[Federal Register Volume 68, Number 117 (Wednesday, June 18, 2003)]
[Notices]
[Pages 36607-36611]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-15354]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 26076; 812-12674]


Franklin Gold and Precious Metals Fund, et al.; Notice of 
Application

June 12, 2003.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order under section 12(d)(1)(J) of 
the Investment Company Act of 1940 (``Act'') for an exemption from 
sections 12(d)(1)(A) and (B) of the Act, under sections 6(c) and 17(b) 
of the Act for an exemption from section 17(a) of the Act, and under 
section 17(d) of the Act and rule 17d-1 under the Act to permit certain 
joint transactions.

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Applicants:  Franklin Gold and Precious Metal Fund, Franklin Capital 
Growth Fund, Franklin High Income Trust, Franklin Custodian Funds, 
Inc., Franklin California Tax-Free Income Fund, Inc., Franklin New York 
Tax-Free Income Fund, Franklin Federal Tax-Free Income Fund, Franklin 
Tax-Free Trust, Franklin California Tax-Free Trust, Franklin New York 
Tax-Free Trust, Franklin Investors Securities Trust, Institutional 
Fiduciary Trust, Franklin Value Investors Trust, Franklin Managed 
Trust, Franklin Municipal Securities Trust, Franklin Floating Rate 
Master Trust, Franklin Strategic Mortgage Portfolio, Franklin Strategic 
Series, Adjustable Rate Securities Portfolios, Franklin Templeton 
International Trust, Franklin Global Trust, Franklin Real Estate 
Securities Trust, Franklin Templeton Global Trust, Franklin Templeton 
Variable Insurance Products Trust, Franklin Universal Trust, Franklin 
Multi-Income Trust, Franklin Templeton Fund Allocator Series, Franklin 
Money Fund, Franklin Templeton Money Fund Trust, Franklin Federal Money 
Fund, Franklin Tax-Exempt Money Fund, Franklin Mutual Series Fund Inc., 
Franklin Floating Rate Trust, The Money Market Portfolios 
(collectively, the ``Franklin Funds''); Templeton Growth Fund, Inc., 
Templeton Funds, Inc., Templeton Global Smaller Companies Fund, Inc., 
Templeton Income Trust, Templeton Capital Accumulator Fund (formerly, 
Templeton Capital Accumulator Fund Inc.), Templeton Global 
Opportunities Trust, Templeton Institutional Funds, Inc., Templeton 
Developing Markets Trust, Templeton Global Investment Trust, Templeton 
Emerging Markets Fund (formerly Templeton Emerging Markets Fund, Inc.), 
Templeton Global Income Fund, Inc., Templeton Emerging Markets Income 
Fund, Templeton China World Fund, Inc., Templeton Dragon Fund, Inc., 
Templeton Russia and East European Fund, Inc. (formerly, Templeton 
Russia Fund, Inc.) (collectively, the ``Templeton Funds'') FTI Funds; 
(the Franklin Funds, the Templeton Funds and the FTI Funds are 
collectively, together with any other registered management investment 
company or series thereof advised by an Adviser, as defined below, the 
``Franklin Templeton Funds''); Franklin Advisers, Inc., Franklin 
Advisory Services, LLC, Franklin Investment Advisory Services Inc., 
Franklin Mutual Advisers, LLC, Franklin Private Client Group, Inc., 
Templeton/Franklin Investment Services Inc., Templeton Investment 
Counsel, LLC, Franklin Templeton Asset Strategies, LLC, Fiduciary 
International, Inc., Franklin Templeton Investment Management Limited, 
Franklin Templeton Investments (Asia) Limited, Franklin Templeton 
Investments Corp., Templeton Asset Management LTD., Templeton Global 
Advisors Limited, Fiduciary Investment Management International, Inc., 
Fiduciary Trust International Limited, FTI Institutional, LLC 
(``Advisers''), together with any entity controlling, controlled by, or 
under common control with Advisers that acts in the future as 
investment adviser for the Franklin Templeton Funds, the Unregistered 
Funds (as defined below), or a Managed Account (as defined below) 
(included in the term ``Advisers''); the Advisers on behalf of certain 
private investment companies or series thereof that are excluded from 
the definition of ``investment company'' pursuant to section 3(c)(1), 
section 3(c)(7) or section 3(c)(11) of the 1940 Act for which one of 
the Advisers

[[Page 36608]]

currently or in the future serves as investment adviser or trustee (the 
``Unregistered Funds''); and the Advisers on behalf of institutional 
and individual accounts that are not pooled investment vehicles for 
which one of the Advisers currently or in the future serves as 
investment adviser (the ``Managed Accounts'').

