SECURITIES AND EXCHANGE COMMISSION

Agency decision

Ask Donna

What actually matters in this document.

Text

oT.'.~~:. .

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON. D.C. 20549

DIVISION OF

INVESTMENT MANAGEMENT

August 30, 1993

Thomas A. Early

Associate General Counsel

Frank Russell Investment Management Company

P.O. Box 1591

Tacoma, Washington 98401

Re: Item 5 (c) of Form N-1A

Dear Mr. Early:

This is in response to your letter of May 6, 1993,

June 2 from Deedra A. Smith

supplemented by letters of May 28 and

to Martha H. Platt of my office, in which Frank Russell

Investment Management Company (" FRIMCo") requests guidance in

of Form N-1A.

responding to Item 5 (c)

According to your letters, FRIMCo is the investment adviser

to Frank Russell Investment Company,. an open-end management

investment company registered with the Commission under the

Company Act of 1940. FRIMCo selects sub-advisers (the

Investment

"Portfolio Managers") to make specific investments for the Fund IS

portfolios. Five FRIMCo employees a~e responsible for the review

of the twenty-two portfolios', and FRIMCo has the authority to

Managers and to terminate

reallocate assets among the Portfolio

Portfolio Managers. The Fund currently employs thirty-three

Portfolio Managers. .

Each portfolio is managed by a numer of Portfolio Managers,

with the exception of the Real Estate Securities Fund, which has

a single Portfolio Manager, and two of the money market funds,

which

are managed solely by FRIMCo. FRIMCo requests assurance

that the staff would not recommend enforcement action to the

Securities and Exchange Commission if FRIMCo made Item 5 (c)

disclosure regarding the FRIMCo employees rather than the

individuals employed by the Portfolio Manager to make investments

for each portfolio.

Item 5 (c) requires disclosure about that person or those

persons "who are primarily responsible for the day-to-day

management of the fund i s portfolio . .. " rour request raises

the question of how Item 5 (c) applies to a fund that operates

with a multi-manager structure.

-2

We do not believe that the Commission contemplated a multi-

manager structure when it adopted Item 5 (c). A literal .

interpretation of the item's reference to "day-to-day management"

would suggest the naming of multiple portfolio managers, a result

that may be appropriate in some circumstances, but not in a

multi-manager structure such as you describe in your letter. An

investor in a fund holding itself out as a being managed by a

"manager of managers" is more likely to be interested in the

background and skill of those who manage the managers than in the

individuals being managed; if not, we assume that, if the

opportunity is available, the investor would direct his or her

assets directly to the individuals being managed by the manager.

Therefore, we believe that where a fund holds itself ,out as

being managed by a manager of managers, (i.e., holds itself out

as being managed by more than one sub-adviser under the

supervision of the adviser), and in fact, significant management

functions are performed by the adviser, it may be appropriate to

conclude'that an individual (or individuals) employed by the

adviser, rather than the sub-advisers, is (are) responsible for

day-to-day management of the fund and should be named as the

'portfolio manager (s) .1 Significant management functions would

include, at a minimum, regular review of the perforrance of the

sub-advisers by an adviser pavirig the authority to discharge the

sub-advisers and periodically reallocating assets among the subadvisers based on the changing market. perceptions of the adviser

(~, reallocation from a sub-adviser managing equities to one

managing bonds) or the performnce of the sub-adviser.

Based on FRIMCo' s representations in its prospectußes and in

your, letters to 'us regarding the allocation of management

responsibility betwßen FRIMCo and non-FRIMCo portfolio managers,

we believe that it would be sufficient for FRIMCo to make Item

5 (c) disclosure regarding

the following:

the FRIMCo employee (s). responsible for overseeing the

Portfolio Managers for those portfolios with more than

one Portfolio Manager;

the individual (s) employed by the Portfolio Manager for

portfolios managed by a single Portfolio Manager; and

We would not take the same position, however, with respect

to a fund with a multi-manager structure under which the

adviser managed the portfolio management activities of subadvisers through a committee structure because no portfolio

manger would be named. See Instruction 2 to Item 5 (c) .

