[Federal Register Volume 62, Number 138 (Friday, July 18, 1997)]
[Proposed Rules]
[Pages 38495-38509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18857]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 202, 230, 232, 239, 270, and 274

[Release Nos. 33-7430, IC-22747, File No. S7-19-97]
RIN 3235-AG73


Registration Under the Securities Act of 1933 of Certain 
Investment Company Securities

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rules.

-----------------------------------------------------------------------

SUMMARY: The Commission is proposing amendments to the rule and the 
form under the Investment Company Act of 1940 that prescribe the method 
by which certain investment companies calculate and pay registration 
fees under the Securities Act of 1933. The proposed amendments are 
designed to implement the provisions of the National Securities Markets 
Improvement Act of 1996 that simplify the method of determining the 
amount of these fees.

DATES: Comments must be received on or before August 18, 1997.

ADDRESSES: Comments should be submitted in triplicate to Jonathan G. 
Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, 
NW., Stop 6-9, Washington, DC 20549. Comments also may be submitted 
electronically at the following E-mail address: [email protected]. 
All comment letters should refer to File No. S7-19-97; this file number 
should be included on the subject line if E-mail is used. Comment 
letters will be available for public inspection and copying in the 
Commission's Public Reference Room,

[[Page 38496]]

450 Fifth Street, NW., Washington, DC 20549. Electronically submitted 
comment letters also will be posted on the Commission's Internet web 
site (http://www.sec.gov).

FOR FURTHER INFORMATION CONTACT: Robin S. Gross, Staff Attorney, or 
Nadya B. Roytblat, Assistant Office Chief, at (202) 942-0690, Office of 
Regulatory Policy, Division of Investment Management, Stop 10-2, 
Securities and Exchange Commission, 450 Fifth Street, NW., Washington, 
DC 20549.

SUPPLEMENTARY INFORMATION: The Commission is requesting public comment 
on amendments to rule 24f-2 (17 CFR 270.24f-2) and Form 24F-2 (17 CFR 
274.24) under the Investment Company Act of 1940 (15 U.S.C. 80a) (the 
``Investment Company Act''). In addition, the Commission is proposing 
conforming amendments to rule 485 (17 CFR 230.485) under the Securities 
Act of 1933 (15 U.S.C. 77a) (the ``Securities Act''); Form N-1A (17 CFR 
274.11A and 239.15A), Form N-3 (17 CFR 274.11b and 239.17a), and Form 
N-4 (17 CFR 274.11c and 239.17b), the registration forms used by 
certain types of investment companies to register under the Investment 
Company Act and to register their securities under the Securities Act; 
Form S-6 (17 CFR 239.16), the form used by unit investment trusts to 
register their securities under the Securities Act; Form N-14 (17 CFR 
239.23), the form used by investment companies to register under the 
Securities Act securities issued in business combination transactions; 
rule 24e-1 under the Investment Company Act (17 CFR 270.24e-1); rule 13 
of Regulation S-T (17 CFR 232.13); and rule 3a of Informal and Other 
Procedures (17 CFR 202.3a). The Commission is also proposing to rescind 
rules 24e-2 and 24f-1 under the Investment Company Act (17 CFR 270.24e-
2 and 270.24f-1).

Table of Contents

Executive Summary

I. Background
II. Discussion
    A. Amendments to Rule 24f-2
    1. Form Filing Requirements
    2. Fund Mergers and Reorganizations
    B. Amendments to Form 24F-2
    1. General Information (Proposed Items 1-4)
    2. The Worksheet
    a. Sales Information (Proposed Item 5(i))
    b. Redemption Information (Proposed Items 5(ii)-5(iv))
    c. Registration Fee Calculation (Proposed Items 5(v)-5(iii))
    3. Interest and Other Payment Information (Proposed Items 6-8)
    4. Request for Comment
    C. Conforming Amendments
    1. Rule Rescissions
    2. Conforming Amendments to Forms and Rules
    D. General Request for Comment
III. Cost/Benefit Analysis
IV. Paperwork Reduction Act
V. Summary of Regulatory Flexibility Analysis
VI. Statutory Authority
Text of Proposed Rule and Form Amendments

Executive Summary

    The Commission is proposing amendments to rule 24f-2 and Form 24F-2 
under the Investment Company Act that prescribe the methods by which 
certain investment companies calculate and pay registration fees under 
the Securities Act. The proposed amendments are designed to implement a 
provision of the National Securities Markets Improvement Act of 1996 
(``Improvement Act'') that amended sections 24 (e) and (f) of the 
Investment Company Act to simplify the current system for registering 
investment company securities. The proposed amendments to rule 24f-2 
and Form 24F-2 would streamline the rule and Form to make them 
consistent with amended section 24.

I. Background

    The Securities Act generally requires issuers that wish to offer 
their securities publicly to register the securities with the 
Commission and pay a registration fee.1 The application of 
these provisions has presented operational problems for certain types 
of investment companies. Unlike other issuers, open-end management 
investment companies, unit investment trusts and face-amount 
certificate companies (collectively, ``funds'') sell and redeem their 
securities on a continuous basis. A fund often cannot predict the 
number of securities it will sell at the time it files its registration 
statement under the Securities Act. In addition, funds often experience 
a high turnover in their outstanding securities, as a substantial 
number of securities that are sold replace securities that recently 
have been redeemed or repurchased.2
---------------------------------------------------------------------------

    \1\ Section 5(a) of the Securities Act (15 U.S.C. 77e(a)) makes 
it unlawful to sell a security through the mails or in interstate 
commerce unless a registration statement is in effect as to that 
security. Section 6(a) (15 U.S.C.77f(a)) sets forth certain 
requirements for registration statements. Section 6(b) (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.
    \2\ See Computation of Filing Fees for Securities Registered by 
Open-End Management Companies, Investment Company Act Rel. No. 9677 
(Mar. 15, 1977) (42 FR 15922 (Mar. 24, 1977)) (adopting amendments 
to rule 24e-2).
---------------------------------------------------------------------------

    Section 24 of the Investment Company Act modifies the Securities 
Act registration provisions for funds.3 Section 24 and 
related rules were designed to address the problem of inadvertent 
``over sales'' (i.e., sales in excess of securities registered) that 
easily could occur with a fund that continually issues 
securities.4 Section 24(e) permits a fund to register 
additional securities by a post-effective amendment to a registration 
statement.5 Section 24(f) permits a fund to register 
securities within six months after their sale, but requires that the 
fund pay three times the registration fee that otherwise would be due 
under section 6(c) of the Securities Act.6
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 80a-24.
    \4\ See Investment Company Act Rel. No. 15611 (Mar. 9, 1987) (52 
FR 8302 (Mar. 17, 1987)) (proposing amendments to rule 24f-2 
relating to certain unit investment trusts).
    \5\ 15 U.S.C. 80a-24(e).
    \6\ 15 U.S.C. 80a-24(f).
---------------------------------------------------------------------------

    Section 24(f) also authorizes the Commission to adopt rules to 
permit funds to register an indefinite number of securities. In 1977, 
the Commission exercised this authority and adopted rule 24f-
2.7 Rule 24f-2 permits a fund to declare that it is 
registering an indefinite number of securities (``rule 24f-2 
declaration'').8 After the end of each of its fiscal years, 
the fund must file a notice on Form 24F-2 to make the registration of 
securities it sold during the fiscal year ``definite'' and pay a 
registration fee with respect to those securities.9 Under 
certain circumstances, the fund may offset, or ``net,'' sales made 
during the fiscal year against redemptions effected during the fiscal 
year for the purpose of calculating the fund's Securities Act 
registration fee.10
---------------------------------------------------------------------------

    \7\ Registration of an Indefinite Number of Investment Company 
Shares, Investment Company Act Rel. No. 9989 (Nov. 3, 1977) (42 FR 
58400 (Nov. 9, 1977)).
    \8\ Rule 24f-2(a)(1) (17 CFR 270.24f-2(a)(1)).
    \9\ Rule 24f-2(b)(1) (17 CFR 270.24f-2(b)(1)).
    \10\ Rule 24f-2(c) (17 CFR 270.24f-2(c)). The rule that governs 
the computation of fees for registering securities by post-effective 
amendment, rule 24e-2, allows a fund to take a credit for securities 
redeemed during the previous fiscal year. Thus, a fund that has had 
redemptions in excess of sales in one fiscal year can apply the 
unused redemptions to reduce registration fees that it would pay 
under rule 24e-2 in the next fiscal year (in effect, preserving the 
unused redemptions).
---------------------------------------------------------------------------

