SEC Adopts Rule Amendments for EDGAR System

Washington, DC, May 1, 2000 - The Securities and Exchange Commission recently adopted rule amendments in connection with the next stage of EDGAR modernization (EDGAR Release 7.0). EDGAR Release 7.0 will enable filers to:

include graphic and image files in HTML filings,
include hyperlinks between documents within a submission and to other documents in the EDGAR database, and
submit filings via the Internet. In addition, the rule amendments eliminate the requirement to file a Financial Data Schedule with Form N-SAR for filings made after January 1, 2001.

EDGAR Release 7.0, which is a Windows based system, will be available for filers to use beginning May 30 of this year. The SEC will continue to support the current EDGAR release, which is a DOS based system, through November 1, 2000. The Institute filed a comment letter after the

HTML Filings
Since its inception, the EDGAR system has accepted filings in ASCII format. In June 1999, the SEC began allowing filers to submit documents to EDGAR in HTML format. The SEC has not yet proposed to require filings be submitted in HTML. However, the Adopting Release indicates that the Commission expects to require most filings be submitted in HTML in the future and urges filers to use HTML for their filings and gain experience with it. The SEC is adopting an expanded set of permissible HTML tags in connection with EDGAR Release 7.0. The Adopting Release indicates that Form N-SAR and Form 13F will continue to be filed in ASCII format.

Graphic and Image Material
EDGAR Release 7.0 will permit graphic and image material in HTML documents. The SEC considered three approaches to graphics in HTML filings:

make their use strictly optional,
require graphics in HTML documents only where the Commission’s rules require graphics, or
require graphics in HTML documents wherever the documents distributed to shareholders or potential investors contain graphics.

Consistent with the proposing release, the Commission has amended Rule 304 of Regulation S-T to require graphics in HTML filings only in the limited circumstances where SEC rules require graphics (i.e., the line graph comparison required by Item 5(b)(1) of Form N-1A). Consistent with existing practice, registrants that file in ASCII must include a table or chart depicting the line graph comparison.

Expanded Use of Hypertext Links
EDGAR Release 7.0 will allow hypertext links to other documents within the same filing (i.e., exhibits). In addition, filers will be able to include hypertext links to documents contained in other official filings in the EDGAR database. For example, filers may link from a document to previously filed documents that are incorporated by reference. All links outside the EDGAR database are prohibited, including links to an issuer’s website. The Adopting Release notes that several commenters urged the Commission to consider permitting broader use of links, noting that links can assist investors by providing educational material. The Adopting Release indicates that the Commission may revisit this issue in the future.

Internet Transmission of Filings
EDGAR Release 7.0 will enable filing via an Internet service provider. The SEC will provide security through secure socket layer encrypted transmissions and certificates. The SEC will not require, but will permit filers to use client side certificates.

Financial Data Schedules
The Commission has decided to eliminate the requirement to file a financial data schedule with Form N-SAR. The Commission has adopted a deferred effective date of January 1, 2001 for the elimination of the financial data schedule in order to reduce the burden on users and developers of after-market products that may rely on the information.

The Institute filed a comment letter regarding the SEC proposal on April 3.