SECURITIES AND EXCHANGE COMMISSION

          17 CFR Parts 232, 270 and 274

          [Release No. IC-23786; File No. S7-31-98]

          RIN 3235-AG29

          Deregistration of Certain Registered Investment Companies

          AGENCY:  Securities and Exchange Commission

          ACTION:  Final rule

          SUMMARY:  The Commission is adopting amendments to the rule and

          form under the Investment Company Act of 1940 that govern the

          deregistration of registered investment companies.  The

          Commission also is adopting amendments that require investment

          companies to file the form electronically through the

          Commission’s Electronic Data Gathering, Analysis, and Retrieval

          ("EDGAR") system.  The amendments are designed to expedite the

          process for deregistering investment companies.

          EFFECTIVE DATE:  The rule amendments will become effective June

          1, 1999.

          FOR FURTHER INFORMATION CONTACT:  Robin Gross Lehv, Staff

          Attorney, or Penelope Saltzman, Senior Counsel, at (202) 942-

          0690, Office of Regulatory Policy, Division of Investment

          Management, Securities and Exchange Commission, 450 5th Street,

          N.W., Washington, D.C. 20549-0506.  For additional information,

          including questions about filing Form N-8F, contact the Office of

          Investment Company Regulation, Division of Investment Management,

          at (202) 942-0564, Securities and Exchange Commission, 450 5th

          Street, N.W., Washington, D.C. 20549-0506.

          SUPPLEMENTARY INFORMATION:  The Commission is adopting amendments

          to rule 8f-1 [17 CFR 270.8f-1] and Form N-8F [17 CFR 274.218]

          under the Investment Company Act of 1940 [15 U.S.C. 80a] (the

          "Investment Company Act" or "Act"), and to rule 101 of the

          Commission’s Regulation S-T [17 CFR 232.101].

          I.   DISCUSSION

               Under section 8(f) of the Investment Company Act, the

          Commission may deregister a registered investment company

          ("fund") if it determines the fund is no longer an "investment

          company."[1]  In order to expedite the deregistration process and

          assist funds in preparing their applications, in 1978 the

          Commission adopted rule 8f-1 and Form N-8F.[2]  Rule 8f-1

          describes the circumstances in which funds may use Form N-8F to

          apply for a deregistration order, and Form N-8F specifies the

          information that a fund must provide.

                In December 1998, the Commission proposed to revise Form N-

          8F to simplify the form, eliminate unnecessary items, and refocus

          the questions to better elicit the information we need to make

          the finding under section 8(f) to deregister a fund.[3]  We also

          proposed to amend rule 8f-1 to expand the types of circumstances

          in which a fund may use Form N-8F to apply for a deregistration

          order.[4]  Finally, we proposed to require that Form N-8F, like

          most other documents filed by funds, be submitted electronically

          through the Commission’s EDGAR system.

               The Commission received one comment letter, which supported

          the proposed amendments and urged their prompt adoption.[5]  The

          commenter agreed that the amendments would facilitate completion

          of the form and expedite the deregistration process.  We are

          adopting the amendments substantially as proposed, with minor

          technical modifications[6] in response to issues raised by the

          commenter.[7]

          II.  COST-BENEFIT ANALYSIS

               The Commission is sensitive to the costs and benefits that

          result from its rules.  The rule and form amendments are designed

          to decrease the regulatory burdens for funds that apply for a

          deregistration order.  The amendments (i) revise the content and

          format of Form N-8F, making it easier to understand and complete,

          (ii) expand the circumstances under which funds may use the form

          to apply to deregister, and (iii) require the form to be filed

          electronically.

               As explained in greater detail in the cost-benefit analysis

          of the Proposing Release, the Commission believes these changes

          will result in cost and time savings for registered investment

          companies.  Specifically, we estimated that the amendments will

          reduce the average time that it takes to complete the form by

          about 50 percent, and will similarly reduce the number of

          applications that require the applicant to provide additional or

          clarifying information.[8]  The one comment letter we received

          agreed that the proposed amendments would expedite the

          registration process, but did not provide specific estimates of

          any costs or benefits of the amendments.

          III. PAPERWORK REDUCTION ACT

                         Certain provisions of the amendments to rule 8f-1 and Form

          N-8F constitute a "collection of information" requirement within

          the meaning of the Paperwork Reduction Act of 1995 [44 U.S.C.