    These statutory provisions and rules, taken together, have provided 
funds with significant flexibility to avoid over sales and to reduce 
their registration fees. These provisions, however, are highly complex. 
Funds are presented with a number of options for registering their 
securities and using redemptions to offset sales. Inadvertent non-
compliance with, failure to understand the interrelationship of, or a 
late filing

[[Page 38497]]

pursuant to these provisions can result in a fund facing significant 
adverse consequences.11
---------------------------------------------------------------------------

    \11\ Under rule 24f-2, failure to pay the registration fee 
within 60 days after the end of the fund's fiscal year precludes the 
fund's netting sales against redemptions for purposes of fee 
calculations, resulting in a significantly higher registration fee. 
Failure to pay the fee within 180 days could result in the fund 
being deemed to have sold unregistered securities. These penalties 
were not designed to protect the interests of fund shareholders; 
rather, they reflected a mismatch of the fee payment structure of 
the Securities Act and the reality of fund operations. See The 
Securities Investment Promotion Act of 1996: Hearing on S. 1815 
Before the Senate Comm. on Banking, Housing, and Urban Affairs, 
104th Cong., 2d Sess. 39 (1996) (testimony of Arthur Levitt, 
Chairman, SEC).
---------------------------------------------------------------------------

    The Improvement Act amended sections 24 (e) and (f) of the 
Investment Company Act, among other things, to create a new, simpler 
system for the registration of fund securities under the Securities 
Act.12 Amended section 24(f) of the Investment Company Act, 
when effective, will provide that a fund will be deemed to have 
registered an indefinite amount of securities upon the effective date 
of its registration statement under the Securities Act.13 
The fund then will pay a fee within 90 days after the end of each of 
its fiscal years based upon the sale price of the fund securities sold 
during that fiscal year (including securities issued pursuant to a 
dividend reinvestment plan (``DRIP securities'')) reduced by (i) the 
aggregate redemption price of the securities redeemed during that year 
and (ii) the aggregate redemption price of the securities redeemed 
during any prior fiscal year ending on or after October 11, 1995 that 
were not used previously by the fund to reduce its registration fees. 
Section 24(f) will provide the exclusive means for registering fund 
securities.14
---------------------------------------------------------------------------

    \12\ Section 203 of the Improvement Act, Pub. L. 104-290 (1996).
    \13\ Section 24(f)(1), as amended. Amended section 24(f) becomes 
effective on the earlier of October 11, 1997 or the effective date 
of Commission rulemaking implementing amended section 24(f). See 15 
U.S.C. 80a-24 note. For purposes of convenience, section 24, as it 
will be amended when section 203 of the Improvement Act becomes 
effective, is referred to in this Release as ``amended section 24'' 
or ``section 24, as amended.''
    \14\ Section 203 of the Improvement Act will rescind the 
provisions of sections 24 (e) and (f) that allow for post-effective 
amendment and post-sale registration of securities. See supra notes 
5-6 and accompanying text.
---------------------------------------------------------------------------

    The Improvement Act also will replace the current provisions for 
late payment of registration fees with an interest payment requirement. 
A fund will not be deemed to have sold unregistered securities or lose 
the ability to net sales against redemptions solely because its 
registration fee was paid late. Instead, to compensate the U.S. 
Treasury for any delay in the receipt of revenues from a late payment 
of registration fees, amended section 24(f) will require the fund to 
pay interest charges on late payments.15
---------------------------------------------------------------------------

    \15\ Section 24(f)(3), as amended. See also, H.R. Rep. No. 622, 
104th Cong., 2d Sess. 44 (1996) [hereinafter ``House Report'']. 
Payment of interest will not preclude the Commission from bringing 
an action to enforce the requirements of section 24(f). Section 
24(f)(3), as amended.
---------------------------------------------------------------------------

    The Commission is proposing amendments to several rules and forms 
under the Investment Company Act and the Securities Act to implement 
the Improvement Act's amendments to section 24. The Commission also is 
proposing to rescind two rules under the Investment Company Act 
relating to the registration of fund securities that will no longer be 
necessary when the amendments to section 24 become effective.

II. Discussion

A. Amendments to Rule 24f-2

    Rule 24f-2 currently contains detailed technical provisions setting 
out when Securities Act registration fees must be paid, the calculation 
of registration fees, and the circumstances under which a fund may net 
sales against redemptions in calculating its fee. As a result of the 
amendments to section 24(f), many of these provisions can be eliminated 
and the rule can be simplified significantly.16
---------------------------------------------------------------------------

    \16\ For example, the current rule requires a fund to elect to 
register an unlimited number of securities. Rule 24f-2(a) (17 CFR 
24f-2(a)). This provision can be eliminated because, under section 
24(f) as amended, all funds will be deemed to have registered an 
indefinite number of securities upon the effective date of their 
Securities Act registration statement. Similarly, the rule's netting 
provision can be eliminated because amended section 24(f) includes a 
netting provision. Finally, because funds are required to file Form 
24F-2 with the Commission electronically using the Commission's 
Electronic Data Gathering, Analysis, and Retrieval system, the 
amended rule would not contain any provisions that suggest that the 
Form can be filed on paper.
---------------------------------------------------------------------------

1. Form Filing Requirements
    The rule, as proposed to be amended, generally would require a fund 
to file a Form 24F-2 within 90 days after the end of each of its fiscal 
years.17 The amended rule also would specify that any fund 
that pays the fee more than 90 days after the end of its fiscal year 
will be required to pay interest in the manner specified in amended 
section 24(f) and in Form 24F-2.
---------------------------------------------------------------------------

    \17\ The current rule has a provision explaining how to 
calculate the relevant time periods under the rule. Rule 24f-2(e) 
(17 CFR 270.24f-2(e)). The amended rule would retain this provision, 
as well as the explanatory note that provides an example of how to 
determine the filing date. Proposed rule 24f-2(c).
---------------------------------------------------------------------------

    The Commission is proposing to eliminate the provision in current 
rule 24f-2 that a Form 24F-2 is deemed timely filed, regardless of when 
it reaches the Commission, if the fund establishes that it timely 
transmitted the Form to a third party that guaranteed delivery no later 
than the filing date.18 This provision was adopted in 1995 
in response to a series of late filings made by certain funds that 
would have resulted in these funds losing the ability to net 
redemptions against sales without exemptive relief from the 
Commission.19 This provision appears inconsistent with one 
of the reasons for the interest payment requirement in amended section 
24(f)--to compensate the U.S. Treasury for any delay in the timely 
receipt of revenue.20
---------------------------------------------------------------------------

    \18\ Rule 24f-2(f) (17 CFR 24f-2(f)).
    \19\ See Registration Fees for Certain Investment Companies, 
Investment Company Act Release No. 21332 (Sept. 1, 1995) (60 FR 
47041 (Sept. 11, 1995)) (``1995 Adopting Release'') at nn.7-10 and 
accompanying text.
    \20\ See supra note 15 and accompanying text.
---------------------------------------------------------------------------

    The Commission is proposing to eliminate the requirement in current 
rule 24f-2 that a fund's Form 24F-2 be accompanied by an opinion of 
counsel stating that the securities which Form 24F-2 ``makes definite 
in number,'' were legally issued, fully paid, and non-
assessable.21 This opinion requirement no longer seems 
necessary in light of amended section 24(f)'s providing for the 
registration of an indefinite number of securities in all cases. In 
addition, the relevant registration forms require funds to file an 
opinion of counsel to address the legality of the securities being 
registered.22
---------------------------------------------------------------------------

    \21\ Rule 24f-2(b)(1) (17 CFR 24f-2(b)(1)).
    \22\ See, e.g., item 24(b)(10) of Form N-1A (requiring an 
opinion of counsel stating that the securities registered will, when 
sold, be legally issued, fully paid and non-assessable).
---------------------------------------------------------------------------

