[Federal Register Volume 60, Number 25 (Tuesday, February 7, 1995)]
[Proposed Rules]
[Pages 7146-7152]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2901]



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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 270 and 274

[Release Nos. 33-7133; IC-20874; S7-3-95]
RIN 3235-AG29


Registration Fees for Certain Investment Companies

AGENCY: Securities and Exchange Commission.

ACTION: Proposal of rule amendments.

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SUMMARY: The Commission is proposing amendments to rules 24f-1 and 24f-
2 under the Investment Company Act of 1940, the rules that permit 
certain investment companies to register securities sold in excess of 
the number of shares included in a registration statement and to 
register an indefinite number of securities under the Securities Act of 
1933. The Commission is also proposing a new form, Form 24F-2, which 
would serve as the form for annual notices filed under rule 24f-2. The 
proposed amendments and the new form would clarify the application of 
certain provisions of rule 24f-2 and would make the rule's filing 
deadlines more flexible under certain circumstances.

DATES: Comments on the proposed amendments should be received on or 
before March 24, 1995.
ADDRESSES: Comments should be submitted in triplicate to Jonathan G. 
Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, 
NW., Washington, DC. 20549. All comment letters should refer to File 
No. S7-3-95. All comments received will be available for public 
inspection and copying in the Commission's Public Reference Room, 450 
Fifth Street, NW., Washington, DC. 20549.

FOR FURTHER INFORMATION CONTACT: Karen J. Garnett, Attorney, Office of 
Disclosure and Adviser Regulation, (202) 942-0728, or Carolyn A. 
Miller, Senior Financial Analyst, Office of Financial Analysis, (202) 
942-0510, Division of Investment Management, Securities and Exchange 
Commission, 450 Fifth Street, NW., Washington, DC. 20549.

SUPPLEMENTARY INFORMATION: The Commission is proposing amendments to 
rules 24f-1 (17 CFR 270.24f-1) and 24f-2 (17 CFR 270.24f-2) under the 
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) and a new Form 
24F-2 (17 CFR 274.24).

Executive Summary

    The Commission is proposing to amend rule 24f-2 under the 
Investment Company Act of 1940 (``1940 Act''), the rule that permits 
certain investment companies to register an indefinite number of 
securities under the Securities Act of 1933 [15 U.S.C. 77a et seq.] 
(``Securities Act''). The amendments would clarify that annual notices 
required by rule 24f-2 will be deemed timely filed if the investment 
company establishes that it timely transmitted the notice to a company 
or governmental entity that guaranteed delivery to the Commission no 
later than the filing date. The amendments would make it easier to 
compute required filing dates and time periods and clarify the 
operation of the termination provisions of rule 24f-2 in the case of 
investment company business combination transactions. The Commission is 
also proposing Form 24F-2, a standard form for annual notices required 
by the rule. Form 24F-2 would request the information currently 
required for annual notices by rule 24f-2 and would also include a work 
sheet for calculating filing fees. The form would improve the accuracy 
of information contained in Rule 24f-2 Notices and improve the 
Commission's ability to process the notices. Finally, the Commission is 
proposing conforming amendments to rule 24f-1, the rule that permits 
certain investment companies to register securities sold in excess of 
the number of shares included in a registration statement.

I. Background

    Section 6(b) of the Securities Act (15 U.S.C. 77f(b)) specifies the 
fees that must be paid in connection with registering securities with 
the Commission under the Securities Act. Section 24 of the 1940 Act (15 
U.S.C. 80a-24) modifies these provisions for certain investment 
companies [[Page 7147]] (``funds'').\1\ Section 24 was intended to 
address the problem of inadvertent ``oversales,'' i.e., sales in excess 
of securities registered, that could easily occur with a fund that 
continually issues and redeems securities.\2\

    \1\These companies include face amount certificate companies, 
open-end management investment companies, and unit investment 
trusts. Rule 24f-2(a)(1) (17 CFR 270.24f-2(a)(1)).
    \2\See Investment Company Act Rel. No. 15611 (Mar. 9, 1987) (52 
FR 8302 (Mar. 17, 1987)) (proposing to revise the registration 
requirements under rule 24f-2 for certain unit investment trusts).
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    Rule 24f-2 under the 1940 Act permits funds to register an 
indefinite number of securities. A fund that makes a declaration to be 
governed by that rule (``Rule 24f-2 declaration'') pays an initial 
election fee of $500. Once a fund makes its Rule 24f-2 declaration, it 
must file a notice within six months after the close of each fiscal 
year (``Rule 24f-2 Notice'') and pay a fee based upon the number of 
shares sold during the fiscal year.\3\ If the fund files its Rule 24f-2 
Notice within two months after the close of its fiscal year, paragraph 
(c) of rule 24f-2 permits the fund to deduct the value of shares 
redeemed from the value of shares sold in calculating the amount of 
fees due.\4\ This netting provision can result in substantial savings 
to funds and their shareholders.

    \3\Rules 24f-2(a)(1), (a)(3), and (b)(1) (17 CFR 270.24f-
2(a)(1),(a)(3), and (b)(1)).
    \4\Rule 24f-2(c) [17 CFR 270.24f-2(c)]. A more detailed 
explanation of the operation of rule 24f-2 is set out in Investment 
Company Act Rel. No. 15611 (Mar. 9, 1987) (52 FR 8302 (Mar. 17, 
1987)).
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    Since its adoption in 1977, rule 24f-2 has allowed funds to comply 
with the registration requirements of the Securities Act without the 
burden of estimating the number of shares they will sell each year or 
filing post-effective amendments to register shares sold in excess of 
such estimates. At the same time, certain questions have arisen in 
connection with the rule. The Commission has reviewed the operation of 
rule 24f-2 and has concluded that certain changes to the rule may be 
appropriate.

