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25616 Federal Register / Vol. 71, No.

83 / Monday, May 1, 2006 / Notices

address challenges such as labor market (3) Page 67463: In section X, an amendment during the notice period,
competition and skill gap issues. ‘‘Authorities and Waiver of Laws and the substance of which is reflected in
However, because of the previous Regulations Required,’’ add the the notice.
waivers, the demonstration project is following new waivers: HEARING OR NOTIFICATION OF HEARING: An
precluded from taking advantage of —Before the waiver for ‘‘Section order granting the application will be
these tools to address recruitment and 7512(3),’’ insert ‘‘Section 5753 and issued unless the Commission orders a
retention concerns. This notice removes 5754 Recruitment, Relocation and hearing. Interested persons may request
the demonstration project’s independent Retention Incentives. This waiver a hearing by writing to the
authority to pay recruitment and applies only to the extent necessary to Commission’s Secretary and serving
retention payments, thereby allowing allow employees and positions under applicants with a copy of the request,
the project to use the recruitment and the demonstration project to be personally or by mail. Hearing requests
retention incentive authorities in 5 treated as employees and positions should be received by the Commission
U.S.C. 5753 and 5754, and subparts A under the General Schedule or the SL/ by 5:30 p.m. on May 22, 2006, and
and C of 5 CFR part 575. This will ST pay plan.’’ should be accompanied by proof of
provide managers in the demonstration —Before the waiver for ‘‘Section service on applicants, in the form of an
project the same flexibilities now 752.401(a)(3),’’ insert ‘‘Part 575, affidavit or, for lawyers, a certificate of
available to General Schedule and other Subparts A, B and C, Recruitment, service. Hearing requests should state
employees under title 5. The Relocation and Retention Incentives. the nature of the writer’s interest, the
demonstration project needs to be able This waiver applies only to the extent reason for the request, and the issues
to take advantage of legislative changes necessary to allow employees and contested. Persons who wish to be
to title 5 when appropriate. It should be positions under the demonstration notified of a hearing may request
noted that since the demonstration project to be treated as employees and notification by writing to the
project did not waive 5 U.S.C. 5753 or positions under the General Schedule Commission’s Secretary.
subpart B of 5 CFR part 575 pertaining or the SL/ST pay plan.’’ ADDRESSES: Secretary, U.S. Securities
to relocation bonuses, the and Exchange Commission, 100 F
demonstration project could use the [FR Doc. 06–4049 Filed 4–28–06; 8:45 am]
Street, NE., Washington, DC, 20549–
relocation incentive flexibilities BILLING CODE 6325–43–P
1090. Applicants, c/o Gregory J. Lyons,
provided by the Federal Workforce Esq., Frank Russell Company, 909 A
Flexibility Act of 2004 and Street, Tacoma, Washington 98402.
implementing regulations prior to this SECURITIES AND EXCHANGE FOR FURTHER INFORMATION CONTACT:
notice. This notice continues to allow COMMISSION Marilyn Mann, Senior Counsel, at (202)
the demonstration project to use the title [Investment Company Act Release No. 551–6813 or Mary Kay Frech, Branch
5 relocation incentive authority. 27292; 812–13214] Chief, at (202) 551–6821 (Division of
III. Changes to the Project Plan Investment Management, Office of
Frank Russell Investment Company, et Investment Company Regulation).
This notice modifies the Commerce al.; Notice of Application SUPPLEMENTARY INFORMATION: The
demonstration plan by rescinding its following is a summary of the
independent authority related to April 25, 2006.
AGENCY: Securities and Exchange application. The complete application
recruitment and retention payments, may be obtained for a fee at the
thereby providing authority to use Commission (‘‘Commission’’).
Commission’s Public Reference Desk,
recruitment and retention incentive ACTION: Notice of an application for an 100 F Street, NE., Washington, DC,
authorities under 5 U.S.C. 5753 and order under (a) section 6(c) of the 20549–0102 (tel. (202) 551–5850).
5754, and subparts A and C of 5 CFR Investment Company Act of 1940
part 575. The following discussion (‘‘Act’’) granting an exemption from Applicants’ Representations
refers readers to the substantive changes sections 18(f) and 21(b) of the Act; (b) 1. Each Trust is organized as a
to the project plan. The following page section 12(d)(1)(J) of the Act granting an Massachusetts business trust and is
numbers refer to the pages in the final exemption from section 12(d)(1) of the registered under the Act as an open-end
plan, published in the Federal Register Act; (c) sections 6(c) and 17(b) of the management investment company.
on December 24, 1997. Act granting an exemption from sections Frank Russell Investment Company
(1) Page 67451: Remove Paragraph 17(a)(1) and 17(a)(3) of the Act; and (d) consists of 34 separate series (‘‘Funds’’)
B.12, ‘‘Recruitment and Retention section 17(d) of the Act and rule 17d– and Russell Investment Funds consists
Payments,’’ and renumber Paragraphs 1 under the Act to permit certain joint of 5 separate Funds. FRIMCo, a
B.13, ‘‘Travel Expenses,’’ and B.14, transactions. Washington corporation, is registered as
‘‘Promotion,’’ as Paragraphs B.12 and an investment adviser under the
B.13, respectively. SUMMARY OF THE APPLICATION: Investment Advisers Act of 1940, and
(2) Page 67463: In section X, Applicants request an order that would serves as the investment adviser to each
‘‘Authorities and Waiver of Laws and permit certain registered open-end Fund.1 An existing Commission order
Regulations Required,’’ remove the management investment companies to permits the Funds to invest uninvested
following waivers: participate in a joint lending and cash balances in money market Funds
—‘‘5 U.S.C. 5753–5754 Recruitment and borrowing facility. that comply with rule 2a–7 under the
relocation bonuses; Retention APPLICANTS: Frank Russell Investment Act.2
allowances (except that relocation Company and Russell Investment Funds 2. Some Funds may lend money to
bonuses under Section 5753 continue (each, a ‘‘Trust’’ and collectively, the banks or other entities by entering into
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to apply),’’ ‘‘Trusts’’), and Frank Russell Investment


