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58640 Federal Register / Vol. 71, No.

192 / Wednesday, October 4, 2006 / Notices

provide more specific guidance for information on respondents, including Dimensions Series, Inc., RiverSource
persons registering under the Act than through the use of automated collection International Managers Series, Inc.,
the information contained in the statute. techniques or other forms of information RiverSource Managers Series, Inc.,
For the most part, these procedural rules technology. Consideration will be given RiverSource Selected Series, Inc.,
do not require the disclosure of to comments and suggestions submitted RiverSource Short Term Investments
information. Two of the rules, however, in writing within 60 days of this Series, Inc., RiverSource Income Series,
require limited disclosure of publication. Inc., RiverSource Strategy Series, Inc.,
information.1 The information required Please direct your written comments RiverSource Special Tax-Exempt Series
by the rules is necessary to ensure that to R. Corey Booth, Director/Chief Trust, RiverSource Tax-Exempt Series,
investors have clear and complete Information Officer, Securities and Inc., RiverSource Tax-Exempt Money
information upon which to base an Exchange Commission, C/O Shirley Market Series, Inc., RiverSource Sector
investment decision. The Commission Martinson 6432 General Green Way, Series, Inc., RiverSource Variable
uses the information that investment Alexandria, Virginia, 22312; or send an Portfolio-Income Series, Inc.,
companies provide on registration e-mail to: PRA_Mailbox@sec.gov. RiverSource Variable Portfolio-
statements in its regulatory, disclosure Dated: September 27, 2006.
Investment Series, Inc., RiverSource
review, inspection and policy-making Variable Portfolio-Managed Series, Inc.,
Nancy M. Morris,
roles. The respondents to the collection RiverSource Variable Portfolio-Money
Secretary. Market Series, Inc., RiverSource
of information are investment
[FR Doc. E6–16330 Filed 10–3–06; 8:45 am] Variable Portfolio-Managers Series, Inc.,
companies filing registration statements
under the Act. BILLING CODE 8010–01–P RiverSource Variable Portfolio-Select
The Commission does not estimate Series, Inc., RiverSource Retirement
separately the total annual reporting and Series Trust (collectively, the
recordkeeping burden associated with SECURITIES AND EXCHANGE ‘‘Companies’’), RiverSource
rules 8b–1 to 8b–33 because the burden COMMISSION Investments, LLC (‘‘RiverSource’’), and
associated with these rules are included [Investment Company Act Release No. Ameriprise Financial, Inc.
in the burden estimates the Commission 27506; 812–12799] (‘‘Ameriprise’’).
submits for the investment company Filing Dates: The application was
registration statement forms (e.g., Form RiverSource Diversified Income Series, filed on March 26, 2002, and amended
N–1A, Form N–2, Form N–3, and Form Inc., et al.; Notice of Application on September 27, 2006.
N–4). For example, a mutual fund that Hearing or Notification of Hearing: An
September 28, 2006. order granting the application will be
prepares a registration statement on AGENCY: Securities and Exchange
Form N–1A must comply with the rules issued unless the Commission orders a
Commission (‘‘Commission’’). hearing. Interested persons may request
under section 8(b), including rules on
ACTION: Notice of an application for an a hearing by writing to the
riders, amendments, the form of the
registration statement, and the number order under (a) section 6(c) of the Commission’s Secretary and serving
of copies to be submitted. Because the Investment Company Act of 1940 applicants with a copy of the request,
fund only incurs a burden from the (‘‘Act’’) granting an exemption from personally or by mail. Hearing requests
section 8(b) rules when preparing a sections 18(f) and 21(b) of the Act; (b) should be received by the Commission
registration statement, it would be section 12(d)(1)(J) of the Act granting an by 5:30 p.m. on October 23, 2006, and
impractical to measure the compliance exemption from section 12(d)(1) of the should be accompanied by proof of
burden of these rules separately. The Act; (c) sections 6(c) and 17(b) of the service on applicants, in the form of an
Commission believes that including the Act granting an exemption from sections affidavit or, for lawyers, a certificate of
burden of the section 8(b) rules with the 17(a)(1) and 17(a)(3) of the Act; and (d) service. Hearing requests should state
burden estimates for the investment section 17(d) of the Act and rule 17d– the nature of the writer’s interest, the
company registration statement forms 1 under the Act to permit certain joint reason for the request, and the issues
provides a more accurate and complete transactions. contested. Persons who wish to be
estimate of the total burdens associated notified of a hearing may request
Summary of the Application: notification by writing to the
with the registration process. Applicants request an order that would
Written comments are invited on: (a) Commission’s Secretary.