-3

the FRI~Co employees for portfolios managed only by

FRIMCo.

Sincerely,

ÛdP~

Robert E. Plaze

Assistant Director

While FRIMCo employees manage the Money Market and U. S

Government Money Market Portfolios, we do not expect that

the fund will identify these FRIMCo employee (s) because

money market funds are exempt from Item 5 (c) .

Frank Russell

Investment

Management Company

P.. Bo 1591

RLCD S.E.C.

lel DetFax: ~4

206.6mo1

Tacoma Sydney

Plse refer to: Tl A. Early

0I Une: ~240

Tacoma. Washington 98401

Fax 20.596.2497

London Toky

MAY .7 1993

May 6, 1993

New York Toronto

ala

VIA OVERNIGHT COURIER

Thomas S. Haran

Chef Counsel

Ofce of the Chief Counsel

Division of Investment Management

Secunties and Exchange Commssion

Item 5(c) to Form N-IA, Adopted

Pursuant to Release No. 33-6988

Mail Stop 10-6

'4ft -'.' :r CA oj /9l.O

450 Fifth Street, N.W.

SECON . 9i ( £, ) .

Washigton, DC 20549

RULE

Re: Frank Russell Investment Company

AVAIIL

File No. 33-71299

PUC

75/3.0/'3

Dear Mr. Haran:

On behal of Frank Russell Investment Company, I respecy request that you advise me

that the Sta of the Securties and Exchange Commssion wi not recommerid

enforcement action to the Commssion if Fran Russell Investment Company makes the

disclosure descrbe in the attched no-action request in response to Item 5(c) of

Form N-1A.

.In accordance with Securties Act Release No. 6269 (December 5, 1980), I am submittg

an original and seven copies of the request letter.. Please indicate your receipt of these

letters by date-stamping the extia copy of this cover letter and the attched request letter

and retug them in the enclosed self-addressed, stamped envelope.

If you have any questions concerng this matter, please do not hesitate to contact me at

(206) 596-2406 or Deeda Smith at (206) 591-3537.

~~. &.

Sincerely,

Thomas A. Early

Associate General Counsel

Chief Financial Services Counsel

cc: Karl J. Ege, Esq.

James T. Fir, Esq.

Deeda A. Smith, Esq.

Margaret L. Barclay

1:\WORDDATA\TAEICRRIMAF10303.L TR 05093:08:31

lb. Rusel

, .

Frank Russell

Investment ..

Management Company

P.. Box 1591

Tacoma. Washington 98401

Fax 206-596.2497

206.6mo1

Plse refer to: Thas A. Early

Tacoma Sydney

Dir Une: 20592406

London Toky

Lel Det Fax: 205984

New York Toronto

May 6, 1993

VIA OVERNIGHT COURIER

Thomas S. Haran

Chef' Counsel

Office of the Chief Counsel

Division of Investment Management

Item 5(c) to Form N-IA, Adopted

Pursuant to Release No. 33-6988

Securties and Exchange Commssion

Mail Stop 10-6

450,Fifth Street, N.W.

Washington, DC 20549

Re: Frank Russell Investment Company

File No. 33-71299

Deai Mr. Haran:

On behal of Fran Russell Investment Company (the "Fund"), we respectfy request a

letter from the Sta ("Sta') of the Securties and Exchange Commssion ("Commssion")

statig that the Sta wi not recommend any enforcement action to the Commssion if

its curent or futue Portolios, as defied below, in response to Item 5(c) of Form N-1A.

after July 1, 1993, the Fund makes the disclosures descrbed herein with respect to any

In á recent telephone cal, Brian P. Kidelan of Stradley, Ronon, Stevens & Young,

counsel to the Fund, discussed Release No. 33-6988 (Apri 6, 1993) (the "Adopting

Release") with Robert Plaz of theSEC Staff and was inormed that the Staff considered

comment letters from funds, such as the Fund, which may be unquely impacted. by the

Adopting Release, but that the Sta decided to address the concerns of such funds on a

case-by-case basis rather than in the context of a generic release) We understand from

this telephone conversation that a no-:action request on behal of the Fund is the

appropriate approach to address the Fund's concerns.

