Interactive Data Supporting Statement - Adoption

OMB CONTROL NUMBER: 3235-0642

SUPPORTING STATEMENT
Investment Company Interactive Data
A.

JUSTIFICATION
1.

Necessity for the Information Collection

Open-end management investment companies (“open-end funds” or “funds”), such as
mutual funds and exchange-traded funds, are required to submit to the Commission information
included in their registration statements, or information included in or amended by posteffective amendments thereto, in response to Items 2, 3, and 4 (“risk/return summary
information”) of Form N-1A (OMB Control No. 3235-0307)1 in interactive data format and to
post it on their websites, if any, in interactive data form. In addition, funds are required to
submit an Interactive Data File 2 to the Commission for any form of prospectus filed pursuant to
rule 497(c) or (e)3 under the Securities Act of 1933 (“Securities Act”) 4 that includes risk/return
summary information that varies from the registration statement and to post the interactive data
file on their websites, if any. The specified risk/return summary information is also required to
be submitted to the Commission as part of the registration statement, post-effective amendment,
or form of prospectus filing itself.
The current title for the collection of information for submitting certain information that
is included in fund registration statements (or post-effective amendments thereto, or forms of

1

17 CFR 239.15A and 274.11A.

2

Regulation S-T defines the term “Interactive Data File” to mean the machine-readable computer
code that presents information in XBRL electronic format pursuant to rule 405 of Regulation S-T
and as specified by the EDGAR Filer Manual. 17 CFR 232.11; 17 CFR 232.405. The EDGAR
Filer Manual sets forth the technical formatting requirements for the presentation and submission
of electronic filings through the EDGAR system.

3

17 CFR 230.497.

4

15 U.S.C. 77a et seq.

prospectus filed as discussed above) in interactive data format is “Mutual Fund Interactive Data”
(OMB Control No. 3235-0642). The Commission is re-titling this collection of information as
“Investment Company Interactive Data.” This collection of information relates to regulations
and forms adopted under the Securities Act, the Securities Exchange Act of 1934, 5 and the
Investment Company Act of 1940 (“Investment Company Act”) 6 that set forth disclosure
requirements for funds and other issuers.
Form N-1A is used by funds to register under the Investment Company Act and to offer
their securities under the Securities Act. The information required by this collection of
information corresponds to the risk/return summary information required by Form N-1A and is
required to appear in exhibits to registration statements on Form N-1A and rule 497 submissions,
and on fund websites. 7 Although the interactive data filing requirements are included in Form
N-1A, the Commission has separately reflected the burden for these requirements in the burden
estimate for the re-titled Registered Investment Company Interactive Data, and not in the burden
for Form N-1A.

5

15 U.S.C. 78a et seq.

6

15 U.S.C. 80a-1 et seq.

7

In 2009, the Commission adopted rules requiring operating companies and open-end funds to
submit certain disclosures in the XBRL format. See Interactive Data for Mutual Fund Risk/Return
Summary, Investment Company Act Release No. 28617 (Feb. 11, 2009) [74 FR 7748 (Feb. 19,
2009)].
In June 2018, the Commission amended its rules to require operating companies, and open-end
funds to submit the required information in Inline XBRL. See Inline XBRL Filing of Tagged Data,
Investment Company Act Release No. 33139 (June 28, 2018) [83 FR 40846 (Aug. 16, 2018)]
(“Inline XBRL Adopting Release”). The adopted amendments require open-end funds to use the
“Inline XBRL” format for the submission of fund risk/return summary information using the
machine-readable (i.e., interactive) eXtensible Business Reporting Language (XBRL) format in
interactive data files. These amendments require filers, on a phased in basis, to embed part of the
interactive data file within an HTML document using Inline XBRL and include the rest in an exhibit
to that document.

2

On March 11, 2020, the Commission issued a release adopting rule and form
amendments designed to update and enhance disclosures to investors in variable annuity and
variable life insurance contract (“variable contracts”). The amendments permit a person to
satisfy its prospectus delivery obligations under the Securities Act for a variable contract by
sending or giving a summary prospectus to investors, with access to more detailed information
available online and electronically or in paper format on request. In addition, the amendments
update the registration forms for variable contracts, including Form N-3, N-4, and N-6, update
and enhance the disclosures to investors in these contracts, and implement the new summary
prospectus framework.8 The Commission also adopted amendments to certain rules and forms
that would require variable contract issuers to use the Inline eXtensible Business Reporting
Language (“Inline XBRL”) format for the submission of certain required disclosures in the
variable contract prospectus. Specifically, the Commission adopted amendments to the General
Instructions of Forms N-3, N-4, and N-6, 9 rules 485 and 497 under the Securities Act, and rules
under Regulation S-T, to require the use of Inline XBRL format for submitting these required
disclosures to the Commission in registration statements and post-effective amendments
regarding contracts being sold to new investors, as well as in forms of prospectuses for such
contracts that include information that varies from the registration statement. Although contracts