permit certain registered open-end
Whether the proposed collection of ADDRESSES: Secretary, Commission, U.S.
management investment companies to
information is necessary for the proper Securities and Exchange Commission,
participate in a joint lending and
performance of the functions of the 100 F Street, NE., Washington, DC
borrowing facility.
agency, including whether the Applicants: RiverSource Diversified 20549–1090. Applicants: Companies,
information will have practical utility; Income Series, Inc., RiverSource 901 Marquette Avenue South, Suite
(b) the accuracy of the agency’s estimate California Tax-Exempt Trust, 2810, Minneapolis, MN 55402–3268;
of the burden of the collection of RiverSource Bond Series, Inc., and RiverSource and Ameriprise, 200
information; (c) ways to enhance the RiverSource Equity Series, Inc., Ameriprise Financial Center,
quality, utility, and clarity of the RiverSource High Yield Income Series, Minneapolis, MN 55474.
information collected; and (d) ways to Inc., RiverSource Government Income FOR FURTHER INFORMATION CONTACT:
minimize the burden of the collection of Series, Inc., RiverSource Global Series, Laura J. Riegel, Senior Counsel at (202)
Inc., RiverSource Large Cap Series, Inc., 551–6873 or Nadya B. Roytblat,
1 Rule 8b–3 (17 CFR 270.8b–3) provides that
RiverSource Tax-Exempt Income Series, Assistant Director, at (202) 551–6821
whenever a registration form requires the title of (Division of Investment Management,
Inc., RiverSource International Series,
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securities to be stated, the registrant must indicate


the type and general character of the securities to Inc., RiverSource Investment Series, Office of Investment Company
be issued. Rule 8b–22 (17 CFR 270.8b–22) provides Inc., RiverSource Strategic Allocation Regulation).
that if the existence of control is open to reasonable
doubt, the registrant may disclaim the existence of
Series, Inc., RiverSource Market SUPPLEMENTARY INFORMATION: The
control, but it must state the material facts pertinent Advantage Series, Inc., RiverSource following is a summary of the
to the possible existence of control. Money Market Series, Inc., RiverSource application. The complete application

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Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Notices 58641

may be obtained for a fee at the 4. If the Funds were to borrow money directly to other Funds would earn
Commission’s Public Reference Desk, from the bank under their committed interest at a rate higher than they
100 F Street, NE., Washington, DC line of credit, the Funds would pay otherwise could obtain from investing
20549–0102 (tel. (202) 551–5850). interest on the borrowed cash at a rate their cash in repurchase agreements.
