Rulemaking for EDGAR System

SUMMARY: The Securities and Exchange Commission is modernizing the

Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system.

Beginning June 28, 1999, we will be able to accept filings submitted to

EDGAR in HyperText Markup Language (HTML) in addition to documents

submitted in the current American Standard Code for Information

Interchange (ASCII) format; filers also will have the option of

accompanying their required filings with unofficial copies in Portable

Document Format (PDF). Beginning May 24, 1999, and continuing through

June 25, 1999 (the test period), filers may submit test filings that

include documents in HTML and PDF format; filers electing to submit

test HTML and/or PDF documents during the test period must do so in

accordance with the new rule provisions. In this release, we are

adopting rule amendments reflecting initial changes to filing

requirements resulting from EDGAR modernization, as well as other

changes clarifying or updating our rules.

EFFECTIVE DATE: These rules are effective on June 28, 1999 and apply to

filings submitted on or after that date.

FOR FURTHER INFORMATION CONTACT: If you have questions about the rules

we are adopting, please contact one of the following members of our

staff: in the Division of Investment Management, Ruth Armfield Sanders,

Senior Counsel, (202) 942-0633; and in the Division of Corporation

Finance, Margaret R. Black, EDGAR Specialist, (202) 942-2940. If you

have questions about the development of the modernized EDGAR system,

please contact Richard D. Heroux, EDGAR Program Manager, (202) 942-

8885, in the Office of Information Technology.

SUPPLEMENTARY INFORMATION: Today we are adopting amendments to the

following rules relating to electronic filing on the EDGAR system:

Rules 485, 486, 487, 495, and 497,1 and Form S-

6,2 under the Securities Act of 1933 (Securities Act);

3 Rules 10, 11, 101, 102, 302, 303, 304, 305, 306, 307, and

310 of Regulation S-T; 4 Schedule 14A 5 under the

Securities Exchange Act of 1934 (Exchange Act); 6 Rules 8b-

23 and 8b-32,7 and Form N-SAR,8 under the

Investment Company Act of 1940 (Investment Company Act); 9

and Forms N-1, N-1A, N-2, N-3, N-4, and N-5 10 under the

Securities Act and the Investment Company Act. We also are adding the

following new rules to Regulation S-T: Rules 104, 105, and 106.

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\1\ 17 CFR 230.485, 230.486, 230.487, 230.495, and 230.497.

\2\ 17 CFR 239.16.

\3\ 15 U.S.C. 77a, et seq.

\4\ 17 CFR 232.10, 232.11, 232.101, 232.102, 232.302, 232.303,

232.304, 232.305, 232.306, 232.307, and 232.310.

\5\ 17 CFR 240.101.

\6\ 15 U.S.C. 78a, et seq.

\7\ 17 CFR 270.8b-23 and 8b-32.

\8\ 17 CFR 274.101.

\9\ 15 U.S.C. 80a-1, et seq.

\10\ 17 CFR 239.15 and 274.11, 17 CFR 239.15A and 274.11A, 17

CFR 239.14 and 274.11a-1, 17 CFR 239.17a and 274.11b, 17 CFR 239.17b

and 274.11c, 17 CFR 239.24 and 274.5.

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I. Modernization of EDGAR

A. Background

In 1984, we initiated the EDGAR system to automate the receipt,

processing, and dissemination of documents required to be filed with us

under the Securities Act, the Exchange Act, the Public Utility Holding

Company Act of 1935 (Public Utility Act),11 the Trust

Indenture Act of 1939,12 and the Investment Company Act.

Since 1996, we have required all domestic public companies to file with

us electronically through the EDGAR system, absent an exemption. EDGAR

filings are disseminated electronically and displayed on our web site

at http://www.sec.gov, in the form in which we receive them. The EDGAR

system's broad and rapid dissemination benefits the public by allowing

investors and others to obtain information rapidly in electronic

format. Electronic format is easily searchable and lends itself to

ready financial analysis, using spreadsheets and other methods.

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\11\ 15 U.S.C. 79a, et seq.

\12\ 15 U.S.C. 77sss, et seq.

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Recent technological advances, most notably the rapidly expanding

use of the Internet, have led to unprecedented changes in the means

available to corporations, government agencies, and the investing

public to obtain and disseminate information. Today many companies,

regardless of size, make information available to the public through

Internet web sites. On those sites and through links from one web site

to others, individuals may obtain a vast amount of information in a

matter of seconds. Advanced data presentation methods using audio,

video, and graphic and image material are now available through even

the most inexpensive personal computers or laptops.

As discussed below, we are modernizing the EDGAR system to

accommodate some of the changes in technology that have occurred since

the system was developed. On March 10, 1999, we issued a release

proposing amendments to our rules to reflect initial changes to filing

requirements resulting from EDGAR modernization, as well as certain

other changes to clarify or update the rules.13 In that

release, we proposed to accept filings submitted to EDGAR in HTML

format as well as documents submitted in ASCII format and to allow

filers to accompany their required filings with unofficial copies in

PDF format.14 Today we are adopting these amendments as

proposed.

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\13\ Rulemaking for EDGAR System, Release Nos. 33-7653; 34-

41150; IC-23735 (Mar. 10, 1999) [64 FR 12908] (the proposing

release).

\14\ In the proposing release, we also described further changes

to the system that we plan to make after the HTML implementation

period. We will propose corresponding rule changes closer to that

time.

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We received a number of comment letters with suggestions concerning

the evolving EDGAR system. Many of these comments addressed divergent

concerns of filers, filing agents, disseminators, and public users of

the EDGAR database. We appreciate the need to balance the competing

interests of these parties in order to have a system that adequately

addresses the fundamental needs of each. We have considered and will

continue to consider these comments in connection with future planning

for the system and future rulemaking related to the next stage of EDGAR

modernization following the HTML implementation period.15

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\15\ You may read and copy comment letters in our Public

Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549 in

File No. S-7-9-99. You also may read the comment letters that were

submitted electronically on our web site (http://www.sec.gov).

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Some disseminators and information providers commented that they

would not have enough time to make the required modifications to their

systems to begin accepting HTML and PDF documents on May 24, 1999. We

have decided not to make the rules effective on May 24 as planned.

Instead, during the test period from May 24 through June 25, 1999,

filers may submit test filings that include documents in HTML and PDF

format. Live filings, however,

[[Page 27889]]

must continue to be in ASCII format. The test period should provide

disseminators with sufficient time to assure completion of system

changes and will provide filers the opportunity to test the EDGAR

system's new features. Beginning June 28, filers may make live filings

including documents in HTML and PDF format.

B. Implementation of HTML/PDF Environment

With EDGAR modernization, we hope to make the system easier for

filers to use and the documents more attractive and readable for the

users of public information. Currently, filers must submit electronic

filings to the EDGAR system in a text-based ASCII format. In the

modernized system, for most filings, filers may choose to submit

documents to us in either HTML or in ASCII. We expect that HTML will

eventually replace ASCII for most filings. Filers also may submit

unofficial PDF copies of filings. Unlike ASCII documents, HTML and PDF

documents can include graphics, varied fonts, and other visual displays

that filers use when they create Internet presentations or material for

distribution to shareholders and other investors. In this release, we

refer to the required filings that filers must submit only in either

ASCII or HTML formats as official filings. We refer to the PDF

documents as unofficial PDF copies because filers may not use them

instead of HTML or ASCII documents to meet filing requirements.

