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,


supplemented by letters of May 28 and 
 June 2 from Deedra A. Smith


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

Investment Management Company (" FRIMCo") requests guidance in
 

responding to Item 5 (c) of Form N-1A.
 

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
 

"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
 

Investment 

Managers and to terminate
 

Portfolio Managers. The Fund currently employs thirty-three
 

Portfolio Managers. .
 

reallocate assets among the Portfolio 


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 sub-


advisers 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 sub-


advisers through a committee structure because no portfolio
 manger would be named. See Instruction 2 to Item 5 (c) . 

1 
- 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) . 

2 
. ,
 Frank Russell Investment 

Management Company 

P.. Bo 1591
 

Tacoma. Washington 98401 

Fax 20.596.2497 RLCD S.E.C. 206.6mo1 

Plse refer to: Tl A. Early Tacoma Sydney
 0I Une: ~240 London Toky

lel DetFax: ~4 MAY .7 1993 New York Toronto 

May 6, 1993 ala 

VIA OVERNIGHT COURIER 

Thomas S. Haran Item 5(c) to Form N-IA, Adopted 

Chef Counsel Pursuant to Release No. 33-6988 

Ofce of the Chief Counsel 

Division of Investment Management 

Secunties and Exchange Commssion 

Mail Stop 10-6
 '4ft -'.' :r CA oj /9l.O

450 Fifth Street, N.W. SECON . 9i ( £, ) . 

Washigton, DC 20549 RULE 

PUC

Re: Frank Russell Investment Company AVAIIL 75/3.0/'3 , I File No. 33-71299 

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

Chef' Counsel Pursuant to Release No. 33-6988 

Office of the Chief Counsel 

Division of Investment Management 

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
 

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

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

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 

selecte FRCo to evaluate, select and monitor the Portolio Managers and new
 

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 

Tacoma Sydney
 Plse referto: Dera A. Smlh London Toky
 0I Une: 206591-37
 New York Toronto 

Lel Oe Fax: 2084 

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
 

frequency of reallocation of a fund's assets 
 among money managers and the 

frequency of the temination of money managers. 

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 1 0303. 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
 Tacoma Sydney
 0I Une: 20591~7
 London Toky
 Lel De Fax: 20~84 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 .
 

Number of Managers . Number of Managers Portolio Year Termn'ated Hied 

Equity I 1989 0 0 

Equity I 1990 3 2 

Equity I 1991 3 4 

Equity I 1992 1 i 

Equity II 1989 1 1 

Equity II 1990 2 2 

Equity II 1991 0 0 

Equity II 1992 0 0 

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
 

'. Portolio 

Equity il
 

Equity il
 

Equity il
 

Equity il
 

Equity Q
 

Equity Q
 

Equity Q
 

Equity 0 

International
 

International
 

International
 

Internátional
 

Fixed Income I
 

Fixed Income I
 

Fixed Income I
 

Fixed Income I
 

. Fixed Income IT
 

Fixed Income IT
 

Fixed Income IT
 

Fixed Income IT
 

Diversifed Equity
 

Diversifed Equity 

Diversifed Equity 

Diversified Eaity 

Special Growt
 

Special Growt
 

Special Growth
 

Special Growth
 

Equity Income 

Equity Income 

Equity Income 

Equity Income 

Quantitative Equity 

Quantitative Equity 

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 

Number of Managers 

Termnated 

0 

1 

0 

0 

1 

0 

0 

0 

0 

0 

0 

0 

3 

0 

0 

1 

0 

0 

0 

2 

0 

3 

3 

I 

1 

2 

0 

0 

0 

1 

0 

0 

1 

0 

0 

0 

Number of Managers 

Hied 

0 

0 

0 

0 

1 

0 

0 

0 

0 

1 

0 

0 

3 

0 

0 

0 

0 

0 

0 

4 

0 

2 

4 

1 

1 

2 

0 

0 

0 

0 

0 

0 

1 

0 

0 

0 

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 Number of Managers 

Portolio Year Termnated Hied 

Intl Securties 1989 o o
 

Intl Securties 1990 o
 1 

Int1 Securties 1991 o o
 

Intl Securities 1992 o o
 

Diversifed Bond 1989 3 3
 

Diversifed Bond 1990 o o
 

Diversifed Bond 1991 o o
 

Diversifed Bond 1992 1 o


Volatity Constraied 1989 o o
 

Volatity Constred 1990 o o
 

Volatity Constraied 1991 o o
 

Volatiity Constrained 1992 2 4
 

Real Estate Sec. 1989 o 1
 

Real Estate Sec. 1990 o o
 

Real Estate Sec. 1991 o . o
 

Real Estate Sec. 1992 o o
 

Limted Volatity 1989 o o
 

Limted Volatity 1990 o o
 

Limted Volatity 1991 o o
 

Limted Volatity 1992 o o
 

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 ..... __ ... l-­ .r ; 

l: 

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