which would likely be significantly Thus, applicants believe that the
Applicants’ Representations higher than the rate that would be proposed credit facility would benefit
1. The Companies are organized as earned by other non-borrowing Funds both borrowing and lending Funds. The
Minnesota corporations or on investments in repurchase interest rate charged to a Fund on any
Massachusetts business trusts and are agreements and other short-term loan made pursuant to the proposed
registered under the Act as open-end instruments of the same maturity as the credit facility (‘‘Interfund Loan Rate’’)
management investment companies.1 bank loan. Applicants believe this would be determined daily and would
Most Companies offer one or more differential represents the bank’s profit be the average of the ‘‘Joint Accounts
series, each with a different investment for serving as the middleman between a Repo Rate’’ and the ‘‘Bank Loan Rate,’’
objective and different investment borrower and a lender. The Funds pay both as defined below. The Joint
policies. RiverSource is registered as an an annual commitment fee for the Accounts Repo Rate for any day would
investment adviser under the committed line of credit. be the current overnight repurchase
Investment Advisers Act of 1940. 5. Applicants request an order that agreement rate available through the
RiverSource has entered into an would permit the Funds to enter into a Joint Accounts. The Bank Loan Rate for
investment management services master interfund lending agreement any day would be calculated by the
agreement with each Fund. Ameriprise (‘‘Interfund Lending Agreement’’) under ‘‘Credit Facility Team’’ (as defined
serves as the administrator to each Fund which the Funds would lend and below) on each day an Interfund Loan
under the terms of its administrative borrow money for temporary purposes is made according to a formula
services agreement with the Fund. directly to and from each other through established by each Fund’s board of
RiverSource is a wholly-owned a credit facility (‘‘Interfund Loan’’). directors or trustees (‘‘Board’’) intended
subsidiary of Ameriprise. Applicants state that the proposed to approximate the lowest interest rate
2. The Funds may lend cash to banks credit facility would reduce potential at which a bank short-term loan would
or other entities by entering into borrowing Funds’ costs and enhance be available to the Fund. The formula
repurchase agreements either directly or lending Funds’ ability to earn higher would be based upon a publicly
through the ‘‘Joint Accounts’’ (as rates of interest on short-term loans. available rate (e.g., Federal funds plus
defined below), purchasing short-term Although the proposed credit facility 25 basis points) and would vary with
investments or under arrangements would reduce the Funds’ need to this rate so as to reflect changing bank
whereby custodian fees are reduced. borrow from banks, the Funds would be loan rates. The Board of each Fund
Each Fund may deposit uninvested free to establish and/or continue would periodically review the
daily balances into one or more joint committed lines of credit or other continuing appropriateness of using the
trading accounts administered by borrowing arrangements with banks. publicly available rate, as well as the
RiverSource and its affiliates (‘‘Joint 6. The credit facility may be used
relationship between the Bank Loan
Accounts’’) and invest the daily balance when the cash position of a Fund is
Rate and current bank loan rates that
of the Joint Accounts in repurchase insufficient to meet a day’s cash
would be available to the Fund. The
agreements. An existing Commission requirements, such as when shareholder
initial formula and any subsequent
order also permits each Fund to invest redemptions exceed anticipated
modifications to the formula would be
uninvested cash and cash collateral in volumes. When a Fund sells portfolio
subject to the approval of each Fund’s
securities to meet redemption requests,
one or more money market Funds that Board.
it may not receive payment in
comply with rule 2a–7 under the Act. 8. The credit facility would be
settlement for up to three days, or longer
3. Currently, the Funds have a administered by the Fund’s treasurer, a
in the case of certain foreign
committed line of credit from a bank. representative from Ameriprise’s
transactions, even though redemption
Each Fund can borrow money from the treasury department, and a
requests are normally satisfied
bank to complete security transactions representative from compliance, all of
immediately. Other reasons that cash
suspended by the closing of the whom are employees of Ameriprise
may not be available in a timely fashion
electronic money transfer systems or to (collectively, the ‘‘Credit Facility
to meet redemptions or settle
meet redemptions on a timely basis Team’’). Under the proposed credit
transactions are: circumstances such as
regardless of whether sale transactions following September 11, 2001; when a facility, the portfolio managers for each
are awaiting settlement. The amount of sale of securities fails; or improper participating Fund could provide
each Fund’s borrowing under the delivery instructions by the broker standing instructions to participate
committed line of credit is limited to the effecting the transaction delays delivery daily as a borrower or lender. The Credit
amount permitted by the Fund’s of cash to the custodian. In such cases, Facility Team on each business day
fundamental investment policies. the credit facility could provide a source would collect data on the uninvested