Beginning on June 28, 1999 (and on May 24, 1999 on a test basis)

and extending until early 2000 (the HTML implementation period), we are

imposing certain limitations on HTML documents. These limitations are

necessary due to technical issues that we must resolve before full

implementation of the new HTML component of the EDGAR

system.16 We will provide limited support for HTML by

allowing only certain tags (commands and identifying information) to be

accepted by the EDGAR system. Later, we plan to further modernize the

EDGAR system so that it will be able to accept and display HTML

documents that use graphic and other visual presentations. In this

release, we describe how the EDGAR system is changing for the initial

HTML implementation period, and we adopt rule changes to govern EDGAR

filing during this period.17

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\16\ As we stated in the proposing release, the modernized EDGAR

system is designed to be Year 2000 compliant. During the summer of

1999, we will turn the dates forward on the EDGAR system at

specified times to give filers an opportunity to submit test filings

so they can assure themselves that the Commission-owned and -

operated EDGAR components will operate after January 1, 2000. We

will issue an announcement with the details shortly. The

announcement will be posted on our web site. We advise filers to

have their own operating environments certified to be Year 2000

compliant.

\17\ We also have revised the EDGAR Filer Manual. See Release

No. 33-7685 (May 17, 1999). The EDGAR Filer Manual sets forth the

technical formatting requirements governing the preparation and

submission of electronic filings through the EDGAR system. Filers

must comply with the provisions of the Filer Manual to assure timely

acceptance and processing of electronic filings. See Rule 301 of

Regulation S-T [17 CFR 232.301].

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C. Use of HTML

Although the EDGAR system will be able to accept HTML documents

beginning on June 28, 1999 (and on May 24, 1999 on a test basis), we

are not now requiring the use of HTML. However, we expect to require

HTML for most filings in the future, so we encourage filers to use it

and gain experience with this format if they do not have it

already.18 We are providing technical support for filers to

assist them in submitting and correcting HTML documents through our

filer technical support function.

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\18\ See footnote 35 and accompanying text for submissions that

we will keep in ASCII format.

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As proposed, during the HTML implementation period, if HTML is

used, each EDGAR document may consist of no more than one HTML file.

Filers may not submit EDGAR documents composed of multiple linked HTML

files. The EDGAR system will suspend any submission containing any HTML

document composed of more than one file.

D. Use of PDF

In addition to permitting the use of HTML in filings, we are

permitting filers to submit a single unofficial PDF copy of each

electronic document.19 These copies will be disseminated

publicly. We believe that filers may want to submit these copies

because PDF documents retain all the fonts, formatting, colors, images,

and graphics contained in an original document. The unofficial PDF copy

will be optional, but if a filer submits an unofficial PDF copy of a

document, that PDF document must be substantively equivalent

20 to the official HTML or ASCII document of which it is a

copy. Further, filers may not make a submission consisting solely of

PDF documents; filers must include unofficial PDF copies only in

submissions containing official documents in HTML or ASCII format.

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\19\ For example, if a filing consists of a registration

statement plus five exhibits, there are six electronic documents for

EDGAR purposes. Generally, the filer can submit all of these as HTML

documents, all as ASCII documents, or some as HTML and some as ASCII

documents. The filer also has the option to accompany any or all of

the six documents with an unofficial PDF copy. But the rules do not

permit a filer to submit a single unofficial PDF copy including the

registration statement and exhibits; each PDF document should

reflect only one ASCII or HTML document. The rules prohibit filers

from including more PDF documents than the total number of HTML and

ASCII documents combined.

\20\ Substantively equivalent documents are the same in all

respects except for the formatting and inclusion of graphics

(instead of the narrative and/or tabular description of the

graphics). For documents to be substantively equivalent, the text of

the two documents must be identical.

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E. Graphic and Image Material

During the HTML implementation period, we will not accept graphic

or image material in HTML documents.21 The EDGAR system will

suspend submissions made during the HTML implementation period if they

contain tags for graphic or image files. However, the optional,

unofficial PDF copy of an EDGAR document may contain static graphic

and/or image material. After the HTML implementation period, we intend

to propose that filers may include graphic and image material in HTML

documents.

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\21\ Filers should continue to provide a fair and accurate

description of the differences between a version including graphic

or image material and the filed version, as required by Rule 304 of

Regulations S-T [17 CFR 232.304].

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We also will prohibit any EDGAR submission containing animated

graphics (e.g., files with moving corporate logos or other animation),

either in any official document or any unofficial PDF copy. We are

imposing this requirement due to the issues concerning how to capture

and represent the animated graphics, which we cannot print or search,

in defining the official filing.

F. Limitation on Hypertext Links

During the HTML implementation period, we are prohibiting hypertext

links from HTML documents to external web sites. Similarly, we are

prohibiting hypertext links from HTML documents to external documents

(including exhibits), whether or not the document is part of the same

filing. However, electronic filers may include hypertext links to

different sections within a single HTML document.22 A

document may include an inactive textual reference to external sites or

documents for informational purposes,23 but it may not

include a link to the external site or

[[Page 27890]]

document. We will consider expanding the use of hypertext links after

the HTML implementation period.

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\22\ For example, companies might wish to include a prospectus

table of contents containing links to the various sections of the

prospectus.

\23\ It is the staff's position that such an inactive textual

reference will not be deemed to incorporate the material by

reference into the filing. See ITT Corp. (Dec. 6, 1996) and

Baltimore Gas & Electric Co. (Jan. 6, 1997).

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G. HTML Standard; Permissible Tag Set

We are adopting a specific HTML standard for HTML documents

submitted on the EDGAR system during the HTML implementation period.

Because different Internet browsers used by filers or the public may

display the information presented in an HTML document in a different

fashion, a document viewed through one browser may have a different

appearance and layout from the same filing viewed through a different

browser. This would be especially evident when a filing printed in hard

copy from one browser appears significantly different from the same

filing printed out from another browser. Initially, we are maximizing

the likelihood of consistent document appearance across different

browsers by specifying HTML 3.2 as the required standard for HTML

documents.

Some commenters expressed the view that the selection of HTML 3.2

as the standard imposes a burden on systems that are not browser-based.

Other commenters, however, expressed the view that HTML 3.2 was

necessary for standardization and consistency. Still other commenters

urged us to adopt a higher standard such as HTML 4.0. We believe HTML

3.2 represents the best approach at this time. We will consider the

evolution of this standard when appropriate.

We also are adopting a set of permissible HTML 3.2 tags for use in

HTML documents during the HTML implementation period. These permissible

tags allow for most HTML 3.2 formatting capability while eliminating

active content and certain classes of hypertext links.24 We

have included the tag list in the EDGAR Filer Manual. In general, the

EDGAR system will suspend submissions which contain tags that are not

permitted. We anticipate that the permitted tag set will evolve over

time to accommodate the industry standard and needs of filers.

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\24\ The permissible tag set does not include proprietary

extensions that are not supported by all browsers.