          3501-3520].  The Commission solicited, but did not receive,

          comments on the collection of information requirements in the

          Proposing Release.  The Commission submitted the proposed

          amendments to the Office of Management and Budget ("OMB")

          pursuant to 44 U.S.C. 3507(d) and received approval of the

          amendments' collection of information requirements (OMB control

          number 3235-0157).[9]  An agency may not conduct or sponsor, and

          a person is not required to respond to, a collection of

          information unless it displays a currently valid control number.

               The collection of information is not mandatory but is

          recommended for all funds that seek to deregister under the

          circumstances described in rule 8f-1.  The amended rule does not

          require that the collection of information be made public or kept

          confidential by the parties.

          IV.  SUMMARY OF FINAL REGULATORY FLEXIBILITY ANALYSIS

               A Final Regulatory Flexibility Analysis ("FRFA") concerning

          rule 8f-1 and Form

          N-8F has been prepared in accordance with 5 U.S.C. 604.  An

          Initial Regulatory Flexibility Analysis ("IRFA") was prepared in

          accordance with 5 U.S.C. 603, and a summary of the IRFA was

          included in the Proposing Release.  The Commission received no

          comments on the IRFA.

               The FRFA notes that the amendments are intended to improve

          the quality of information provided on the form and to reduce the

          time and effort required to complete the form.  The amendments do

          not impose new burdens on respondents other than the requirement

          that the form be filed through the EDGAR system.  The amendments

          will not impose any new reporting or recordkeeping requirements.

               As discussed more fully in the FRFA, the amendments will

          affect small businesses or small organizations (collectively,

          "small entities"), as defined by the Commission’s rules, in the

          same manner as all other entities who use Form N-8F to

          deregister.  The Commission believes the amendments will decrease

          burdens on all funds by facilitating and expediting the

          deregistration process, saving them time and money.

                The FRFA states that for purposes of the Investment Company

          Act and the Regulatory Flexibility Act, a small entity is a fund

          that, together with other funds in the same group of related

          funds, has net assets of $50 million or less as of the end of its

          most recent fiscal year.[10]  Of approximately 3900 active funds

          (including business development companies), 339 funds are small

          entities.  Any of these 339 funds that applies to deregister

          under circumstances described in amended rule 8f-1 could use Form

          N-8F.

                Finally, the FRFA notes that the Commission considered

          various alternatives that might minimize the economic impact of

          the amendments on small entities.  These include:  (i) the

          establishment of differing compliance requirements that take into

          account the resources available to small entities; (ii) the

          clarification, consolidation, or simplification of compliance

          requirements under the rule for small entities; (iii) the use of

          performance rather than design standards; and (iv) an exemption

          from coverage of the rule, or any part thereof, for small

          entities.  The FRFA concludes that alternative requirements or

          simplification or consolidation of the requirements is

          unnecessary because the amendments are designed to reduce the

          compliance burdens for all funds, including small entities.  In

          addition, an exemption from any of the requirements for small

          entities would increase their regulatory burden rather than

          decrease it.

                A copy of the FRFA may be obtained by contacting Robin

          Gross Lehv, Division of Investment Management, Securities and

          Exchange Commission, 450 5th Street, N.W., Washington, D.C.

          20549-0506.

          V.   STATUTORY AUTHORITY

               The Commission is amending rule 8f-1 and Form N-8F pursuant

          to the authority set forth in section 38(a) [15 U.S.C. 80a-37(a)]

          of the Investment Company Act.

          List of Subjects in 17 CFR Part 232

               Reporting and recordkeeping requirements.

          List of Subjects in 17 CFR Part 270

                         Investment companies, Securities.

          List of Subjects in 17 CFR Part 274

                         Investment companies, Reporting and recordkeeping

          requirements.

          TEXT OF RULE AND FORM AMENDMENTS

               For the reasons set out in the preamble, Title 17, Chapter

          II of the Code of Federal Regulations is amended as follows:

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

                         1.   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, 80-30 and 80a-37.

               2.   Section 232.101 is amended in paragraph (a)(1)(iv) by

          removing the phrase ", 8(f)" and by removing the phrase ", 80a-

          8(f)".

               3.   Section 232.101 is amended in paragraph (c)(11) by

          removing the phrase "8(f)," and by removing the phrase "80a-

          8(f),".

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

               4.   The authority citation for Part 270 continues to read,

          in part, as follows:

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

          39 unless otherwise noted;

               * * * * *

               5.   Section 270.8f-1 is revised to read as follows:

          § 270.8f-1  Deregistration of certain registered investment

          companies.