II. Proposed Amendments to Rule   24f-2

A. Delayed Filings

    The Commission is proposing new paragraph (f) to rule 24f-2 to 
clarify the date on which a Rule 24f-2 Notice will be deemed filed with 
the Commission. As with other filings under the 1940 Act, a Rule 24f-2 
Notice is currently deemed filed with the Commission on the date it is 
actually received by the Commission.\5\ The consequences of missing the 
rule's filing deadlines can be severe. If a fund's Rule 24f-2 Notice 
arrives at the Commission more than two months after the end of the 
fund's fiscal year, the fund cannot use the netting provision of 
paragraph (c) of the rule. If the fund misses the six month deadline, 
its Rule 24f-2 declaration terminates.

    \5\Rule 0-2 under the 1940 Act (17 CFR 270.02). Cf. section 6(c) 
(15 U.S.C. 77f(c)) of the Securities Act (15 U.S.C. 77a et seq.), 
rule 0-4 (17 CFR 275.04) under the Investment Advisers Act of 1940 
(15 U.S.C. 80b-1 et seq.), and rule 0-3 (17 CFR 240.03) under the 
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
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    Recently the Commission has had to address the consequences of late 
filings by funds that made a good faith effort to file Rule 24f-2 
Notices within the two month period but whose filings did not reach the 
Commission until after the two-month deadline expired. The Commission 
has issued exemptive orders pursuant to its authority under section 
6(c) of the 1940 Act\6\ to allow these funds to take advantage of the 
netting provisions.\7\ In four cases, the fund mailed its Rule 24f-2 
Notice through the United States Postal Service at least seven days 
before the expiration of the two month period. Three other funds 
engaged a same-day courier service to deliver their Rule 24f-2 Notices 
on the last day of the two-month period. In each case, the Rule 24f-2 
Notice was not received by the Commission until after the deadline had 
passed. The Commission determined in each case that the fund was not at 
fault for the late filing, and that granting an exemption from the 
provisions of rule 24f-2 was appropriate in the public interest and 
consistent with the protection of investors and the purposes of the 
1940 Act.

    \6\15 U.S.C. 80a-6(c).
    \7\The Flex Funds, Investment Company Act Rel. Nos. 19008 (Oct. 
8, 1992) 57 FR 47361 (Oct. 15, 1992) (Notice of Application) and 
19074 (Nov. 3, 1992) 52 SEC Docket 3632 (Order); Invesco Treasurer's 
Series Trust, Investment Company Act Rel. Nos. 20503 (Aug. 25, 1994) 
59 FR 45054 (Aug. 31, 1994) (Notice of Application) and 20564 (Sep. 
20, 1994) 57 SEC Docket 1298 (Order); Kidder Peabody Premium Account 
Fund and Kidder Peabody Government Money Fund, Inc., Investment 
Company Act Rel. Nos. 20527 (Sep. 2, 1994) 59 FR 46873 (Sep. 12, 
1994) (Notice of Application) and 20586 (Sep. 28, 1994) 57 SEC 
Docket 20986 (Order); ACM Institutional Reserves, Inc., Investment 
Company Act Rel. Nos. 20574 (Sep. 26, 1994) 59 FR 50312 (Oct. 3, 
1994) (Notice of Application) and 20645 (Oct. 21, 1994) 57 SEC 
Docket 2705 (Order); A.T. Ohio Municipal Money Fund and The Victory 
Funds, Investment Company Act Rel. Nos. 20811 (Dec. 29, 1994) 60 FR 
2166 (Jan. 6, 1995) (Notice of Application) and 20854 (Jan. 24, 
1995) (Order).
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    The netting provision of rule 24f-2(c) is intended to encourage 
early filing of Rule 24f-2 Notices, not to penalize funds that file 
Rule 24f-2 Notices more than two months after the close of their fiscal 
year.\8\ The Commission's experience with rule 24f-2 demonstrates that 
the purposes of the rule are best served if funds give prompt attention 
to their filing requirements.\9\ Nevertheless, it may not be 
appropriate for a fund's filing fees to increase substantially as a 
result of the failure of a third party that guaranteed timely delivery 
to the Commission.

    \8\Investment Company Act Rel. No. 9989 (Nov. 3, 1977) (42 FR 
58400 (Nov. 9, 1977) (adopting rule 24f-2).
    \9\Investment Company Act Rel. No. 13624 (Nov. 14, 1983) (48 FR 
52433 (Nov. 18, 1983) (adopting amendments to rule 24f-2).
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    Proposed paragraph (f) to rule 24f-2 would permit a fund whose Rule 
24f-2 Notice reaches the Commission after the expiration of the two 
month period to take advantage of the netting provisions of rule 24f-
2(c), if the fund establishes that it timely transmitted the notice to 
a company or governmental entity that guaranteed delivery to the 
Commission no later than the filing date.\10\ This provision would 
apply to both the six month deadline for filing Rule 24f-2 Notices and 
the two month deadline for taking advantage of the netting 
provision.\11\ If this provision is adopted, the Commission would not 
expect to entertain further exemptive applications from late filers. 
Comment is requested on whether there are other circumstances under 
which filings that do not reach the Commission on a timely basis should 
be deemed timely filed.

    \10\This provision would be substantially the same as rule 16a-
3(h) under the Securities Exchange Act of 1934 (17 CFR 240.16a-3), 
which governs filing of periodic reports of beneficial ownership of 
stock (Forms 3, 4, and 5) by certain corporate ``insiders.'' See 
Securities Act Rel. No. 6389 (Mar. 8, 1982) (47 FR 1125-01 (Mar. 16, 
1982)) (adopting rule 16a-3(h)).
    \11\The amendments would change the deadlines for filing Rule 
24f-2 Notices from six months and two months to 180 days and 60 
days, respectively. See infra ``Calculation of Time Periods.''
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    Funds that file Rule 24f-2 Notices by direct transmission on the 
Commission's EDGAR system (``electronic filers'') would not be affected 
by this provision, since the timeliness of their filings does not 
depend upon the mail or courier services.\12\ While an electronic 
filing may be delayed for technical reasons, the rules governing 
electronic filings contain adequate procedures to address transmission 
problems.\13\