1 Applicants request that the order also apply to
of immediate, short-term liquidity cash and borrowing requirements of all
any existing or future series of the Companies and pending receipt of cash and result in participating Funds from the Funds’
to any other registered open-end management savings to the borrowing Fund and custodians. Once it determined the
investment company or its series for which increased returns to the lending Funds. aggregate amount of cash available for
RiverSource or a person controlling, controlled by, 7. While bank borrowings generally loans and borrowing demand, the Credit
or under common control with RiverSource serves
as investment adviser (collectively, together with
could supply needed cash to cover Facility Team would allocate loans
unanticipated redemptions and sales among borrowing Funds without any
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the Companies, the ‘‘Funds’’). All existing


registered investment companies that currently fails, under the proposed credit facility further communication from portfolio
intend to rely on the requested order have been a borrowing Fund would pay lower managers. Applicants expect far more
named as applicants. Any other existing or future
Fund that relies on the requested order in the future
interest rates than those offered by available uninvested cash each day than
will comply with the terms and conditions of the banks on short-term loans. In addition, borrowing demand. After the Credit
application. Funds making short-term cash loans Facility Team has allocated cash for

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58642 Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Notices

Interfund Loans, the Credit Facility relief from sections 18(f) and 21(b) of Ameriprise, through the Credit Facility
Team would invest any remaining cash the Act; (b) section 12(d)(1)(J) of the Act Team, would administer the program as
in accordance with the standing granting relief from section 12(d)(1) of a disinterested party; (b) all Interfund
instructions of portfolio managers or the Act; (c) sections 6(c) and 17(b) of the Loans would consist only of uninvested
return remaining amounts to the Funds. Act granting relief from sections 17(a)(1) cash reserves that a Fund otherwise
The money market Funds typically and 17(a)(3) of the Act; and (d) under would invest in short-term repurchase
would not participate as borrowers section 17(d) of the Act and rule 17d– agreements or other short-term
because they rarely need to borrow cash 1 under the Act to permit certain joint instruments; (c) the Interfund Loans
to meet redemptions. arrangements. would not involve a greater risk than
9. The Credit Facility Team would such other investments; (d) the lending
allocate borrowing demand and cash Applicants’ Legal Analysis
Fund would receive interest at a rate
available for lending among the Funds 1. Section 17(a)(3) generally prohibits higher than it could obtain through such
on what the Credit Facility Team any affiliated person, or affiliated other investments; and (e) the borrowing
believes to be an equitable basis, subject person of an affiliated person, from Fund would pay interest at a rate lower
to certain administrative procedures borrowing money or other property from than otherwise available to it under its
applicable to all Funds, such as the time a registered investment company. bank loan agreements and avoid the
of filing requests to participate, Section 21(b) generally prohibits any quarterly commitment fees associated
minimum loan lot sizes, and the need to registered management company from with committed lines of credit.
minimize the number of transactions lending money or other property to any Moreover, applicants believe that the
and associated administrative costs. To person if that person controls or is other conditions in the application
reduce transaction costs, each Interfund under common control with the would effectively preclude the
Loan normally would be allocated in a company. Section 2(a)(3)(C) of the Act possibility of any Fund obtaining an
manner intended to minimize the defines an ‘‘affiliated person’’ of another undue advantage over any other Fund.
number of participants necessary to person, in part, to be any person directly 4. Section 17(a)(1) generally prohibits
complete the loan transaction. or indirectly controlling, controlled by, an affiliated person of a registered
10. The Credit Facility Team would or under common control with, the investment company, or an affiliated
(a) Monitor the interest rates charged other person. Applicants state that the person of an affiliated person, from
and the other terms and conditions of Funds may be under common control by selling any securities or other property
the Interfund Loans; (b) limit the virtue of having RiverSource as their to the company. Section 12(d)(1)
borrowings and loans entered into by common investment adviser and/or by generally makes it unlawful for a
each Fund to ensure that they comply reason of having common officers and/ registered investment company to
with the Fund’s investment policies and or directors or trustees. purchase or otherwise acquire any
limitations; (c) ensure equitable 2. Section 6(c) provides that an security issued by any other investment
treatment of each Fund; and (d) make exemptive order may be granted where company except in accordance with the
quarterly reports to the Board of each an exemption is necessary or limitations set forth in that section.