—‘‘Part 575, Subpart A, Recruitment Management Company (‘‘FRIMCo’’). 1 All entities that currently intend to rely on the

requested relief have been named as applicants.


bonuses,’’ and FILING DATES: The application was filed 2 Frank Russell Investment Company, Investment
—‘‘Part 575, Subpart C, Retention on July 19, 2005 and amended on April Company Act Release Nos. 25416 (February 12,
allowances.’’ 13, 2006. Applicants have agreed to file 2002) (notice) and 25458 (March 12, 2002) (order).

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Federal Register / Vol. 71, No. 83 / Monday, May 1, 2006 / Notices 25617

repurchase agreements or purchasing cash shortfall if a Fund has undertaken proposed credit facility, the portfolio
other short-term investments. Other to purchase securities using the managers for each participating Fund
Funds may borrow money from the proceeds from the securities sold. could provide standing instructions to
same or similar banks for temporary Alternatively, the Fund could fail on its participate daily as a borrower or
purposes to satisfy redemption requests intended purchase due to lack of funds lender. The Credit Facility Team on
or to cover unanticipated cash shortfalls from the previous sale, resulting in each business day would collect data on
such as a trade ‘‘fail’’ in which cash additional cost to the Fund, or sell a the uninvested cash and borrowing
payment for a security sold by a Fund security on a same day settlement basis, requirements of all participating Funds
has been delayed. Currently, the Funds earning a lower return on the from the Funds’ custodian. Once it
have entered into a credit agreement investment. Use of the credit facility determined the aggregate amount of
with a bank. If a Fund were to borrow under these circumstances would cash available for loans and borrowing
money under the credit agreement, it enable the Fund to have access to demand, the Credit Facility Team would
would pay interest on the loan at a rate immediate short-term liquidity. allocate loans among borrowing Funds
that is significantly higher than the rate 6. While bank borrowings generally without any further communication
that is earned by other (non-borrowing) could supply needed cash to cover from portfolio managers other than the
Funds on investments in repurchase unanticipated redemptions and sales money market Fund portfolio manager
agreements and other short-term fails, under the proposed credit facility on the Credit Facility Team. Applicants
instruments of the same maturity as the a borrowing Fund would pay lower expect far more available uninvested
loan under the credit agreement. interest rates than those offered by cash each day than borrowing demand.
Applicants state that this differential banks on short-term loans. In addition, All allocations will require the approval
represents the profit the bank would Funds making short-term cash loans of at least one member of the Credit
earn on loans under the credit directly to other Funds would earn Facility Team who is not a money
agreement and is not attributable to any interest at a rate higher than they market Fund portfolio manager. After
material difference in the credit quality otherwise could obtain from investing the Credit Facility Team has allocated
or risk of such transactions. their cash in repurchase agreements or cash for Interfund Loans, the Credit
3. Applicants request an order that purchasing shares of a money market Facility Team would invest any
would permit the Funds to enter into Fund. Thus, applicants believe that the remaining cash in accordance with the
interfund lending agreements proposed credit facility would benefit standing instructions of portfolio
(‘‘Interfund Lending Agreements’’) both borrowing and lending Funds. managers or return remaining amounts
under which the Funds would lend and 7. The interest rate charged to a Fund to the Funds. The money market Funds
borrow money for temporary purposes on any Interfund Loan (‘‘Interfund Loan typically would not participate as
directly to and from each other through Rate’’) would be the average of the borrowers because they rarely need to