Summary of Application: The applicants request an order that would 
permit (a) certain registered management investment companies, 
Unregistered Funds and Managed Accounts to invest uninvested cash and 
cash collateral in affiliated registered and unregistered money market 
funds, and (b) the registered investment companies and certain 
affiliated entities to continue to engage in purchase and sale 
transactions involving portfolio securities in reliance on rule 17a-7 
under the Act. The order would supersede a prior order.\1\ The order 
also would amend a prior order.\2\
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    \1\ Franklin Gold Fund, et. al, Investment Company Act Release 
Nos. 23633 (Jan. 5, 1999)(Notice) and 23675 (Feb. 2, 1999)(Order).
    \2\ Franklin Templeton Fund Manager, et. al, Investment Company 
Act Release Nos. 21964 (May 20, 1996)(Notice) and 22022(June 17, 
1996)(Order) (the ``Fund of Funds Order'').

Filing Dates: The application was filed on October 26, 2001 and amended 
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on October 18, 2002, and June 10, 2003.

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving applicants with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on July 7, 2003, and should be accompanied by proof of service on 
the applicants, in the form of an affidavit, or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street, NW., Washington, DC 
20549-0609; Applicants, c/o David P. Goss, Esq., Franklin Templeton 
Investments, One Franklin Parkway, San Mateo, CA 94403-1906.

FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at 
(202) 942-0574 or Todd Kuehl, Branch Chief, at (202) 942-0564 (Division 
of Investment Management, Office of Investment Company Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
Commission's Public Reference Branch, 450 Fifth Street, NW, Washington, 
DC 20549-0102 (telephone (202) 942-8090).

Applicants' Representations

    1. The Franklin Templeton Funds are organized as Maryland 
Corporations, California Corporations, Massachusetts business trusts, 
or Delaware statutory trusts. The Franklin Templeton Funds are 
registered under the Act as open-end or closed-end management 
investment companies. The Advisers are each registered under the 
Investment Advisers Act of 1940 (``Advisers Act'') together with any 
entity controlling, controlled by and under common control with 
Advisers that acts in the future as investment adviser for the Franklin 
Templeton Funds, an Unregistered Fund, as defined below, Managed 
Account, as defined below, included in the term Advisers.\3\
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    \3\ All existing Advisers and Franklin Templeton Funds that 
currently intend to rely on the requested order are named as 
applicants. Any other entity will not rely on the relief requested 
except in accordance with the terms and conditions in the 
application.
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    2. Certain of the Franklin Templeton Funds or series thereof are 
money market funds subject to the requirements of rule 2a-7 under the 
Act (``Registered Money Market Funds''). The Franklin Templeton Funds 
or series thereof that are not money market funds are the ``Registered 
Funds.'' Certain of the Unregistered Funds that rely on section 3(c)(1) 
or 3(c)(7) of the Act also operate as cash management vehicles 
(``Unregistered Money Market Funds,'' \4\ together with the Registered 
Money Market Funds, the ``Money Market Funds''). The Unregistered Money 
Market Funds will comply with rule 2a-7 under the Act.
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    \4\ In addition to cash management vehicles that are excluded 
from the definition of an investment company pursuant to section 
3(c)(1) or section 3(c)(7) of the 1940 Act, Unregistered Money 
Market Funds may include one or more entities that are organized 
offshore and offer their shares privately to U.S. investors 
(``Offshore Money Market Funds,'' included in the term 
``Unregistered Money Market Funds''). Any Offshore Money Market Fund 
will have as its investment adviser or trustee one of the Advisers.
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    3. The Registered Funds, Unregistered Funds and Managed Accounts 
(``Participating Funds'') have, or may be expected to have, cash that 
has not been invested in portfolio securities (``Uninvested Cash'').\5\ 
Uninvested Cash may result from a variety of sources, including 
dividends or interest received on portfolio securities, unsettled 
securities transactions, reserves held for strategic purposes, 
scheduled maturity of investments, liquidation of investment securities 
to meet anticipated redemptions and dividend payments, and new monies 
received from investors. Certain of the Registered Participating Funds 
have the ability to increase their income by participating in a 
securities lending program (``Securities Lending Program'') under which 
they may lend portfolio securities to registered broker-dealers or 
other institutional investors deemed by the respective Adviser to be of 
good standing. The loans are continuously secured by collateral which 
may include cash (``Cash Collateral,'' together with Uninvested Cash, 
``Cash Balances'') equal at all times in value to at least the market 
value of the securities loaned.
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    \5\ The Participating Funds that are Registered Funds are the 
``Registered Participating Funds.'' The Participating Funds that are 
Unregistered Funds and Management Accounts are the ``Unregistered 
Participating Funds.''
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    4. Applicants request an order of the Commission to permit: (i) The 
Participating Funds to use their Cash Balances to purchase shares of 
one or more of the Money Market Funds; (ii) the Money Market Funds to 
sell their shares to, and purchase (redeem) such shares from, the 
Participating Funds; and (iii) the Advisers to effect the above 
transactions (the ``Proposed Transactions''). The requested order also 
would permit the Participating Funds and the Money Market Funds to 
continue to engage in interfund purchase and sale transactions 
(``Interfund Transactions'').