    \12\The term ``direct transmission'' means the transmission of 
electronic submissions via a telephonic communication session. 17 
CFR 232.11(b).
    \13\Regulation S-T provides that if an electronic filer in good 
faith attempts to file a document in a timely manner but the filing 
is delayed due to technical difficulties beyond the filer's control, 
the electronic filer may request an adjustment of the filing date, 
and the Commission, or the staff acting pursuant to delegated 
authority, may grant the request if it appears that such adjustment 
is appropriate. 17 CFR 232.13(b). [[Page 7148]] 
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B. Dividend Reinvestment Shares

    Shares issued in connection with dividend reinvestment plans 
(``DRIP shares'') generally are not treated as ``sales'' of stock for 
purposes of registration requirements under the Securities Act,\14\ and 
many funds typically do not include DRIP shares as ``sales'' for 
purposes of rule 24f-2. Some of these funds, however, include DRIP 
shares in determining the amount of shares redeemed during the fiscal 
year for purposes of rule 24f-2's netting provision. This method of 
counting shares is inconsistent with the purpose of the netting 
provision, which was intended to recognize that a substantial portion 
of shares being registered were issued to replace redeemed shares that 
had previously been registered under the Securities Act.\15\

    \14\Securities Act Rel. No. 33-929 (July 29, 1936) (11 FR 
10957).
    \15\See Investment Company Act Rel. No. 9819 (June 16, 1977)[42 
FR 31781 (June 23, 1977)] (adopting the netting provision of rule 
24e-2 under the Investment Company Act).
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    The Commission proposes to amend rule 24f-2 to require funds taking 
advantage of the rule's netting provisions to include DRIP shares when 
determining the amount of shares sold and redeemed during the fiscal 
year.\16\ This amendment would ensure consistent treatment of DRIP 
shares without imposing the recordkeeping burdens that might accompany 
a requirement that these shares be excluded from redeemed shares for 
purposes of rule 24f-2's netting provision. Comment is requested on 
alternative approaches that would prevent inconsistent treatment of 
DRIP shares under rule 24f-2's netting provisions. One approach would 
require funds to determine the ratio of DRIP shares issued during the 
period to shares sold in transactions registered under the Securities 
Act and to apply that ratio to determine the amount of redeemed shares 
that would be available under the rule's netting provision.

    \16\The proposed requirement would not affect the Commission's 
policy as stated in Securities Act Rel. No. 33-929 (Jul. 29, 1936); 
fund DRIP shares would be included as sales only for purposes of the 
netting provision of rule 24f-2.
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C. Mergers and Other Business Combinations

    Paragraph (b)(3) of rule 24f-2 (17 CFR 270.24f-2(b)(3)) requires a 
fund planning to cease operations to file a post-effective amendment 
terminating the Rule 24f-2 declaration and file a Rule 24f-2 Notice 
``before ceasing operations.'' In the case of investment company 
business combination transactions, especially those involving a 
liquidation, merger, or sale of assets, the operation of the rule is 
unclear. While in most cases operations cease upon consummation of the 
transaction, it may be impractical for the fund to file before the 
transaction since sales and redemptions may be occurring until the time 
of the transaction. In addition, paragraph (b)(3) is silent as to the 
applicability of the netting provisions of paragraph (c) when a fund 
files a Rule 24f-2 Notice in connection with ceasing operations.
    The Commission is proposing to amend rule 24f-2 to delete the 
requirement that a fund file its final Rule 24f-2 Notice prior to 
ceasing operations and, in its place, provide that if a fund ceases 
operations, the date it ceases operations is the end of its fiscal year 
for purposes of rule 24f-2. As a result, a fund (or its successor) 
would have to file a final Rule 24f-2 Notice within 180 days after 
ceasing operations and pay registration fees on all shares sold during 
the fiscal year. If a fund files the Rule 24f-2 Notice within sixty 
days after ceasing operations, it would be permitted, under paragraph 
(c), to net redemptions made during the period after the end of the 
last fiscal year against sales during that period.17

    \17\This approach is similar to that taken in rule 8f-1 under 
the 1940 Act (17 CFR 270.8f-1), which requires a registered 
investment company winding up its affairs or being merged into or 
consolidated with another investment company to file an application 
for an order declaring that the company has ceased to be a 
registered investment company after the transaction has occurred.
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    For funds involved in certain business combination transactions, 
revised paragraph (b)(3) would specify that a fund ceases operations 
for purposes of rule 24f-2 on the date that the fund's assets are 
distributed in a liquidation, the effective date of a merger, or, when 
there has been a sale of all or substantially all of the fund's assets, 
the date those assets are transferred. The revised paragraph would also 
clarify that certain other transactions--transactions for the purpose 
of changing the fund's state of incorporation or form of organization--
would not result in the company ceasing operations.18 Instead, 
under this type of reorganization the successor company would succeed 
to all assets and liabilities of the fund, including the registration 
fee liabilities (net of any redemption credits) under rule 24f-
2.19

    \18\These transactions would be limited to those reorganizations 
under which the successor issuer is permitted to succeed to the 
registration statement of the fund under rule 414 of Regulation C of 
the Securities Act (17 CFR 230.414). This provision would codify a 
longstanding staff interpretation of rule 24f-2(b)(3). See, e.g., 
Lowry Market Timing Fund, Inc. (pub. avail. Jan. 9, 1985); Frank 
Russell Investment Company (pub. avail. Dec. 3, 1984).
    \19\Rule 414(b) (17 CFR 230.414(b)) requires that the succession 
result in the successor issuer acquiring all of the assets of and 
assuming all of the liabilities and obligations of the issuer. In 
combinations other than this type of reorganization, while the 
successor company would succeed to the fund's registration fee 
liabilities (as it would all other liabilities), it may only use the 
fund's redemption credits against the fund's registration fee 
liabilities--not those of the successor company.
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D. Calculation of Time Periods

    The Commission is proposing to revise paragraphs (b)(1) and (c) of 
Rule 24f-2 to replace the ``six month'' and ``two month'' time periods 
with ``180 day'' and ``60 day'' time periods, respectively. The current 
rule's references to ``months'' has resulted in different periods 
depending upon the months involved and is inconsistent with the timing 
provisions in other Commission rules.20 This has, on occasion, 
caused some confusion among funds about determining filing deadlines. 
To further clarify how to calculate time periods, a new paragraph (e) 
would be added to the rule specifying that the first day of the time 
periods is the first calendar day of the fiscal year following the 
fiscal year for which the Rule 24f-2 Notice is filed. The Commission is 
proposing similar amendments to rule 24f-1, which permits funds with 
effective registration statements to file a notification that has the 
effect of registering shares sold in excess of the number of shares 
previously registered.21

