On March 1, 2017, the SEC issued a proposed rule that would require the use of the "Inline XBRL" format for the submission of mutual fund risk/return summaries. Inline XBRL allows filers to embed XBRL data directly into an HTML document, eliminating the need to tag a copy of the information in a separate XBRL exhibit. In 2009, the SEC required mutual funds to provide risk/return summary information from their prospectuses in eXtensible Business Reporting Language (i.e., XBRL) format by submitting it to the SEC in an "Interactive Data File" exhibit. The Interactive Data File is required to be posted on a mutual fund's website for as long as the registration statement or post-effective amendment to which the Interactive Data File relates remains current. If a mutual fund does not submit or post interactive data as required, its ability to file post-effective amendments to its registration statement under Rule 485(b) under the Securities Act is automatically suspended until it submits and posts the interactive data required. The 2009 requirements were intended to make mutual fund risk/return summaries easier for investors to analyze and to assist in automating regulatory filings.
To "help facilitate efficiencies in the mutual fund post-effective amendment filing process," the SEC is proposing changes to the General Instructions to Form N-1A that would change the timing requirements for the submission of Interactive Data Files. As noted in the proposing release, the SEC proposes permitting mutual funds to submit Interactive Data Files concurrently with certain post-effective amendments filed pursuant to Rule 485(b) under the Securities Act. The SEC also is proposing to eliminate the current 15 business day filing period accorded to all mutual fund filings containing risk/return summaries, including initial registration statements, post-effective amendments, and forms of prospectuses filed pursuant to Rule 497. In the case of initial registration statements and post-effective amendments, the Interactive Data File would be required to be submitted no later than the effective date of those filings. In the case of forms of prospectuses filed pursuant to Rule 497, the Interactive Data File would be required to be submitted concurrently with the filing.
The SEC proposes a phase-in for mutual funds based on net asset size. For "larger entities," identified in the proposing release as mutual funds that together with other investment companies in the same "group of related investment companies" have net assets of $1 billion or more as of the end of the most recent fiscal year, the proposed compliance date is one year after the effective date to comply with the new reporting requirements. For "smaller entities," i.e., mutual funds that together with other investment companies in the same "group of related investment companies" have net assets of less than $1 billion as of the end of the most recent fiscal year, the SEC proposes to provide for an additional year to comply with the new reporting requirements.
Comments on the proposed rule are due by May 16, 2017. The SEC's proposing release is available at: https://www.sec.gov/rules/proposed/2017/33-10323.pdf.