a credit facility (‘‘Interfund Loan’’). ‘‘Repo Rate’’ and the ‘‘Bank Loan Rate,’’
borrow cash to meet redemptions.
Applicants believe that the proposed both as defined below. The Repo Rate
on any day would be the highest rate 9. The Credit Facility Team would
credit facility would reduce the Funds’
available to the Funds from investing in allocate borrowing demand and cash
borrowing costs and enhance their
overnight repurchase agreements. The available for lending among the Funds
ability to earn higher interest rates on
Bank Loan Rate on any day would be on what the Credit Facility Team
short-term investments. Although the
calculated by FRIMCo each day an believes to be an equitable basis, subject
proposed credit facility would reduce
the Funds’ need to borrow from banks, Interfund Loan is made according to a to certain administrative procedures
the Funds would be free to establish formula established by a Fund’s board applicable to all Funds, such as the time
committed lines of credit or other of trustees (‘‘Board’’) intended to of filing requests to participate,
borrowing arrangements with banks. approximate the lowest interest rate at minimum loan lot sizes, and the need to
4. Applicants anticipate that the which bank short-term loans would be minimize the number of transactions
credit facility would provide a available to the Funds. The formula and associated administrative costs. To
borrowing Fund with significant savings would be based upon a publicly reduce transaction costs, each Interfund
when the cash position of the Fund is available rate (e.g., Federal funds plus Loan normally would be allocated in a
insufficient to meet temporary cash 25 basis points) and would vary with manner intended to minimize the
requirements. This situation could arise this rate so as to reflect changing bank number of participants necessary to
when redemptions exceed anticipated loan rates. The Board of each Fund complete the loan transaction. The
volumes and certain Funds have would periodically review the method of allocation and related
insufficient cash on hand to satisfy such continuing appropriateness of using the administrative procedures would be
redemptions. When a Fund liquidates publicly available rate to determine the approved by each Fund’s Board,
portfolio securities to meet redemption Bank Loan Rate, as well as the including a majority of trustees who are
requests which normally are effected relationship between the Bank Loan not ‘‘interested persons’’ of the Fund, as
immediately, it often does not receive Rate and current bank loan rates that defined in section 2(a)(19) of the Act
payment in settlement for up to three would be available to the Funds. The (‘‘Independent Trustees’’), to ensure that
days (or longer for certain foreign initial formula and any subsequent both borrowing and lending Funds
transactions). The credit facility would modifications to the formula would be participate on an equitable basis.
provide a source of immediate, short- subject to the approval of each Fund’s 10. FRIMCo would (a) monitor the
term liquidity pending settlement of the Board. Interfund Loan Rate and the other terms
sale of portfolio securities. 8. The credit facility would be and conditions of the loans; (b) limit the
5. Applicants also propose using the administered by FRIMCo’s fund borrowings and loans entered into by
credit facility when a sale of securities accounting department, an investment each Fund to ensure that they comply
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‘‘fails’’ due to circumstances such as a professional within FRIMCo who serves with the Fund’s investment policies and
delay in the delivery of cash to a Fund’s as a portfolio manager of money market limitations; (c) ensure equitable
custodian or improper delivery Funds and a compliance professional treatment of each Fund; and (d) make
instructions by the broker effecting the within FRIMCo (collectively, the quarterly reports to the Board of each
transaction. Sales fails may present a ‘‘Credit Facility Team’’). Under the Fund concerning any transactions by