Fund concerning any transactions by appropriate in the public interest and Applicants state that the obligation of a
the Fund under the credit facility and consistent with the protection of borrowing Fund to repay an Interfund
the interest rates charged. The method investors and the purposes fairly Loan may constitute a security under
of allocation and related administrative intended by the policy and provisions of sections 17(a)(1) and 12(d)(1). Section
procedures would be approved by each the Act. Section 17(b) authorizes the 12(d)(1)(J) provides that the Commission
Fund’s Board, including a majority of Commission to exempt a proposed may exempt persons or transactions
directors or trustees who are not transaction from section 17(a) provided from any provision of section 12(d)(1) if
‘‘interested persons’’ of the Fund, as that the terms of the transaction, and to the extent that such exemption
defined in section 2(a)(19) of the Act including the consideration to be paid is consistent with the public interest
(‘‘Independent Board Members’’), to or received, are reasonable and fair and and the protection of investors.
ensure that both borrowing and lending do not involve overreaching on the part Applicants contend that the standards
Funds participate on an equitable basis. of any person concerned, and the under sections 6(c), 17(b), and
11. Ameriprise, through the Credit transaction is consistent with the policy 12(d)(1)(J) are satisfied for all the
Facility Team, would administer the of the investment company as recited in reasons set forth above in support of
credit facility as part of its duties under its registration statement and with the their request for relief from sections
its existing administrative services general purposes of the Act. Applicants 17(a)(3) and 21(b) and for the reasons
agreement with each Fund and would believe that the proposed arrangements discussed below.
receive no additional compensation for satisfy these standards for the reasons 5. Applicants state that section
its services. No Fund may participate in discussed below. 12(d)(1) was intended to prevent the
the credit facility unless: (a) The Fund 3. Applicants submit that sections pyramiding of investment companies in
has obtained shareholder approval for 17(a)(3) and 21(b) were intended to order to avoid imposing on investors
its participation, if such approval is prevent a person with strong potential additional and duplicative costs and
required by law; (b) the Fund has fully adverse interests to, and some influence fees attendant upon multiple layers of
disclosed all material information over the investment decisions of, a investment companies. Applicants
concerning the credit facility in its registered investment company from submit that the proposed credit facility
prospectus or statement of additional causing or inducing the investment does not involve these abuses.
information (‘‘SAI’’); and (c) the Fund’s company to engage in lending Applicants note that there will be no
participation in the credit facility is transactions that unfairly inure to the duplicative costs or fees to the Funds or
consistent with its investment benefit of such person and that are to the Funds’ shareholders, and that
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objectives, limitations, and detrimental to the best interests of the Ameriprise will receive no additional
organizational documents. investment company and its compensation for its services in
12. In connection with the credit shareholders. Applicants assert that the administering the credit facility.
facility, applicants request an order proposed credit facility transactions do Applicants also note that the purpose of
under (a) section 6(c) of the Act granting not raise these concerns because: (a) the proposed credit facility is to provide

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Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Notices 58643

economic benefits for all of the investment limitations. Applicants Fund may borrow through the credit
participating Funds. therefore believe that each Fund’s facility only on a secured basis. A Fund
6. Section 18(f)(1) of the Act prohibits participation in the credit facility will may not borrow through the credit
registered open-end investment be on terms that are no different from facility or from any other source if its
companies from issuing any senior or less advantageous than that of other total outstanding borrowings
security except that a company is participating Funds. immediately after the interfund
permitted to borrow from any bank, if borrowing would exceed the limits
immediately after the borrowing, there Applicants’ Conditions
imposed by section 18 of the Act.