    \20\See, e.g., rule 485 under the Securities Act (17 CFR 
230.485).
    \21\The six month time periods referred to in paragraphs (a) and 
(c) of the rule (17 CFR 270.24f-1(a), 270.24f-1(c)) would be changed 
to 180 days.
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III. Form 24F-2

    Rule 24f-2 currently specifies the information which funds must 
include in a Rule 24f-2 Notice, but generally does not require that the 
information be presented in any particular format.22 The 
Commission believes that a standard form for Rule 24f-2 Notices will 
facilitate the calculation of fees due under rule 24f-2 and reduce 
errors in the calculation of filing fees. The Commission's ability to 
process Rule 24f-2 Notices and detect errors should also be improved by 
a standard form.

    \22\Paragraph (b)(1) of the rule currently specifies the 
information that must appear in a Rule 24f-2 Notice. Most of these 
items would be deleted from the rule if the form is adopted.
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    Proposed Form 24F-2 consists of twelve items.23 The first four 
items [[Page 7149]] require basic identifying information: The name and 
address of the fund; the class of shares or series to which the filing 
relates;24 the Securities Act file number of the registration 
statement on which the shares are registered; and the last day of the 
fiscal-year for which the Rule 24f-2 Notice is filed.

    \23\The proposed Form also contains several instructions 
concerning completion and filing of the Form which incorporate 
provisions of the rule. For example, Instruction A.3 incorporates 
the proposed amendments to paragraph (b)(3) of rule 24f-2 regarding 
the filing requirements for companies that cease operations, and 
Instruction D.3 incorporates proposed paragraph (f) of rule 24f-2, 
under which a form would be deemed timely filed if the fund 
establishes that it timely transmitted the form to a third party 
that guaranteed delivery no later than the required filing date.
    \24\The proposed instructions clarify how the rule applies to 
funds that offer more than one class or series of securities. 
Instruction A.3 of the form makes it clear that an issuer may file a 
single Rule 24f-2 Notice for more than one class or series, provided 
each class or series has the same fiscal year end and is registered 
on the same Securities Act registration statement. See Letter to 
Registrant, Feb. 25, 1994, at 3 (hereinafter, 1994 Generic Comment 
Letter). This instruction would not affect the method of allocating 
expenses among multiple classes of funds in accordance with existing 
orders or proposed rule 18f-3 under the 1940 Act; a multiple class 
fund could net credits for redemptions of shares of one class 
against sales of shares of another class only if the fund's 
exemptive order or plan under rule 18f-3 treats federal securities 
registration fees as a fund expense and does not provide for the 
allocation of those fees on a class by class basis. See Investment 
Company Act Rel. No. 19955 (Dec. 15, 1993) (58 FR 68074 (Dec. 23, 
1993)) (proposing rule 18f-3).
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    Items 5 and 6 would be completed only if the fund fails to file its 
Rule 24f-2 Notice within 180 days after its fiscal year end. In such 
cases, the fund's declaration to register an indefinite number of 
shares is terminated on the next business day.25 As under the 
current rule, such fund must file a separate Form 24F-2 with respect to 
sales of securities made pursuant to the declaration during (1) the 
fiscal year for which the notice was not timely filed, and (2) the 
period after the close of the fiscal year but before the declaration 
was terminated. Item 5 would require the fund to indicate whether the 
form is being filed for purposes of reporting securities sold after the 
close of the fiscal year but before termination of the fund's Rule 24f-
2 declaration. The fund would report the date of termination of its 
Rule 24f-2 declaration in Item 6.

    \25\Rule 24f-2(b)(2) (17 CFR 270.24f-2(b)(2)).
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    Items 7 through 11 would require funds to identify the shares sold 
during the fiscal year for which registration fees have previously been 
paid or which must be accounted for in determining the fee payable with 
the Rule 24f-2 Notice. This information is substantially the same as 
that currently required by a Rule 24f-2 Notice.26 The only 
significant change would be that the form would require information 
concerning DRIP shares. This item reflects the proposed amendment to 
paragraph (c) of Rule 24f-2, which would require funds to include all 
securities issued pursuant to DRIPs in the fund's aggregate sales for 
purposes of calculating registration fees under the rule's netting 
provisions.27

    \26\The information to be provided in items 7 and 8 is not 
required to determine the fee due, although rule 24f-2 currently 
requires funds to report this information in annual notices. This 
information assists the Commission staff and fund compliance 
personnel in determining whether the issuer has complied with the 
registration requirements of the Securities Act for shares other 
than those that are covered by the fund's rule 24f-2 declaration.
    \27\Instruction B.5 would clarify that this item should be 
completed only if the issuer is using the netting provision of rule 
24f-2(c) to calculate its registration fee. For further discussion 
of the proposed amendment, see supra ``Dividend Reinvestment 
Shares.''
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    Proposed item 12 is a work sheet for calculating the fee payable 
with the notice. The fee calculation is presented in tabular format to 
facilitate the Commission staff's review of filing fees for purposes of 
determining whether a fund has paid the appropriate amount. The work 
sheet contains seven line items:
    (i) The aggregate sale price of securities sold during the fiscal 
year in reliance on Rule 24f-2;
    (ii) The aggregate price of DRIP shares (if not included in (i));
    (iii) The aggregate price of shares redeemed or repurchased during 
the fiscal year;
    (iv) The aggregate price of shares redeemed or repurchased and 
previously applied as a reduction to filing fees pursuant to Rule 24e-
2;28