    Comment is requested on the general approach of the proposed 
amendments. Should any provisions that would be eliminated from the 
rule be retained? Comment also is requested whether the opinion 
requirement should be retained in order to provide additional assurance 
that fund securities are legally issued.
2. Fund Mergers and Reorganizations
    Like the current rule, the amended rule would specify that the date 
on which a fund ceases operations would be deemed to be the end of the 
fund's fiscal year.23 As under the current rule, a fund that 
ceases operations because it is merged into an operating fund would 
file a Form 24F-2 with respect to its final fiscal year. The acquiring 
fund would not assume the redemptions

[[Page 38498]]

(``redemption credits'') of the acquired fund to reduce its 
registration fees.
---------------------------------------------------------------------------

    \23\ Rule 24f-2(b)(3) (17 CFR 270.24f-2(b)(3)); proposed rule 
24f-2(b).
---------------------------------------------------------------------------

    Rule 24f-2 provides two exceptions to this provision that would 
continue to be available under the amendment (``reorganization 
exceptions''). The first exception is a reorganization undertaken for 
the purpose of changing the state of incorporation or form of 
organization of a fund (``predecessor fund''), that satisfies the 
requirements of rule 414 of Regulation C under the Securities 
Act.24 In such a reorganization, the fund that remains after 
the transaction (``successor fund''), may assume any remaining 
redemption credits of the predecessor fund. The other exception 
involves the merger of the predecessor fund into a newly-created series 
of a ``series company'' as defined in rule 18f-2 under the Investment 
Company Act.25 In each case, the successor fund assumes the 
assets and liabilities of the predecessor fund, continues the 
predecessor fund's business, and each shareholder of the predecessor 
fund, following the transaction, owns the same pro rata interest in the 
same portfolio of securities as the shareholder owned before the 
transaction occurred. In both instances, therefore, the predecessor 
fund is not being acquired by an operating fund.
---------------------------------------------------------------------------

    \24\ Rule 24f-2(b)(3)(i) (17 CFR 270.24f-2(b)(3)(i)); rule 414 
([17 CFR 230.414). Rule 414 generally provides that the registration 
statement of a predecessor company will be deemed to be the 
registration statement of the successor company when the purpose of 
the reorganization is to change the company's domicile or form of 
organization, provided certain conditions are satisfied.
    \25\ Rule 24f-2(b)(3)(ii) (17 CFR 270.24f-2(b)(3)(ii)); rule 
18f-2 (17 CFR 270.18f-2). A series company is a fund that issues two 
or more series of securities, each of which is preferred over all 
other series with respect to a specific portfolio of assets. A 
merger into a series of another fund generally would not satisfy the 
requirements of rule 414 because the successor series would be part 
of a separately registered series company and would not necessarily 
adopt the predecessor fund's registration statement as its own, as 
required by rule 414.
---------------------------------------------------------------------------

    The proposed amendments would simplify the reorganization 
exceptions by deleting the references to rules 414 and 18f-2. The 
amended rule would permit the successor fund to assume the redemption 
credits of the predecessor fund if the successor fund (i) had no assets 
or liabilities, other than nominal assets or liabilities, and no 
operating history prior to the merger; and (ii) acquired all of the 
assets and assumed all of the liabilities and obligations of the 
predecessor fund.26 Satisfying these conditions, which are 
derived from rule 414, demonstrates that the transaction was effected 
solely to change the form of organization of the predecessor fund. 
Comment is requested whether the proposed amendments would simplify the 
rule or whether the terminology of the current rule should be retained.
---------------------------------------------------------------------------

    \26\ Proposed rule 24f-2(b). The proposed amendments would make 
clear that the successor fund may be a series of a series company.
---------------------------------------------------------------------------

    The proposed amendments would clarify that the reorganization 
exceptions are not available in a transaction designed to result in the 
predecessor fund merging with a fund that was not a shell prior to the 
merger.27 This clarification is intended to prevent 
redemption credits from being preserved in instances when the ultimate 
purpose of the transaction is to merge the predecessor fund into an 
operating fund.
---------------------------------------------------------------------------

    \27\ Proposed rule 24f-2(b)(3).
---------------------------------------------------------------------------

B. Amendments to Form 24F-2

    Form 24F-2 was adopted by the Commission in 1995 to provide a 
standard format for the annual registration fee filings required by 
rule 24f-2.28 The Commission is proposing amendments to Form 
24F-2 to reflect the changes made by the Improvement Act. Form 24F-2, 
as proposed to be amended, would consist of 8 Items and Instructions 
for completing and filing the Form.29 The proposed Items 
include identifying information about the fund, a worksheet for 
calculating the registration fee, and provisions regarding paying the 
fee and any interest that may be due.
---------------------------------------------------------------------------

    \28\ See 1995 Adopting Release, supra note 19, at nn. 33-43 and 
accompanying text.
    \29\ Reflecting current practice, the proposed amendments would 
require a fund choosing to calculate registration fees on a class-
by-class or series-by-series basis to make one filing, consisting of 
a separate Form 24F-2 for each class or series. See Instruction A.1 
to Form 24F-2 as proposed to be amended.
---------------------------------------------------------------------------

1. General Information (Proposed Items 1-4)
    Like the current Form, the amended Form would require certain 
identifying information concerning the fund and the class or series of 
securities to which the filing relates.30 Unlike the current 
Form, the amended Form would not require information about securities 
registered other than pursuant to rule 24f-2.31 This 
information is not directly relevant to the calculation of the 
registration fee; rather the Items requiring this information were 
designed to assist funds in determining that all their securities were 
registered. The need to determine this information will be 
substantially reduced as funds sell shares that were previously 
registered. Comment is requested whether the Form should continue to 
require this information to assist fund compliance personnel in 
determining whether securities sold by the fund have been appropriately 
registered.
---------------------------------------------------------------------------

    \30\ Items 1, 2, 3 and 4 of Form 24F-2 as proposed to be 
amended. Proposed Item 4, which requires the fund to provide the 
date of its fiscal year-end also would require the fund to indicate 
whether the Form was being filed late. This requirement is designed 
to facilitate Commission processing of a late filing that would 
require the payment of interest. Proposed Item 4 also would include 
a box to be checked if the filing is the last time the fund will be 
filing the Form (for example, if the fund is ceasing operations). 
This Item would replace current Item 6, which requires a fund to 
indicate if it is terminating its rule 24f--2 declaration.
    \31\ Items 7, 8 and 9 of Form 24F-2.
---------------------------------------------------------------------------

2. The Worksheet
    The proposed worksheet in Form 24F-2 would be less complex than the 
one in the current Form, reflecting the simplified registration system 
of amended section 24(f). It would consist of eight line items.
    a. Sales Information (Proposed Item 5(i)).
    Section 24(f)(2), as amended, will require that a fund calculate 
its fee based only on the number of securities sold during the fiscal 
year pursuant to an indefinite registration of securities under section 
24(f). In this way, section 24(f) will avoid imposing a fee on 
securities that were registered pursuant to section 24(e) prior to the 
effective date of the amendments to section 24(f) and on which a 
registration fee had already been paid.32
---------------------------------------------------------------------------

    \32\ As discussed above, after the effective date of the 
amendments to section 24(f), all funds will be deemed to have 
registered an indefinite number of securities and no fund will have 
reason to register a definite number of securities and pay a 
registration fee on the securities at the time of their 
registration. In addition, with the repeal of section 24(e)(1), 
funds may not register additional securities on a post-effective 
amendment.
---------------------------------------------------------------------------

    Reflecting the statutory provision, proposed Item 5(i) of the 
worksheet would require the aggregate sale price of securities sold 
during the fiscal year pursuant to section 24(f). Proposed Instruction 
to the amended Form would remind funds to include in this Item DRIP 
securities, as required by amended section 24(f), but not to include 
previously registered shares.33
---------------------------------------------------------------------------