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As proposed, we are not at this time allowing EDGAR submissions to

include tables within tables (nested tables). This is because users of

EDGAR information may find it difficult to locate and use information

in documents with nested tables. In addition, as proposed, EDGAR

submissions may not contain tags used to include executable code,

either in any official submission or any unofficial PDF copy, at any

time, either during the HTML implementation period or

subsequently.25 The EDGAR system will suspend any submission

containing executable code.

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\25\ See note 40 and accompanying text.

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II. Rule Amendments To Accommodate EDGAR Modernization

We are adopting the following amendments to our rules and

regulations to accommodate the initial modernization of EDGAR. We are

amending all of the rules as proposed.

A. Amendments to Regulation S-T.

We are amending several provisions of Regulation S-T, which governs

the preparation and submission of electronic filings to us, in

connection with the addition of HTML documents and unofficial PDF

copies to the EDGAR environment.

Rule 11--Definition of Terms used in Part 232. Rule 11

26 contains definitions used in Regulation S-T. We are

adding to the definition section of Regulation S-T the following new

terms: animated graphics; ASCII document; disruptive code; electronic

document; executable code; HTML document; hypertext links or

hyperlinks; and unofficial PDF copy. We also are revising the

definition of electronic filing to make it clear that an electronic

filing may include more than one document.

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\26\ 17 CFR 232.11.

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New Rule 104--Unofficial PDF Copies Included in an Electronic

Submission. Rule 104 provides that an electronic submission may include

one unofficial PDF copy of each electronic document contained within an

electronic submission.27 Each unofficial PDF copy must be

substantively equivalent to its associated ASCII or HTML document

contained in the submission.28 Filers wanting to submit an

unofficial PDF copy to replace one with errors, or to include an

omitted one, must submit the unofficial PDF copy as part of another

electronic submission containing an amendment to the original

submission. The amendment must include an explanatory note that the

purpose of the amendment was to add or replace an unofficial PDF

copy.29 If the amendment was being filed to add or resubmit

an unofficial PDF copy of one or more exhibits, the submission must

include an exhibit document for each exhibit for which an unofficial

PDF copy was being submitted.30

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\27\ Rule 104(a) [17 CFR 232.104(a)]. We also are permitting the

filer to submit an unofficial PDF copy of correspondence or a cover

letter document.

\28\ See note 20 and accompanying text.

\29\ The amendment may consist solely of the cover page (or the

first page of the document), the explanatory note, and the signature

page and exhibit index (where appropriate), and the corresponding

unofficial PDF copy may include the complete text of the official

filing for which the amendment was being submitted.

\30\ The amendment may consist of the cover page (or first page

of the document), the explanatory note, the signature page (where

appropriate), the exhibit index, a separate electronic document for

each exhibit for which an unofficial PDF copy is being submitted,

and the corresponding unofficial PDF copy of each exhibit document.

However, the text of the official exhibit document(s) could contain

only the following legend: RESUBMITTED TO ADD/REPLACE UNOFFICIAL PDF

COPY OF EXHIBIT.

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Rule 104 provides that unofficial PDF copies are not official

filings.31 The rule makes it clear that unofficial PDF

copies that are prospectuses retain prospectus liability under Section

12 of the Securities Act.32 The rule also makes it clear

that an unofficial PDF copy may contain graphic and image material even

though its ASCII (and, during the implementation period, HTML)

counterpart does not contain such material.33

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\31\ Rule 104(d) [17 CFR 232.104(d)].

\32\ Rule 104(e) [17 CFR 232.104(e)].

\33\ Rule 104(b) [17 CFR 232.104(b)].

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We will accept electronic submissions even if an unofficial PDF

copy is flawed and not accepted. In such a case, we will accept the

submission but not the PDF document.34 Otherwise, filers

would risk having a late time-sensitive filing because of a problem

with the unofficial PDF copy.

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\34\ See the discussion of Rule 106 [17 CFR 232.106] below.

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New Rule 105--Limitation on Use of HTML Documents and Unofficial

PDF Copies; Use of Hypertext Links. Filers may not submit Form N-SAR,

Form 13F, or Financial Data Schedules as HTML documents.35

These documents have standard formats and tagging designed for

presentation in ASCII, and their current format facilitates their

downloading and use in other computer applications.

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\35\ Rule 105(a) [17 CFR 232.105(a)]. We are allowing filers the

option of submitting all exhibits to Form N-SAR except Financial

Data Schedules as HTML documents.

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Rule 105 prohibits electronic filers from including in HTML

documents hypertext links to sites or documents outside the HTML

document that is filed with us.36 However, the rule allows

electronic filers to include hypertext links to different sections

within a single HTML document. Rule 105 provides that, if an accepted

filing includes external links in contravention of this rule, we will

not consider information contained in the linked material to be part of

the official filing for determining compliance with reporting

obligations. Such information will, however, continue to be subject to

[[Page 27891]]

the civil liability and anti-fraud provisions of the federal securities

laws.37

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\36\ Rule 105(b) [17 CFR 232.105(b)].

\37\ The rule provides that information contained in the linked

material is not part of the official filing for reporting purposes

in order to prevent a filing from being considered complete when the

entire content of the filing is not available without reference to

another document. This provision should not, however, be viewed as a

statement that linked material is not considered to be part of the

filed document for other purposes.

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Some commenters expressed concerns that this rule would represent

our general position on liability for linked material, including

information that companies and broker-dealers put on their own web

sites. This rule, however, applies only to EDGAR filings and is

narrowly drawn to address the initial stages of EDGAR modernization. We

will further consider the status of links in EDGAR filings if we

propose to expand filers' ability to use links to other documents or

external sites after the HTML implementation period.38

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\38\ We are considering giving more general public guidance on a

variety of issues arising from the use of electronic media in

contexts other than EDGAR, which could include link liability

issues. See note 327 in ``The Regulation of Securities Offerings,''

Securities Act Release No. 7606A (Nov. 13, 1998)[63 FR 67174].

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New Rule 106--Prohibition Against Electronic Submissions Containing

Executable Code. The modernized EDGAR system is designed to minimize

security risks. Accordingly, Rule 106 39 prohibits any EDGAR

submission containing executable code, either in any official

submission or any unofficial PDF copy, at any time, either during the

HTML implementation period or subsequently.40 Executable

code includes, but is not limited to, disruptive code.41

This requirement is necessary to protect the integrity of the EDGAR

system and database, by reducing the possibility of unauthorized access

to sensitive information, and to reduce the possibility of introducing

viruses or other destructive applications into the EDGAR system (and to

any disseminator receiving data from the EDGAR system).

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\39\ 17 CFR 232.106.

\40\ Executable code is defined as instructions to a computer to

carry out operations that use features beyond the ability of the

viewer, reader, or Internet browser to interpret and display HTML,

PDF, and static graphic files. Such code may be in binary (machine

language) or in script form. See the definition of executable code

in Rule 11 of Regulation S-T [17 CFR 232.11]. Thus, scripting

languages, such as JavaScript and similar scripting languages, fall

into this class of executable code, as does Java, ActiveX,

Postscript, and any other programming language.