    \28\Section 24(e)(1) of the 1940 Act permits a fund to file a 
post-effective amendment to its Securities Act registration 
statement to increase the number of securities registered. Rule 24e-
2 provides that the fee to be paid at the time of filing such post-
effective amendment will be based on the maximum aggregate offering 
price at which the additional securities will be offered. This 
filing fee may be reduced by the amount of securities redeemed or 
repurchased by the issuer in its previous fiscal year, provided the 
issuer did not use those redemptions or repurchases under the 
netting provisions of rule 24f-2. Conversely, the issuer may not 
count redemptions and repurchases used to reduce the filing fee 
under rule 24e-2 for purposes of netting under rule 24f-2.
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    (v) The net aggregate sale price of securities sold during the 
fiscal year in reliance on Rule 24f-2 (line (i), plus line (ii), less 
line (iii), plus line (iv));
    (vi) The multiplier to be used to determine the fee;29 and

    \29\In the act making appropriations for the Commission for 
fiscal 1994, Congress increased the rate of fees prescribed by 
section 6(b) of the Securities Act from one fiftieth of one percent 
to one twenty-ninth of one percent. Pub.L. 103-121 (Oct. 27, 1993). 
Congress extended the increased fee for fiscal year 1995. Pub.L. 
103-352 (Oct. 13, 1994). The current fee rate will be in effect 
through September 30, 1995, unless further extended by Congress; 
otherwise, the rate will revert to one fiftieth of one percent. 
Instruction C.4 to the Form would remind funds to determine the 
current fee rate prior to filing, since the form may not be accepted 
for filing if the law requires the fee to be calculated at a rate 
higher than that used by the filer and an overpayment may result if 
the statutory rate in effect is lower than the rate on the form.
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    (vii) The fee due (line (i) (if the netting provision is not used) 
or line (v) (if the netting provision is used) multiplied by line 
(vi)).\30\

    \30\Instruction C.2 specifies that the $100 minimum fee 
prescribed by section 6(b) of the Securities Act does not apply to 
fees payable under rule 24f-2. This provision would also be 
incorporated into paragraph (c) of the rule.

Funds would complete lines (ii), (iii), (iv), and (v) only if the fund 
is using the rule's netting provision. Thus, the work sheet can be used 
whether or not the fund is using the rule's netting provision.
    The work sheet provided in Item 12 is similar to the method for 
reporting the calculation of Rule 24f-2 fees on the EDGAR system. Under 
the EDGAR system, an electronic filer is required to prepare a header 
for each Rule 24f-2 Notice. The header contains certain filing fee 
information that is included in the accompanying Rule 24f-2 Notice. The 
Commission's computer systems are programmed to ``check'' the filer's 
fee calculation based on the information provided in the header. If the 
computer cannot verify the fee calculation, Commission staff review the 
accompanying notice to determine the source of the error. As proposed, 
Form 24F-2 would not alter the headers for EDGAR filings. The 
Commission requests comment whether it should modify its systems to 
permit computer verification of the fee calculation based on 
information in the notice rather than the header, thus avoiding the 
need for filers to duplicate information.

IV. General Request for Comments

    Any interested persons wishing to submit written comments on the 
proposed rule changes and the proposed new form that are the subject of 
this Release, to suggest additional changes (including changes to 
provisions of the rules that the Commission is not proposing to amend), 
or to submit comments on other matters that might have an effect on the 
proposals described above, are requested to do so. Commenters 
suggesting alternative approaches are encouraged to submit proposed 
rule text.

V. Cost/Benefit Analysis

    The rule amendments and new form proposed today would clarify the 
operation of rule 24f-2 and would make the rule's filing deadlines more 
flexible under certain circumstances. The [[Page 7150]] addition of 
paragraph (f) to rule 24f-2 would provide a means for companies to 
avoid late filings, which can result in significant costs to companies. 
This provision would relieve companies of the cost of preparing 
applications for exemption from the provisions of the rule and would 
relieve the Commission of the cost of reviewing such applications. 
Other proposed revisions to rule 24f-2 are intended to clarify the 
operation of the rule when an extraordinary business transaction occurs 
such as a merger or liquidation. The change in use of days rather than 
months to measure the filing deadlines under rules 24f-1 and 24f-2 
would, in most cases, shorten the period to make required filings by a 
day or two, and thus could be viewed as a ``cost.'' The Commission 
believes, however, that this ``cost'' is outweighed by the added 
certainty and uniformity that such a change would bring to the 
operation of the rule. Proposed Form 24F-2 would ensure that funds 
provide consistent information in their Rule 24f-2 Notices and would 
facilitate the staff's review of annual notices. The Commission 
believes that the standard form and the interpretive guidance will 
reduce the burden of preparing and reviewing Rule 24f-2 Notices. The 
Commission invites specific comment on its assessment of the costs and 
benefits with respect to today's proposals, including estimates of any 
costs and benefits perceived by commenters.

VI. Summary of Regulatory Flexibility Act Analysis

    The Commission has prepared an Initial Regulatory Flexibility Act 
Analysis in accordance with 5 U.S.C. 603 regarding the proposed 
amendments. The analysis explains that the proposed form and amendments 
would result in a reduction of reporting and compliance requirements 
for small entities. The proposed amendments would clarify several 
issues that have arisen in connection with rule 24f-2, and the proposed 
from would facilitate preparation of accurate Rule 24f-2 Notices. The 
analysis states that there are no alternative means to achieve the 
objectives of the proposed form and amendments. A copy of the Initial 
Regulatory Flexibility Act Analysis may be obtained by contacting Karen 
J. Garnett, Mail Stop 10-6, Securities and Exchange Commission, 450 
Fifth Street, N.W., Washington, D.C. 20549.

Text of Proposed Rule Amendments

List of Subjects in 17 CFR Parts 270 and 274

    Investment companies, Reporting and recordkeeping requirements, 
Securities.

