Memo #
20911

Draft ICI Comments on SEC Proposal to Extend Interactive Data Voluntary Reporting Program to Include Mutual Fund Risk/Return Summary Information; Conference Call on 3/8
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[20911]

 

March 5, 2007

TO: ACCOUNTING/TREASURERS COMMITTEE No. 6-07
SEC RULES COMMITTEE No. 21-07
SMALL FUNDS COMMITTEE No. 8-07
TECHNOLOGY ADVISORY COMMITTEE No. 6-07     RE: DRAFT ICI COMMENTS ON SEC PROPOSAL TO EXTEND INTERACTIVE DATA VOLUNTARY REPORTING PROGRAM TO INCLUDE MUTUAL FUND RISK/RETURN SUMMARY INFORMATION; CONFERENCE CALL ON 3/8

 

As previously indicated, the Securities and Exchange Commission has proposed rule amendments that would enable investment company registrants to voluntarily submit supplemental tagged information contained in the risk/return summary section of their prospectuses using eXtensible Business Reporting Language (“XBRL”). [1]  The Institute has prepared a draft comment letter on the proposal.  The draft letter is attached and summarized below.

 

Comments on the proposal are due to the SEC by March 14th.  We will hold a conference call on Thursday, March 8th, to discuss comments on the draft letter.  The dial in number is 888-282-0171 and the pass code is 63461.  Please send an e-mail to Barbara Watkins at bwatkins@ici.org to let us know if you plan to participate on the call.  If you cannot participate on the call, please provide any comments to Frances Stadler at 202/326-5822 or frances@ici.org before the call.

 

The draft letter expresses strong support for the proposal, calling it an important step in the SEC’s continuing efforts to promote greater use of technology to better inform investors.  It also strongly urges the SEC to pursue additional disclosure reforms that will further enable funds to better serve investors’ information needs and preferences.  In this regard, the draft letter recommends that the SEC propose as soon as possible rule changes to allow mutual funds to provide investors with a concise disclosure document, similar to a fund profile, in paper, with additional information available on the Internet (or in paper, upon request).  The draft letter states that this approach, along with the SEC’s interactive data initiative, will benefit investors, their financial advisers, and other market participants, and will bring the mutual fund disclosure system into the 21st century.

 

The draft letter then makes the following specific comments on the SEC’s proposal.

  • The risk/return summary is an ideal choice for expanding the voluntary XBRL program for mutual funds, because it contains key fund information that lends itself well to analyses and comparisons. 
  • The SEC should permit participants in the voluntary program to file risk/return summary exhibits that cover one or more, but fewer than all, funds, series or share classes included in the corresponding official filing. 
  • For any fund, series or share class that a volunteer chooses to include in an exhibit filed under the voluntary program, the Institute supports requiring tagging of all of the risk/return summary information relating to that fund, series or class. 
  • The SEC need not and should not require funds to submit separate tagged risk/return summary exhibits for each series or class because the design of the ICI taxonomy makes this unnecessary. 
  • The Institute supports the proposal not to create a continuing obligation for a volunteer to submit tagged risk/return summary information. 
  • As an incentive to encourage participation in the voluntary program, the SEC should offer expedited review of exemptive applications. 
  • The Institute supports the proposed requirements concerning cautionary disclosures. 
  • The Institute supports the proposed extension of liability protection to Section 11 of the Securities Act of 1933. 
  • Technically and practically, the ICI taxonomy can be considered valid XBRL.  The Institute intends to seek additional levels of recognition by the XBRL International consortium responsible for the XBRL standards (“acknowledgement” and “approval”).  There may be obstacles to obtaining approval on a predictable schedule, but we do not believe that approval is necessary before allowing filers to use the taxonomy in the voluntary program. 
  • The Institute recommends giving filers adequate flexibility to extend the ICI taxonomy in the voluntary program. 
  • The Institute is in favor of the SEC offering a rendering tool on its website, and recommends that any such tool include appropriate cautionary language, as well as a cross-reference to the EDGAR database for investors who seek information for investment purposes. 
  • The Institute supports the expeditious implementation of the proposal and recommends that, if possible, the amendments become effective the later of:  (1) 30 days after publication of the adopting release in the Federal Register or (2) 30 days after the ICI taxonomy is made available to filers on the SEC’s website.
  • It is difficult to estimate the likely cost of participation in the voluntary program at this time, but the Institute hopes to learn more about the costs of participation from its members as they begin to prepare XBRL submissions.

 

Frances M. Stadler
Deputy Senior Counsel

Attachment

endnotes

 [1] See Memorandum to Accounting /Treasurers Committee No. 2-07, SEC Rules Committee No. 12-07, Small Funds Committee No. 4-07 and Technology Advisory Committee No. 5-07 [20853], dated February 7, 2007.