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25618 Federal Register / Vol. 71, No. 83 / Monday, May 1, 2006 / Notices

the Funds under the credit facility and the Act. Section 17(b) authorizes the Loan may constitute a security under
the Interfund Loan Rate charged. Commission to exempt a proposed sections 17(a)(1) and 12(d)(1). Section
11. FRIMCo, through the Credit transaction from section 17(a) provided 12(d)(1)(J) provides that the Commission
Facility Team, would administer the that the terms of the transaction, may exempt persons or transactions
credit facility under its existing including the consideration to be paid from any provision of section 12(d)(1) if
management, advisory, or or received, are fair and reasonable and and to the extent such exemption is
administrative contract with each Fund do not involve overreaching on the part consistent with the public interest and
and would receive no additional of any person concerned, and the the protection of investors. Applicants
compensation for its services. FRIMCo transaction is consistent with the policy contend that the standards under
may collect fees in connection with of the investment company as recited in sections 6(c), 17(b), and 12(d)(1)(J) are
repurchase and lending transactions its registration statement and with the satisfied for all the reasons set forth
generally, including transactions general purposes of the Act. Applicants above in support of their request for
through the credit facility, for pricing believe that the proposed arrangements relief from sections 17(a)(3) and 21(b)
and record keeping, bookkeeping and satisfy these standards for the reasons and for the reasons discussed below.
accounting services. These fees would discussed below. 5. Applicants state that section
be no higher than those applicable for 3. Applicants submit that sections 12(d)(1) was intended to prevent the
comparable bank loan transactions. 17(a)(3) and 21(b) of the Act were pyramiding of investment companies in
12. No Fund may participate in the intended to prevent a party with strong order to avoid imposing on investors
credit facility unless: (a) The Fund has potential adverse interests to, and some additional and duplicative costs and
obtained shareholder approval for its influence over the investment decisions fees attendant upon multiple layers of
participation, if such approval is of, a registered investment company investment companies. Applicants
required by law; (b) the Fund has fully from causing or inducing the investment submit that the proposed credit facility
disclosed all material facts concerning company to engage in lending does not involve these abuses.
the credit facility in its prospectus and/ transactions that unfairly inure to the Applicants note that there will be no
or statement of additional information benefit of such party and that are duplicative costs or fees to the Funds or
(‘‘SAI’’); and (c) the Fund’s participation detrimental to the best interests of the shareholders, and that FRIMCo will
in the credit facility is consistent with investment company and its receive no additional compensation for
its investment objectives, limitations shareholders. Applicants assert that the its services in administering the credit
and organizational documents. proposed credit facility transactions do facility. Applicants also note that the
13. In connection with the credit not raise these concerns because: (a) purpose of the proposed credit facility
facility, applicants request an order FRIMCo, through the Credit Facility is to provide economic benefits for all
under (a) section 6(c) of the Act granting Team, would administer the program as of the participating Funds and their
relief from sections 18(f) and 21(b) of a disinterested fiduciary; (b) all shareholders.
the Act; (b) section 12(d)(1)(J) of the Act Interfund Loans would consist only of 6. Section 18(f)(1) prohibits open-end
