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SEC Votes to Include Funds in XBRL Pilot Tests

The Securities and Exchange Commission voted on Wednesday to allow mutual funds to voluntarily join the 40 publicly traded companies currently submitting data to the SEC in interactive extensible business reporting language (XBRL). Fund companies will be able to submit information on their investment strategies, risks, returns and costs in XBRL.

"Investors today are inundated with information in a form that, being charitable, is difficult to understand," said SEC Chairman Christopher Cox. The chairman has proposed incorporating a software tool into the SEC website that will allow investors to readily parse through information submitted in XBRL.

Eventually, the Commission is expected to make the data tagging mandatory. For now, the tagged data will be an additional source of information that fund companies will submit in addition to the existing Form N-1A registration document in which they include the information.

Two commissioners, Annette Nazareth and Roel Campos, noted at the SEC meeting how they would like the SEC to take additional steps to improve fund disclosure. In particular, Campos said, the SEC should revisit the two-page prospectus profile that has been suggested numerous times over the past seven years. Nazareth said investors should be supplied with a streamlined prospectus at the point of sale.

Also last week, Canada's Joint Forum of Financial Market Regulators released proposed point-of-sale disclosure rules for mutual funds that would highlight a fund's performance, risk and cost.

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