation S-T, which includes the rules we are
adopting, and the instructions in our EDGAR Filer Manual, filers may
access other sources for guidance in tagging their financial
information. These include the XBRL U.S. Preparers Guide; user guidance
accompanying tagging software; and financial printers and other service
providers. New software and other forms of third-party support for
tagging risk/return summary information using interactive data are also
becoming available.
3. Commission Viewer
    Some commenters asserted that the Commission's mutual fund viewer
required more development before the Commission requires filings in
interactive data format.\155\ Specifically, commenters expressed
concern that the viewer was too narrow and uncomfortable to read,\156\
that filers in the voluntary program were unable to view an interactive
data exhibit prior to submitting the exhibit,\157\ and that existing
viewers, including the Commission's, do not display the tagged files
consistently.\158\
---------------------------------------------------------------------------

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

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

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

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

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

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

F. Application of Federal Securities Laws

    Complete, accurate, and reliable disclosures are essential to
investors and the proper functioning of the securities markets. Our
requirement to submit interactive data with mutual fund registration
statements is designed to provide investors with new tools to obtain,
review, and analyze information from mutual funds more efficiently and
effectively. To satisfy these goals, interactive data must meet
investor expectations of reliability and accuracy. Many factors,
including mutual fund policies and procedures buttressed by incentives
provided by the Commission's application of technology, market forces,
and the liability provisions of the federal securities laws, help
further those goals.
    New rule 406T of Regulation S-T \163\ addresses the liability for
an interactive data file and provides that an interactive data file is:
---------------------------------------------------------------------------

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

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

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

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

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

    As proposed, rule 406 of Regulation S-T also provided that the
usual liability provisions of the federal securities laws would apply
to human-readable interactive data that is identical in all material
respects to the corresponding data in the traditional format filing
\168\ as displayed by a viewer that the Commission provides. Commenters
raised substantial concerns over this proposal, including: (1) Seeking
clarification of the liability applicable to situations not intended to
be addressed explicitly by the proposed rules, such as for errors
arising as a result of the Commission's interactive data rendering
software,\169\ or as a result of comparative applications provided by
either the Commission or a third party; \170\ (2) requesting
clarifications that funds should not be held responsible for
information converted into viewable form by non-Commission
viewers,\171\ or for interactive data posted on fund Web sites; \172\
and (3) requesting that a mutual fund be able to incorporate by
reference the fund's full prospectus and SAI into the viewable
interactive data exhibit.\173\
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    \168\ As proposed, the human-readable interactive data would
have been identical to the corresponding data in the traditional
format filing if the mutual fund complied with the interactive data
tagging requirements of proposed rule 405.
    \169\ See letter of ABA.
    \170\ See letter of Oppenheimer.
    \171\ See letters of ABA, ICI, and Oppenheimer.
    \172\ See letters of ABA and ICI.
    \173\ See letters of Federated, ICI, and Schnase. One commenter
noted that the risk/return summary information in a prospectus is
subject to liability under Sections 11 or 12 of the Securities Act,
but only in connection with the full prospectus in which it is
contained, and the SAI that is typically incorporated therein. See
letter of ICI. The commenter asserted that it would not be
appropriate to isolate the risk/return summary information from the
context of the entire registration statement and impose liability.