    For the reasons set out in the preamble, Title 17 Chapter II of the 
Code of Federal Regulations is proposed to be amended as follows:

Part 270--[AMENDED]

    1. The authority citation for part 270 continues to read in part as 
follows:

    Authority: 15 U.S.C. 80a-1 et seq., 1unless otherwise noted.
* * * * *


Secs. 270.24f-1 and 270.24f-2  [Amended]

    2. The authority citations following Secs. 270.24f-1 and 270.24f-2 
are removed.


Sec. 270.24f-1  [Amended]

    3. By amending Sec. 270.24f-1, paragraphs (a) and (c), by revising 
the phrase ``6 months'' to read ``180 days''.
    4. By amending Sec. 270.24f-2 by revising paragraphs (b)(1), 
(b)(3), and (c) and by adding paragraphs (e) and (f) to read as 
follows:


Sec. 270.24f-2  Registration under the Securities Act of 1933 of an 
indefinite number of certain investment company securities.

* * * * *
    (b)(1) If an issuer has filed a registration statement or post-
effective amendment with a declaration authorized by paragraph (a)(1) 
of this section, it shall, with respect to such registration statement 
and within 180 days after the close of any fiscal year during which 
such declaration was in effect, file five copies of a notice (``Rule 
24f-2 Notice'') with the Commission. The Rule 24f-2 Notice shall be 
filed on Form 24F-2 (17 CFR 274.24) and shall be prepared in accordance 
with the requirements of the form. The Rule 24f-2 Notice shall be 
accompanied by an opinion of counsel indicating whether the securities 
the registration of which the notice makes definite in number were 
legally issued, fully paid, and non-assessable, and the additional 
filing fee, if any, specified in paragraph (c) of this section.
* * * * *
    (3) For purposes of this section, if a registrant ceases 
operations, the date the registrant ceases operations shall be deemed 
to be the close of its fiscal year. In the case of a liquidation, 
merger, or sale of all or substantially all of the registrant's assets, 
the registrant shall be deemed to have ceased operations for purposes 
of this section on the date all or substantially all of the 
registrant's assets are distributed, the date the merger becomes 
effective under state law, or the date the assets are transferred; 
provided, however, that a registrant whose registration statement is 
succeeded to by another registrant in a transaction described by 
Sec. 230.414 of this chapter shall not be deemed to have ceased 
operations.
    (c) A Rule 24f-2 Notice shall be accompanied by the payment of a 
filing fee with respect to the securities sold during the fiscal year 
in reliance upon registration pursuant to this section and shall be 
based upon the actual aggregate sale price for which such securities 
were sold. The filing fee shall be calculated in the manner specified 
in section 6(b) of the Securities Act of 1933 and the rules and 
regulations thereunder, except that the minimum filing fee required 
under section 6(b) shall not apply to fees due under this section. When 
the Rule 24f-2 Notice is filed not later than 60 days after the close 
of the fiscal year during which such securities were sold pursuant to 
this section, the filing fee to be paid as to such securities shall be 
the fee, if any, calculated in the manner specified in section 6(b) of 
the Securities Act of 1933 except that, for the purposes of such 
calculation, such fee shall be based upon the actual aggregate sale 
price for which securities (including, for this purpose, all securities 
issued pursuant to a dividend reinvestment plan) were sold during the 
issuer's previous fiscal year, reduced by the difference between
    (1) The actual aggregate redemption or repurchase price of such 
securities of the issuer redeemed or repurchased by the issuer during 
such previous fiscal year; and
    (2) The actual aggregate redemption or repurchase price of such 
redeemed or repurchased securities previously applied by the issuer 
pursuant to Sec. 270.24e-2(a) in filings made pursuant to section 
24(e)(1) of the Investment Company Act of 1940.
* * * * *
    (e) To determine the date on which a Rule 24f-2 Notice must be 
filed with the Commission under paragraph (b)(1) of this section or the 
date that a Rule 24f-2 Notice must be filed in order to permit the 
issuer to calculate the fee due in accordance with the second sentence 
of paragraph (c) of this section, the first day of the 180 day or 60 
day period, as the case may be, shall be the first calendar day of the 
fiscal year following the fiscal year for which the Rule 24f-2 Notice 
is to be filed.

    Note to Paragraph (e): For example, a Rule 24f-2 Notice for a 
fiscal year ending on June [[Page 7151]] 30 must be filed no later 
than December 28 or, if the issuer calculates the fee due in 
accordance with the second sentence of paragraph (c), no later than 
August 29. If the last day of the period falls on a non-business day 
(a Saturday, Sunday or federal holiday), the period shall end on the 
first business day thereafter, as provided by Sec. 270.02.

    (f) The date of filing of a Rule 24f-2 Notice with the Commission 
shall be the date on which the Rule 24f-2 Notice is actually received 
by the Commission; provided, however, that other than in the case of a 
Rule 24f-2 Notice filed by direct transmission (as such term is defined 
in rule 11 of Regulation S-T [17 CFR 232.11]) a Rule 24f-2 Notice 
received by the Commission after the date due under either paragraph 
(b)(1) or paragraph (c) of this section shall be deemed to have been 
timely filed if the issuer establishes that the Rule 24f-2 Notice had 
been transmitted timely to a third party company or governmental entity 
providing delivery services in the ordinary course of business, which 
guaranteed delivery of the Notice to the Commission no later than the 
required filing date.

Part 274--[AMENDED]

    5. The authority citation for part 274 continues to read as 
follows:

    Authority: 15 U.S.C. 80a-1 et seq., unless otherwise noted.

    6. Section 274.24 and Form 24F-2 are added to read as follows:

    Note: The text of Form 24F-2 does not appear in the Code of 
Federal Regulations. A copy of Form 24F-2 is attached as Appendix I 
to this document.


Sec. 274.24  Form 24F-2, annual notice of securities sold pursuant to 
registration of an indefinite number of certain investment company 
securities.

    Form 24F-2 shall be used as the annual report filed by face amount 
certificate companies, open-end management companies, and unit 
investment trusts pursuant to Sec. 270.24f-2 for reporting securities 
sold during the fiscal year.

    By the Commission.

    Dated: February 1, 1995.
Margaret H. McFarland,
Deputy Secretary.

Appendix I

Form 24F-2--Annual Notice of Securities Sold Pursuant to Rule 24f-2

    Read instructions at end of Form before preparing Form. Please 
print or type.

