==========================================START OF PAGE 1====== 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, N.W., Stop 6-9, Washington, D.C. 20549. Comments also may be submitted electronically at the following E- mail address: rule-comments@sec.gov. 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, 450 Fifth Street, N.W., Washington, D.C. 20549. Electronically submitted comment letters also will be posted on the Commission's Internet web site (http://www.sec.gov). ==========================================START OF PAGE 2====== 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, N.W., Washington, D.C. 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 USC 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 USC 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]. ==========================================START OF PAGE 3====== 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. ==========================================START OF PAGE 4====== 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]- Section 24 of the Investment Company Act modifies the Securities Act registration provisions for funds.-[3]- ---------FOOTNOTES---------- -[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). -[3]- 15 USC 80a-24. ==========================================START OF PAGE 5====== 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]- 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 ---------FOOTNOTES---------- -[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 USC 80a-24(e). -[6]- 15 USC 80a-24(f). -[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)]. ==========================================START OF PAGE 6====== "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]- 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 pursuant to these provisions can result in a fund facing significant adverse consequences.-[11]- ---------FOOTNOTES---------- -[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). -[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 (continued...) ==========================================START OF PAGE 7====== 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 ---------FOOTNOTES---------- -[11]-(...continued) 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). -[12]- Section 203 of the Improvement Act, Pub. L. No. 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 USC 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." ==========================================START OF PAGE 8====== registration fees. Section 24(f) will provide the exclusive means for registering fund securities.-[14]- 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]- 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 -[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. -[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. ==========================================START OF PAGE 9====== 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]- 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. The Commission is proposing to eliminate the provision in -[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. -[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). ==========================================START OF PAGE 10====== 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]- 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 -[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. -[21]- Rule 24f-2(b)(1) [17 CFR 24f-2(b)(1)]. ==========================================START OF PAGE 11====== 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]- 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 ("redemption credits") of the acquired fund to reduce its registration fees. 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 -[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). -[23]- Rule 24f-2(b)(3) [17 CFR 270.24f-2(b)(3)]; proposed rule 24f-2(b). ==========================================START OF PAGE 12====== 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. The proposed amendments would simplify the reorganization -[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. ==========================================START OF PAGE 13====== 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. 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. B. Amendments to Form 24F-2 -[26]- Proposed rule 24f-2(b). The proposed amendments would make clear that the successor fund may be a series of a series company. -[27]- Proposed rule 24f-2(b)(3). ==========================================START OF PAGE 14====== 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. 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 ---------FOOTNOTES---------- -[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. -[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. ==========================================START OF PAGE 15====== 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. 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 ---------FOOTNOTES---------- -[31]- Items 7, 8 and 9 of Form 24F-2. ==========================================START OF PAGE 16====== paid.-[32]- 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]- 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 permit funds to net redemptions during the fiscal year or earlier fiscal years against sales without having to -[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. -[33]- Instruction C.4 to Form 24F-2, as proposed to be amended. ==========================================START OF PAGE 17====== "preserve" those redemption credits through filing periodic post- effective amendments pursuant to section 24(e).-[34]- 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). 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 -[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. -[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. ==========================================START OF PAGE 18====== 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]- 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 -[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). ==========================================START OF PAGE 19====== 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. 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- -[38]- The manner in which interest should be calculated would be set forth in proposed Instruction D. -[39]- See 15 USC 80a-24(e)(1) and (2). ==========================================START OF PAGE 20====== sale registration, the Commission is proposing to rescind rule 24f-1, which details the procedures for post-sale registration. 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). 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 ---------FOOTNOTES---------- -[40]- Form S-6, Form N-1A, Form N-3, Form N-4, and Form N- 14. -[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. ==========================================START OF PAGE 21====== Act in rule 24e-1 under the Investment Company Act would be changed to reflect that that section will become section 24(e). 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 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 ==========================================START OF PAGE 22====== 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 ---------FOOTNOTES---------- -[43]- 44 USC 3501. ==========================================START OF PAGE 23====== displayed. 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- ==========================================START OF PAGE 24====== 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 USC 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 ==========================================START OF PAGE 25====== 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, N.W., Stop 6-9, Washington, D.C. 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 USC 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 ==========================================START OF PAGE 26====== 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 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 ==========================================START OF PAGE 27====== 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 ==========================================START OF PAGE 28====== 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, N.W., Mail Stop 10-2, Washington, D.C. 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 USC 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 USC 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 ==========================================START OF PAGE 29====== 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. * * * * * 2. In  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, ==========================================START OF PAGE 30====== 78c, 78d, 78l, 78m, 78n, 78o, 78w, 78ll(d), 78t, 80a-8, 80a-29, 80a-30, and 80a-37, unless otherwise noted. * * * * * 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. 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, ==========================================START OF PAGE 31====== 79g, 79j, 79l, 79m, 79n, 79q, 79t, 80a-8, 80a-29, 80a-30 and 80a-37, unless otherwise noted. * * * * * 8. Form S-6 (referenced in  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. Note: Form N-14 does not and the amendments will not appear in the Code of Federal Regulations. 9. Form N-14 (referenced in  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). * * * * * 10. Form N-14 (referenced in  239.23) is amended by revising General Instruction B to read as follows: FORM N-14 ==========================================START OF PAGE 32====== * * * * * 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). 12. Section 270.24e-1 is amended by removing the reference ==========================================START OF PAGE 33====== "24(e)(3)" each time it appears and adding the reference "24(e)". 13. Section 270.24e-2 is removed. 14. Section 270.24f-1 is removed. 15. Section 270.24f-2 is amended to read as follows:  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 ==========================================START OF PAGE 34====== 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  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. ==========================================START OF PAGE 35====== 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. 17. Form N-1A (referenced in  239.15A and  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." 18. Form N-1A (referenced in  239.15A and  274.11A) is amended by revising General Instruction B to read as follows: Form N-1A * * * * * ==========================================START OF PAGE 36====== 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. * * * * * 19. Form N-1A (referenced in  239.15A and  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. * * * * * 20. Form N-1A (referenced in  239.15A and  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 ==========================================START OF PAGE 37====== in the Code of Federal Regulations. 21. Form N-3 (referenced in  239.17a and  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. 22. Form N-3 (referenced in  239.17a and  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. * * * * * 23. Form N-3 (referenced in  239.17a and  274.11b) is amended by revising General Instruction H.2 to read as follows: ==========================================START OF PAGE 38====== 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. * * * * * 24. Form N-3 (referenced in  239.17a and  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. 25. Form N-4 (referenced in  239.17b and  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 ==========================================START OF PAGE 39====== 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. 26. Form N-4 (referenced in  239.17b and  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. * * * * * 27. Form N-4 (referenced in  239.17b and  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 * * * * * ==========================================START OF PAGE 40====== 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. * * * * * 28. Form N-4 (referenced in  239.17b and  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:  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  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 amended is attached as Appendix I to this document [a copy of the Form is not available in the electronic version of this document; to obtain a copy of the Form, call (202) 942-0690]. By the Commission. Jonathan G. Katz Secretary ==========================================START OF PAGE 41====== July 14, 1997