granting relief from section 12(d)(1) of uninvested cash reserves that the Funds investment companies from issuing any
the Act; (c) sections 6(c) and 17(b) of the otherwise would invest in short-term senior security except that a company is
Act granting relief from sections 17(a)(1) repurchase agreements or other short- permitted to borrow from any bank;
and 17(a)(3) of the Act; and (d) under term instruments either directly or provided, that immediately after the
section 17(d) and rule 17d-1 under the through a money market Fund; (c) the borrowing, there is asset coverage of at
Act to permit certain joint arrangements. Interfund Loans would not involve a least 300 per centum for all borrowings
greater risk than such other investments; of the company. Under section 18(g) of
Applicants’ Legal Analysis
(d) the lending Fund would receive the Act, the term ‘‘senior security’’
1. Section 17(a)(3) generally prohibits interest at a rate higher than it could includes any bond, debenture, note or
any affiliated person, or affiliated obtain through such other investments; similar obligation or instrument
person of an affiliated person, from and (e) the borrowing Fund would pay constituting a security and evidencing
borrowing money or other property from interest at a rate lower than otherwise indebtedness. Applicants request relief
a registered investment company. available to it under its bank loan from section 18(f)(1) to the limited
Section 21(b) generally prohibits any agreements and avoid the up-front extent necessary to implement the credit
registered management company from commitment fees associated with facility (because the lending Funds are
lending money or other property to any committed lines of credit. Moreover, not banks).
person if that person controls or is applicants believe that the other terms 7. Applicants believe that granting
under common control with the and conditions in the application would relief under section 6(c) is appropriate
company. Section 2(a)(3)(C) of the Act effectively preclude the possibility of because the Funds would remain
defines an ‘‘affiliated person’’ of another any Fund obtaining an undue advantage subject to the requirement of section
person, in part, to be any person directly over any other Fund. 18(f)(1) that all borrowings of a Fund,
or indirectly controlling, controlled by, 4. Section 17(a)(1) generally prohibits including combined interfund and bank
or under common control with, the an affiliated person of a registered borrowings, have at least 300% asset
other person. Applicants state that the investment company, or an affiliated coverage. Based on the conditions and
Funds may be under common control by person of an affiliated person, from safeguards described in the application,
virtue of having FRIMCo as their selling any securities or other property applicants also submit that to allow the
common investment adviser and having to the company. Section 12(d)(1) Funds to borrow from other Funds
a common Board and officers. generally makes it unlawful for a pursuant to the proposed credit facility
2. Section 6(c) provides that an registered investment company to is consistent with the purposes and
exemptive order may be granted where purchase or otherwise acquire any policies of section 18(f)(1).
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an exemption is necessary or security issued by any other investment 8. Section 17(d) and rule 17d–1
appropriate in the public interest and company except in accordance with the generally prohibit any affiliated person
consistent with the protection of limitations set forth in that section. of a registered investment company, or
investors and the purposes fairly Applicants state that the obligation of a affiliated persons of an affiliated person,
intended by the policy and provisions of borrowing Fund to repay an Interfund when acting as principal, from effecting