\41\ The term disruptive code means any active content or other

executable code, or any program or set of electronic computer

instructions inserted into a computer, operating system, or program

that replicates itself or that actually or potentially modifies or

in any way alters, damages, destroys or disrupts the file content or

the operation of any computer, computer file, computer database,

computer system, computer network or software, or as otherwise set

forth in the EDGAR Filer Manual. A violation of Rule 106 or the

relevant provision of the EDGAR Filer Manual also may be a violation

of the Computer Fraud and Abuse Act of 1986, as amended, and other

statutes and laws.

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We will, in general, suspend any attempted submission that our

staff determines contains executable code.42 The EDGAR

system is programmed to detect and prohibit acceptance of such code

during acceptance processing. If a submission is accepted, and our

staff later determines that the accepted submission contains executable

code, our staff may delete any document contained in the electronic

submission from the EDGAR system and direct the electronic filer to

resubmit electronically replacement documents for all or selected

documents deleted from the submission. We are aware that suspending

acceptance of a filing, or deleting it from the EDGAR database, could

have significant consequences to the filer, such as causing a filing to

miss its due date or preventing a time-sensitive filing from moving

forward. Nevertheless, we need to take whatever steps are necessary to

address potential security problems, and our staff will work with

filers to minimize any adverse consequences.

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\42\ If the executable code is contained only in one or more PDF

documents, we will accept the submission but not the PDF

document(s).

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Rule 302--Signatures. Rule 302 43 currently provides

that signatures to or within electronic documents must be in typed

form. We are amending this rule to make it clear that this provision

relates only to required signatures to or within electronic

submissions.44 We anticipate allowing signatures that are

not required to appear as script in HTML documents once we permit

graphic and image material.

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\43\ 17 CFR 232.302.

\44\ We are keeping the rule that required signatures be typed

to ensure legibility of these signatures. We are not requiring

signatures in unofficial PDF copies.

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Rule 304--Graphic, Image, Audio and Video Material. Rule 304

45 currently prohibits the inclusion of graphic, image, or

audio material in an EDGAR document. We are adding the word ``video''

to the rule to make it clear that that information also is

prohibited.46 Rule 304 applies only to official filings, not

to unofficial PDF copies, which may contain graphic and image material

(but not animated graphics, audio or video material).47

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\45\ 17 CFR 232.304.

\46\ As part of a later rulemaking proposal, we anticipate

proposing to lift the prohibition on graphic and image material (but

not on audio or video material) after the HTML implementation

period.

\47\ See Rule 104 [17 CFR 232.104].

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Rule 305--Number of Characters per Line; Tabular and Columnar

Information. Currently, Rule 305 48 limits the number of

characters per line. We are adding paragraph (b) to the rule to provide

that the limitations of paragraph (a) 49 do not apply to

HTML documents.50

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\48\ 17 CFR 232.305.

\49\ I.e., the narrative portion of an electronic document may

not exceed certain character limitations per line and other

formatting restrictions.

\50\ Rule 305(b) [17 CFR 232.305(b)].

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Rule 306--Foreign Language Documents and Symbols. Rule 306

51 provides that foreign currency denominations be expressed

in words or letters in the English language rather than representative

symbols. We are amending Rule 306 to allow HTML documents to include

the representative foreign currency symbols specified in the EDGAR

Filer Manual and to provide that the limitations would not apply to

documents which are unofficial PDF copies.

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\51\ 17 CFR 232.306.

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Rule 307--Bold-Face Type. Rule 307 provides that filers should

present required bold-face type as capital letters in ASCII documents.

We are amending Rule 307 to make it clear that the provision does not

apply to HTML documents because filers are able to include bold-face

type in HTML documents.

Rule 310--Marking Changed Material. Rule 310 52 provides

that the requirement for marking changed materials is satisfied by

inserting the tag before and the tag following a paragraph

containing changed material. We are retaining this redlining convention

and extending it to HTML documents. 53 Further, we are

allowing filers to mark changed material in HTML documents within

paragraphs, as well.54

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\52\ 17 CFR 232.310.

\53\ Filers should not redline PDF documents. While the EDGAR

system will remove the redlining tags from HTML documents before

they are publicly disseminated (just as is currently the case with

ASCII documents), the EDGAR system will not remove the redlining

tags from PDF documents. Therefore, if a filer includes redlining

tags in a PDF document, the disseminated PDF document will contain

redlining tags.

\54\ We caution filers that, while evidence of redlining tags in

HTML documents will not be viewable in the browser, it may be

viewable in the HTML source code.

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[[Page 27892]]

B. Other Rule Amendment in Connection With EDGAR Modernization

Paragraph (k)(2)(ii) of Rule 497 55 requires investment

company filers to submit additional copies of certain forms 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 electronic address (URL) of the profile

page(s) in an exhibit to the electronic filing. We are amending

paragraph (k)(2)(ii) of Rule 497 to allow a filer to submit with its

electronically filed definitive form of profile an unofficial PDF copy

of the profile instead.

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\55\ 17 CFR 230.497(k)(2)(ii).

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C. Miscellaneous Amendments

We also are adopting several electronic filing rule amendments that

are not directly associated with EDGAR modernization.

1. Amendments to Regulation S-T

Rule 10--Form ID. Rule 10 56 provides that filers must

file Form ID, the uniform application for access codes to file on the

EDGAR system, before they begin electronic filing. We are amending Rule

10 to make it clear that filers must submit Form ID in paper format.

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\56\ 17 CFR 232.10.

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Rule 101(a)--Mandated Electronic Submissions and Exceptions. The

note to paragraph (a)(1)(iii) of Rule 101 instructs filers filing

Schedules 13D and 13G with respect to foreign private issuers to file

in paper because one of the required data elements--the IRS tax

identification number--is not available for foreign issuers. However, a

paper filing is no longer necessary. The staff advises these filers to

include in the EDGAR submission header all zeroes (i.e., 00-0000000)

for the IRS tax identification number, so that they may file

electronically. We are amending the note to this rule to formalize the

existing practice and permit electronic filing.

Rules 101(b), 102(e), and 303--Permitted Electronic Submissions;

Exhibits; and Incorporation by Reference.

Currently, electronic filers may submit exhibits to Forms N-SAR,

other than the Financial Data Schedule, either electronically or in

paper.57 We have allowed filers to submit these exhibits in

paper because, during phase-in to electronic filing, registrants could

file their Forms N-SAR electronically on a voluntary basis in advance

of their phase-in date, at a time when they were not able to make any

other electronic filings. With the completion of phase-in, we are now

requiring that filers submit all Form N-SAR exhibits

electronically.58

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\57\ See the former provisions of Rules 101(b)(7), 102(e)(2),

and 303(a)(3)(ii) [17 CFR 101(b)(8), 102(e)(2), and 202(a)(3)(ii)].

\58\ We are removing the last sentence of Instruction F(2) of

Form N-SAR [17 CFR 274.101], which allowed filers to submit exhibits

to the form in paper, and removing the exemption for small business

investment companies, which are now phased-in to electronic filing.

Finally, we are revising Instruction F(1) to correctly reference

Sub-Item 77Q1 (Exhibits).

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Because phase-in has been completed, we also are removing the

references to phase-in for registered investment companies and business

development companies.

