SEC Adopts Rule Amendments to Modernize EDGAR

Washington, DC, May 21, 1999 - The Securities and Exchange Commission recently adopted rule amendments to facilitate the modernization of its Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. The Institute had filed a comment letter on the rule proposals. Beginning June 28, EDGAR will accept filings submitted in HyperText Markup Language (HTML) in addition to documents submitted in the current American Standard Code for Information Interchange (ASCII) format. Also, filers will have the option of accompanying their filings with unofficial copies in Portable Document Format (PDF). Beginning May 24 and continuing through June 25, filers may submit test filings that include documents in HTML and PDF format. The SEC's plans for EDGAR modernization of interest to investment companies and their shareholders are summarized below.

EDGAR Modernization
EDGAR modernization is intended to make the system easier for filers to use, and filed documents more attractive and readable for investors who use the system to access information. Under the current system, filers must submit documents in a text-based ASCII format. In the modernized system, filers may choose to submit documents in either HTML or ASCII. Eventually, HTML will replace ASCII for most filings. Filers may also choose to submit unofficial PDF copies of required filings. Unlike ASCII documents, HTML and PDF documents can include graphics, varied fonts, and other visual displays that filers use when they create documents for delivery to investors. Also, the SEC intends to permit Internet based filings in the near future. The SEC has also adopted a new version of the EDGAR Filer Manual (Release 6.50). The EDGAR Filer Manual contains detailed instructions for preparing and submitting electronic filings.

HTML Format
Beginning on June 28 and extending through early 2000 (the HTML implementation period), EDGAR will impose certain limitations on HTML documents. The SEC will provide limited support for HTML by allowing only certain tags (commands and identifying information) to be accepted by the EDGAR system. After the implementation period, the SEC plans to expand the permitted tag set, so that EDGAR will be able to accept and display graphic and other visual presentations. In order to maximize the likelihood of consistent document appearance across different Internet browsers, the SEC has selected HTML 3.2 as the required standard for HTML documents. Although EDGAR will be able to accept HTML documents beginning on June 28, (and on May 24 on a test basis), the SEC is not now requiring the use of HTML.

PDF Format
The modernized EDGAR system will permit filers to submit a single unofficial PDF copy of each electronic document. PDF documents retain all the fonts, formatting, colors, images and graphics contained in an original document. Unofficial PDF copies will be optional; however, filers may wish to take advantage of this feature in order to improve the appearance of their disclosure documents accessed through EDGAR. The unofficial PDF copy must be substantively equivalent to the official HTML or ASCII document.

Hypertext Links
During the HTML implementation period, HTML documents may not contain hypertext links to external web sites. Similarly, HTML documents may not contain hypertext links to external documents (including exhibits), whether or not the document is part of the same filing. However, electronic filings may contain hypertext links to different sections within a single document. Documents may contain inactive textual references to external sites or documents for informational purposes. The adopting release notes that the SEC will consider expanding the use of hypertext links after the HTML implementation period.

Rule Amendments to Accommodate EDGAR Modernization
Rule 104-Unofficial PDF Copies Included in an Electronic Submission
New Rule 104 of Regulation S-T provides that an electronic submission may include one unofficial PDF copy of each electronic document contained within an electronic submission. The unofficial PDF copy must be substantively equivalent to its associated ASCII or HTML document contained in the submission. Rule 104 provides that unofficial PDF copies are not official filings, and that unofficial PDF copies that are prospectuses retain prospectus liability under Section 12 of the Securities Act of 1933 (1933 Act).

Rule 105(a)-Limitation on Use of HTML Documents
New Rule 105(a) indicates that Form N-SAR, Form 13F, and Financial Data Schedules cannot be filed in HTML and must continue to be filed in ASCII. These documents have standard formats and tagging designed for presentation in ASCII. Accordingly, filers may continue to use existing applications designed to prepare these filings.

Rule 105(c)-Limitation on Hypertext Links
New Rule 105(c) prohibits electronic filers from including in HTML documents hypertext links to sites or documents outside the HTML document. Linked information included in an electronic filing in contravention of the Rule will, however, be subject to the civil liability and anti-fraud provisions of the federal securities laws.

Rule 106-Prohibition Against Executable Code
In order to protect the integrity and the security of the EDGAR system, new Rule 106 prohibits executable code in an EDGAR submission. This rule is intended to reduce the possibility of unauthorized access to sensitive information, and to reduce the possibility of introducing viruses or other destructive applications into the EDGAR system. Rule 106 gives the staff the authority to suspend any submission that contains executable code and to delete from the system any accepted submission that contains executable code. The adopting release indicates that the staff is aware that suspension or deletion of a filing may delay a time-sensitive offering or cause a filer to miss a due date, and that the staff will work with registrants to minimize any adverse consequences.

Rule 497-Filing of Certain Profiles
Paragraph (k)(2)(ii) of Rule 497 under the 1933 Act requires investment company filers to submit additional copies of profiles in the primary form intended for distribution to investors (e.g., paper or electronic media) or, if the profile is distributed primarily on the Internet, to provide the URL in an exhibit to the electronic filing. The SEC has amended paragraph (k)(2)(ii) of Rule 497 to permit registrants to satisfy this requirement through submission of an unofficial PDF copy.

Financial Data Schedules
The SEC has amended the investment company registration forms to eliminate the requirement to include a financial data schedule as an exhibit to the registration statement. The financial data schedule must continue to be filed as an exhibit to Form N-SAR. Although the rule amendments are not effective until June 28, the adopting release indicates that the staff will not object if investment company registrants omit the financial data schedule from prospectus updates beginning immediately.

Form N-SAR
The SEC has amended Rule 101(b) of Regulation S-T to require that all exhibits to Form N-SAR be filed electronically. Accordingly, Form N-SAR exhibits may no longer be filed in paper form.