is asset coverage of at least 300 per Applicants agree that any order 5. Before any Fund that has
centum for all borrowings of the granting the requested relief will be outstanding interfund borrowings may,
company. Under section 18(g) of the subject to the following conditions: through additional borrowings, cause its
Act, the term ‘‘senior security’’ includes 1. The Interfund Loan Rate to be outstanding borrowings from all sources
any bond, debenture, note or similar charged to the Funds under the credit to exceed 10% of its total assets, the
obligation or instrument constituting a facility will be the average of the Joint Fund must first secure each outstanding
security and evidencing indebtedness. Accounts Repo Rate and the Bank Loan Interfund Loan by the pledge of
Applicants request relief from section Rate. segregated collateral with a market
18(f)(1) to the limited extent necessary 2. On each business day, the Credit value at least equal to 102% of the
to implement the credit facility (because Facility Team will compare the Bank outstanding principal value of the loan.
the lending Funds are not banks). Loan Rate with the Joint Accounts Repo If the total outstanding borrowings of a
7. Applicants believe that granting Rate and will make cash available for Fund with outstanding Interfund Loans
relief under section 6(c) of the Act is Interfund Loans only if the Interfund exceed 10% of its total assets for any
appropriate because the Funds would Loan Rate is (a) more favorable to the other reason (such as a decline in net
remain subject to the requirement of lending Fund than the Joint Accounts asset value or because of shareholder
section 18(f)(1) of the Act that all Repo Rate and (b) more favorable to the redemptions), the Fund will within one
borrowings of a Fund, including borrowing Fund than the Bank Loan business day thereafter (a) repay all its
combined Interfund Loans and bank Rate. outstanding Interfund Loans; (b) reduce
borrowings, have at least 300 per 3. If a Fund has outstanding its outstanding indebtedness to 10% or
centum asset coverage. Based on the borrowings, any Interfund Loans to the less of its total assets; or (c) secure each
conditions and safeguards described in Fund (a) will be at an interest rate equal outstanding Interfund Loan by the
the application, applicants also submit to or lower than any outstanding bank pledge of segregated collateral with a
that to allow the Funds to borrow from loan; (b) will be secured at least on an market value at least equal to 102% of
other Funds pursuant to the proposed equal priority basis with at least an the outstanding principal value of the
credit facility is consistent with the equivalent percentage of collateral to loan until the Fund’s total outstanding
purposes and policies of section 18(f)(1) loan value as any outstanding bank loan borrowings cease to exceed 10% of its
of the Act. that requires collateral; (c) will have a total assets, at which time the collateral
8. Section 17(d) and rule 17d–1 maturity no longer than any outstanding called for by this condition (5) shall no
generally prohibit any affiliated person bank loan (and in any event not over longer be required. Until each Interfund
of a registered investment company, or seven days); and (d) will provide that, Loan that is outstanding at any time that
any affiliated person of an affiliated if an event of default occurs under any a Fund’s total outstanding borrowings
person, when acting as principal, from agreement evidencing an outstanding exceed 10% of its total assets is repaid
effecting any joint transaction in which bank loan to the Fund, that event of or the Fund’s total outstanding
the company participates unless the default will automatically (without need borrowings cease to exceed 10% of its
transaction is approved by the for action or notice by the lending Fund) total assets, the Fund will mark the
Commission. Rule 17d–1(b) provides constitute an immediate event of default value of the collateral to market each
that in passing upon applications filed under the Interfund Lending Agreement day and will pledge such additional
under the rule, the Commission will entitling the lending Fund to call the collateral as is necessary to maintain the
consider whether the participation of a Interfund Loan (and exercise all rights market value of the collateral that
registered investment company in a with respect to any collateral) and that secures each outstanding Interfund Loan
joint enterprise on the basis proposed is such call will be made if the lending at least equal to 102% of the
consistent with the provisions, policies, bank exercises its right to call its loan outstanding principal value of the loan.