2. Other Rule Amendments

Item 22(a)(4) of Schedule 14A and Forms N-1, N-1A, N-2, N-3, N-4,

N-5, and S-6--Financial Data Schedules. We are revising provisions

concerning Financial Data Schedules (Schedules) submitted by registered

investment companies and business development companies. We believe

that electronic filers that are registered investment companies will

provide us with sufficient financial information in Schedule form by

filing their Schedules with their Forms N-SAR.59 Therefore,

we are removing the requirement for registered investment companies to

submit Schedules with other forms and filings.60 Business

development companies will continue to submit Schedules with their Form

10-K filings; face amount certificate companies and other investment

companies filing on forms not unique to investment companies will

continue to submit Schedules with the relevant forms.61

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\59\ Unit investment trusts are not required to submit the

Schedule with their N-SARs.

\60\ See revisions to Item 22(a)(4) of Schedule 14A [17 CFR

240.101]; and Forms N-1 [Secs. 239.15 and 274.11], N-1A

[Secs. 239.15A and 274.11A], N-2 [Secs. 239.14 and 274.11a-1], N-3

[Secs. 239.17a and 274.11b], N-4 [Secs. 239.17b and 274.11c], N-5

[Secs. 239.24 and 274.5], and S-6 [Sec. 239.16]. We also are

revising Rules 485, 486, 487, and 495 [17 CFR 230.485, 486, 487, and

495], which refer to Financial Data Schedule requirements within

registration statement forms.

The staff of the Division of Investment Management will not

object if investment companies do not include Financial Data

Schedules in filings under the above rule and forms submitted before

the effective date of the amendments.

\61\ See Rule 483(e)(2)(ii) [17 CFR 483(e)(2)(ii)].

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Investment Company Act Rules 8b-23 and 8b-32--Incorporation by

Reference; Incorporation of Exhibits by Reference. We are making minor

revisions to Rules 8b-23 and 8b-32 62 to remove the

reference to Regulation S-T Rule 102. This reference is no longer

relevant following completion of phase-in by investment company

registrants.

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\62\ 17 CFR 270.8b-23 and 270.8b-32.

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III. Cost-Benefit Analysis

Our determination in 1984 to disseminate our EDGAR database to the

public marked a milestone in public access to timely information

relating to the nation's securities markets. Since that time,

technology has evolved rapidly. The rules we adopt today reflect this

reality. They represent the first stage of our modernization program,

which will more closely align our technology to industry standards and

maintain the effectiveness of this important resource.

EDGAR modernization will ultimately result in significant benefits

to the securities markets, investors, and other members of the public,

by increasing the accessibility of the information that is filed and

made available through the EDGAR system. Investors will benefit from

EDGAR modernization because they will receive documents that

communicate more effectively. For example, the on-line presentation of

documents formatted in HTML (unlike in ASCII) better accommodates the

sort of indentation, spacing, bullet points, and highlighting that we

encourage in our plain English guidance. Acceptance of unofficial

documents in PDF format should allow even greater preservation of the

original presentation of the document. We are aware that the process of

converting a document to an ASCII format can result in a document that

is difficult to read. Allowing the voluntary filing of HTML documents

is an important first step in the transition to a broader use of HTML

in filings.

Companies that make public filings will benefit from having the

option to file HTML documents and to submit unofficial PDF copies

because their HTML and PDF documents will communicate more effectively

with shareholders and be more attractive for marketing and other

purposes. As investors find that they can more effectively obtain the

information they seek from the EDGAR system, filers should get fewer

requests for paper copies of filings. Some filers that prepare

documents in HTML for purposes of offerings or of company web site

postings may find it less burdensome to convert documents into the

version of HTML provided for in the rules than to convert them into

ASCII.

At the same time, we recognize that the full transition to HTML

formatting will impose some hardware, software, and staffing costs

associated with the modernization of computer systems to industry

standards. At this stage, issuers need not incur any immediate costs

because filing in HTML is voluntary. Some issuers may use filing

agents, such

[[Page 27893]]

as financial printers, if they wish to submit HTML documents without

incurring the system costs themselves. Filing agents that are not HTML-

ready may incur some immediate additional costs to meet any customer

demand for this service. Disseminators of EDGAR information will face

some transitional costs as they revise their software and expand their

storage capacity to accommodate HTML and PDF documents.63

The volume of HTML and PDF documents is likely to be limited at first,

allowing such disseminators of EDGAR information time to scale up their

operations over time. As technology continues to evolve, we believe

these transition costs will be outweighed by longer-term benefits. We

do not have the data to quantify the costs or benefits of these

amendments. We requested comment on the costs and benefits but received

no data.

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\63\ We continually attempt to reduce the costs of the EDGAR

system and to pass those costs along when possible. For example, in

November 1998, under the new EDGAR contract, we were able to effect

a cost savings with the implementation of a new privatized

dissemination system. This resulted in our passing along a cost

savings of nearly $200,000 per year to disseminators when their

yearly subscription cost was reduced from $278,000 to $79,686.

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We are providing a month-long test period during which filers may

submit test filings which include documents in HTML and PDF format.

This test period should provide disseminators with sufficient time to

assure completion of system changes to accommodate acceptance of HTML

and PDF documents. During the test period, our rules will still require

that filers submit live filings entirely in ASCII. Therefore, the

operations of the disseminators should not be disrupted during the test

period. The test period also will provide filers the opportunity to

test the EDGAR system's new features. We considered a further delay in

the implementation of the rules we adopted today. However, in balancing

the interests of all the affected groups, we do not believe that

further delay is warranted.

The rules we adopt today impose no costs related to substantive

disclosure because the new EDGAR rules do not substantively change the

information and disclosure we currently require. Rather, the rules

merely modify and supplement current rules to reflect the expanded

filing formats and modes of presentation through which filers may

submit information to us electronically.

IV. Analysis of Burdens on Competition, Capital Formation and

Efficiency

Section 23(a)(2) of the Exchange Act requires us, in adopting rules

under the Exchange Act, to consider the anti-competitive effects of any

rules that we adopt thereunder. Furthermore, Section 2(b) of the

Securities Act,64 Section 3(f) of the Exchange

Act,65 and Section 2(c) 66 of the Investment

Company Act require us, when engaging in rulemaking, and considering or

determining whether an action is necessary or appropriate in the public

interest, to consider whether the action will promote efficiency,

competition, and capital formation. In compliance with our

responsibilities under these sections, we requested comment on whether

the proposals, if adopted, would promote efficiency, competition, and

capital formation. We encouraged commenters to provide empirical data

or other facts to support their views. We received no comments in

response to the above request.

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\64\ 15 U.S.C. 77b(b).

\65\ 15 U.S.C. 78c(f).

\66\ 15 U.S.C. 80a-2(c).

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In compliance with our responsibilities under the previously

mentioned provisions, we considered whether the amendments would

promote efficiency, competition and capital formation. Although filing

agents and information disseminators may be disparately affected

depending on their technical readiness and programming formats, we

believe that the new rules and amendments will not impose any burden on

competition not necessary or appropriate in the furtherance of the

purposes of the securities laws.

We believe that the new rules and amendments will not have any

adverse effect on capital formation. We believe the amendments will

promote efficiency by giving investors information in a more readable

format and by more closely aligning our technical standards to the

industry's. The new rules and amendments apply equally to all entities

currently required to file on EDGAR. Because the proposed rules and

amendments are designed in part to permit filers to provide information

in a format that will be more useful to investors, the amendments are

appropriate in the public interest and for the protection of investors.