BACKGROUND

The Fund is a diversifed open-end management investment company established as a

Massachusetts business trst and registered with the Commssion under the Investment

Company Act of 1940 (the "1940 Act"). The Fund's Declaration of Trust perßUts the

IFrank Russell Investment Management Company submitted on behalf of the Fund a

comment letter dated March 9, 1990, to Jonathan G. Katz with respect to the proposing

release, Release No. 33-6850 (Januar 8, 1990).

I:\WORDDA TA\TAE\ORRIMAF1 0303.l TR 05093:08:31

Jh.Russel

Thomas S. Haran

May 6, i 993

Page 3

Fund to offer separate series of unts of beneficial interest ("Shares"). Each Share of each

series represents an equal proportonate interest in that series with each other Share of that

series. The Fund curently has established 22 series: Equity I, Equity II, Equity il,

Equity Q, International, Emerging Markets, Fixed Income I, Fixed Income II, Fixed

Income il, Money Market, Diversified Equity, Speial Growth, Equity Income,

Quantitative Equity, Intemational Securties, Rea Estate Securties, Diversified Bond,

Volatity Constraied Bond, Multistrategy Bond, Limte Volatity Tax Free, U.S.

Governent Money Market and Tax Free Money Market (collectively, "the Portolios").

The Fund's distrbutor is Russell Fund Distrbutors, Inc., a wholly-owned subsidiar of

Fran Russell Investment Management Company ("FRCo"), which is in tu a wholly-

owned subsidiar of Fran Russell Company ("Frank Russell").

The Fund is strctued and operates in a manner which diers from that of a conventional

registered investment company. Rather than operate with a single investment adviser, the

Fund employs multiple advisers. It is this unconventional, multiple manager strcture

which causes us to ask for the Stafs concurence in our interpretation of Item 5( c) of

Form N-1A, which was recently added by the Commssion in the Adoptig Release.

. - FRICo ~s the Fund's investment adviser within the meag of Section 2(a)(20) of the

i 940 Act, and provides the Fund, pursuant to a wrtten advisory agreement, with the

management and admitrtive servces necessar for a registered investment company to

operate on an ongoing basis. FRCo's services include the evaluation, selection (subject

to the approval of the Fund trstees, includig a majority of the Fund's disinterested

trstees) and monitorig of investment advisers which make the specifc portolio

investments for each of

the Portolios (collectively: "the Portolio Managers"). FRCo

enters into a sub-advisory' agreement (subject to the approval of the Fund trstees,

including a majority of the Fund's disintereste trstees) with each Portfolio Manager'.

Curently, FRCo has engaged on behal of the Fund 332 individual Portolio Managers,

each of which has discretionary authority to invest the assets of a porton of a parcular .

Portolio. The Portolio Managers are selecte by FRCo based priary upon the

research and recommendations of Frank Russell, which evaluates, qualtatively and

quantitatively, Portolio Managers' sks and investment results in managig assets for

specifc asset classes, investment styles and strategies. Short-term investment

performance, by itslf, is not a controllng factor in selectig or termatig a Portolio

Manager. FRCo sets the Portolio's investment strategies, and guides and directs the

Portolio Manager to assure compliance with the Portolio's investment objectives, policies

and restrctions. For brief periods of tie in connection with Portolio Manager changes,

FRCo may exercise specifc investment discretion (i.e., individual Portolio securties

selection) responsibilty for one or more of the Portfolios. FRCo is also authorized to

226 of the Portolio Managers manage one or more Portolios in one or more prospectus.