and purposes of the Act and the extent under its agreement with the borrowing 6. No Fund may lend to another Fund
to which the company’s participation is Fund. through the credit facility if the loan
on a basis different from or less 4. A Fund may make an unsecured would cause the lending Fund’s
advantageous than that of other borrowing through the credit facility if aggregate outstanding loans through the
participants. its outstanding borrowings from all credit facility to exceed 15% of its net
9. Applicants submit that the purpose sources immediately after the interfund assets at the time of the loan.
of section 17(d) is to avoid overreaching borrowing total 10% or less of its total 7. A Fund’s Interfund Loans to any
by and unfair advantage to investment assets, provided that if the Fund has a one Fund shall not exceed 5% of the
company insiders. Applicants believe secured loan outstanding from any other lending Fund’s current net assets.
that the credit facility is consistent with lender, including but not limited to 8. The duration of Interfund Loans
the provisions, policies, and purposes of another Fund, the Fund’s interfund will be limited to the time required to
the Act in that it offers both reduced borrowing will be secured on at least an receive payment for securities sold, but
borrowing costs and enhanced returns equal priority basis with at least an in no event more than seven days. Loans
on loaned funds to all participating equivalent percentage of collateral to effected within seven days of each other
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Funds and their shareholders. loan value as any outstanding loan that will be treated as separate loan
Applicants note that each Fund would requires collateral. If a Fund’s total transactions for purposes of this
have an equal opportunity to borrow outstanding borrowings immediately condition.
and lend on equal terms consistent with after an interfund borrowing would be 9. A Fund’s borrowings through the
its investment policies and fundamental greater than 10% of its total assets, the credit facility, as measured on the day

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58644 Federal Register / Vol. 71, No. 192 / Wednesday, October 4, 2006 / Notices

when the most recent loan was made, such other information presented to the interfund borrowing and lending
will not exceed the greater of 125% of Fund’s Board in connection with the demand in an equitable manner and in
the Fund’s total net cash redemptions or review required by conditions 13 and accordance with procedures established
102% of sales fails for the preceding 14. by the Board; and (e) that the Interfund
seven calendar days. 16. In the event an Interfund Loan is Loan Rate does not exceed the interest
10. Each Interfund Loan may be called not paid according to its terms and the rate on any third party borrowings of a
on one business day’s notice by a default is not cured within two business borrowing Fund at the time of the
lending Fund and may be repaid on any days from its maturity or from the time Interfund Loan.
day by a borrowing Fund. the lending Fund makes a demand for After the final report is filed, each
11. A Fund’s participation in the payment under the provisions of the Fund’s independent public accountant,
credit facility must be consistent with Interfund Lending Agreement, the in connection with its audit
its investment policies and limitations Credit Facility Team promptly will refer examinations, will continue to review
and organizational documents. the loan for arbitration to an the operation of the credit facility for
12. The Credit Facility Team will independent arbitrator selected by the compliance with the conditions of the
calculate total Fund borrowing and Board of any Fund involved in the loan application and its review will form the
lending demand through the credit who will serve as the arbitrator of basis, in part, of the auditor’s report on
facility, and allocate interfund loans on disputes concerning Interfund Loans.2 internal accounting controls in Form N–
an equitable basis among the Funds, The arbitrator will resolve any problem SAR.
without the intervention of any portfolio promptly, and the arbitrator’s decision 18. No Fund will participate in the
manager of the Funds. The Credit will be binding on both Funds. The credit facility upon receipt of requisite
Facility Team will not solicit cash for arbitrator will submit, at least annually, regulatory approval unless it has fully
the credit facility from any Fund or a written report to the Board of each disclosed in its prospectus or SAI all
prospectively publish or disseminate Fund setting forth a description of the material facts about its intended
loan demand data to portfolio managers. nature of any dispute and the actions participation.
