Alert May 20, 2008

SEC to Consider Mandatory Interactive Data Tagging of Risk/Return Summary in Mutual Fund Prospectuses

The SEC announced that at an open meeting on Wednesday, May 21, it will consider whether to propose that prospectuses in mutual fund EDGAR filings present risk/return summary information using interactive data format.  Use of interactive data format involves data tagging or labeling information in electronic filings using standardized definitions so that the information can be retrieved, searched and analyzed through automated means.  The SEC began a voluntary program in August 2007 (as discussed in the July 17, 2007 Alert) that has allowed mutual funds to submit data tagged information in the risk/return summary portion of their prospectuses.  The SEC has posted an overview of the voluntary data tagging program for mutual funds at http://www.sec.gov/info/smallbus/secg/risk_return_secg.htm#foot1.  The prospectus risk/return summary includes information about a fund’s investment objectives and strategies, investment risk, performance and fees and expenses.  The SEC recently added a mutual fund comparison tool to its website that demonstrates the use of data tagged information extracted from filings made by funds participating in the voluntary program (as discussed in the April 15, 2008 Alert).