1. Name and address of issuer:

----------------------------------------------------------------------

2. Name of each series or class of funds for which this notice is 
filed:

----------------------------------------------------------------------

3. Investment Company Act File Number:

----------------------------------------------------------------------

Securities Act File Number:

----------------------------------------------------------------------

4. Last day of fiscal year for which this notice is filed:

----------------------------------------------------------------------

5. Check box if this notice is being filed more than 180 days after 
the close of the issuer's fiscal year for purposes of reporting 
securities sold after the close of the fiscal year but before 
termination of the issuer's 24f-2 declaration: [ ]
6. Date of termination of issuer's declaration under rule 24f-
2(a)(1), if applicable (see Instruction A.5):

----------------------------------------------------------------------

7. Number and aggregate sale price of securities of the same class 
or series sold during the fiscal year which had been registered 
under the Securities Act of 1933 other than pursuant to rule 24f-2 
in a prior fiscal year, but which remained unsold at the beginning 
of the fiscal year:

----------------------------------------------------------------------

8. Number and aggregate sale price of securities registered during 
the fiscal year other than pursuant to rule 24f-2:

----------------------------------------------------------------------

9. Number and aggregate sale price of securities sold during the 
fiscal year in reliance upon registration pursuant to rule 24f-2:

----------------------------------------------------------------------

10. Number and aggregate sale price of securities issued during the 
fiscal year in connection with dividend reinvestment plans, if 
applicable (see Instruction B.5):

----------------------------------------------------------------------

11. Number and aggregate sale price of securities sold during the 
fiscal year:

----------------------------------------------------------------------

12. Calculation of registration fee:


(i) Aggregate sale price of securities sold during the        $____     
 fiscal year in reliance on rule 24f-2 (from Item 9):.                  
(ii) Aggregate price of shares issued in connection with      +____     
 dividend reinvestment plans (from Item 10, if applicable):.            
(iii) Aggregate price of shares redeemed or repurchased       -____     
 during the fiscal year (if applicable):.                               
(iv) Aggregate price of shares redeemed or repurchased and    +____     
 applied as a reduction to filing fees pursuant to rule 24e-            
 2 (if applicable):.                                                    
(v) Net aggregate sale price of securities sold during the    ..........
 fiscal year in reliance on rule 24f-2 [line (i), plus line             
 (ii), less line (iii), plus line (iv)] (if applicable):.               
                                                             -----------
(vi) Multiplier prescribed by Section 6(b) under the           x ____   
 Securities Act of 1933 or other applicable law or                      
 regulation (see Instruction C.5):.                                     
(vii) Fee due [line (vi) multiplied by line (vii)]:.........  ..........
                                                             ===========
                                                                        


Instruction: Issuers should complete lines (ii), (iii), (iv), and 
(v) only if the form is being filed within 60 days after the close 
of the issuer's fiscal year. See Instruction C.3.
13. Check box if fees are being remitted to the Commission's lockbox 
depository as described in section 3a of the Commission's Rules of 
Informal and Other Procedures (17 CFR 202.3a). [ ]
Date of mailing or wire transfer of filing fees to the Commission's 
lockbox depository:

----------------------------------------------------------------------

Signatures

This report has been signed below by the following persons on behalf 
of the issuer and in the capacities and on the dates indicated.

By (Signature and Title)*----------------------------------------------

----------------------------------------------------------------------

Date-------------------------------------------------------------------

* Please print the name and title of the signing officer below the 
signature.

Form 24F-2--Annual Notice of Securities Sold Pursuant to Rule 24f-2

Instructions

A. Rule as to Use of Form 24F-2

    1. This form shall be used for annual notices required by rule 
24f-2 under the Investment Company Act of 1940 (``Act'') [17 CFR 
270.24f-2]. Annual notices on this form shall be filed within 180 
days after the close of any fiscal year during which the issuer has 
in effect a declaration to register an indefinite number of 
securities pursuant to rule 24f-2(a)(1) of the Act. If the notice is 
being filed not later than 60 days after the close of the issuer's 
fiscal year, the fees due with the notice may be reduced (see 
Instruction C.3).
    2. If the form contains insufficient space for the information 
required in any item, issuers should attach additional pages as 
necessary and indicate in the space provided on the form that 
additional pages are attached.
    3. The issuer named in Item 1 of this form is the face amount 
certificate company, open-end management company, or unit investment 
trust that has filed a registration statement under the Securities 
Act of 1933 (``Securities Act'') [15 USC 77a et seq.] containing a 
declaration to register an indefinite number of securities under 
rule 24f-2(a)(1) of the Act. If the issuer has registered more than 
one class or series on the same Securities Act registration 
statement, the issuer may file a single Form 24F-2 for those classes 
or series, provided each class or series has the same fiscal year 
end. Issuers electing to calculate filing fees on a class-by-class 
or series-by-series basis, however, should include in their filings 
a separate Form 24F-2 for each class or series. All classes and 
series for which the form is filed should be identified in Item 2.
    4. The Investment Company Act file number reported in response 
to Item 3 should be the number of the issuer's registration 
statement filed under the Investment Company Act of 1940. The 
[[Page 7152]] Securities Act file number in Item 3 refers to the 
registration statement filed to register an indefinite number of 
securities (beginning with either ``2-'' or ``33-'').
    5. Item 4 requires issuers to report the date of the last day of 
the fiscal year for which the notice is filed. In the case of an 
issuer that ceases operations, the date it ceases operations is 
deemed the last day of its fiscal year for purposes of rule 24f-2.
    6. Items 5 and 6 should be completed only if the issuer fails to 
file its Rule 24f-2 Notice within 180 days after the close of the 
issuer's fiscal year. In such cases, the issuer's declaration to 
register an indefinite number of shares will be terminated on the 
next business day, and the issuer should report the date of 
termination in Item 6. All such issuers must file a separate Form 
24F-2 with respect to sales of securities made pursuant to the 
declaration during (1) the fiscal year for which the notice was not 
timely filed, and (2) the period after the close of the fiscal year 
but before the declaration was terminated. Issuers should check the 
box in Item 5 only if they are filing the form to report securities 
sold during the 180-day period after the close of the fiscal year 
but before the declaration was terminated.