V. Summary of Regulatory Flexibility Act Certification

Our Chairman has certified, under Section 605(b) of the Regulatory

Flexibility Act, 5 U.S.C. 605(b), that the new rules and rule

amendments in this release would not have a significant economic impact

on a substantial number of small entities. The certification,

documenting the factual basis therefor, was attached to the proposing

release as Appendix B. We received no comments on the certification.

VI. Paperwork Reduction Act

The new rules and amendments do not come within the scope of the

Paperwork Reduction Act of 1995 67 because the new rules and

amendments do not create a new collection of information.68

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\67\ 44 U.S.C. 3501, et seq.

\68\ 5 CFR 1320.5(g).

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VII. Statutory Basis

We are adopting the new rules and rule amendments outlined above

under Sections 6, 7, 8, 10 and 19(a) of the Securities Act, Sections 3,

12, 13, 14, 15(d), 23(a) and 35A of the Exchange Act, Sections 3, 5, 6,

7, 10, 12, 13, 14, 17 and 20 of the Public Utility Act,69

Section 319 of the Trust Indenture Act of 1939,70 and

Sections 8, 30, 31 and 38 of the Investment Company Act.71

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\69\ 15 U.S.C. 79a, et seq.

\70\ 15 U.S.C. 77aaa, et seq.

\71\ 15 U.S.C. 80a-1, et seq.

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List of Subjects

17 CFR Parts 230 and 270

Confidential business information, Investment companies, Reporting

and recordkeeping requirements, Securities.

17 CFR Part 232

Administrative practice and procedure, Confidential business

information, Reporting and recordkeeping requirements, Securities.

17 CFR Part 239

Reporting and recordkeeping requirements, Securities.

17 CFR Part 240

Confidential business information, Reporting and recordkeeping

requirements, Securities.

17 CFR Part 274

Investment companies, Reporting and recordkeeping requirements,

Securities.

Text of the Amendments

In accordance with the foregoing, Title 17, Chapter II of the Code

of Federal Regulations is amended as follows:

PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933

1. The authority citation for part 230 continues to read in part as

follows:

Authority: 15 U.S.C. 77b, 77f, 77g, 77h, 77j, 77r, 77s, 77sss,

78c, 78d, 78l, 78m, 78n, 78o, 78w, 78ll(d), 79t, 80a-8, 80a-24, 80a-

28,

[[Page 27894]]

80a-29, 80a-30, and 80a-37, unless otherwise noted.

* * * * *

Sec. 230.485 [Amended]

2. By amending Sec. 230.485 by removing paragraph (f)(2) before the

Note and redesignating paragraph (f)(1) as paragraph (f).

Sec. 230.486 [Amended]

3. By amending Sec. 230.486 by removing paragraph (f)(2) before the

Note and redesignating paragraph (f)(1) as paragraph (f).

Sec. 230.487 [Amended]

4. By amending Sec. 230.487 by removing paragraph (d)(2) and

redesignating paragraph (d)(1) as paragraph (d).

Sec. 230.495 [Amended]

5. By amending Sec. 230.495 by removing paragraph (e)(2) and

redesignating paragraph (e)(1) as paragraph (e).

Sec. 230.497 [Amended]

6. By amending Sec. 230.497 by adding a sentence before the last

sentence in paragraph (k)(2)(ii) to read as follows:

Sec. 230.497 Filing of investment company prospectuses--number of

copies.

* * * * *

(k) * * *

(2) Filing procedures. * * *

(ii) * * * Filers may fulfill the requirements of this paragraph by

submitting with their definitive form of profile filed electronically

under paragraph (k)(1)(ii) of this section an unofficial PDF copy of

the profile in accordance with Sec. 232.104 of this chapter. * * *

PART 232--REGULATION S-T--GENERAL RULES AND REGULATIONS FOR

ELECTRONIC FILINGS

7. The authority citation for part 232 continues to read as

follows:

Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77sss(a),

78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 78ll(d), 79t(a), 80a-8, 80a-

29, 80a-30 and 80a-37.

8. By amending Sec. 232.10 by revising paragraph (b) before the

Note to read as follows:

Sec. 232.10 Application of part 232.

* * * * *

(b) Each registrant, third party, or agent must file in paper

format a Form ID (Secs. 239.63, 249.446, 259.602, 269.7 and 274.402 of

this chapter), the uniform application for access codes to file on

EDGAR, before beginning to file electronically.

* * * * *

9. By amending Sec. 232.11 by removing all paragraph designations;

revising the definition of ``electronic filing,'' and adding the

definitions of ``animated graphics,'' ``ASCII document,'' ``disruptive

code,'' ``electronic document,'' ``executable code,'' ``HTML

document,'' ``hypertext links'' or ``hyperlinks,'' and ``unofficial PDF

copy'' in alphabetical order to read as follows:

Sec. 232.11 Definition of terms used in part 232.

* * * * *

Animated graphics. The term animated graphics means text or images

that do not remain static but that may move when viewed in a browser.

ASCII document. The term ASCII document means an electronic text

document with contents limited to American Standard Code for

Information Interchange (ASCII) characters and that is tagged with

Standard Generalized Mark Up Language (SGML) tags in the format

required for ASCII/SGML documents by the EDGAR Filer Manual.

* * * * *

Disruptive code. The term disruptive code means any active content

or other executable code, or any program or set of electronic computer

instructions inserted into a computer, operating system, or program

that replicates itself or that actually or potentially modifies or in

any way alters, damages, destroys or disrupts the file content or the

operation of any computer, computer file, computer database, computer

system, computer network or software, and as otherwise set forth in the

EDGAR Filer Manual.

* * * * *

Electronic document. The term electronic document means the portion

of an electronic submission separately tagged as an individual document

in the format required by the EDGAR Filer Manual.

* * * * *

Electronic filing. The term electronic filing means one or more

electronic documents filed under the federal securities laws that are

transmitted or delivered to the Commission in electronic format.

* * * * *

Executable code. The term executable code means instructions to a

computer to carry out operations that use features beyond the viewer's,

reader's, or Internet browser's native ability to interpret and display

HTML, PDF, and static graphic files. Such code may be in binary

(machine language) or in script form. Executable code includes

disruptive code.

HTML document. The term HTML document means an electronic text

document tagged with HyperText Markup Language tags in the format

required by the EDGAR Filer Manual.

* * * * *

Hypertext links or hyperlinks. The term hypertext links or

hyperlinks means the representation of an Internet address in a form

that an Internet browser application can recognize as an Internet

address.

* * * * *

Unofficial PDF copy. The term unofficial PDF copy means an optional

copy of an electronic document that may be included in an EDGAR

submission tagged as a Portable Document Format document in the format

required by the EDGAR Filer Manual and submitted in accordance with

Rule 104 of Regulation S-T (Sec. 232.104).

10. By amending Sec. 232.101 by revising the note to paragraph

(a)(1)(iii) and by removing paragraph (b)(7) to read as follows:

Sec. 232.101 Mandated electronic submissions and exceptions.

(a) Mandated electronic submissions. (1) * * *

(iii) * * *

Note to paragraph (a)(1)(iii): Electronic filers filing

Schedules 13D and 13G with respect to foreign private issuers should

include in the submission header all zeroes (i.e., 00-0000000) for

the IRS tax identification number because the EDGAR system requires

an IRS number tag to be inserted for the subject company as a

prerequisite to acceptance of the filing.