Applicants' Legal Analysis

I. Investment of Cash Balances by the Participating Funds in the Money 
Market Funds

A. Section 12(d)(1)
    1. Section 12(d)(1)(A) of the Act provides that no registered 
investment company may acquire securities of another investment 
company, and no investment company may inquire securities of a 
registered investment company, if such securities represent more than 
3% of the acquired company's outstanding voting stock, more than 5% of 
the acquiring company's total assets, or if such securities, together 
with the securities of other acquired investment companies, represent 
more than 10% of the acquiring company's assets. Section 12(d)(1)(B) of 
the Act provides that no registered open-end investment company may 
sell its securities to another investment company if the sale will 
cause the acquiring company to own more than 3% of the acquired 
company's voting stock, or if the sale will cause more than 10% of the 
acquired company's voting stock to be

[[Page 36609]]

owned by investment companies. Any entity that is excluded from the 
definition of investment company under section 3(c)(1) or 3(c)(7) of 
the Act is deemed to be an investment company for the purposes of the 
3% limitation specified in sections 12(d)(1)(A) and (B) with respect to 
purchases by and sales to such entity of securities of a registered 
investment company.
    2. Section 12(d)(1)(J) of the Act provides that the Commission may 
exempt any person, security, or transaction from any provision of 
section 12(d)(1) if and to the extent that such exemption is consistent 
with the public interest and the protection of investors. Applicants 
request relief under section 12(d)(1)(J) to permit the Participating 
Funds to use their Cash Balances to acquire shares of the Registered 
Money Market Funds in excess of the percentage limitations in section 
12(d)(1)(A), provided however, that in all cases a Registered 
Participating Fund's aggregate investment of Uninvested Cash in shares 
of the Money Market Funds will not exceed 25% of the Registered 
Participating Fund's total assets at any time. Applicants also request 
relief to permit the Registered Money Market Funds to sell their 
securities to the Participating Funds in excess of the percentage 
limitations in section 12(d)(1)(B).\6\
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    \6\ Applicants also seek relief to allow the Registered 
Participating Funds to acquire shares of an offshore Money Market 
Fund in excess of the limits in section 12(d)(1)(A) of the Act.
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    3. Applicants state that the proposed arrangement will not result 
in the abuses that sections 12(d)(1)(A) and (B) were intended to 
prevent. Applicants state that because each Registered Money Market 
Fund maintains a highly liquid portfolio and the Advisers will serve as 
investment advisers to both the Participating Funds and the Money 
Market Funds, the Advisers will not be susceptible to undue influence 
regarding their management of the Registered Money Market Funds due to 
threatened redemptions or loss of fees. Applicants state that the 
proposed arrangement will not result in inappropriate layering of fees. 
Shares of the Money Market Funds sold to the Participating Funds will 
not be subject to a sales load, redemption fee, distribution fee under 
a plan adopted in accordance with rule 12b-1 under the Act or service 
fee (as defined in rule 2830(b)(9) of the Conduct Rules of the National 
Association of Securities Dealers Inc., (a ``Service Fee''). If a Money 
Market Fund offers more than one class of shares, a Registered 
Participating Fund will invest in the class with the lowest expense 
ratio at the time of investment. Before the next meeting of the board 
of directors or trustees (``Board'') of the Registered Participating 
Fund that invests in the Money Market Fund is held for the purpose of 
voting on an advisory contract under section 15 of the Act, the Adviser 
will provide the Board with specific information regarding the 
approximate cost to the Adviser for, or portion of the advisory fee 
under the existing advisory contract attributable to, managing the 
Uninvested Cash of the Registered Participating Fund that can be 