1:IWORDDATAITAE\CORRlAF1030.L TR 05093:08:31

Jh.Russell

Thomas S. Haran

May 6, 1993

Page 4

(i) exercise investment discretion or select a Portolio Manager to exercise Í1vestment

discetion for Portolio assets assigned to a "liquidity PQrtolio" which is used to create

temporary an equity exposure for cash balances unti those balances are investe; and (ü)

exercise investment discretion for "qualty core portolios" which are used to control a

Portolio's aggregate risk and adhere more closely to a Portolio's investment objectives,

restrctions and policies. FRCo curently exercises investment discretion with respect

to the'liquidity portolio but not with respect to qualty core portolios. FRCo also has

develope an intemal investment sta to advise and invest assets of the Money Market

and U.S. Governent Money Market Portolios.

The Fund's unconventional strcture and method of operation results in the Fund's

shareholders being substatialy uninterested in detaed information about the Portolio

Managers. When a shareholder decides to invest in à Portolio, he or she has made a

decision to rely upon FRCo's expertse to evaluate, select and monitor the Portolio

Managers. Shareholders expect and rely upon FRICo to monitor changes in the

Portolio Managers, includig changes in' key personnel, and to reta or termate the .

Portolio Ntanager as necessar.

Consistent with the multiple manager structure of the Fund, the. Fund believes that the

additional dÍsclosure required by Item 5(c) with respect to al persons who are "priy

responsible for the day-to-day maagement of the fud's portolio," should be given with

respect to FRCo employees who make such a priar contrbution. Shareholders have

and new

selecte FRCo to evaluate, select and monitor the Portolio Managers

disclosure in response to Item 5(c) should inorm shareholders which FRCo employees

are priary responsible for these tasks.

The Fund does not believe that the purose of

Item 5(c) wi be signcantly advanced by providing such additional disclosure with

respect to Portolio Manager employees. In addition, as descrbe in more detal below,

disclosure about Portolio Manager employees would be very lengthy (which would tend

to obscure disclosure which is importnt to shareholders) and would be quite expensive,

which agai would be a detrent to shareholders since these signcant costs would

adversely afect the performance of the Portolios.

DISCUSSION

The AdoDtini: Release and New Item 5( c)

In the Adopting Release, the Commssion adopted rule and form amendments under the

Securities Act of 1933 and the Investment Company Act of 1940 to improve disclosure of

the performance of open-end management investment companies in their prospectuses and

annual reports to shareholders. One of the changes adopted by the Commssion was an

amendment to Form N-IA to add new Item 5(c) which wi require a fund to disclose the

"name and title of the person or persons employed by or associated with the (fund or its

1:IWORDDATAITAE\CORRIMAFt0303.L TR 05093:08:31

JJJ.Rusell

Thomas S. Haran

May 6, 1993

Page 6

i. A mium of 16 additional pages of prospectus. disclosure (8 in one prospectus,

and 8 in the second prospectus) (assumig 3 "priary responsible" employees per

Portolio Manager ties 33 Portolio Managers ties 1 paragraph per person and

12 paragraphs per page). Th is a 23% and a 20% increase, respectively, in the

size of the Fund's two prospectuses.

2. A

mium of 10 stickers to reflect changes in "priy responsible" individual

employees.6

3. Items 1 and 2 above are in addition to one-hal page of disclosure consistent with

Item 5(c) with respect to the approxiately 5 FRCo employees priary

-responsible for the monitorig of Portolio M~nagers and the management of. the

liquidity portolio.

In addition to the confusion such lengthy and unecessar disclosure would cause, if Item

5(c) is interpreted to apply to the Portolio Managers, the Fund's additional printig and

mag costs per anum would be approxiately $117,593 (åssumig $.42 to print and

maii each sticker and $.06 additional pritig costs per prospectus.)