* * * * *

11. By amending Sec. 232.102 by revising paragraph (e) to read as

follows:

Sec. 232.102 Exhibits.

* * * * *

(e) Notwithstanding the provisions of paragraphs (a) through (d) of

this section, any incorporation by reference by a registered investment

company or a business development company must relate only to documents

that have been filed in electronic format, unless the document has been

filed in paper under a hardship exemption (Sec. 232.201 or 232.202) and

any required confirming copy has been submitted.

* * * * *

12-15. By adding Secs. 232.104, 232.105 and 232.106 to read as

follows:

[[Page 27895]]

Sec. 232.104 Unofficial PDF copies included in an electronic

submission.

(a) An electronic submission may include one unofficial PDF copy of

each electronic document contained within that submission, tagged in

the format required by the EDGAR Filer Manual.

(b) Except as provided in paragraph (c) of this section, each

unofficial PDF copy must be substantively equivalent to its associated

electronic document contained in the electronic submission. An

unofficial PDF copy may contain graphic and image material (but not

animated graphics, or audio or video material), notwithstanding the

fact that its HTML or ASCII document counterpart may not contain such

material but must contain a fair and accurate narrative description or

tabular representation of any omitted graphic or image material.

(c) If a filer omits an unofficial PDF copy from, or submits one or

more flawed unofficial PDF copies in, the electronic submission of an

official filing, the filer may add or resubmit an unofficial PDF copy

by electronically submitting an amendment to the filing to which it

relates. The amendment must include an explanatory note that the

purpose of the amendment is to add or to correct an unofficial PDF

copy.

(1) If such an amendment is filed, the official amendment may

consist solely of the cover page (or first page of the document), the

explanatory note, and the signature page and exhibit index (where

appropriate). The corresponding unofficial copy must include the

complete text of the official filing document for which the amendment

is being submitted.

(2) If the amendment is being filed to add or resubmit an

unofficial PDF copy of one or more exhibits, the submission may consist

of the following: the official filing--consisting of the cover page (or

first page of the document), the explanatory note, the signature page

(where appropriate), the exhibit index, and a separate electronic

exhibit document for each exhibit for which an unofficial PDF copy is

being submitted--and the corresponding unofficial PDF copy of each

exhibit document. However, the text of the official exhibit document

need not repeat the text of the exhibit; that document may contain only

the following legend: RESUBMITTED TO ADD/REPLACE UNOFFICIAL PDF COPY OF

EXHIBIT.

(d) An unofficial PDF copy is not filed for purposes of section 11

of the Securities Act (15 U.S.C. 77k), section 18 of the Exchange Act

(15 U.S.C. 78r), section 16 of the Public Utility Act (15 U.S.C. 79p),

section 323 of the Trust Indenture Act (15 U.S.C. 77www), or section

34(b) of the Investment Company Act (15 U.S.C. 80a-33(b)), or otherwise

subject to the liabilities of such sections, and is not part of any

registration statement to which it relates. An unofficial PDF copy is,

however, subject to all other civil liability and anti-fraud provisions

of the above Acts or other laws.

(e) Unofficial PDF copies that are prospectuses are subject to

liability under Section 12 of the Securities Act (15 U.S.C. 77l).

Sec. 232.105 Limitation on use of HTML documents and hypertext links.

(a) Electronic filers must submit the following documents in ASCII:

Form N-SAR (Sec. 274.101 of this chapter), Form 13F (Sec. 249.325 of

this chapter), and Financial Data Schedules submitted in accordance

with Item 601(c) of Regulation S-K (Sec. 229.601(c) of this chapter),

Item 601(c) of Regulation S-B (Sec. 228.601(c) of this chapter), or

Rule 483(e) (Sec. 230.483(e) of this chapter). Notwithstanding the

foregoing provision, electronic filers may submit exhibits to Form N-

SAR in HTML, except for Financial Data Schedules, which filers must

submit in ASCII.

(b) Electronic filers may not include in any HTML document

hypertext links to sites, locations, or documents outside the HTML

document, including links to exhibit documents. Electronic filers may

include within an HTML document hypertext links to different sections

within that single HTML document.

(c) If, notwithstanding paragraph (b) of this section, electronic

filers include hypertext links to external sites within a submission,

information contained in such links will not be considered part of the

official filing for determining compliance with reporting obligations;

however, this information is subject to the civil liability and anti-

fraud provisions of the federal securities laws.

Sec. 232.106 Prohibition against electronic submissions containing

executable code.

(a) Electronic submissions must not contain executable code.

Attempted submissions identified as containing executable code will be

suspended, unless the executable code is contained only in one or more

PDF documents, in which case the submission will be accepted but the

PDF document(s) containing executable code will be deleted and not

disseminated.

(b) If an electronic submission has been accepted, and the

Commission staff later determines that the accepted submission contains

executable code, the staff may delete from the EDGAR system the entire

accepted electronic submission or any document contained in the

accepted electronic submission. The Commission staff may direct the

electronic filer to resubmit electronically replacement document(s) or

a replacement submission in its entirety, in compliance with this

provision and the EDGAR Filer Manual.

Note to Sec. 232.106: A violation of this section or the

relevant EDGAR Filer Manual section also may be a violation of the

Computer Fraud and Abuse Act of 1986, as amended, and other statutes

and laws.

16. By amending Sec. 232.302 by revising paragraph (a) to read as

follows:

Sec. 232.302 Signatures.

(a) Required signatures to or within any electronic submission must

be in typed form rather than manual format. When used in connection

with an electronic filing, the term ``signature'' means an electronic

entry in the form of a magnetic impulse or other form of computer data

compilation of any letter or series of letters or characters comprising

a name, executed, adopted or authorized as a signature. Signatures are

not required in unofficial PDF copies submitted in accordance with Rule

104 of Regulation S-T (Sec. 232.104).

* * * * *

17. By amending Sec. 232.303 by revising paragraph (a)(3) to read

as follows:

Sec. 232.303 Incorporation by reference.

(a) * * *

(3) For a registered investment company or a business development

company, documents that have not been filed in electronic format,

unless the document has been filed in paper under a hardship exemption

(Sec. 232.201 or 232.202 of this chapter) and any required confirming

copy has been submitted.

* * * * *

18. By amending Sec. 232.304 by revising the section heading,

paragraphs (a) and (b) and the first sentence of paragraph (c) to read

as follows:

Sec. 232.304 Graphic, image, audio and video material.

(a) If a filer includes graphic, image, audio or video material in

a document delivered to investors and others that may not, in

accordance with the requirements of the EDGAR Filer Manual, be

reproduced in an electronic filing, the electronically filed version of

that document must include a fair and accurate narrative description,

tabular representation or transcript of the omitted material. Such

descriptions, representations or transcripts may be included in the

text of the electronic filing at the point where the graphic, image,

audio or video material is

[[Page 27896]]

presented in the delivered version, or they may be listed in an

appendix to the electronic filing. Immaterial differences between the

delivered and electronically filed versions, such as pagination, color,

type size or style, or corporate logo need not be described.