    \33\ Instruction C.4 to Form 24F-2, as proposed to be amended.
---------------------------------------------------------------------------

    b. Redemption Information (Proposed Items 5(ii)--5(iv)). Section 
24(f)(2), as amended, will provide that in calculating its registration 
fee a fund may reduce the amount of securities sold during the fiscal 
year by (i) the aggregate price of securities redeemed during the 
fiscal year, and (ii) the aggregate price of the securities redeemed 
during any prior fiscal year ending on or after October 11, 1995 that 
were not used previously to reduce fees. In this way, amended section 
24(f) will

[[Page 38499]]

permit funds to net redemptions during the fiscal year or earlier 
fiscal years against sales without having to ``preserve'' those 
redemption credits through filing periodic post-effective amendments 
pursuant to section 24(e).34
---------------------------------------------------------------------------

    \34\ Had Congress not included a ``cut-off'' date (i.e., fiscal 
years ended on or after October 11, 1995), funds arguably could have 
used as credits securities redeemed before rule 24f-2 was adopted in 
1977. Since redemptions occurring before October 11, 1995 would have 
to have been ``preserved'' by registering securities pursuant to 
rule 24e-2 before the effective date of the amendments, and since 
such newly registered securities would not have been registered 
pursuant to an indefinite registration pursuant to amended section 
24(f), the provision should not result in the loss of any redemption 
credits of any fund that is entitled to use them to reduce 
registration fees. See House Report, supra note 15, at 44. See also 
supra note 10.
---------------------------------------------------------------------------

    Reflecting the statutory provision, proposed Item 5(ii) would 
require the aggregate price of securities redeemed or repurchased 
during the fiscal year, and proposed Item 5(iii) would require the 
aggregate price of securities redeemed or repurchased during any prior 
fiscal year ending no earlier than October 11, 1995.35 The 
total amount of available redemption credits would be set forth in 
proposed Item 5(iv).
---------------------------------------------------------------------------

    \35\ In each case, proposed Instructions C.5 and C.6 to the 
amended Form would remind funds not to include redemptions that were 
previously used to reduce registration fees payable to the 
Commission.
---------------------------------------------------------------------------

    c. Registration Fee Calculation (Proposed Items 5(v)-5(viii)).
    In order to determine the fund's net aggregate sale price of 
securities for purposes of calculating the registration fee, the fund's 
aggregate redemptions (proposed Item 5(iv)) would be subtracted from 
the fund's aggregate sales (proposed Item 5(i)). If sales exceeded 
redemptions, the result would be set forth in proposed Item 5(v). This 
amount would be used to calculate the fund's registration fee.
    If the fund's aggregate redemptions exceeded the fund's aggregate 
sales, the amount would be set forth in proposed Item 5(vi). In this 
case, the fund would not be required to pay a registration fee. As 
provided by amended section 24(f), these redemption credits could be 
used by the fund in future years to reduce registration fees.
    Proposed Item 5(vii) would require the fund to set forth the 
multiplier for determining the registration fee. 36 The 
registration fee due would be set forth in proposed Item 
5(viii).37
---------------------------------------------------------------------------

    \36\ The multiplier for calculation of the registration fee is 
determined by the Commission in accordance with section 6(b) of the 
Securities Act. As of October 1, 1996, the multiplier was 1/3300. 
This multiplier is subject to change from time to time, without 
notice, by act of Congress. The Commission staff has found that most 
mistakes in Form 24F-2 filings arise from the use of the wrong 
multiplier. Having the fund set forth the multiplier it used often 
enables the staff to quickly determine and notify the fund of the 
source of the error. Proposed Instruction C.3 to the Form would 
remind funds to determine the current fee rate prior to filing. 
Changes in the multiplier are generally posted on the Commission's 
web site.
    \37\ A fund that showed net redemptions in proposed Item 5(vi) 
would enter ``0'' in Item 5(viii).
---------------------------------------------------------------------------

3. Interest and Other Payment Information (Proposed Items 6-8)
    Proposed Item 6 would be completed only by funds that filed the 
Form late. It would require the fund to report the amount of interest 
due (if any).38 The total of the registration fee and 
interest payment would be reported in proposed Item 7. Proposed Item 8 
would contain information about when and how the fund's payment was 
sent to the Commission's lockbox depository.
---------------------------------------------------------------------------

    \38\ The manner in which interest should be calculated would be 
set forth in proposed Instruction D.
---------------------------------------------------------------------------

4. Request for Comment
    Comment is requested on the proposed amendments to Form 24F-2. Will 
the amended Form assist funds in calculating their registration fees? 
Should any additional information be required or is any of the 
information proposed to be set forth on the Form unnecessary? Do the 
proposed Instructions to the amended Form adequately address the 
procedures for completing and filing the Form?

C. Conforming Amendments

1. Rule Rescissions
    The Improvement Act will, when effective, eliminate the provisions 
of the Investment Company Act that relate to the registration of fund 
securities by post-effective amendment.39 As a result of 
those changes, rule 24e-2, the rule that addresses the computation of 
fees on securities registered by post-effective amendment, will be 
extraneous, and the Commission is proposing that it be rescinded. 
Similarly, because the Improvement Act will eliminate the provision of 
section 24(f) of the Investment Company Act that allows for post-sale 
registration, the Commission is proposing to rescind rule 24f-1, which 
details the procedures for post-sale registration.
---------------------------------------------------------------------------

    \39\ See 15 USC 80a-24(e) (1) and (2).
---------------------------------------------------------------------------

2. Conforming Amendments to Forms and Rules
    The forms used by funds to register securities under the Securities 
Act contain provisions on their cover pages and related instructions 
concerning the calculation and payment of registration fees and the 
registration of an indefinite number of securities under current rule 
24f-2.40 The Commission is proposing to modify these forms 
to delete these provisions or to conform them to amended section 24(f).
---------------------------------------------------------------------------

    \40\ Form S-6, Form N-1A, Form N-3, Form N-4, and Form N-14.
---------------------------------------------------------------------------

    The Commission also is proposing a conforming amendment to rule 485 
under the Securities Act, the rule that permits post-effective 
amendments to certain fund registration statements to become effective 
automatically. Currently, rule 485 permits a fund's registration 
statement filed to increase the number of securities registered or to 
register an indefinite number of securities to become effective 
immediately.41 These provisions would be eliminated. In 
addition, the Commission is proposing to amend certain rules relating 
to registration fee payments to reflect amended section 
24.42 Finally, cross-references to section 24(e)(3) of the 
Investment Company Act in rule 24e-1 under the Investment Company Act 
would be changed to reflect that that section will become section 
24(e).
---------------------------------------------------------------------------

    \41\ Rule 485(b) (i) and (ii) [17 CFR 230.485(b) (i) and (ii)].
    \42\ Rule 3a of Informal and Other Procedures and rule 13 of 
Regulation S-T.
---------------------------------------------------------------------------

D. General Request for Comment

    Any interested persons wishing to submit written comments on the 
proposed rule and form changes 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.

III. Cost/Benefit Analysis

    The Commission is sensitive to the costs and benefits imposed by 
its rules. The Commission notes that the proposed amendments implement 
the changes mandated by the Improvement Act to the system for 
registering fund securities under the Securities Act. The proposed 
amendments reflect the requirements of amended section 24 of the 
Investment Company Act and do not impose any additional requirements. 
The proposed amendments to Form 24F-2 should assist funds in 
calculating their registration fees and interest, if any, under amended 
section 24(f). Based on its experience with Form 24F-2, the Commission 
believes that the benefits to funds and the Commission of having a 
standardized format for registration fee

[[Page 38500]]

filings and the guidance provided by the Form should outweigh any 
burdens associated with filing the Form. Form 24F-2 has made it easier 
for funds to calculate registration fees and reduced errors in fee 
calculations. The Form as proposed to be amended would continue these 
benefits. The Commission does not believe that the amended Form would 
impose any significant one-time or ongoing costs on funds. The proposed 
amendments to funds' registration forms also are designed to reflect 
amended section 24 and would not require funds to obtain or provide any 
information that is not currently required by these forms.
    The Commission requests comment on any of these matters.