Pro

Dosed Solution

To avoid this very onerous and unnecessar impact on multi-manager fuds such as the

Fund, and to avoid the confsion that the addition of such lengthy and unnecessar

disclosure would cause shareholders, the Fund proposes to: (i) make disclosure .in its

prospectus consistent wÍth Item 5(c) with respect to FRCo employees who are

priary responsible for the day-to-day selection, evaluation and monitoring of the

Portolio Managers or who are priary responsible for the day-to-daymanagement of

the liquidity portolio, quality core portolios and any future programs pursuant to which

FRCo exercises investment discretion over. the selection of individual Portfolio

securties; and (ü) continue to identi in its prospectuses al Portolio Managers and

contiue to sticker its prospectuses to reflect any changes in Portolio Managers. Ths

disclosure would permit potential investors to assess the background and experience of

those persons who set Portolio investment strategies and who guide and direct Portfolio

Managers to assure compliance with a Portolio's investment objectives, policies and

restrctions.

6The Fund already stickers all Portolio Manager firm changes (i.e., an estimated i i

stickers for anyone year.) The 10 stickers noted here would be additional stickers to

disclose changes in individuals within each Portolio Manager.

1:IWORDDATAITAEICORRIMAF10303.L TR 05093:08:31

JhA Russell

Frank Russell

Investment

Manageme-'t Company

P.. Bo 1591

Tacoma. Washington 98401

Fax 20596-2497

20.627l1

Plse referto: Dera A. Smlh

0I Une: 206591-37

Lel Oe Fax: 2084

Tacoma Sydney

London Toky

New York Toronto

May 28, 1993

VIA FACSIMILE AND OVERNIGHT COURIER

Marha H. Platt

Senior Attorney

Division of Investment Management

Securties and Exchange Commssion

Mai Stop 10-6

450 Fifh Street

Washington, D.C. 20549

Re: Fran Russell Investment Company

File No. 33-71299

Dear Ms. Platt:

Than you for your tiely response to Fran Russell Investment Management Company's

no-action letter request dated May 6, 1993. Durg our telephone conversation on May

14, 1993 you requested furer clarcation and information on the four,issues outled

below:

1. No-Action Letter, Page 6, Proposed Solution, (ii): Clarcation of the number

of Frank Russell Investment Management Company ("FRCo") employees

responsible for each of the 22 Frank Russell Investment Company ("FRC")

portfolios.

2: External Fee Fund Prospectus, The Money Mana~ers: Clarcation of the

among money managers and the

frequency of the temination of money managers.

frequency of reallocation of a fund's assets

3. No-Action Letter, Page 5, Impact on the Fund: Detail of the number of money

managers terminated and hired within the last four years for each of the 22 FRIC

portfolios.

4. External Fee Fund Prospectus, The Monev Manaeers: Reconciliation of the

following statement in the prospectus: "each money manager has complete

discretion to purchase and sell portfolio securities for its segment of a fund within

I:\WORDDA T AIOAS\CORRIOAS 10 i 04. L TR 052893: 10:56

IbA Russell

Thomas S. Haran

May 6, 1993

Page 7

Accordingly, we respectfy request that the Sta advise us that it wi not reçommend

any enforcement action to the Commssion if afer July i, i 993, the Fund makes disclosure

in its prospectuses as describe above in response to Item 5(c) of Form N-1A. If the Sta

intends to issue a response that is adverse to this request, we respecy fuer request

the opportnity of a telephone conference prior to the issuance of such a response.

Finaly, since the effective date of ths new disclosure requiement is July 1, 1993, and wi

apply to any post-effective amendment of the Fund fied after that date, we respectfy

request an expeite review of ths request. If you have any questions regarding ths

request, pleae do not hesitate to contact the undersigned at (206) 596-2406 or Deea

Smith at (206) 591-3537.

Sincerely,

--~ k, ~

Thomas A. Early

Associate General Counsel

Chef Financial Servces Counsel

cc: KarlJ. Ege, Esq.

DeeaA. Smith, Esq.

I:IWOROOATAITAEIRR\AF

10303.