                         A registered investment company that seeks a Commission

          order declaring that it is no longer an investment company may

          file an application with the Commission on Form N-8F (17 CFR

          274.218) if the investment company:

               (a)  Has sold substantially all of its assets to another

          registered investment company or merged into or consolidated with

          another registered investment company;

               (b)  Has distributed substantially all of its assets to its

          shareholders and has completed, or is in the process of, winding

          up its affairs;

               (c)  Qualifies for an exclusion from the definition of

          "investment company" under section 3(c)(1) (15 U.S.C. 80a-

          3(c)(1)) or section 3(c)(7) (15 U.S.C. 80a-3(c)(7)) of the Act;

          or

               (d)  Has become a business development company.

               Note to § 270.8f-1: Applicants who are not eligible to use

          Form N-8F to file an application to deregister may follow the

          general guidance for filing applications under rule 0-2 (17 CFR

          270.0-2) of this chapter.

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

                6.  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.

               7.   Section 274.218 and Form N-8F are revised to read as

          follows:

          § 274.218  Form N-8F, application for deregistration of certain
          registered investment companies.

                          This form must be used as the application for an order of

          the Commission in cases in which the applicant is a registered

          investment company that:

               (a)  Has sold substantially all of its assets to another

          registered investment company or merged into or consolidated with

          another registered investment company;

               (b)  Has distributed substantially all of its assets to its

          shareholders and has completed, or is in the process of, winding

          up its affairs;

               (c)  Qualifies for an exclusion from the definition of

          "investment company" under section 3(c)(1) (15 U.S.C. 80a-

          3(c)(1)) or section 3(c)(7) (15 U.S.C. 80a-3(c)(7)) of the Act;

          or

               (d)  Has become a business development company.

               Note to § 274.218:  Form N-8F does not, and the amendments

          will not, appear in the Code of Federal Regulations.  A copy of

          Form N-8F is attached as an Appendix to this document.

          By the Commission.



                                        Jonathan G. Katz
                                        Secretary

          April 15, 1999


          **FOOTNOTES**

          [1]: 15 U.S.C. 80a-8(f).

          [2]: See Deregistration of Certain Investment Companies and
               Quarterly Reports of Management Investment Companies,
               Investment Company Act Release No. 10237 (May 11, 1978) [43
               FR 21664 (May 19, 1978)].

          [3]: See Deregistration of Certain Registered Investment
               Companies, Investment Company Act Release No. 23588 (Dec. 4,
               1998) [63 FR 69236 (Dec. 16, 1998)] ("Proposing Release").

          [4]: Under the proposed amendments, a fund could use the form if
               it (i) has sold substantially all of its assets to another
               fund or merged into or consolidated with another fund, (ii)
               has distributed substantially all of its assets to its
               shareholders and completed, or is in the process of, winding
               up its affairs, (iii) qualifies for an exclusion from the
               definition of investment company under section 3(c)(1) or
               section 3(c)(7) of the Act, or (iv) has decided to become a
               business development company.

          [5]: See Letter from Investment Company Institute (Feb. 5, 1999)
               (placed in File No. S7-31-98).

          [6]: Among other technical changes, we deleted the question
               requesting the date that the fund filed a notice of
               registration, because that information is not necessary to
               our determination under section 8(f) if the fund provides
               its registration number, as requested by the form.  See
               Proposed Form N-8F, item 10; Amended Form N-8F, item 3.

          [7]: Form N-8F contains a reminder, but not a requirement, that a
               deregistering fund must file a final Form N-SAR [17 CFR
               274.101] in accordance with other rules under the Act.  See
               Amended Form N-8F, instruction 6.  The commenter suggested
               that the Commission eliminate the obligation to file a final
               Form N-SAR in certain circumstances.  We are considering
               amendments to Form N-SAR, and will consider the commenter’s
               suggestion in the context of that rulemaking.

          [8]: The Commission believes the form typically is completed by
               support staff.  Based on an estimated cost of $15 per hour
               for a clerical worker to complete Form N-8F and an estimate
               of 130 applications filed each year, the Commission
               estimates the current total annual cost of filing the form
               is $11,700 (130 x $15 x 6 hrs.), while the total annual cost
               of filing the amended form would be $5,850 (130 x $15 x 3
               hrs.).

           [9]: As stated in the Proposing Release, the Commission estimates that
                the amendments will reduce the reporting and recordkeeping burden
                of the rule and form to 3 hours per respondent.  Based on past
                experience, we estimate that each year approximately 130 funds
                will apply to deregister, and that each applicant will apply only
                once.  Therefore, we estimate that the annual reporting and
                recordkeeping burden for the amended form will be 3 hours per
                applicant, and 390 hours total for all applicants.



           [10]: Rule 0-10 under the Investment Company Act [17 CFR 270.0-10].