IV. Paperwork Reduction Act

    Certain provisions of the proposed amendments contain ``collection 
of information'' requirements within the meaning of the Paperwork 
Reduction Act of 1995,43 and the Commission has submitted 
them to the Office of Management and Budget (``OMB'') for review in 
accordance with 44 USC 3507(d) and 5 CFR 1320.11. The title for the 
collection of information is ``Proposed Amendments to Forms 24F-2, N-
1A, N-3, N-4, N-14 and S-6.'' The Forms contain currently approved 
collections of information under OMB control numbers 3235-0456, 3235-
0307, 3235-0316, 3235-0318, 3235-0336 and 3235-0184, respectively. The 
proposed amendments to these collections of information are necessary 
to implement the changes to section 24 of the Investment Company Act 
made by the Improvement Act. An agency may not sponsor, conduct, or 
require response to an information collection unless a currently valid 
OMB control number is displayed.
---------------------------------------------------------------------------

    \43\ 44 USC 3501.
---------------------------------------------------------------------------

    Form 24F-2 provides a standardized format for funds' annual 
registration fee filings and assists funds in calculating the fees. 
Form N-1A is used by open-end management investment companies to 
register with the Commission as investment companies under the 
Investment Company Act and to register their offerings of securities 
under the Securities Act. Form N-3 is used by insurance company 
separate accounts organized as management investment companies to 
register with the Commission as investment companies under the 
Investment Company Act and to register their offerings of securities 
under the Securities Act. Form N-4 is used by insurance company 
separate accounts organized as unit investment trusts (``UITs'') to 
register with the Commission as investment companies under the 
Investment Company Act and to register their offerings of securities 
under the Securities Act. Form S-6 is used by UITs to register their 
securities under the Securities Act (UITs register as investment 
companies on a separate Form N-8B-2). Form N-14 is used by investment 
companies to register under the Securities Act securities issued in 
business combination transactions. The primary purpose of the 
registration process and registration forms is to provide disclosure of 
financial and other information to investors and potential investors 
for the purpose of evaluating an investment in a security.
    Form 24F-2 is required to be filed annually. Forms N-1A, N-3, and 
N-4 are filed annually and updated on occasion. Form N-14 is filed on 
occasion. Form S-6 is filed annually. It is estimated that 
approximately 6681 funds file Form 24F-2, 7500 funds file Form N-1A, 53 
funds file Form N-3, 288 funds file Form N-4, 95 funds file Form N-14, 
and 3263 funds file Form S-6. The average annual burden per respondent 
for Form 24F-2 is estimated to be 1.9 hours, for Form N-1A, 213 hours, 
for Form N-3, 512.3 hours, for Form N-4, 138.35 hours, for Form N-14, 
620 hours, and for Form S-6, 35 hours. The total annual burden for all 
respondents for Form 24F-2 is estimated to be 12,694 hours, for Form N-
1A, 990,000 hours, for Form N-3, 27,499 hours, for Form N-4, 40,562 
hours, for Form N-14, 58,900 hours, and for Form S-6, 114,205 hours. 
The proposed amendments would reduce the annual burden per respondent 
for Form 24F-2 from 1.9 hours to 1 hour. The proposed amendments would 
not result in any change in the burden hours for the registration 
forms.
    The information collection requirements imposed by Form 24F-2 and 
the registration forms are mandatory. Responses to the collection of 
information will not be kept confidential.
    Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits 
comments to (i) evaluate whether the proposed collections of 
information are necessary for the proper performance of the functions 
of the agency, including whether the information shall have practical 
utility; (ii) evaluate the accuracy of the agency's estimate of the 
burden of the proposed collections of information; (iii) enhance the 
quality, utility, and clarity of the information to be collected; (iv) 
minimize the burden of the collections of information on those who are 
to respond, including through the use of automated collection 
techniques or other forms of information technology.
    Persons desiring to submit comments on the collection of 
information requirements should direct them to the Office of Management 
and Budget, Attention: Desk Officer for the Securities and Exchange 
Commission, Office of Information and Regulatory Affairs, Washington, 
D.C. 20503, and should also send a copy of their comments to Jonathan 
G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth 
Street, NW., Stop 6-9, Washington, DC 20549 with reference to File No. 
S7-19-97. OMB is required to make a decision concerning the collections 
of information between 30 and 60 days after publication, so a comment 
to OMB is best assured of having its full affect if OMB receives it 
within 30 days of publication.

V. Summary of Regulatory Flexibility Analysis

    The Commission has prepared an Initial Regulatory Flexibility 
Analysis (``IRFA'') in accordance with 5 U.S.C. 603 regarding the 
proposed rule and form amendments. The IRFA states that the proposed 
amendments to rule 24f-2 and Form 24F-2 would implement the provisions 
of the Improvement Act governing registration of fund securities under 
the Securities Act. The IRFA further states that the proposed 
conforming amendments to rules and forms would conform the relevant 
provisions of these rules and forms to the requirements of amended 
section 24 of the Investment Company Act. The IRFA indicates that the 
proposed amendments are designed to make it easier for funds to comply 
with the new statutory provisions and provide guidance on calculating 
registration fees on fund securities.
    The IRFA sets forth the statutory authority for the proposed 
amendments. The IRFA also discusses the effect of the proposed 
amendments on funds that are small entities. For purposes of the 
proposed amendments, small entities are funds with assets of $50 
million or less at the end of their most recent fiscal year. Based on a 
review of data filed by funds with the Commission, it is estimated that 
approximately 948 funds may be considered small entities. The IRFA 
states that the proposed amendments would assist small entities in 
complying with the new statutory requirements.
    The IRFA states that the proposed amendments would not impose any 
new reporting, recordkeeping or other compliance requirements, and that 
the Commission believes that there are no

[[Page 38501]]

rules that duplicate, overlap or conflict with the proposed amendments.
    The IRFA discusses the various alternatives considered by the 
Commission in connection with the proposed amendments that might 
minimize the effect on small entities, including: (a) The establishment 
of differing compliance or reporting requirements or timetables that 
take into account the resources available to small entities; (b) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rule for small entities; (c) the use 
of performance rather than design standards; and (d) an exemption from 
coverage of the rule, or any part of the rule, for small entities. 
Performance, rather than design, standards are incorporated in amended 
section 24(f) of the Act, and are therefore incorporated into the 
proposed rule and form amendments, to the extent that (i) registration 
fees on fund shares are based on sales less redemptions, and (ii) a 
fund is required to pay interest if the registration fee is paid late.
    The Commission believes that it would be inconsistent with the 
purposes of amended section 24 of the Investment Company Act to exempt 
small entities from the proposed amendments. The Commission considered 
not having a standardized form to accompany the funds' annual 
registration fee filings. Based on the Commission's and funds' 
experience prior to the adoption of Form 24F-2, and the comments 
received when Form 24F-2 was proposed, however, the Commission believes 
that Form 24F-2 has been beneficial. Form 24F-2 has made it easier for 
funds to calculate registration fees and reduced errors in fee 
calculations.
    Different compliance or reporting requirements for small entities 
are not necessary because the proposed amendments do not establish any 
new reporting, recordkeeping or compliance requirements. The Commission 
has determined that it is not feasible to further clarify, consolidate 
or simplify the proposed amendments for small entities.
    The IRFA includes information concerning the solicitation of 
comments with respect to the IRFA. Cost-benefit information reflected 
in the ``Cost-Benefit Analysis'' section of this Release also is 
reflected in the IRFA. A copy of the IRFA may be obtained by contacting 
Robin S. Gross, Securities and Exchange Commission, 450 5th Street, 
NW., Mail Stop 10-2, Washington, DC. 20549.
    For purposes of the Small Business Regulatory Enforcement Fairness 
Act of 1996, the Commission also requests information regarding the 
potential impact of the proposed amendments on an annual basis. 
Commenters should provide empirical data to support their views.

VI. Statutory Authority

    The Commission is proposing to rescind rules 24e-2 and 24f-1, and 
amend rules 24e-1 and 24f-2 and Form 24F-2, pursuant to the authority 
set forth in sections 24 and 38(a) of the Investment Company Act (15 
U.S.C. 80a-24, -37(a). The Commission is proposing to amend rule 485 
pursuant to the authority set forth in sections 6, 7, 8, 10 and 19(a) 
of the Securities Act (15 U.S.C. 77f, 77h, 77j, 77s(a)) and section 38 
of the Investment Company Act. The authority citations for the proposed 
amendments to Forms N-1A, N-3, N-4, N-14 and S-6, and rule 13 of 
Regulation S-T and rule 3a of Informal and Other Procedures precede the 
text of the amendments.