The Credit Facility Team will invest taken by the Funds to resolve the For the Commission, by the Division of
amounts remaining after satisfaction of dispute. Investment Management, under delegated
borrowing demand in accordance with 17. The Credit Facility Team will authority.
the standing instructions from portfolio prepare and submit to the Board of each Nancy M. Morris,
managers or return remaining amounts Fund for review an initial report Secretary.
to the Funds. describing the operations of the credit
13. The Credit Facility Team will [FR Doc. E6–16365 Filed 10–3–06; 8:45 am]
facility and the procedures to be BILLING CODE 8010–01–P
monitor the interest rates charged and
implemented to ensure that all Funds
the other terms and conditions of the
are treated fairly. After the
Interfund Loans and will make a
commencement of operations of the SECURITIES AND EXCHANGE
quarterly report to the Board of each
credit facility, the Credit Facility Team COMMISSION
Fund concerning the participation of the
will report on the operations of the
Fund in the credit facility and the terms [Release Nos. 33–8743; 34–54519; File No.
credit facility at the quarterly meetings 4–526]
and other conditions of any extensions
of each Fund’s Board.
of credit under the credit facility.
14. The Board of each Fund, In addition, for two years following SEC Government-Business Forum on
including a majority of the Independent the commencement of the credit facility, Small Business Capital Formation
Board Members, will: (a) Review no less the independent public accountant for
each Fund shall prepare an annual AGENCY: Securities and Exchange
frequently than quarterly the Fund’s Commission.
participation in the credit facility during report that evaluates the Credit Facility
Team’s assertion that it has established ACTION: Request for public comment in
the preceding quarter for compliance connection with Forum on Small
with the conditions of any order procedures reasonably designed to
achieve compliance with the conditions Business Capital Formation.
permitting the transactions; (b) establish
the Bank Loan Rate formula used to of the order. The report shall be SUMMARY: The Securities and Exchange
determine the Interfund Loan Rate and prepared in accordance with the Commission is providing for additional
review no less frequently than annually Statements on Standards for Attestation public input in connection with its
the continuing appropriateness of the Engagements No. 10 and it shall be filed annual Government-Business Forum on
Bank Loan Rate formula; and (c) review pursuant to Item 77Q3 of Form N–SAR Small Business Capital Formation, to be
no less frequently than annually the as such Statements or Form may be held Friday, September 29, 2006,
continuing appropriateness of the revised, amended, or superseded from beginning at 9 a.m. EDT, at its
Fund’s participation in the credit time to time. In particular, the report Washington, DC headquarters. The
facility. shall address procedures designed to morning sessions of the Forum will be
15. Each Fund will maintain and achieve the following objectives: (a) Webcast on the Commission’s Web site
preserve for a period of not less than six That the Interfund Loan Rate will be at www.sec.gov. The public is invited to
years from the end of the fiscal year in higher than the Joint Accounts Repo submit written statements in connection
which any transaction under the credit Rate, but lower than the Bank Loan with the Forum.
facility occurred, the first two years in Rate; (b) compliance with the collateral This year’s Forum program will
an easily accessible place, written requirements as set forth in the include two roundtable discussions in
records of all such transactions setting application; (c) compliance with the the morning. The first roundtable will
forth a description of the terms of the percentage limitations on interfund discuss the advantages to smaller public
rwilkins on PROD1PC63 with NOTICES

transaction, including the amount, the borrowing and lending; (d) allocation of companies of filing interactive data with
maturity and the rate of interest on the 2 If the dispute involves Funds with separate
the SEC. The second roundtable will
loan, the rate of interest available at the Boards, the Board of each Fund will select an
discuss current issues in capital raising
time on short-term repurchase independent arbitrator that is satisfactory to each techniques for small business, such as
agreements and bank borrowings, and Fund. the status of the IPO (initial public

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