64606 Federal Register / Vol. 62, No. 235 / Monday, December 8, 1997 / Notices

Members Title

Michael Slachta, Jr ................................................................................... Deputy Assistant Inspector General for Auditing.

John H. Mather, M.D ................................................................................ Assistant Inspector General for Healthcare Inspections.

Maureen T. Regan .................................................................................... Counselor to the Inspector General.

ENVIRONMENTAL PROTECTION AGENCY

Nikki Tinsley .............................................................................................. Acting Inspector General.

Kenneth Konz ........................................................................................... Assistant Inspector General for Audit.

John Jones ............................................................................................... Assistant Inspector General for Management.

Allen Fallin ................................................................................................ Assistant Inspector General for Investigations.

Emmet Dashiell ......................................................................................... Deputy Assistant Inspector General for Investigations.

FEDERAL EMERGENCY MANAGEMENT AGENCY

Richard Skinner ........................................................................................ Deputy Inspector General.

Nancy Hendricks ....................................................................................... Assistant Inspector General for Audits.

Paul Lillis ................................................................................................... Assistant Inspector General for Investigations.

GENERAL SERVICES ADMINISTRATION

Joel S. Gallay ........................................................................................... Deputy Inspector General.

Kathleen S. Tighe ..................................................................................... Counsel to the Inspector General.

James E. Henderson ................................................................................ Assistant Inspector General for Investigations.

Gary Seybold ............................................................................................ Deputy Assistant Inspector General for Investigations.

William E. Whyte, Jr ................................................................................. Assistant Inspector General for Auditing.

Eugene L. Waszily .................................................................................... Deputy Assistant Inspector General for Auditing.

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

Richard D. Triplett ..................................................................................... Assistant Inspector General for Investigations.

NUCLEAR REGULATORY COMMISSION

David C. Lee ............................................................................................. Deputy Inspector General.

Thomas J. Barchi ...................................................................................... Assistant Inspector General for Audits.

James E. Childs ........................................................................................ Assistant Inspector General for Investigations.

OFFICE OF PERSONNEL MANAGEMENT

Joseph R. Willever .................................................................................... Deputy Inspector General.

Harvey D. Thorp ....................................................................................... Assistant Inspector General for Audits.

Gary S. Yauger ......................................................................................... Assistant Inspector General for Investigations.

RAILROAD RETIREMENT BOARD

William H. Tebbe ...................................................................................... Assistant Inspector General for Investigations.

SMALL BUSINESS ADMINISTRATION

Karen S. Lee ............................................................................................. Deputy Inspector General.

Phyllis K. Fong .......................................................................................... Assistant Inspector General for Management and Legal Counsel.

Peter L. McClintock .................................................................................. Assistant Inspector General for Auditing.

Thomas C. Cross ...................................................................................... Assistant Inspector General for Inspection and Evaluation.

SOCIAL SECURITY ADMINISTRATION

James G. Huse, Jr .................................................................................... Deputy Inspector General.

Thomas J. Blatchford ................................................................................ Assistant Inspector General for Investigations.

Pamela J. Gardiner ................................................................................... Assistant Inspector General for Audit.

Daniel R. Devlin ........................................................................................ Deputy Assistant Inspector General for Audit.

Dated: December 1, 1997.

John C. Layton,

Inspector General, Department of Energy, and

Vice Chair, PCIE.

[FR Doc. 97–32047 Filed 12–5–97; 8:45 am]

BILLING CODE 6450–01–U

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–22922; 812–10458]

Janus Investment Fund, et al.; Notice

of Application

December 2, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for an

order under the Investment Company

Act of 1940 (the ‘‘Act’’) under (i) section

6(c) of the Act granting an exemption

from sections 18(f) and 21(b) of the Act;

(ii) section 12(d)(1)(J) of the Act granting

an exemption from section 12(d)(1) of

the Act; (iii) sections 6(c) and 17(b) of

the Act granting an exemption from

sections 17(a)(1) and 17(a)(3) of the Act,

and (iv) section 17(d) of the Act and rule
Federal Register / Vol. 62, No. 235 / Monday, December 8, 1997 / Notices 64607

1All existing Funds (defined below) that

currently intend to rely on the order have been

named as applicants, and any other existing or

future Funds that subsequently rely on the order

will comply with the terms and conditions in the

application.

17d–1 under the Act to permit certain

joint arrangements.

Summary of Application: Applicants

request an order that would permit

certain registered investment companies

to participate in a joint lending and

borrowing facility.

Applicants: Janus Investment Fund,

Janus Aspen Series, Janus Capital

Corporation (‘‘Janus Capital’’), any

person controlling, controlled by, or

under common control with Janus

Capital, and any open-end management

investment company registered under

the Act for which Janus Capital or any

person controlling, controlled by, or

under common control with Janus

Capital serves as investment adviser.1

FILING DATES: The application was filed

on December 9, 1996 and amended on

July 9, 1997, and November 7, 1997.

Applicants have agreed to file an

amendment during the notice period,

the substance of which is included in

this notice.

Hearing or Notification of Hearing: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving applicants with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

December 29, 1997, and should be

accompanied by proof of service on

applicants, in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, N.W., Washington, DC 20549.

Applicants, Janus Capital Corporation,

100 Fillmore Street, Denver, CO 80206–

4923.

FOR FURTHER INFORMATION CONTACT:

Lisa McCrea, Attorney Adviser, (202)

942–0562 (Office of Investment

Company Regulation, Division of

Investment Management), or Mercer E.