Text of Proposed Rule and Form Amendments

List of Subjects

17 CFR Part 202

    Administrative practice and procedure, Securities.

17 CFR Parts 230, 270 and 274

    Investment companies, Reporting and recordkeeping requirements, 
Securities.

17 CFR Part 232

    Administrative practice and procedure, Reporting and recordkeeping 
requirements, Securities.

17 CFR Part 239

    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 202--INFORMAL AND OTHER PROCEDURES

    1. The authority citation for part 202 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77s, 77t, 78d-1, 78u, 78w, 78ll(d), 79r, 
79t, 77sss, 77uuu, 80a-37, 80a-41, 80b-9, and 80b-11, unless 
otherwise noted.
* * * * *


Sec. 202.3a  [Amended]

    2. In Sec. 202.3a, the seventh sentence of the introductory text is 
amended by adding the phrase ``, including fees paid pursuant to 
section 24(f) of the Investment Company Act of 1940 (15 U.S.C. 80a-
24(f))'' after the phrase ``Section 6(b) of the Securities Act of 
1933''.

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

    3. The authority citation for part 230 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77b, 77f, 77g, 77h, 77j, 77s, 77sss, 78c, 
78d, 78l, 78m, 78n, 78o, 78w, 78ll(d), 78t, 80a-8, 80a-29, 80a-30, 
and 80a-37, unless otherwise noted.
* * * * *


Sec. 230.485  [Amended]

    4. Section 230.485 is amended by removing paragraphs (b)(1) (i) and 
(ii) and redesignating paragraphs (b)(1) (iii) through (ix) as 
paragraphs (b)(1) (i) through (vii), revising the reference to 
``paragraph (b)(1)(ix)'' in the introductory text of paragraph (b)(2) 
to read ``paragraph (b)(1)(vii)'' and the two references to ``paragraph 
(b)(1)(v)'' in paragraph (d)(2)(ii)(B) and the undesignated paragraph 
that follows to read ``paragraph (b)(1)(iii)''.

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

    5. 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.


Sec. 232.13  [Amended]

    6. Section 232.13 is amended in paragraph (a)(1)(iii) by adding 
after the words ``Securities Act filings'' the phrase ``, including 
filings under section 24(f) of the Investment Company Act (15 U.S.C. 
80a-24(f))''.

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

    7. 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-29, 80a-30 and 80a-37, unless 
otherwise noted.
* * * * *


Sec. 239.16  [Form S-6 Amended]

    8. Form S-6 (referenced in Sec. 239.16) is amended on the cover 
page by removing the words ``and amount'' in Item E, removing Items F 
and G, and redesignating Item H as Item F.

    Note: Form S-6 does not and the amendment will not appear in the 
Code of Federal Regulations.

[[Page 38502]]

    Note: Form N-14 does not and the amendments will not appear in 
the Code of Federal Regulations.


Sec. 239.23  [Form N-14 Amended]

    9. Form N-14 (referenced in Sec. 239.23) is amended on the cover 
page by revising the Instruction to the table ``Calculation of 
Registration Fee under the Securities Act of 1933'' to read as follows:

Form N-14

* * * * *

Calculation of Registration Fee under the Securities Act of 1933

* * * * *

Instruction

    Registrants relying on section 24(f) of the Investment Company 
Act, which permits registration of an indefinite number of 
securities, need not include the Securities Act registration fee 
table, but must provide the ``Title of Securities Being Registered'' 
and state that no filing fee is due because of reliance on section 
24(f).
* * * * *


Sec. 239.23  [Form N-14 amended]

    10. Form N-14 (referenced in Sec. 239.23) is amended by revising 
General Instruction B to read as follows:

Form N-14

* * * * *

General Instructions

* * * * *

B. Registration Fee

    Section 6(b) of the 1933 Act and Rule 457 (17 CFR 230.457) 
thereunder set forth the fee requirements under the 1933 Act. 
Registrants relying on section 24(f) of the 1940 Act, which permits 
registration of an indefinite number of shares, are directed to rule 
24f-2 under the 1940 Act (17 CFR 270.24f-2) regarding payment of the 
registration fee. If, contemporaneous with a filing on Form N-14, an 
open-end management company is offering its securities to the public 
by means of a current prospectus under an effective registration 
statement, the prospectus included in a registration statement filed 
on Form N-14 may be used, under Rule 429(a) (17 CFR 230.429(a)), in 
connection with the securities covered by the earlier registration 
statement.
* * * * *

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

    11. The authority citation for part 270 is amended by adding the 
following citation to read as follows:

    Authority: 15 U.S.C. 80a-1 et seq., 80a-37, 80a-39 unless 
otherwise noted;
* * * * *
    Section 270.24f-2 also issued under 15 U.S.C. 80a-24(f)(4).


Sec. 270.24e-1  [Amended]

    12. Section 270.24e-1 is amended by removing the reference 
``24(e)(3)'' each time it appears and adding the reference ``24(e)''.


Sec. 270.24e-2  [Removed]

    13. Section 270.24e-2 is removed.


Sec. 270.24f-1  [Removed]

    14. Section 270.24f-1 is removed.
    15. Section 270.24f-2 is revised to read as follows:


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

    (a) General. Any face-amount certificate company, open-end 
management company or unit investment trust (``issuer'') that is deemed 
to have registered an indefinite amount of securities pursuant to 
section 24(f) of the Act (15 U.S.C. 80a-24(f)) shall, not later than 90 
days after the end of any fiscal year during which it has publicly 
offered such securities, file Form 24F-2 (17 CFR 274.24) with the 
Commission. Form 24F-2 shall be prepared in accordance with the 
requirements of that Form, and shall be accompanied by the payment of a 
registration fee with respect to the securities sold during the fiscal 
year in reliance upon registration pursuant to section 24(f) of the Act 
calculated in the manner specified in section 24(f) of the Act and such 
Form. An issuer that pays the registration fee more than 90 days after 
the end of its fiscal year shall pay interest in the manner specified 
in section 24(f) of the Act and in Form 24F-2.
    (b) Issuer ceasing operations; mergers and other transactions. For 
purposes of this section, if an issuer ceases operations, the date the 
issuer ceases operations shall be deemed to be the end of its fiscal 
year. In the case of a liquidation, merger, or sale of all or 
substantially all of the assets (``merger'') of the issuer, the issuer 
shall be deemed to have ceased operations for purposes of this section 
on the date the merger is consummated; provided, however, that in the 
case of a merger of an issuer or a series of an issuer (``Predecessor 
Issuer'') with another issuer or a series of that issuer (``Successor 
Issuer''), the Predecessor Issuer shall not be deemed to have ceased 
operations and the Successor Issuer shall assume the obligations, fees, 
and redemption credits of the Predecessor Issuer incurred pursuant to 
section 24(f) of the Act and Sec. 270.24e-2 (as in effect prior to the 
effective date of its rescission) if the Successor Issuer:
    (1) Had no assets or liabilities, other than nominal assets or 
liabilities, and no operating history immediately prior to the merger;
    (2) Acquired all of the assets and assumed all of the liabilities 
and obligations of the Predecessor Issuer; and
    (3) The merger is not designed to result in the Predecessor Issuer 
merging with, or substantially all of its assets being acquired by, an 
issuer (or a series of that issuer) that would not meet the conditions 
of paragraph (b)(1) of this section.
    (c) Counting days. To determine the date on which Form 24F-2 must 
be filed with the Commission under paragraph (a) of this section, the 
first day of the 90 day period shall be the first calendar day of the 
fiscal year following the fiscal year for which the Form is to be 
filed. If the last day of the 90 day period falls on a Saturday, Sunday 
or Federal holiday, the period shall end on the first business day 
thereafter.

    Note to paragraph (c): For example, a Form 24F-2 for a fiscal 
year ending on June 30 must be filed no later than September 28. If 
September 28 falls on a Saturday or Sunday, the Form must be filed 
on the following Monday.

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

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

    16. 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.