expected to be invested in the Money Market Fund. Before approving any 
advisory contract under section 15, the Board of the Registered 
Participating Fund, including a majority who are not ``interested 
persons,'' as that term is defined in section 2(a)(19) of the Act 
(``Disinterested Directors''), shall consider to what extent, if any, 
the advisory fees charged to the Registered Participating Fund by the 
Adviser should be reduced to account for reduced services provided to 
the Registered Participating Fund by the Adviser as a result of 
Uninvested Cash being invested in the Money Market Funds. Applicants 
represent that no Money Market Fund will acquire securities of any 
other investment company in excess of the limitations contained in 
section 12(d)(1)(A) of the Act.
B. Section 17(a) of the Act
    1. Section 17(a) of the Act makes it unlawful for any affiliated 
person of a registered investment company, acting as principal, to sell 
or purchase any security to or from the investment company. Section 
2(a)(3) of the Act defines an affiliated person of an investment 
company to include any person directly or indirectly owning, 
controlling, or holding with power to vote 5% or more of the 
outstanding voting securities of the other person or, any person 5% or 
more of whose outstanding securities are directly or indirectly owned, 
controlled, or held with power to vote by such other person, any person 
directly or indirectly controlling, controlled by, or under common 
control with the other person, and any investment adviser to the 
investment company. Because the Advisers serve, or will serve, as 
investment adviser or trustee exercising investment discretion for the 
Participating Funds and Money Market Funds, they may be deemed to be 
under common control and therefore, affiliated persons of each other. 
In addition, if a Participating Fund purchases more than 5% of the 
voting securities of a Money Market Fund, the Money Market Fund and the 
Participating Fund may be affiliated persons of each other. As a 
result, section 17(a) would prohibit the sale of the shares of Money 
Market Funds to the Participating Funds, and the redemption of the 
shares by the Participating Funds.
    2. Section 17(b) of the Act authorizes the Commission to exempt a 
transaction from section 17(a) of the Act if the terms of the proposed 
transaction, including the consideration to be paid or received, are 
reasonable and fair and do not involve overreaching on the part of any 
person concerned, and the proposed transaction is consistent with the 
policy of each registered investment company concerned and with the 
general purposes of the Act. Section 6(c) of the Act permits the 
Commission to exempt any person or transactions from any provision of 
the Act, if the exemption is necessary or appropriate in the public 
interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act.
    3. Applicants submit that their request for relief to permit the 
purchase and redemption of shares of the Money Market Funds by the 
Participating Funds satisfies the standards in sections 6(c) and 17(b) 
of the Act. Applicants note that the consideration paid and received on 
the sale and redemption of shares of the Money Market Funds will be 
based on the net asset value per share of the Money Market Funds. 
Applicants state that the Registered Participating Funds will retain 
their ability to invest Cash Balances directly in money market 
instruments and other short-term obligations as authorized by their 
respective investment objectives and policies. Applicants represent 
that a Money Market Fund reserves the right to discontinue selling 
shares to any of the Participating Funds if the Money Market Fund's 
Board determines that such sale would adversely affect the Money Market 
Fund's portfolio management and operations.
C. Section 17(d) of the Act and Rule 17d-1 Under the Act
    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
an affiliated person of a registered investment company, acting as 
principal, from participating in or effecting any transaction in 
connection with any joint enterprise or joint arrangement in which the 
investment company participates, unless the Commission has approved the 
joint arrangement. Applicants state that the Participating Funds and 
the Money