L TR 05093:08:31

Jh.Russell

Frank Russell

Investment

Management Company

P.O. Box 1591

Tacoma, Washington 98401

Fax 206.596.2497

206.6mo1

Plse refer to:

Oe Sm~h

0I Une: 20591~7

Lel De Fax: 20~84

Tacoma Sydney

London Toky

New York Toronto

June 2, 1993

VI FACSIMILE AND OVERNIGHT COURER

Marha H. Platt

Senior Attorney

Division of Investment Management

Securties and Exchange Commssion

Mai Stop 10-6

450 Fifth Street

Washington, D.C. 20549

Re:, Frank"Russell Investment Company

File No. 33-71299

Dear Ms. Platt:

Pusuant to my letter of May 28, 1993 (a copy of which is attached), please accept the

following" as documentation in response to itèm 3 which was unavaiable in my previous

correspondence.

Clarcation of the Frequency of Reallocation of a Fund's Assets Among Portolio

Managers

For the period 1992-1993, FRCohas not reallocated assets among Portolio Managers.

FRCo employees daiy monitor the established ratio of assets among Portolio

Managers and allocate additional investments or redemption requests to maita the

established ratios.

I:\WOADDA TAIOASICAAIOAS 10135.L TA 06193:17:12

Jh.Russell

. .

Ms. Mara H. Platt

May 28, 1993

Page 2

the fund's investment objectives, restrctions and policies, and the more specifc

strategies '. developed by Fran Russell Company and Management Company"

with the fial sentence on page 6 of the no-açtion letter which reads "Ths

disclosure wi pennt potential investors to access the background experience of

those persons who set portolio investment strategies and who guide and direct

portolio managers to assure compliance with a portolio's investment objectives,

policies and restrctions."

Clarcation of Number of FRCo Employees Responsible For Each of the FRC

Portolios

There are five FRCo employees responsible for the review of the 22 FRC portolios.

Each of these five employees has responsibilties which relate to each of the 22 portolios.

Clarcation of the FrequenGY of Reallocation of a Fund's Assets Among Portolio

Managers

FRCo is curently in the procss of documentig .the reallocation of assets among

Portolio Managers for each of the 22 FRC portolios for the period 1992-1993. Rather

than delay your recipt of the other inormation you requeste I wi forward ths ,

inormation to your attntion as soon as it is available. I expect the documentation to be

complete ealy next week.

Detail of

the Number ofPortolIo Managers Termnated and Hired Within the Last Four

Years for Each of the FRIel Portolios .

Portolio

Year

Equity I

Equity II

1989

1990

1991

1992

1989

1990

1991

1992

Number of Managers

Termn'ated

. Number of Managers

Hied

lDetal for money markets portfolio is not included since Release 33-698 (Apnl 6, 1993) does not require

disclosure about individual mangers of money market fuds; detal for Emerging Markets, Fixed Income

II and Multistrtegy Bond portfolios is not included because portfolios commenced operation in

November 1992.

I:\WOADDA TAIOASICAAIOAS 1 0104.L TA 052893: 10:56

JIJ~ Russell

--Ms. Mara H. Platt

May 28, 1993

Page 3

Number of Managers

Portolio

Equity il

Equity Q

Equity 0

International

Internátional

Fixed Income I

. Fixed Income IT

Fixed Income IT

Diversifed Equity

Diversified Eaity

Special Growt

Special Growth

Equity Income

Quantitative Equity

Ouantitative Equity

Year

1989

1990

1991

1992

1989

1990

1991

1992

1~89

1990

1991

.1992

1989

1990

1991

1992

1989

1990

1991

1992

1989

1990

1991

1992

1989

1990

1991

1992

1989

1990

1991

1992

1989

1990

1991

1992

Termnated

Number of Managers

Hied

I:IWORDDA T AIOASICORRIOAS 101 04.L TR 052893: 10:56

JhÁ Russell

."s)

.....