8

Updated Disclosure Requirements and Summary Prospectus for Variable Annuity and Variable
Life Insurance Contracts, Investment Company Act Release No. 33814 (Mar. 11, 2020)
(“Adopting Release”), available at https://www.sec.gov/rules/final/2020/33-10765.pdf.

9

Specifically, registrants are required to submit the following information in Inline XBRL format
in registration statements or post effective amendments, as well as in forms of prospectuses filed
pursuant to rule 497(c) or 497(e) under the Securities Act that include information that varies
from the registration statement: (1) Form N-3 registrants: information provided in response to
proposed Items 2, 4, 5, 11, 18, and 19 of Form N-3; (2) Form N-4 registrants: information
provided in response to proposed Items 2, 4, 5, 10, and 17 of Form N-4; and (3) Form N-6
registrants: information provided in response to proposed Items 2, 4, 5, 10, 11, and 18 of Form N6.

3

not being sold to new investors are excluded from the Inline XBRL requirement, for purposes of
the estimates discussed below, we are assuming on a conservative basis that all contracts are
subject to the requirement.
2.

Purpose and Use of the Information Collection

The purpose of the “Investment Company Interactive Data” requirements is to make
certain prospectus disclosure information easier for investors to analyze, and to assist in
automating regulatory filings and business information processing. The purpose of the
amendments requiring variable contract issuers to tag certain disclosures in Inline XBRL format
is to improve this data’s usefulness, timeliness, and quality, benefiting investors and other market
participants, and to decrease, over time, the cost of preparing the data for submission to the
Commission.
3.

Consideration Given to Information Technology

Responses under the interactive data file requirements are submitted to the Commission
electronically on its Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. The
public may access submissions on EDGAR through the Commission’s Internet website
(http://www.sec.gov).
4.

Duplication

The Commission periodically evaluates rule-based reporting and recordkeeping
requirements for duplication, and reevaluates them whenever it proposes a rule or a change in a
rule. The “Investment Company Interactive Data” requirements generally are not duplicated
elsewhere.
Like fund risk/ summary prospectus disclosures, the variable contract prospectus
disclosures required to be tagged using Inline XBRL format are required to be submitted to the

4

Commission on EDGAR in HTML format as part of a registration statement, post-effective
amendment, or form of prospectus filing. The information in that format, however, cannot be
utilized as effectively as when filed in an interactive data format that a variety of software
applications can recognize and process. The interactive data format would therefore make it
easier for investors to analyze an investment company’s disclosures, and assist issuers in
automating regulatory filings and business information processing.
5.

Effect on Small Entities

The Commission reviews all rules periodically, as required by the Regulatory Flexibility
Act, to identify methods to minimize recordkeeping or reporting requirements affecting small
businesses. 10
Approximately 46 funds registered on Form N-1A are considered small entities. 11 The
“Investment Company Interactive Data” requirements do not distinguish between small entities
and other registrants. The burden on small entities, however, to prepare and submit interactive
data may be greater than for larger registrants. This burden may include the cost of software
designed to prepare risk/return summary information in interactive data format and hiring a
consultant or filing agent to prepare and/or file risk/return summary information in interactive
data format. The Commission believes, however, that imposing different requirements on
smaller funds would not be consistent with investor protection and the purposes of the
“Investment Company Interactive Data” requirements.

10

5 U.S.C. 601 et seq.

11

This estimate is based on analysis by the Division of Investment Management staff of publicly
available data (as of December 2019).

5

No small entities currently file registration statements on Forms N-3, N-4, or N-6.
Therefore, the interactive data amendments for variable contract issuers registering on these
forms would not affect any small entities.
6.

Consequences of Not Conducting Collection

If the specified information were not required in interactive data format, the information
would be available through the Commission only as part of a registration statement, posteffective amendment, or form of prospectus filing itself. The use of interactive data format
assists issuers in automating regulatory filings and business information processing. If
interactive data format information were required less frequently, less information would appear
in that format and, as a result, the interactive data file requirement would be less likely to
facilitate its intended purposes and achieve its expected benefits. Failure to conduct the
collection of information required by the amendments could frustrate the Commission’s intent to
improve the quality of data on variable contracts (benefiting investors in variable contracts, other
market participants, and other data users) and to decrease, over time, the cost of preparing the
data for submission to the Commission.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

Not applicable.
8.