    Note: Form N-1A does not and the amendments will not appear in 
the Code of Federal Regulations.


Secs. 239.15A and 274.11A  [Form N-1A Amended]

    17. Form N-1A (referenced in Sec. 239.15A and Sec. 274.11A) is 
amended on the cover page by removing the words ``Calculation of 
Registration Fee Under the Securities Act of 1933'' and the 
accompanying chart and note, and adding the following:

``Title of Securities Being Registered . . . . .
    Omit from the facing sheet reference to the other Act if the 
Registration Statement or amendment is filed under only one of the 
Acts. Include the ``Approximate Date of Proposed Public Offering'' 
and ``Title of Securities Being Registered'' only where securities 
are being registered under the Securities Act of 1933.''


Secs. 239.15A and 274.11A  [Form N-1A Amended]

    18. Form N-1A (referenced in Sec. 239.15A and Sec. 274.11A) is 
amended by

[[Page 38503]]

revising General Instruction B to read as follows:

Form N-1A

* * * * *

General Instructions

* * * * *

B. Registration Fees

    Registration fees should not be paid when filing this form. See 
section 24(f) of the Investment Company Act and rule 24f-2 
thereunder.
* * * * *


Secs. 239.15A and 274.11A [Form N-1A Amended]

    19. Form N-1A (referenced in Sec. 239.15A and Sec. 274.11A) is 
amended by revising General Instruction F.2 to read as follows:

    Note: Form N-1A does not and the amendments will not appear in 
the Code of Federal Regulations.

Form N-1A

* * * * *

General Instructions

* * * * *

F. Documents Comprising Registration Statement or Amendment

* * * * *
    2. A registration statement or an amendment thereto which is 
filed under only the 1933 Act shall contain all the information and 
documents specified in paragraph 1 of this Instruction F.
* * * * *


Secs. 239.15A and 274.11A  [Form N-1A Amended]

    20. Form N-1A (referenced in Sec. 239.15A and Sec. 274.11A) is 
amended by removing General Instruction F.3 and redesignating General 
Instruction F.4 as General Instruction F.3.

    Note: Form N-1A does not and the amendments will not appear in 
the Code of Federal Regulations.


Secs. 239.17a and 274.11b  [Form N-3 Amended]

    21. Form N-3 (referenced in Sec. 239.17a and Sec. 274.11b) is 
amended on the cover page by removing the words ``Calculation of 
Registration Fee Under the Securities Act of 1933'' and the 
accompanying chart and note, and adding the following:

``Title of Securities Being Registered . . . . .
    Omit from the facing sheet reference to the other Act if the 
Registration Statement or amendment is filed under only one of the 
Acts. Include the ``Approximate Date of Proposed Public Offering'' 
and ``Title of Securities Being Registered'' only where securities 
are being registered under the Securities Act of 1933.

    Note: Form N-3 does not and the amendments will not appear in 
the Code of Federal Regulations.


Secs. 239.17a and 274.11b  [Form N-3 Amended]

    22. Form N-3 (referenced in Sec. 239.17a and Sec. 274.11b) is 
amended by revising General Instruction B to read as follows:

    Note: Form N-3 does not and the amendments will not appear in 
the Code of Federal Regulations.

Form N-3

* * * * *

General Instructions

* * * * *

B. Registration Fees

    Registration fees should not be paid when filing this form. See 
section 24(f) of the Investment Company Act and rule 24f-2 
thereunder.
* * * * *


Secs. 239.17a and 274.11b  [Form N-3 Amended]

    23. Form N-3 (referenced in Sec. 239.17a and Sec. 274.11b) is 
amended by revising General Instruction H.2 to read as follows:

    Note: Form N-3 does not and the amendments will not appear in 
the Code of Federal Regulations.

Form N-3

* * * * *

General Instructions

* * * * *

H. Documents Comprising Registration Statement or Amendment

* * * * *
    2. A registration statement or an amendment to it which is filed 
under only the 1933 Act shall contain all the information and 
documents specified in paragraph 1 of this Instruction H.
* * * * *


Secs. 239.17a and 274.11b  [Form N-3 Amended]

    24. Form N-3 (referenced in Sec. 239.17a and Sec. 274.11b) is 
amended by removing General Instruction H.3 and redesignating General 
Instructions H.4 and H.5 as General Instructions H.3 and H.4.

    Note: Form N-3 does not and the amendments will not appear in 
the Code of Federal Regulations.


Secs. 239.17b and 274.11c  [Form N-4 Amended]

    25. Form N-4 (referenced in Sec. 239.17b and Sec. 274.11c) is 
amended on the cover page by removing the words ``Calculation of 
Registration Fee Under the Securities Act of 1933'' and the 
accompanying chart and note, and adding the following:

``Title of Securities Being Registered . . .
    Omit from the facing sheet reference to the other Act if the 
Registration Statement or amendment is filed under only one of the 
Acts. Include the ``Approximate Date of Proposed Public Offering'' 
and ``Title of Securities Being Registered'' only where securities 
are being registered under the Securities Act of 1933.''

    Note: Form N-4 does not and the amendments will not appear in 
the Code of Federal Regulations.


Secs. 239.17b and 274.11c  [Form N-4 Amended]

    26. Form N-4 (referenced in Sec. 239.17b and Sec. 274.11c) is 
amended by revising General Instruction B to read as follows:

    Note: Form N-4 does not and the amendments will not appear in 
the Code of Federal Regulations.

Form N-4

* * * * *

General Instructions

* * * * *

B. Registration Fees

    Registration fees should not be paid when filing this form. See 
section 24(f) of the Investment Company Act and rule 24f-2 
thereunder.
* * * * *


Secs. 239.17b and 274.11c  [Form N-4 Amended]

    27. Form N-4 (referenced in Sec. 239.17b and Sec. 274.11c) is 
amended by revising General Instruction H.2 to read as follows:

    Note: Form N-4 does not and the amendments will not appear in 
the Code of Federal Regulations.

Form N-4

* * * * *

General Instructions

* * * * *

H. Documents Comprising Registration Statement or Amendment

* * * * *
    2. A registration statement or an amendment to it which is filed 
under only the 1933 Act shall contain all the information and 
documents specified in paragraph 1 of this Instruction H.
* * * * *


Secs. 239.17b and 274.11c  [Form N-4 Amended]

    28. Form N-4 (referenced in Sec. 239.17b and Sec. 274.11c) is 
amended by removing General Instruction H.3 and redesignating General 
Instructions H.4 and H.5 as General Instructions H.3 and H.4.
    29. Section 274.24 and Form 24F-2 are revised to read as follows:

[[Page 38504]]

Sec. 274.24  Form 24F-2, annual notice of securities sold pursuant to 
registration 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 of this chapter for 
reporting securities sold during the fiscal year.

    Note: Form 24F-2 does not and the amendments will not appear in 
the Code of Federal Regulations. A copy of Form 24F-2 as proposed to 
be revised is attached as Appendix I to this document.

    Dated: July 14, 1997.

    By the Commission.
Margaret H. McFarland
Deputy Secretary.