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    In response to commenters' concerns we believe that interactive
data in viewable form are best addressed in relation to interactive
data files and traditional concepts of liability. Interactive data in
viewable form that are displayed on the Commission's Web site will
reflect the related interactive data file and, as a result, such
interactive data in viewable form should be treated in the same manner
as the related interactive data file in regard to a fund's failure to
correctly tag an interactive data file that results in a failure of the
interactive data in viewable form to reflect the related official
filing. Interactive data in viewable form that are displayed on other
Web sites would be subject to general anti-fraud principles applicable
to republication of another person's statements.\174\ Consistent with
traditional concepts of liability, a fund could not be liable twice for
a failure that occurs in both an interactive data file and the related
interactive data in viewable form.
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    \174\ These general anti-fraud principles relate to, among other
areas, aiding and abetting, control persons, entanglement, and
adoption.
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    We believe that this change is appropriate to address commenters'
concerns and provide certainty as to the parameters of their liability
related to interactive data. We also believe that it is appropriate
given other protections that investors will receive related to the
interactive data, including that the risk/return summary information
and other disclosures in the traditional format related official filing
to which the interactive data relate would continue to be subject to
the usual liability provisions of the federal securities laws. For
example, the traditional format related official filing would continue
to be subject to Section 10(b) and rule 10b-5 of the Exchange Act and,
in the appropriate circumstance, to Section 11 of the Securities Act.
    In the Interactive Data Adopting Release, we elaborate further upon
interactive data in viewable form and our decision not to impose any
separate liability for such data.\175\ Given that the rules do not
include such provisions, we do not address further commenters' requests
for clarification related to liability for rendered documents. Further,
we do not believe it is needed to provide funds with the ability to
incorporate by reference into rendered documents, given that liability
is not imposed separately upon interactive data in viewable form.
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    \175\ See Interactive Data Adopting Release, supra note 6.
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    In the Proposing Release, we did not propose to permit or require
cautionary legends for interactive risk/return summary information.
Several commenters expressed concern about the potential consequences
of investor reliance on incomplete information.\176\ Two commenters
suggested that the Commission require viewable interactive risk/return
disclosures to include a cautionary disclosure similar to the legend we
recently required for the new mutual fund summary prospectus, which
advises investors where to locate additional information about the fund
in the fund's prospectus and SAI, and permits a fund to incorporate
certain information by reference into the summary prospectus.\177\ As
noted in Section II.E. above, we agree with commenters that it is
appropriate to alert investors about the availability of additional
information in a fund's prospectus. Therefore, we will include
cautionary language on the Commission's mutual fund viewer encouraging
investors to review a fund's full prospectus.
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    \176\ See letters of ABA, Federated, ICI, Oppenheimer, and
Schnase.
    \177\ See letters of ICI and Schnase; see also Summary
Prospectus Adopting Release, supra note 28.
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    We believe, however, that attempting to place in interactive data
legends of the type suggested would be impracticable because
interactive data will often be accessed in its machine-readable form
and, even if it were accessed in viewable form, might not be accessed
in a place where the legend would appear. As to a legend that states
people should not rely on the interactive data in particular, such a
legend would be inappropriate because there is no reason the data
should not be reliable and, were it not reliable, it would have little
value.\178\
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    \178\ We reach a different conclusion regarding a tagged legend
in the voluntary program and continue to require such legends to
provide investors with limited additional notice because that
information is not part of the official filing and was intended for
experimental submissions.
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    We are adopting, as proposed, the requirement that an interactive
data file consist of ``no more and no less'' than the corresponding
risk/return summary information in the related official filing.\179\
One commenter expressed concern that submitting interactive risk/return
summary information for multiple funds may confuse some investors who
seek data about only a single fund.\180\ However, as a result of our
Summary Prospectus Initiative, multiple fund prospectuses must present
the summary information for each fund sequentially and not integrate
the information for more than one fund.\181\ Since risk/return summary
information for multiple funds will no longer be permitted to be
combined in the prospectus, this information will also, in accordance
with rule 405, be presented separately in interactive format. In view
of this requirement, interactive risk/return summary information for
multiple funds should be as easy for investors to locate and understand
as similar information for a single-fund prospectus.
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    \179\ Rule 405(b)(2) of Regulation S-T.
    \180\ See letter of ICI.
    \181\ See Summary Prospectus Adopting Release, supra note 28.
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    To assist mutual funds in ensuring the accuracy of their XBRL
filings, we plan, in the future, to make available to mutual funds the
opportunity to make a test submission with the Commission to create
viewable interactive data.\182\ If the validation system finds an
error, it will advise the filer of the nature of the error and whether
the error was major or minor. As occurs in the voluntary program, a
major error in an interactive data exhibit that is part of a live
filing will cause the exhibit to be held in suspense in the electronic
filing system. The rest of the filing will be accepted and disseminated
if there are no major errors outside of the interactive data exhibit.
If that happens, the filer will need to revise the interactive data
exhibit to eliminate the major error and submit the exhibit as an
amendment to the filing to which it is intended to appear as an
exhibit. A minor error in an interactive data exhibit that is part of a
live filing will not prevent the interactive data exhibit from being
accepted and disseminated together with the rest of the filing if there
are no major errors in the rest of the filing. We believe it is
appropriate to accept and disseminate a filing without the interactive
data exhibit submitted with it if only the exhibit has a major error,
in order to disseminate at least as much information at least as timely
as would have been disseminated were there no interactive data
requirement.
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    \182\ The EDGAR Filer Manual addresses test submissions
primarily at Section 6.6.5 of Volume II.
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    The rule does not require mutual funds to involve third parties,
such as auditors or consultants, in the creation of the interactive
data provided as an exhibit to a mutual fund's Form N-1A filing,
including assurance.\183\ We are

taking this approach after considering various factors, including:
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    \183\ With respect to registration statements, SAS 37 (AU
Section 711) was issued in April 1981 to address the auditor's
responsibilities in connection with filings under the federal
securities statutes. With respect to our rule, an auditor will not
be required to apply AU Section 711 to the interactive data provided
as an exhibit in a fund's registration statement, or to the viewable
interactive data.
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     Commenters' views;
     The availability of a comprehensive list of tags for risk/
return summary information from which appropriate tags can be selected,
thus reducing a mutual fund's need to develop new elements;
     The availability of user-friendly software with which to
create the interactive data file;
     The delayed compliance date, prior to which mutual funds
may become familiar with the tagging of risk/return summary
information;
     The availability of interactive data technology
specifications, and of other XBRL U.S., XBRL International, and
Commission resources for preparers of tagged data; \184\
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    \184\ An example of Commission resources includes the EDGAR
Filer Manual.
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     The advances in rendering/presentation software and
validation tools for use by preparers of tagged data that can identify
the existence of certain tagging errors;
     The expectation that preparers of tagged data will take
the initiative to develop practices to promote accurate and consistent
tagging; and
     The mutual fund's and preparer's liability for the
accuracy of the traditional format version of the risk/return summary
information.

