July 31, 2007
SEC Expands Interactive Data Voluntary Reporting by Funds
The Securities and Exchange Commission (SEC) adopted rule amendments allowing mutual funds to submit
voluntarily risk/return summary information from their prospectuses through the SEC’s interactive data voluntary
reporting program. The program allows text-based information to be “tagged” so that it can become interactive
and be retrieved, searched and analyzed through interactive means. The SEC’s release announcing the rule
amendments stated that interactive data has the “potential to enable investors and other market participants to
compare data from different sources more efficiently and effectively and to exchange information across various
platforms automatically.” It also noted that interactive data, “by minimizing the need for human intervention and,
therefore, human error,” has the “potential to increase accuracy and reduce costs.” The SEC adopted these rule
amendments on July 12, 2007.
In 2005, the SEC adopted rules permitting entities to submit financial information interactively as an exhibit to
certain filings in a format known as “XBRL” (eXtensible Business Reporting Language) through EDGAR. In 2006,
the SEC initiated a test program in which companies, including investment companies, could voluntarily agree to
provide interactive data in XBRL format with their filings. Previously, however, the information provided
interactively was limited to financial information. The new rule amendments allow mutual funds to include the
risk/return summary section of their prospectuses using a form of XBRL developed by the Investment Company
Institute, and then submit the data through EDGAR as exhibits to Items 2 and 3 of Form N-1A. No pre-approval is
required. Previously adopted rules allowed mutual funds to submit tagged financial information as exhibits to
Form N-CSR. Under the new rules, “[a] mutual fund submitting tagged risk/return summary information may, but
is not required to, submit tagged financial highlights or condensed information. Similarly, a mutual fund that
submits tagged financial highlights or condensed information may, but is not required to, submit tagged risk/return
summary information.”
For a Form N-1A filing that includes more than one series, the risk/return summary information of any one or more
series may be tagged. Tagging of one or more series, though, does not require the filer to provide interactive data
for every series of a fund. For each series that is tagged, all information for that series, including the information
for each class of the series, must be tagged. Non-class-specific information, such as investment objectives, is not
required to be separately identified by class. Only “class-specific information, such as expenses and performance,
[is] required to be separately identified by class.”
Tagged risk/return summary information submitted should be filed as a supplemental exhibit to a previous filing on
Form N-1A. It does not replace any version of the information currently required to be filed. Because N-1A filings
are often revised prior to effectiveness, the rule amendments require that any tagged exhibit to a Form N-1A only
be filed after the effective date of such filing. The release states “[a]n exhibit containing tagged risk/return
summary information may be submitted under rule 485(b) of the Securities Act [of 1933] . . . 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. . . . Section 5.2.4 of the EDGARLink Filer Manual (Volume II): ‘EDGAR Filing’ will
provide instructions and guidance on the preparation, submission, and validation of EDGAR-acceptable electronic
filings with attached tagged risk/return summary information.”
The release states that mutual funds choosing to submit tagged filings do so voluntarily. As a result, funds may do
so “regularly or from time to time, and . . . may stop and start as they choose. Participating in the voluntary
program will not create a continuing obligation for a volunteer to submit tagged risk/return summary information as
an exhibit to a subsequent post-effective amendment.” Any tagged exhibit that fails to reflect the information
contained in its corresponding official filing, however, will be required to be amended. Moreover, included within
the tagged exhibit (and the exhibit index of any Form N-1A filing including a tagged exhibit) must be “disclosure
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that the purpose of submitting the tagged exhibit is to test the related format and technology and, as a result,
investors should not rely on the exhibit in making investment decisions.”
Under the adopted rules, tagged exhibits are not deemed “filed” for purposes of Section 11 of the Securities Act of
1933 (Securities Act), Section 18 of the Securities Exchange Act of 1934 (Exchange Act) or Section 34(b) of the
Investment Company Act of 1940 (Investment Company Act), or otherwise subject to liability under those
sections. Moreover, the release states that the adopted rules provide “general relief from liability under the
securities laws, including the Securities Act, the Exchange Act, the Trust Indenture Act of 1939, and the
Investment Company Act, for information in a tagged exhibit that complies with the content and format
requirements of the voluntary program to the extent that the information in the corresponding portion of the official
EDGAR filing was not materially false or misleading.”
Mutual funds will be allowed to submit tagged exhibits containing risk/return summary information beginning
August 20, 2007.
For further information, please contact Cameron Avery 312-807-4302, Kevin Bettsteller 312-807-4442,
Paul Dykstra 312-781-6029, Jennifer Esquibel 312-807-4262, Alan Goldberg 312-807-4227, Anna Paglia 312-781-7163,
Alicia Perla 312-807-4318, Andrew Pfau 312-807-4386, Paulita Pike 312-781-6027, Eric Purple 202-955-7081,
Bruce Rosenblum 202-955-7087, Donald Weiss 312-807-4303 or Stacy Winick 202-955-7040 of Bell, Boyd & Lloyd’s
Investment Management and Financial Markets Group or visit our Web site at www.bellboyd.com.
This publication has been prepared by the Investment Management and Financial Markets Group of Bell, Boyd & Lloyd for
clients and friends of the firm and is for information only. It is not a substitute for legal advice or individual analysis of a
particular legal matter. Readers should not act without seeking professional legal counsel. Transmission and receipt of this
publication does not create an attorney-client relationship.
© 2007 Bell, Boyd & Lloyd LLP All Rights Reserved
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