BILLING CODE 8010-01-U
      

[[Page 38505]]

[GRAPHIC] [TIFF OMITTED] TP18JY97.000



[[Page 38506]]

[GRAPHIC] [TIFF OMITTED] TP18JY97.001



[[Page 38507]]

[GRAPHIC] [TIFF OMITTED] TP18JY97.002



BILLING CODE 8010-01-C

[[Page 38508]]

Form 24F-2

Annual Filing Under Rule 24f-2 of the Investment Company Act of 1940

Instructions

A. General

    1. This Form should be used by an open-end management investment 
company, face amount certificate company, or unit investment trust 
(``issuer'') for annual notices required by rule 24f-2 under the 
Investment Company Act of 1940 [15 U.S.C. 80a et seq.] (``Investment 
Company Act''). If the issuer has registered more than one class or 
series of securities on the same registration statement under the 
Securities Act of 1933 [15 U.S.C. 77a et seq.] (``Securities Act''), 
the issuer may file a single Form 24F-2 for those classes or series 
that have the same fiscal year end. An issuer choosing to calculate 
registration fees on a class-by-class or series-by-series basis 
should make a single filing consisting of a separate Form 24F-2 for 
each class or series.
    2. This Form must be filed within 90 days after the end of the 
issuer's fiscal year. See Instruction B.4.
    3. Pursuant to rule 101(a)(1)(i) of Regulation S-T [17 CFR 
232.101(a)(1)(i)] this Form must be submitted in electronic format 
using Commission's Electronic Data Gathering, Analysis, and 
Retrieval (``EDGAR'') system. Consult the EDGAR Filer Manual and 
Appendices for instructions on how to properly construct the 
submission header for an electronic 24F-2 EDGAR filing.
    4. This Form must be accompanied by the appropriate registration 
fee. If the Form is being filed late, interest must be paid. See 
Instruction D.
    5. This Form will be deemed filed with the Commission on the 
date on which it is received by the Commission. The Commission will 
not accept for filing any Form accompanied by insufficient payment 
of the registration fee. A Form accompanied by insufficient payment 
of the registration fee will be returned to the issuer for proper 
payment and will not be deemed filed until receipt by the Commission 
of proper payment of the registration fee. No part of the 
registration fee is refundable. Issuers should refer to rule 0-8 
under the Investment Company Act [17 CFR 270.0-8], rule 3a of the 
Commission's Rules of Informal and Other Procedures [17 CFR 202.3a], 
and rule 13(c) under Regulation S-T [17 CFR 232.13(c)] for 
instructions on payment of fees to the Commission.

B. Identifying Information

    1. Item 1--Provide the name of the issuer as it appears on the 
cover of the issuer's most recent Securities Act registration 
statement or post-effective amendment.
    2. Item 2--If the Form is being filed for all classes and series 
of securities of the issuer, Item 2 may be left blank.
    3. Item 3--The Investment Company Act file number should be the 
number assigned to the issuer's registration statement filed under 
the Investment Company Act (beginning with ``811-''). The Securities 
Act file number in Item 3 is the number of the registrant's most 
recent Securities Act registration statement (beginning with ``2-'', 
``33-'' or ``333-'').
    4. Item 4(a)--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 section 24(f) of the Investment Company Act.
    5. Item 4(b)--Check the box if the Form is filed late. If the 
issuer files the Form late, the issuer is required under section 
24(f) to pay interest on unpaid amounts at the average investment 
rate for Treasury and tax loan accounts. See Instruction D.
    6. Item 4(c)--Check the box if this is the last time the issuer 
will be filing Form
24F-2 (i.e., if the issuer has discontinued operations).

C. Computation of Registration Fee

    1. Item 5 is a work sheet for calculating the registration fee 
due. An issuer must aggregate prices within each class or series for 
which the Form is being filed. If the issuer charges a front-end 
sales load on its securities, the aggregate sale price must include 
the sales load.
    2. Special Rule for Separate Accounts--The sale price of 
securities sold to an unmanaged separate account that offers 
interests that are registered under the Securities Act and on which 
a registration fee has been or will be paid may be excluded from the 
sale price of securities reported in Item 5(i). If the issuer 
chooses to exclude the sale price of these securities from Item 
5(i), the issuer may not use securities redeemed or repurchased from 
those unmanaged separate accounts for purposes of determining the 
redemption or repurchase price of securities in Items 5(ii) and 
5(iii).
    3. EDGAR--Report responses for Item 5 under the following EDGAR 
header-tags:

Item 5(i)--
Item 5(iv)--
Item 5(viii)--

    The  and  tags are located 
immediately after the  tag in the 24F-2 submission header.
    4. Item 5(i)--Report the total sale price of securities sold 
during the fiscal year in reliance upon registration under section 
24(f). Include securities issued pursuant to dividend reinvestment 
plans (``DRIP shares'') whether or not they are required to be 
registered under the Securities Act. Do not include the sale price 
of securities, if any, which were registered under the Securities 
Act other than pursuant to section 24(f), such as securities 
registered by post-effective amendment pursuant to rule 24e-2 under 
the Investment Company Act as in effect before [effective date of 
rescission of rule 24e-2]. Example: An issuer sold 1,000,000 shares, 
and 250,000 shares had previously been registered pursuant to rule 
24e-2. Item 5(i) should show the aggregate sale price of 750,000 
shares.
    5. Item 5(ii)--Report the aggregate redemption or repurchase 
price of securities redeemed or repurchased during the fiscal year. 
Do not include securities that have been redeemed or repurchased and 
previously applied as a reduction to registration fees pursuant to 
rule 24e-2 as in effect before [effective date of rescission of rule 
24e-2]. Example: An issuer with an August 30, 1997 fiscal year end 
registered shares pursuant to rule 24e-2 in September 1997. The 
issuer applied securities redeemed during its 1997 fiscal year to 
reduce its registration fees payable under rule 24e-2. The 
redemption price of these securities should not be included in Item 
5(ii).
    6. Item 5(iii)--Report the aggregate redemption or repurchase 
price of securities redeemed or repurchased during any prior fiscal 
year ending no earlier than October 11, 1995, that were not used 
previously to reduce registration fees payable to the Commission. Do 
not include securities that have been redeemed or repurchased and 
previously applied as a reduction to registration fees pursuant to 
rule 24e-2 as in effect before [effective date of rescission of rule 
24e-2]. See the Example to Item 5(ii).
    7. Items 5(iv) through 5(vi)--Report the sum of Items 5(ii) and 
5(iii) in Item 5(iv). Subtract Item 5(iv) from Item 5(i). If Item 
5(iv) is less than Item 5(i), report the result in Item 5(v) (net 
sales). If Item 5(iv) is greater than Item 5(i), report the 
resulting negative number in parentheses in Item 5(vi) (net 
redemptions or repurchases). The amount of redemptions or 
repurchases reported in Item 5(vi) may be used by the issuer in 
future years to offset sales (by including it in response to Item 
5(iii) of Form 24F-2 filed for the next fiscal year).
    8. Item 5(vii)--The multiplier for calculation of the 
registration fee is determined by the Commission in accordance with 
Section 6(b) of the Securities Act [15 U.S.C. 77f(b)]. As of October 
1, 1996, the multiplier was 1/3300. Use of a decimal factor or some 
other method to calculate registration fees may result in payment of 
an incorrect amount. 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). The 
Commission generally makes available information concerning changes 
in the fee rate on its Internet site at http://www.sec.gov/news/
press. 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.
    9. Item 5(viii)--If the issuer reports net redemptions or 
repurchases in Item 5(vi), report ``0'' in Item 5(viii).

D. Computation of Interest Due if Form is Filed Late

    1. Item 6--Section 24(f) requires any issuer that pays its 
registration fee more than 90 days after the end of its fiscal year 
to pay interest to the Commission on unpaid amounts. The payment of 
interest does not preclude the Commission from bringing an action to 
enforce the requirements of section 24(f). Pursuant to section 11 of 
the Debt Collection Act [31 USC 3717], that rate is published by the 
Secretary of the Treasury. The rate is subject to quarterly 
revisions if the annual average of investment rates changes by two 
percent. Otherwise, the rate

[[Page 38509]]

is computed each year for the 12 month period ending September 30 
for applicability effective January 1 of the following year. The 
rate in effect for calendar year 1997 is 5 percent. As noted above, 
however, that rate is subject to change and filers owing interest 
should verify the current interest rate.
    2. The interest is assessed only on the amount of the 
registration fee due, and begins to accrue on the 91st day following 
the end of the issuer's fiscal year. The amount of interest due 
should be calculated based on the interest rate in effect at the 
time the interest payment is made using the following formula:

I = (X) (Y) (Z/365)

Where:

I = Amount of interest due
X = Amount of registration fee due
Y = Applicable interest rate, expressed as a percentage
Z = Number of days by which the registration fee payment is late

E. Payment and Signature

    1. Item 8--Identify which SEC account number (payor's CIK 
number) was designated to receive the payment.
    2. The Form must be signed on behalf of the issuer by an 
authorized officer of the issuer. See rule 302 of Regulation S-T [17 
CFR 232.302] regarding signatures on forms filed electronically.

[FR Doc. 97-18857 Filed 7-17-8:45 am]
BILLING CODE 8010-01-U