G. Changes to the Voluntary Program

    Mutual funds will no longer be able to submit risk/return summary
information in interactive data format through the voluntary program
after the compliance date for the mandatory rules. We are amending rule
401 of Regulation S-T to remove risk/return summary information as a
category of information permitted to be submitted under the voluntary
program effective after the compliance date for the mandatory
rules.\185\ This amendment differs from our proposal which would have
removed the option to file risk/return summary information under the
voluntary program altogether. This change makes explicitly clear that
mutual funds may continue to experiment with the submission of risk/
return summary information in interactive data format up until the
compliance date for these rule amendments. For this same reason, we are
not adopting proposed changes to rule 8b-33 under the Investment
Company Act and certain technical amendments to rule 401 of Regulation
S-T.\186\
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    \185\ See rule 401(b)(iv).
    \186\ See proposed rule 8b-33; proposed rule 401(b)(1)(iv);
proposed rule 401(d)(1)(i); and proposed rule 401(d)(2)(i) in the
Proposing Release, supra note 9.
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    Further, in order to encourage participation in the voluntary
program for tagging investment company financial information, we are
adopting, substantially as proposed, amendments to enable investment
companies that are registered under the Investment Company Act,
business development companies, and other entities that report under
the Exchange Act and prepare their financial statements in accordance
with Article 6 of Regulation S-X to submit exhibits containing a tagged
schedule of portfolio holdings without having to submit other financial
information in interactive data format.\187\ As with the current
voluntary program, volunteers will be able to participate merely by
submitting a tagged Schedule I--Investments in Securities of
Unaffiliated Issuers (``Schedule I'').\188\ To facilitate this, XBRL
U.S. developed a list of tags that could be used to tag portfolio
holdings. On October 21, 2008, XBRL U.S. issued its Schedule of
Investments Taxonomy for public comment.\189\ The taxonomy is expected
to be finalized by XBRL U.S. by the end of January 2009.
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    \187\ Rule 401(b)(1)(v) (designating Schedule I--Investments in
securities of unaffiliated issuers as mandatory content under the
voluntary program). The voluntary program will be modified to permit
participation only by registered investment companies, business
development companies, and other entities that report under the
Exchange Act and prepare their financial statements in accordance
with Article 6 of Regulation S-X. See Interactive Data Adopting
Release, supra note 6 (rule 401(a)).
    \188\ Rule 12-12 of Regulation S-X [17 CFR 210.12-12].
    \189\ See supra note 51.
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    Currently, the interactive data furnished under the voluntary
program must consist of at least one item from a list of enumerated
mandatory content (``Mandatory Content''), including financial
statements, earnings information, and, for registered management
investment companies, financial highlights or condensed financial
information and risk/return summary information set forth in Form N-
1A.\190\ We are adding Schedule I information as a separate item of
Mandatory Content that participants can submit in order to give
volunteers greater flexibility in tagging fund data.
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    \190\ Rule 401(b)(1) of Regulation S-T [17 CFR 232.401(b)(1)].
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    Several commenters asserted that expanding the voluntary program to
include fund portfolio holdings information was premature.\191\ These
commenters stated that (1) the information would not be meaningful to
individual investors; \192\ (2) the taxonomy does not yet exist; \193\
and (3) more experience with the technology is necessary before
expansion of the program.\194\ Given that participants may already
provide portfolio holdings information as part of their financial
statements under the voluntary program, we disagree with these
comments. The expansion of the voluntary program to permit the
submission of portfolio holdings information simply provides volunteers
with an alternative to submitting complete financial statement
information and increases the options for participation in the program.
Investors, financial intermediaries, and third-party information
providers, among others, use the portfolio holdings data contained in
Schedule I to make decisions concerning the purchase and continued
holding of funds and for other purposes. Portfolio holdings data may be
even more useful to these various stakeholders if such data is
interactive.
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    \191\ See letters of Data Communiqu[eacute], ICI, and Vanguard.
    \192\ See letter of Data Communiqu[eacute].
    \193\ See letter of ICI.
    \194\ See letter of Vanguard.
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    Under the current voluntary program, any official filing with which
tagged exhibits are submitted must disclose that the financial
information is ``unaudited'' or ``unreviewed,'' as applicable and that
the purpose of submitting the tagged exhibits is to test the related
format and technology and, as a result, investors should not rely on
the exhibits in making investment decisions.\195\ We believe that this
cautionary disclosure should also be tagged and included within each
interactive data exhibit, in order to help alert investors and other