[[Page 36610]]

Market Funds, by participating in the proposed transactions, and the 
Advisers by managing the proposed transactions, could be deemed to be 
participating in a joint arrangement within the meaning of section 
17(d) and rule 17d-1.
    2. In considering whether to approve a joint transaction under rule 
17d-1, the Commission considers whether the investment company's 
participation in the joint transaction is consistent with the 
provisions, policies and purposes of the Act, and the extent to which 
the participation is on a basis different from or less advantageous 
than that of other participants. Applicants submit that the Proposed 
Transactions meet the standards for an order under rule 17d-1.

II. Interfund Transactions

    1. Applicants state that they currently rely on rule 17a-7 under 
the Act to conduct Interfund Transactions. Rule 17a-7 under the Act 
provides an exemption from section 17(a) for a purchase or sale of 
certain securities between registered investment companies that are 
affiliated persons (or an affiliated person of an affiliated person), 
or between a registered investment company, and a person that is an 
affiliated person of such company (or an affiliated person of such 
person) solely by reason of having a common investment adviser, common 
officers and/or common directors or trustees. Applicants state that the 
Participating Funds and Money Market Funds may not be able to rely on 
rule 17a-7 when purchasing or selling portfolio securities to each 
other, because some of the Participating Funds may own 5% or more of 
the outstanding voting securities of a Money Market Fund and, 
therefore, an affiliation would not exist solely by reason of having a 
common investment adviser, common officers and/or common directors or 
trustees.
    2. Applicants request relief under sections 6(c) and 17(b) of the 
Act to permit the Interfund Transactions. Applicants submit that the 
requested relief satisfies the standards for relief in sections 6(c) 
and 17(b). Applicants state that the Funds will comply with rule 17a-7 
under the Act in all respects, other than the requirement that the 
participants be affiliated solely by reason of having a common 
investment adviser, common directors and/or common officers. Applicants 
state that by complying with the conditions of Rule 17a-7, the 
interests of the shareholders of the Registered Participating Funds and 
the Registered Money Market Funds are protected. Thus, the Applicants 
submit that the Interfund Transactions are reasonable and fair, do not 
involve overreaching, and will be consistent with the purposes of the 
Act.