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Federal Register / Vol. 71, No. 83 / Monday, May 1, 2006 / Notices 25619

any joint transactions in which the outstanding bank loan to the Fund, that total outstanding borrowings cease to
company participates unless the event of default will automatically exceed 10% of its total assets, the Fund
transaction is approved by the (without need for action or notice by the will mark the value of the collateral to
Commission. Rule 17d–1(b) provides lending Fund) constitute an immediate market each day and will pledge such
that in passing upon applications filed event of default under the Interfund additional collateral as is necessary to
under the rule, the Commission will Lending Agreement entitling the maintain the market value of the
consider whether the participation of a lending Fund to call the Interfund Loan collateral that secures each outstanding
registered investment company in a (and exercise all rights with respect to Interfund Loan at least equal to 102% of
joint enterprise on the basis proposed is any collateral) and that such call will be the outstanding principal value of the
consistent with the provisions, policies, made if the lending bank exercises its Interfund Loan.
and purposes of the Act and the extent right to call its loan under its agreement 6. No Fund may lend to another Fund
to which the company’s participation is with the borrowing Fund. through the proposed credit facility if
on a basis different from or less 4. A Fund may make an unsecured the loan would cause its aggregate
advantageous than that of other borrowing through the proposed credit outstanding loans through the proposed
participants. facility if its outstanding borrowings credit facility to exceed 15% of the
9. Applicants submit that the purpose from all sources immediately after the lending Fund’s current net assets at the
of section 17(d) is to avoid overreaching interfund borrowing total 10% or less of time of the loan.
by an unfair advantage to investment its total assets, provided that if the Fund 7. A Fund’s Interfund Loans to any
company insiders. Applicants believe has a secured loan outstanding from any one Fund shall not exceed 5% of the
that the credit facility is consistent with other lender, including but not limited lending Fund’s net assets.
the provisions, policies, and purposes of to another Fund, the Fund’s interfund 8. The duration of Interfund Loans
the Act in that it offers both reduced borrowing will be secured on at least an will be limited to the time required to
borrowing costs and enhanced returns equal priority basis with at least an receive payment for securities sold, but
on loaned funds to all participating equivalent percentage of collateral to in no event more than seven days. Loans
Funds and their shareholders. loan value as any outstanding loan that effected within seven days of each other
Applicants note that each Fund would requires collateral. If a Fund’s total will be treated as separate loan
have an equal opportunity to borrow outstanding borrowings immediately transactions for purposes of this
and lend on equal terms consistent with after an interfund borrowing would be condition.
its investment policies and fundamental greater than 10% of its total assets, the 9. The Fund’s borrowings through the
investment limitations. Applicants Fund may borrow through the proposed proposed credit facility, as measured on
therefore believe that each Fund’s credit facility only on a secured basis. the day when the most recent loan was
participation in the credit facility will A Fund may not borrow through the made, will not exceed the greater of
be on terms that are no different from proposed credit facility or from any 125% of the Fund’s total net cash
or less advantageous than that of other other source if its total outstanding redemptions or 102% of sales fails for
participating Funds. borrowings immediately after such the preceding seven calendar days.
borrowing would be more than 331⁄3% 10. Each Interfund Loan may be called
Applicants’ Conditions on one business day’s notice by a
of its total assets.
Applicants agree that any order 5. Before any Fund that has lending Fund and may be repaid on any
granting the requested relief will be outstanding interfund borrowings may, day by a borrowing Fund.
subject to the following conditions: through additional borrowings, cause its 11. A Fund’s participation in the
1. The Interfund Loan Rate will be the outstanding borrowings from all sources proposed credit facility must be
average of the Repo Rate and the Bank to exceed 10% of its total assets, the consistent with its investment
Loan Rate. Fund must first secure each outstanding objectives, and limitations and
2. On each business day, the Credit Interfund Loan by the pledge of organizational documents.
Facility Team will compare the Bank segregated collateral with a market 12. The Credit Facility Team will
Loan Rate with the Repo Rate and will value at least equal to 102% of the calculate total Fund borrowing and
make cash available for Interfund Loans outstanding principal value of the loan. lending demand through the proposed
only if the Interfund Loan Rate is: (a) If the total outstanding borrowings of a credit facility, and allocate loans on an
More favorable to the lending Fund than Fund with outstanding Interfund Loans equitable basis among the Funds,
the Repo Rate and, if applicable, the exceed 10% of its total assets for any without the intervention of any portfolio
yield of any money market Fund in other reason (such as a decline in net manager of the Funds (other than the
which the lending Fund could asset value or because of shareholder money market Fund portfolio manager
otherwise invest; and (b) more favorable redemptions), the Fund will within one acting in his or her capacity as a
to the borrowing Fund than the Bank business day thereafter: (a) Repay all its member of the Credit Facility Team). All
Loan Rate. outstanding Interfund Loans; (b) reduce allocations will require the approval of
3. If a Fund has outstanding its outstanding indebtedness to 10% or at least one member of the Credit
borrowings, any Interfund Loans to the less of its total assets; or (c) secure each Facility Team who is not the money
Fund: (a) Will be at an interest rate outstanding Interfund Loan by the market Fund portfolio manager. The
equal to or lower than any outstanding pledge of segregated collateral with a Credit Facility Team will not solicit
bank loan; (b) will be secured at least on market value at least equal to 102% of cash for the proposed credit facility
an equal priority basis with at least an the outstanding principal value of the from any Fund or prospectively publish
equivalent percentage of collateral to loan until the Fund’s total outstanding or disseminate loan demand data to
loan value as any outstanding bank loan borrowings cease to exceed 10% of its portfolio managers (except to the extent
that requires collateral; (c) will have a total assets, at which time the collateral that the money market Fund portfolio
cchase on PROD1PC60 with NOTICES