Consultation Outside the Agency

The Commission requested public comment on the Investment Company Interactive Data
collection of information requirements associated with its proposal to require variable contract
issuers to use Inline XBRL format to tag certain disclosures. Specifically, the public was given
the opportunity to comment on the Commission’s estimates for the burdens of the use of Inline
XBRL as proposed and as compared to the existing approved burden inventory in the proposing

6

release for the amendments. While comments were received from filers, investors and other
market participants, and were considered by the Commission as discussed in the Adopting
Release, none of these related to the proposed burden estimates for the use of Inline XBRL. 12 In
addition, the Commission and staff of the Division of Investment Management participate in an
ongoing dialogue with representatives of the investment company industry through public
conferences, meetings, and informal exchanges. These various forums provide the Commission
and the staff with a means of ascertaining and acting upon paperwork burdens that may confront
the industry.
9.

Payment or Gift to Respondents

Not applicable.
10.

Assurance of Confidentiality

Not applicable.
11.

Sensitive Questions

No information of a sensitive nature, including social security numbers, is required under
this collection of information. The information collection does not collect personally identifiable
information (PII). The agency has determined that a system of records notice (SORN) and
privacy impact assessment (PIA) are not required in connection with the collection of
information.
12.

Burden of Information Collection

The paperwork burden estimates associated with the amendments include the internal
burdens attributable to collecting, preparing, reviewing and retaining records. The following
estimates of average burden hours and costs are made solely for purposes of the Paperwork

12

See Adopting Release, supra footnote 8.

7

Reduction Act of 1995 13 and are not derived from a comprehensive or even representative survey
or study of the cost of Commission rules and forms. Compliance with the “Investment Company
Interactive Data” requirements is mandatory for all open-end funds that file on Form N-1A, and
for all variable contract issuers that register on Forms N-3, N-4, and N-6, as applicable.
Responses to the disclosure requirements will not be kept confidential.
Current Estimates. In its most recent Paperwork Reduction Act submission for Mutual
Fund Interactive Data (to be re-titled “Investment Company Interactive Data”), Commission staff
estimated the total cost to the fund industry to comply with this collection of information
requirement to be 178,803 internal burden hours annually, with an estimated cost of $52.5
million per year. 14
New Burdens. The amendments generally impose two types of reporting burdens on
variable contracts being sold to new investors: (1) the burden of submitting certain information
in Inline XBRL to the Commission in registration statements or post-effective amendments filed
on Form N-3, Form N-4, and Form N-6; and (2) the burden of submitting certain information in
Inline XBRL to the Commission in forms of prospectuses filed pursuant to rule 497(c) or 497(e)
under the Securities Act that include information that varies from the registration statement.
We estimate that registrants that file on Forms N-3, N-4, and N-6 will require
approximately 18 burden hours of in-house personnel time to tag and submit the required
disclosure information in Inline XBRL format for each post-effective amendment 15 in the first
13

44 U.S.C. 3501 et seq.

14

These estimates are referenced in the Commission staff’s most-recent information collection
submission, reflecting the Commission’s 2018 adoption of amendments to require the use of Inline
XBRL format for the submission of fund risk/return summary information. The PRA was approved
on Oct. 31, 2018.

15

We are not including estimates for Form N-3 initial registration statements, as none have been filed
in the past three years.

8

year, and the same task in subsequent years will require approximately 12 hours for each
post-effective amendment. 16 With respect to Form N-3 registrants, we estimate an additional
burden of 2 hours per investment option to tag and submit the required disclosure information for
each post-effective amendment. Therefore, we estimate the average annual burden over a
three-year period for each post-effective amendment filed on Form N-3 will be 20 hours,17 and
for those filed on Forms N-4 and N-6, 14 hours. 18 We further estimate that the burden for each
rule 497 filing will be 25% of that, or 3.5 hours per response. 19
We also estimate a weighted burden average of approximately 3 responses per year per
registrant to file initial and post-effective registration statements and rule 497 filings, based on
weighting the burden for each rule 497 filing as 25% of the burden of a post-effective
amendment filing, averaging the burden for each form equally, and estimating (based on a survey
by Commission staff of filings made pursuant to rule 497) that 75% of rule 497 filings by
registrants on each form will contain data that would be required to be submitting in Inline
XBRL format. 20

16

Our estimates are based on our prior experience with Inline XBRL. We are largely following the
same approach to estimating hourly burdens for variable contracts as in the context of mutual funds.