Applicants' Conditions

    Applicants agree that any order granting the requested relief shall 
be subject to the following conditions:
    1. The shares of the Money Market Funds sold to and redeemed from 
the Participating Funds will not be subject to a sales load, redemption 
fee, asset-based distribution fee under a plan adopted in accordance 
with Rule 12b-1, or Service Fee.
    2. Before the next meeting of the Board of the Registered 
Participating Fund that invests in the Money Market Fund is held for 
the purpose of voting on an advisory contract pursuant to section 15 of 
the Act, the Adviser will provide the Board with specific information 
regarding the approximate cost to the Adviser for, or portion of the 
advisory fee under the existing advisory contract attributable to, 
managing the Uninvested Cash of the Registered Participating Fund that 
can be expected to be invested in the Money Market Funds. Before 
approving any advisory contract pursuant to section 15 of the Act, the 
Board of the Registered Participating Fund, including a majority of the 
Disinterested Directors, shall consider to what extent, if any, the 
advisory fees charged to the Registered Participating Fund by the 
Adviser should be reduced to account for reduced services provided to 
the Registered Participating Fund by the Adviser as a result of 
Uninvested Cash being invested in the Money Market Funds. The minute 
books of Registered Participating Fund will record fully the Board's 
consideration in approving the advisory contract, including the 
considerations relating to fees referred to above.
    3. Each Registered Participating Fund's aggregate investment of 
Uninvested Cash in the Money Market Funds will not exceed 25% of the 
Registered Participating Fund's total assets. For purposes of this 
limitation, each Registered Participating Fund or series thereof will 
be treated as a separate investment company.
    4. Investment in shares of the Money Market Funds will be in 
accordance with the investment policies and restrictions of each 
Registered Participating Fund as set forth in its registration 
statement.
    5. Each Registered Fund and Managed Account that may rely on the 
order shall be advised by an Adviser. Each Unregistered Fund shall be 
advised by, or have as its trustee, an Adviser.
    6. No Money Market Fund shall acquire securities of any investment 
company in excess of the limits contained in section 12(d)(1)(A) of the 
Act.
    7. The Unregistered Money Market Funds will comply with the 
requirements of sections 17(a), (d), and (e), and 18 of the 1940 Act. 
With respect to all redemption requests made by a Participating Fund, 
the Unregistered Money Market Funds will comply with section 22(e) of 
the Act. The Advisers will adopt procedures designed to ensure that 
each Unregistered Money Market Fund complies with sections 17(a), (d), 
(e), 18 and 22(e) of the Act. The Advisers also will periodically 
review and update as appropriate the procedures, and will maintain 
books and records describing such procedures, and will maintain books 
and records describing such procedures, and will maintain the records 
required by rules 31a-1(b)(1), 31a-1(b)(2)(ii), and 31a-1(b)(9) under 
the Act. All books and records required to be made pursuant to this 
condition will be maintained and preserved for a period of not less 
than six years from the end of the fiscal year in which any transaction 
occurred, the first two years in an easily accessible place, and will 
be subject to examination by the Commission and its staff.
    8. Each Unregistered Money Market Fund will comply with rule 2a-7. 
With respect to each Unregistered Money Market Fund, the Advisers will 
adopt and monitor the procedures described in rule 2a-7(c)(7) under the 
Act and will take such other actions as are required to be taken under 
those procedures. A Participating Fund may only purchase shares of an 
Unregistered Money Market Fund if the Adviser determines on an ongoing 
basis that the Unregistered Money Market Fund is in compliance with 
rule 2a-7. The Advisers will preserve for a period of not less than six 
years from the date of determination, the first two years in an easily 
accessible place, a record of such determination and the basis upon 
which the determination was made. This record will be subject to 
examination by the Commission and its staff.
    9. Each Participating Fund will purchase and redeem shares of any 
Unregistered Money Market Fund as of the same time and at the same 
price, and will receive dividends and bear its proportionate share of 
expenses on the same basis, as other shareholders of the Unregistered 
Money Market Fund. A separate account will be established in the 
shareholder records of each Unregistered Money Market Fund for the 
account of each Participating Fund

[[Page 36611]]

that invests in such Unregistered Money Market Fund.
    10. To engage in Interfund Transactions, the Registered Funds, 
Unregistered Funds, Managed Accounts and Money Market Funds will comply 
with rule 17a-7 under the Act in all respects other than the 
requirement that the parties to the transaction be affiliated persons 
(or affiliated persons of affiliated persons) of each other solely by 
reason of having a common investment adviser, or investment advisers 
which are affiliated persons of each other, common officers, and/or 
common directors or trustees, solely because a Participating Fund and a 
Money Market Fund might become affiliated persons within the meaning of 
section 2(a)(3)(A) and (B) of the Act.
    11. The net asset value per share with respect to shares of an 
Unregistered Money Market Fund will be determined separately for each 
Unregistered Money Market Fund by dividing the value of the assets 
belonging to that Unregistered Money Market Fund, less the liabilities 
of that Unregistered Money Market Fund, by the number of shares 
outstanding with respect to that Unregistered Money Market Fund.
    12. Before a Registered Participating Fund may participate in the 
Securities Lending Program, a majority of the Board (including a 
majority of the Disinterested Directors) will approve the Registered 
Participating Fund's participation in the Securities Lending Program. 
No less frequently than annually, the Board also will evaluate, with 
respect to each Registered Participating Fund, any securities lending 
arrangement and its results and determine that any investment in Cash 
Collateral in the Money Market Funds is in the best interest of the 
Registered Participating Fund.
    Condition 2 to the Fund-of-Funds Order is amended to read as 
follows: ``No Underlying Portfolio will acquire securities of any other 
investment company in excess of the limits contained in section 
12(d)(1)(A) of the Act, except to the extent that the Underlying 
Portfolio other than a money market fund acquires securities of another 
registered or unregistered investment company pursuant to exemptive 
relief from the Commission permitting the Underlying Portfolio to 
purchase securities of an affiliated registered or unregistered money 
market fund for short-term cash management purposes.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-15354 Filed 6-17-03; 8:45 am]
BILLING CODE 8010-01-P