maturity no longer than any outstanding called for by this condition 5 shall no manager on the Credit Facility Team has
bank loan (and in any event not over longer be required. Until each Interfund access to loan demand data). The Credit
seven days); and (d) will provide that, Loan that is outstanding at any time that Facility Team will invest any amounts
if an event of default by the Fund occurs a Fund’s total outstanding borrowings remaining after satisfaction of borrowing
under any agreement evidencing an exceeds 10% is repaid or the Fund’s demand in accordance with the

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25620 Federal Register / Vol. 71, No. 83 / Monday, May 1, 2006 / Notices

standing instructions of the portfolio the Interfund Loan Rate, the rate of report on internal accounting controls in
managers or return remaining amounts interest available at the time on Form N–SAR.
for investment directly by the portfolio overnight repurchase agreements and 18. No Fund will participate in the
managers of the Funds. commercial bank borrowings, the yield proposed credit facility upon receipt of
13. FRIMCo will monitor the of any money market Fund in which the requisite regulatory approval unless it
Interfund Loan Rate and the other terms lending Fund could otherwise invest, has fully disclosed in its prospectus
and conditions of the Interfund Loans and such other information presented to and/or SAI all material facts about its
and will make a quarterly report to the the Fund’s Board in connection with the intended participation.
Trustees of each Trust concerning the review required by conditions 13 and 19. The Board of each Trust will
participation of the Funds in the 14. satisfy the fund governance standards as
proposed credit facility and the terms 17. FRIMCo will prepare and submit defined in rule 0–1(a)(7) under the Act.
and other conditions of any extensions to the Board for review an initial report For the Commission, by the Division of
of credit under the credit facility. describing the operations of the Investment Management, under delegated
14. The Board of each Trust, proposed credit facility and the authority.
including a majority of the Independent procedures to be implemented to ensure Jill M. Peterson,
Trustees, will: that all Funds are treated fairly. After Assistant Secretary.
(a) Review, no less frequently than the commencement of the proposed [FR Doc. E6–6481 Filed 4–28–06; 8:45 am]
quarterly, each Fund’s participation in credit facility, FRIMCo will report on BILLING CODE 8010–01–P
the proposed credit facility during the the operations of the proposed credit
preceding quarter for compliance with facility at the Board’s quarterly
the conditions of any order permitting meetings. SECURITIES AND EXCHANGE
such transactions; In addition, for two years following COMMISSION
(b) Establish the Bank Loan Rate the commencement of the proposed
formula used to determine the interest credit facility, the independent auditors Sunshine Act Meeting
rate on Interfund Loans and review, no for each Trust shall prepare an annual Notice is hereby given, pursuant to
less frequently than annually, the report that evaluates FRIMCo’s assertion the provisions of the Government in the
continuing appropriateness of the Bank that it has established procedures Sunshine Act, Public Law 94–409, that
Loan Rate formula; and reasonably designed to achieve the Securities and Exchange
(c) Review, no less frequently than compliance with the terms and Commission will hold the following
annually, the continuing conditions of the order. The report shall meeting during the week of May 1,
appropriateness of each Fund’s be prepared in accordance with the 2006:
participation in the proposed credit Statements on Standards for Attestation A closed meeting will be held on