17

(18 hours for the first submission + 12 hours for the second submission + 12 hours for the third
submission) / 3 years) + (2 hours per investment option x 3 investment options) = 20 hours.

18

(18 hours for the first submission + 12 hours for the second submission + 12 hours for the third
submission) / 3 years = 14 hours.

19

Because rule 497 filings are typically 1-3 pages in length, we estimate the burden will be only 25%
of the burden associated with tagging the relevant disclosures in a full registration statement filing.

20

This estimate is derived by weighting the burden for each rule 497 filing as one quarter of the
burden of a post-effective amendment filing, averaging the burden for each form equally, and
estimating (based on a survey by Commission staff of filings made pursuant to rule 497) that 75%
of rule 497 filings by registrants on each form would contain data that would be required to be
submitting in Inline XBRL format.

9

Form N-3 Registrants. Based on a review of Form N-3 filings made with the
Commission, Commission staff estimates that six registrants will file three responses per year.
Accordingly, we estimate that, in the aggregate, the Inline XBRL requirements will result in 360
burden hours annually for Form N-3 registrants. 21
Form N-4 Registrants. Based on a review of Form N-4 filings made with the
Commission, Commission staff estimates there that 426 registrants will file three responses per
year. Accordingly, we estimate that, in the aggregate, the Inline XBRL requirements will result
in 17,892 burden hours annually for Form N-4 registrants.22
Form N-6 Registrants. Based on a review of Form N-6 filings made with the
Commission, Commission staff estimates that 244 registrants will file three responses per year.
Accordingly, we estimate that, in the aggregate, the Inline XBRL requirements will result in
10,248 burden hours annually for Form N-6 registrants. 23
Aggregate Internal Hours Burden for Form N-3, N-4, and N-6 Registrants. In the
aggregate, we estimate that the Inline XBRL requirements will result in 28,500 burden hours for
each of the first three years for Form N-3, N-4, and N-6 registrants. 24 Converted into dollars,

21

6 Form N-3 registrants x 3 responses per year per registrant x (14 hours per registrant + (2 hours
per investment option x 3 investment options per registrant)) = 360 burden hours/year.

22

426 Form N-4 registrants x 3 responses per year per registrant x 14 hours per registrant = 17,892
burden hours/year.

23

244 Form N-6 registrants x 3 responses per year per registrant x 14 hours per registrant = 10,248
hours per year.

24

360 burden hours for Form N-3 registrants + 17,892 burden hours for Form N-4 registrants + 10,248
burden hours for Form N-6 registrants = 28,500 hours.

10

this amounts to a collective internal cost burden of approximately $9,918,000. 25
We therefore estimate the aggregate total hour burden for the re-titled “Investment
Company Interactive Data” collection of information (inclusive of requirements for issuers who
register on Forms N-1A, N-3, N-4, and N-6) would be 206,943 hours26 as a result of the
amendments, with an associated cost of $62,318,000, as follows.
Table 1: Summary of Annual Responses, Burden Hours, and Burden Hour Costs
Estimates for the Information Collection Associated with “Investment Company
Interactive Data”
Investment
Company
Interactive
No. of Responses
Total Burden Hours
Data
(annual)
(annual)
Currently Approved
Form N-1A
15,206
178,803
New Burdens for Variable Contracts Associated with Amendments
Form N-3
18
360
Form N-4
1,278
17,892
Form N-6
732
10,248
Subtotal:
2.028
28,140
Total Burden As a Result of Amendments
Currently
15,206
178,803
Approved
New Burden
2,028
28,140
TOTAL:
17,234
206,943

25

Total Burden Hour
Costs (annual)
$52,500,000
$25,280
$6,226,416
$3,566,304
$9,818,000
$52,500,000
$9,818,000
$62,318,000

The internal time cost equivalent is calculated by multiplying the total hour burden by the estimated
hourly wage of $348. 28,500 burden hours x $348 = $9,918,000.
The estimated wage figure of $348 is based on published rates for Compliance Attorneys ($365)
and Senior Programmers ($331). These hourly figures are from SIFMA’s Management &
Professional Earnings in the Securities Industry 2013, modified to account for an 1,800 hour work
year; multiplied by 5.35 to account for bonuses, firm size, employee benefits and overheard, and
adjusted for inflation. The estimated wage rate was further based on the estimate that Compliance
Attorneys and Senior Programmers would divide time equally, resulting in a weighted wage rate
of $348 (($365 + $331) / 2 = 348.