Ms. Marha H. Platt

May 28, 1993

Page 4

Number of Managers

Portolio

Year

Termnated

Number of Managers

Hied

Intl Securties 1989

Intl Securties 1990

Int1 Securties 1991

Intl Securities 1992

Diversifed Bond 1989

Diversifed Bond 1990

Diversifed Bond 1991

Diversifed Bond 1992

Volatity Constraied 1989

Volatity Constred 1990

Volatity Constraied 1991

Volatiity Constrained 1992

Real Estate Sec. 1989

Real Estate Sec. 1990

Real Estate Sec. 1991

Real Estate Sec. 1992

Limted Volatity 1989

Limted Volatity 1990

Limted Volatity 1991

Limted Volatity 1992

In addition, the ownership of at leat 5 Portolio Managers.has changed durg the last

four years. In those instaces in which the change in ownership constitutes an assignment

of the sub-advisory agreement, the Portolio Manager executes a new sub-advisory

agreement and the Prospectuses are stickered to indicate the change. Ownership changes

may be accompanied with changes in key persoiiel.

." Clarcation of the Role of FRCo EmpIoyees in Establishing Portolio Strategies

The Prospectus disclosure under The Money Managers and the fial sentence of the

"Proposed Solution" paragraph of the no-action letter request are not confctig.

FRCo determnes overal investment strategies and investment objectives, restrctions

and policies for each Portolio. As noted in The Money Managers section of the

Prospectus, each Portolio Manager has complete discretion to purchase and sell portolio

securties within the Portfolio's investment objectives, restrction and policies. FRCo

sets portolio investment strategies and guides and directs managers in three distict ways:

a) FRIMCo recommends to the FRIC Board of Trustees any necessar changes to

the investment objectives, policies and restrctions of each portolio.

I:\WOAODA T AIOASICOAAIOAS 10104.L TA 052893:10:56

Jh.Russell

"c ..... __ ...

;

Ms. Mara H. Platt

May 28, i 993

Page 5

b) FRCo monitors the performce of each P9rtOlio, reviews the contiued

appropriateness of a Portolio Manager's style, and reallocates assets among

Portolio Managers. For example, on lited ocèasions, FRCo may lit a

Portolio Manager's foreign countr exposure whe~ inappropriate for a portolio's

objective. Furer, FRCo may ternate a Portolio Manager because the

manager's style is deterned to be inappropriate for the portolio's objective.

c) FRCo monitors and evaluates Portolio Managers both qualtatively and

quantitatively to ensure the manager is satisfying expectations. Ternation and

replacement of Portolio Managers is demonstrated in 3 above.

As a result of FRCo's involvement in portolio strategies in these thee ways it is the

experience and background of FRCo employees that is most beneficial to investor

education. FRCo's contiual evaluation and monitorig of Portolio Managers results

. in termation of Portolio Managers and hig of replacement mangers when appropriate.

Investors rely upon FRCo to change Portolio Managers if a manager has a change in

personnel which may impact performance. It is this expertse and experience which

investors rely upon when choosing FRC'sunique investrent style, not the experience of .

the individual Portolio Manag'er1s employees.

If you have any questions or desire fuer clarcation regardig ths lettr, pleae do not

hesitate to contact the undersigned at (206) 591-3537 or Thomas A. Early at (206) 596

2406.

cc: Thomas S. Haran, Chief Counsel, Division of Investment Management

Karl J. Ege, Esq.

Thomas A. Early, Esq.. '

I:\WORDDA T AIOAS\CORRIOAS I 01 04.L TR 052893: 10:56

lb. Russell

Ms. Mara H. Platt

June 2, 1993

Page 2

If you have questions or desire fuer clarcation regarding tls letter, please do not

hesitate to cal me at (206) 591-3537 or Thomas A. Early at (206) 596-2406.

~I/L

Deea A. Smith

Staf Counsel

cc: Thomas S. Haran, Chief Counsel, Division of Investment Management

Karl J. Ege, Esq.

Thomas A. Early, Esq.

I:\WOROOA TAIOASICRRIOAS 10135.L TR 06193:17:12

Jh.Russell

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.