(b)(1) The graphic, image, audio and video material in the version

of a document delivered to investors and others is deemed part of the

electronic filing and subject to the civil liability and anti-fraud

provisions of the federal securities laws.

(2) Narrative descriptions, tabular representations or transcripts

of graphic, image, audio and video material included in an electronic

filing or appendix thereto also are deemed part of the filing. However,

to the extent such descriptions, representations or transcripts

represent a good faith effort to fairly and accurately describe omitted

graphic, image, audio or video material, they are not subject to the

civil liability and anti-fraud provisions of the federal securities

laws.

(c) An electronic filer must retain for a period of five years a

copy of each publicly distributed document, in the format used, that

contains graphic, image, audio or video material where such material is

not included in the version filed with the Commission. * * *

* * * * *

19. By amending Sec. 232.305 by designating the existing text as

paragraph (a) and adding paragraph (b) to read as follows:

Sec. 232.305 Number of characters per line; tabular and columnar

information.

(a) * * *

(b) Paragraph (a) of this section does not apply to HTML documents.

20. By amending Sec. 232.306 by revising paragraph (b) to read as

follows:

Sec. 232.306 Foreign language documents and symbols.

(a) * * *

(b) Foreign currency denominations must be expressed in words or

letters in the English language rather than representative symbols,

except that HTML documents may include any representative foreign

currency symbols that the EDGAR Filer Manual specifies. The limitations

of this paragraph do not apply to unofficial PDF copies submitted in

accordance with Rule 104 of Regulation S-T (Sec. 232.104).

21. By amending Sec. 232.307 by designating the existing text as

paragraph (a) and by adding paragraph (b) to read as follows:

Sec. 232.307 Boldface type.

(a) * * *

(b) Paragraph (a) of this section does not apply to HTML documents.

22. By revising Sec. 232.310 to read as follows:

Sec. 232.310 Marking changed material.

Provisions requiring the marking of changed materials are satisfied

in ASCII and HTML documents by inserting the tag before and the tag

following a paragraph containing changed material. HTML documents

may be marked to show changed materials within paragraphs. Financial

statements and notes thereto need not be marked for changed material.

PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

23. The authority citation for part 239 continues to read in part

as follows:

Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2,77sss, 78c,

78l, 78m, 78n, 78o(d), 78u-5, 78w(a), 78ll(d), 79e, 79f, 79g, 79j,

79l, 79m, 79n, 79q, 79t, 80a-8, 80a-24, 80a-29, 80a-30 and 80a-37,

unless otherwise noted.

24. By amending Form S-6 (referenced in Sec. 239.16) by removing

Instruction 5 of Instructions as to Exhibits.

Note--The text of Form S-6 and the amendments will not appear in

the Code of Federal Regulations.

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF

1934

24a. The authority citation for part 240 continues to read in part

as follows:

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77eee,

77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78j-1, 78k,

78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78ll(d),

79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 and 80b-11,

unless otherwise noted.

* * * * *

25. By amending Sec. 240.14a-101 by removing paragraph (a)(4) of

Item 22.

PART 270--RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940

26. The authority citation for part 270 continues to read in part

as follows:

Authority: 15 U.S.C. 80a-1 et seq., 80a-34(d), 80a-37, 80a-39

unless otherwise noted:

* * * * *

27. By amending Sec. 270.8b-23 by revising paragraph (a) to read as

follows:

Sec. 270.8b-23 Incorporation by reference.

(a) Any registrant may incorporate by reference, in answer or

partial answer to any item of a registration statement or report, any

information contained elsewhere in the statement or report or any

information contained in any other statement, report or prospectus

filed with the Commission under any Act administered by it, so long as

a copy of the other statement, report or prospectus is filed with each

copy of the registration statement or report in which it is

incorporated by reference. In the case of a registration statement,

report, or prospectus filed in electronic format, the registrant need

not file a copy of the document incorporated by reference if that

document also was filed in electronic format. A registrant may

incorporate by reference matter contained in an exhibit, however, only

to the extent permitted by Secs. 270.8b-24 and 270.8b-32. A registrant

may not incorporate by reference a Financial Data Schedule.

* * * * *

28. By amending Sec. 270.8b-32 by revising paragraph (c) to read as

follows:

Sec. 270.8b-32 Incorporation of exhibits by reference.

* * * * *

(c) Electronic filings. (1) A registrant may incorporate by

reference into a registration statement or report required to be filed

electronically only exhibits that have been filed in electronic format,

unless the exhibit has been filed in paper under a hardship exemption

(Sec. 232.201 or 232.202 of this chapter) and any required confirming

copy has been submitted.

(2) Notwithstanding paragraph (c)(1) of this section, a registrant

may not incorporate by reference a Financial Data Schedule.

PART 274--FORMS PRESCRIBED UNDER THE INVESTMENT COMPANY ACT OF 1940

29. The authority citation for part 274 continues to read as

follows:

Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78l, 78m,

78n, 78o(d), 80a-8, 80a-24, and 80a-29, unless otherwise noted.

30. By amending Form N-SAR (referenced in Sec. 274.101) by revising

General Instruction F to read as follows:

Note--The text of Form N-SAR and the amendments will not appear

in the Code of Federal Regulations.

Instructions and Form

FORM N-SAR

SEMI-ANNUAL REPORT

FOR REGISTERED INVESTMENT COMPANIES

* * * * *

GENERAL INSTRUCTIONS

* * * * *

[[Page 27897]]

F. Filings on EDGAR

(1) Attention is directed to Sub-Item 77Q1 (Exhibits) for certain

items of financial information that are required (Financial Data

Schedule).

(2) Management investment companies must file Form N-SAR

electronically by direct electronic transmission only, and in

accordance with the EDGAR Filer Manual. Filing of the form on magnetic

tapes or diskettes is not permitted.

* * * * *

PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

PART 274--FORMS PRESCRIBED UNDER THE INVESTMENT COMPANY ACT OF 1940

Note--The text of Forms N-2, N-1, N-1A, N-3, N-4 and N-5 and the

amendments will not appear in the Code of Federal Regulations.

31. By amending Form N-2 (referenced in Secs. 239.14 and 274.11a-1)

by removing General Instruction I and redesignating General Instruction

J as General Instruction I and removing paragraph 2.r of Item 24 of

Part C.

32. By amending Form N-1 (referenced in Secs. 239.15 and 274.11) by

removing General Instruction H and paragraph (b)(16) to Item 1 of Part

II.

33. By amending Form N-1A (referenced in Secs. 239.15A and 274.11A)

by removing paragraph (n) of Item 23 and by redesignating paragraph (o)

of Item 23 as paragraph (n).

34. By amending Form N-3 (referenced in Secs. 239.17a and 274.11b)

by removing General Instruction J and paragraph (b)(17) to Item 28 of

Part C.

35. By amending Form N-4 (referenced in Secs. 239.17b and 274.11c)

by removing General Instruction J and paragraph (b)(14) to Item 24 of

Part C.

36. By amending Form N-5 (referenced in Secs. 239.24 and 274.5) by

removing General Instruction H and Instruction 13 to Instructions as to

Exhibits.

Dated: May 17, 1999.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 99-12811 Filed 5-20-99; 8:45 am]

BILLING CODE 8010-01-U