26

178,803 annual burden hours (current estimated annual hour burden for funds) + 28,140 new
burden hours (due to amendments for variable contracts) = 206,943 hours.

11

13.

Cost to Respondents

Cost burden is the cost of goods and services purchased to comply with the “Investment
Company Interactive Data” requirements, such as for software and/or the services of consultants
and filing agents. The cost burden does not include the cost of the hour burden discussed in Item
12 above. The Commission previously estimated an external aggregate annual cost burden of
$10,000,647 for the cost of services purchased to comply with the current interactive data
requirements, based on an estimate of 11,106 funds.
For Form N-4 and Form N-6 registrants, we estimate an external cost burden of $900 per
registrant for the cost of goods and services purchased to comply with the Inline XBRL
requirements, which is based on the estimated average external cost burden associated with the
Inline XBRL preparation expenses for funds. For Form N-3 registrants, we estimate an
additional cost of $300 per investment option for the cost of goods and services purchased to
comply with the proposed Inline XBRL requirements for an estimated external cost burden of
$1,800 per registrant. 27
Based on the estimate of 6 Form N-3 registrants, 426 Form N-4 registrants, and 244 Form
N-6 registrants, we estimate that, in the aggregate, the total external costs to variable contract
issuers associated with the requirements to tag and submit certain information in Inline XBRL
format would be approximately $613,800. 28 We therefore estimate the aggregate total external

27

$900 per registrant + (3 investment options per registrant x $300 per investment option) = $1,800
per Form N-3 registrant.

28

(6 Form N-3 registrants + 426 Form N-4 registrants + 244 Form N-6 registrants) x $900 per
registrant = 610,200) + (6 Form N-3 registrants x 3 investment options per registrant x $300 per
investment option) = $614,700.

12

cost burden for the re-titled “Registered Investment Company Interactive Data” collection of
information would be $10,614,447 as a result of the proposed amendments. 29
Table 2: Summary of Annual Responses and Total External Cost Estimates for the
Information Collection Associated with “Registered Investment Company
Interactive Data”
Reg. Inv. Co.
No. of Registrants
Cost (per filer)
Total Costs
Interactive Data
(annual)
(annual)
Currently Approved
Form N-1A
11,181
$10,000,647
New Burdens for Variable Contracts Associated with Proposed Rulemaking
Form N-3
6
$1,800
$10,800
Form N-4
426
$900
$383,400
Form N-6
244
$900
$219,600
Subtotal:
676
$613,800
Total Burden As a Result of Proposed Rulemaking
Currently Approved
11,181
$10,000,647
New Burden
676
$613,800
TOTAL:
11,857
$10,614,447
14.

Estimate of Cost to the Federal Government

The annual cost of reviewing and processing disclosure documents, including new
registration statements, post-effective amendments, proxy statements, and shareholder reports of
investment companies amounted to approximately $21.2 million in fiscal year 2019, based on the
Commission’s computation of the value of staff time devoted to this activity and related
overhead.
15.

Explanation of Changes in Burden

Currently, the approved annual hour burden for complying with the newly-retitled
“Investment Company Interactive Data” requirements is 178,803 internal burden hours to use
Inline XBRL format to tag fund risk/return summary items. The new estimate is 206,943 hours,
representing an increase of 28,140 burden hours as a result of the proposal to require variable
29

$10,000,647 (current estimated external cost burden) + additional $613,800 = $10,614,447.

13

contract issuers to use Inline XBRL to tag certain disclosures. The increase in hourly burdens is
due to an increase in the number of registrants that would be required to use Inline XBRL format
to tag certain disclosures, and an increase in the number of filings to be tagged.
Currently, the total external cost burden for software and/or consulting services is
$10,000,647. The new estimate is $10,614,447, representing an increase of $613,800 due to the
increase in the number of registrants that would incur the cost of goods and services purchased to
comply with the Inline XBRL requirements.
16.

Information Collection Planned for Statistical Purposes

Not applicable.
17.

Approval to not Display Expiration Date

We request authorization to omit the expiration date on the electronic version of the
forms for design and IT project scheduling reasons. The OMB control number will be displayed.
18.

Exceptions to Certification Statement

Not applicable.
B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS
The collection of information will not employ statistical methods.

14