B. Computation of Number of Securities

    1. In response to Items 7 through 11, issuers may aggregate 
sales and redemptions of all classes or series for which the notice 
is being filed. Issuers must aggregate sales prices within each 
class or series. If the registration fee paid for securities 
reported in Items 7 and 8 was based on the offering price of those 
securities, issuers should report the offering price instead of the 
sale price.
    2. Item 7 requires the issuer to report the number and dollar 
amount of securities of the same class or series as those for which 
the notice is being filed, if any, which were registered under the 
Securities Act other than pursuant to rule 24f-2. Such securities 
must have been registered prior to the fiscal year for which the 
notice is being filed and must remain unsold at the beginning of the 
fiscal year.
    3. Item 8 refers to securities registered during the fiscal year 
other than pursuant to rule 24f-2. This item includes securities 
registered during the fiscal year by post-effective amendment 
pursuant to rule 24e-2.
    4. Item 9 requires the issuer to report the securities sold 
during the fiscal year in reliance upon registration under rule 24f-
2. This number must exclude securities registered other than under 
rule 24f-2 which were sold during the fiscal year, as reported in 
Item 8.
    5. Item 10 should be completed only if the issuer is using the 
netting provision of Item 12. In such cases, the issuer should 
report the number and dollar amount of securities not registered 
under the Securities Act that were issued during the fiscal year in 
connection with dividend reinvestment plans.
    6. Item 11 should be the sum of Items 7 through 9, but should 
not include Item 10. If the response does not equal the sum of those 
items, the issuer should attach to the form an explanation of the 
difference.

C. Computation of Registration Fees

    1. Item 12 is a work sheet for calculating the filing fee due. 
Items 12 (i) and (ii) should be the same as the responses provided 
to Items 9 and 10, respectively.
    2. The filing fee due shall be calculated in the manner 
specified in Section 6(b) of the Securities Act [15 U.S.C. 77f(b)]. 
Except as provided below, fees shall be based on the actual 
aggregate sale or redemption price at the date on which the 
securities were sold or redeemed. The $100 minimum fee prescribed by 
Section 6(b) does not apply to fees payable under rule 24f-2.
    3. Lines (ii), (iii), (iv), and (v) of Item 12 (netting 
provisions) apply only to issuers that file the form not later than 
60 days after the close of the fiscal year during which securities 
were sold. In such cases, the filing fee shall be based upon the net 
aggregate sale price for which such securities were sold during the 
issuer's previous fiscal year. Net aggregate sale price is the 
actual aggregate sale price, plus the value of shares issued in 
connection with dividend reinvestment plans, reduced by the 
difference between (1) the actual aggregate redemption or repurchase 
price of such securities of the registrant redeemed or repurchased 
by the issuer during the fiscal year, and (2) the actual aggregate 
redemption or purchase price of such redeemed or repurchased 
securities previously applied by the issuer pursuant to rule 24e-
2(a) under the Act.
    4. If the issuer's total redemptions and repurchases during the 
fiscal year exceed the issuer's sales during the fiscal year, the 
issuer may report on line (iii) of Item 12 only the amount of 
redemptions equal to sales during the fiscal year, as reported on 
line (i). The net aggregate sales price reported in line (v) of Item 
12 cannot be less than zero.
    5. The multiplier for calculation of the filing fee required by 
line (vi) of Item 12 is prescribed by Section 6(b) of the Securities 
Act. As of October 13, 1994, the multiplier was one twenty-ninth of 
one percent of the maximum aggregate offering price of the 
securities being registered. This multiplier is subject to change 
from time to time, without notice, by act of Congress through 
appropriations for the Commission or other laws. Issuers should 
determine the current fee rate prior to the time of filing by 
reference to Section 6(b) and any law or regulation affecting 
Section 6(b). Unless otherwise specified by act of Congress, the fee 
rate in effect at the time of filing applies to all securities sold 
during the fiscal year, regardless of whether the fee rate changed 
during the year.
    6. Issuers are cautioned that rounding the percentage used to 
compute the fee may result in payment of an incorrect amount. No 
part of the filing fee is refundable. Fees must be paid by United 
States postal money order, certified bank check, or cash. Issuers 
should refer to rule 0-8 under the Act [17 CFR 270.0-8] and rule 3a 
under the Commission's Rules of Informal and Other Procedures [17 
CFR 202.3a] for instructions on payment of fees to the Commission.

D. Signature and Filing Form; Exhibit

    1. The form shall be signed on behalf of the issuer by an 
authorized officer of the issuer. The issuer shall file five copies 
of the completed form, at least one of which has been manually 
signed, with the Securities and Exchange Commission, 450 Fifth 
Street, N.W., Washington, D.C. 20549. Acknowledgement of receipt by 
the Commission may be obtained by enclosing a self-addressed stamped 
postcard identifying the issuer and the form filed.
    2. This form must be accompanied by the appropriate filing fee 
and an opinion of counsel indicating whether the securities were 
legally issued, fully paid, and non-assessable, and payment of the 
filing fee. (See paragraph (b)(1) of rule 24f-2.) A copy of the 
opinion of counsel should be attached to each copy of the form filed 
with the Commission. Electronic filers are reminded that the filing 
fee must reach the Commission not later than the day the Rule 24f-2 
Notice is filed with the Commission.
    3. This form will be deemed filed with the Commission on the 
date on which it is actually received by the Commission. Except in 
the case of a Rule 24f-2 Notice filed by means of ``direct 
transmission'' (as such term is defined in rule 11 of Regulation S-T 
[17 CFR 232.11], this form shall be deemed to have been timely filed 
if the issuer establishes that it timely transmitted the form and 
required fees to a third party company or governmental entity 
providing delivery services in the ordinary course of business, 
which guaranteed delivery of the form to the Commission no later 
than the required filing date. The Commission will not accept for 
filing any form accompanied by insufficient payment for the filing 
fee. Forms accompanied by insufficient payment shall be returned to 
the issuer for proper payment and shall not be deemed filed until 
receipt by the Commission of proper payment.

[FR Doc. 95-2901 Filed 2-6-95; 8:45 am]
BILLING CODE 8010-01-P