facility. Engagements No. 10 and it shall be filed Thursday, May 4, 2006 at 2 p.m.
15. In the event an Interfund Loan is pursuant to Item 77Q3 of Form N–SAR, Commissioners, Counsel to the
not paid according to its terms and such as such Statements or Form may be Commissioners, the Secretary to the
default is not cured within two business revised, amended, or superseded from Commission, and recording secretaries
days from its maturity or from the time time to time. In particular, the report will attend the closed meeting. Certain
the lending Fund makes a demand for shall address procedures designed to staff members who have an interest in
payment under the provisions of the achieve the following objectives: the matters may also be present.
Interfund Lending Agreement, FRIMCo (a) That the Interfund Loan Rate will The General Counsel of the
will promptly refer such loan for be higher than the Repo Rate, and, if Commission, or his designee, has
arbitration to an independent arbitrator applicable, the yield of the money certified that, in his opinion, one or
selected by the Board of each Fund market Funds, but lower than the Bank more of the exemptions set forth in 5
involved in the loan who will serve as Loan Rate; U.S.C. 552b(c)(3), (5), (7), (9)(B), and
arbitrator of disputes concerning (b) Compliance with the collateral (10) and 17 CFR 200.402(a)(3), (5), (7),
Interfund Loans.3 The arbitrator will requirements as set forth in the (9)(ii) and (10) permit consideration of
resolve any problem promptly, and the application; the scheduled matters at the closed
arbitrator’s decision will be binding on (c) Compliance with the percentage meeting.
both Funds. The arbitrator will submit, limitations on interfund borrowing and Commissioner Atkins, as duty officer,
at least annually, a written report to the lending; voted to consider the items listed for the
Board setting forth a description of the (d) Allocation of interfund borrowing closed meeting in closed session.
nature of any dispute and the actions The subject matter of the closed
and lending demand in an equitable
taken by the Funds to resolve the meeting scheduled for Thursday, May 4,
manner and in accordance with
dispute. 2006 will be:
procedures established by the Board; Formal orders of investigation;
16. Each Fund will maintain and and
preserve for a period of not less than six Institution and settlement of
(e) That the interest rate on any injunctive actions;
years from the end of the fiscal year in Interfund Loan does not exceed the
which any transaction by it under the Institution and settlement of
interest rate on any third-party administrative proceedings of an
proposed credit facility occurred, the borrowings of a borrowing Fund at the
first two years in an easily accessible enforcement nature; and
time of the Interfund Loan. After the Resolution of litigation claims.
place, written records of all such final report is filed, each Trust’s At times, changes in Commission
transactions setting forth a description independent auditors, in connection priorities require alterations in the
of the terms of the transactions, with their audit examinations of the scheduling of meeting items.
cchase on PROD1PC60 with NOTICES

including the amount, the maturity and Funds, will continue to review the For further information and to
3 If the dispute involves Funds with different
operation of the proposed credit facility ascertain what, if any, matters have been
Trustees, the respective Trustees of each Fund will
for compliance with the conditions of added, deleted or postponed, please
select an independent arbitrator that is satisfactory the application and their review will contact: The Office of the Secretary at
to each Fund. form the basis, in part, of the auditor’s (202) 551–5400.

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