Bullard, Special Counsel, (202) 942–

0659 (Office of Chief Counsel, Division

of Investment Management).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee at the SEC’s

Public Reference Branch, 450 5th Street,

N.W., Washington, DC, 20549 (tel. 202–

942–8090).

Applicants’ Representations

1. Janus Investment Fund is registered

under the Act as an open-end

management investment company and

organized as a Massachusetts business

trust. Janus Aspen Series is registered

under the Act as an open-end

management investment company and

organized as a Delaware business trust.

Janus Investment Fund and Janus Aspen

Series have, respectively, nineteen and

nine separate portfolios (each a

‘‘Fund’’). Janus Capital is registered as

an investment adviser under the

Investment Advisers Act of 1940.

Kansas City Southern Industries, Inc., a

publicly traded holding company whose

primary subsidiaries are engaged in

asset management, transportation and

information processing, owns

approximately 83% of the outstanding

voting stock of Janus Capital. Each Fund

has entered into an investment advisory

agreement with Janus Capital under

which Janus Capital exercises

discretionary authority to purchase and

sell securities for the Funds. Janus

Capital also provides administrative

services to the Funds.

2. In 1995, each Fund, Janus Capital

and Janus Service Corporation, the

Funds’ transfer agent, obtained an order

under section 17(d) and rule 17d–1

permitting them and certain other

registered investment companies

(collectively, ‘‘Joint Account

Participants’’) to deposit uninvested

cash balances that remain at the end of

a trading day in one or more joint

trading accounts (each a ‘‘Joint

Account’’) to be used to enter into shortterm investments. Janus Capital invests

the cash in the Joint Account as part of

its duties under its existing advisory

contract with each Joint Account

Participant and does not charge any

additional fee for this service.

3. Some Funds may lend money to

banks or other entities by entering into

repurchase agreements or purchasing

other short-term instruments, either

directly or through the Joint Account.

Other Funds may borrow money from

the same or other banks for temporary

purposes to satisfy redemption requests

or to cover unanticipated cash shortfalls

such as a trade ‘‘fail’’ in which cash

payment for a portfolio security sold by

a Fund has been delayed. Currently, the

Funds have credit arrangements with

their custodians (i.e., overdraft

protection) under which the custodians

may, but are not obligated to, lend

money to the Funds to meet the Funds’

temporary cash needs.

4. If the Funds were to borrow money

from their custodians under their

current arrangements or under other

credit arrangements with a bank, the

Funds would pay interest on the

borrowed cash at a rate which would be

significantly higher than the rate that

would be earned by other (nonborrowing) Funds on investments in

repurchase agreements and other shortterm instruments of the same maturity

as the bank loan. Applicants believe this

differential represents the bank’s profit

for serving as a middleman between a

borrower and lender. Other bank loan

arrangements, such as committed lines

of credit, would require the Funds to

pay substantial commitment fees in

addition to the interest rate to be paid

by the borrowing Fund.

5. Applicants request an order that

would permit the Funds to enter into

lending agreements (‘‘Interfund Lending

Agreements’’) under which the Funds

would lend money directly to and

borrow money directly from each other

through a credit facility for temporary

purposes (‘‘Interfund Loan’’).

Applicants believe that the proposed

credit facility would substantially

reduce the Funds’ potential borrowing

costs and enhance their ability to earn

higher rates of interest on short-term

lendings. Although the proposed credit

facility would substantially reduce the

Funds’ need to borrow from banks, the

Funds might also continue to maintain

committed lines of credit or other

borrowing arrangements with banks.

The Funds also would continue to

maintain overdraft protection currently

provided by their custodians.

6. Applicants anticipate that the

credit facility would provide a

borrowing Fund with significant savings

when the cash position of the Fund is

insufficient to meet temporary cash

requirements. This situation could arise

when redemptions exceed anticipated

volumes and the Funds have

insufficient cash on hand to satisfy such

redemptions. When the Funds liquidate

portfolio securities to meet redemption

requests, which normally are effected

immediately, they often do not receive

payment in settlement for up to three

days (or longer for certain foreign

transactions). The credit facility would

provide a source of immediate, shortterm liquidity pending settlement of the

sale of portfolio securities.

7. Applicants also propose using the

credit facility when a sale of securities

fails due to circumstances such as a

delay in the delivery of cash to the

Fund’s custodian or improper delivery

instructions by the broker effecting the

transaction. Sales fails may present a

cash shortfall if the Fund has
64608 Federal Register / Vol. 62, No. 235 / Monday, December 8, 1997 / Notices

undertaken to purchase a security with

the proceeds from securities sold. When

the Fund experiences a cash shortfall

due to a sales fail, the custodian

typically extends temporary credit to

cover the shortfall and the Fund incurs

overdraft charges. Alternatively, the

Fund could fail on its intended

purchase due to lack of funds from the

previous sale, resulting in additional

cost to the Fund, or sell a security on

a same day settlement basis, earning a

lower return on the investment. Use of

the credit facility under these

circumstances would enable the Fund to

have access to immediate short-term

liquidity without incurring custodian

overdraft or other charges.

8. While borrowing arrangements

with banks will continue to be available

to cover unanticipated redemptions and

sales fails, under the proposed credit

facility a borrowing Fund would pay

lower interest rates than those offered

by banks or short-terms loans. In

addition, Funds making short-term cash

loans directly to other Funds would

earn interest at a rather higher than they

otherwise could obtain from investing

their cash through the Joint Account in

repurchase agreements. Thus,

applicants believe that the proposed

credit facility would benefit both

borrowing and lending Funds.

9. The interest rate charged to the

Funds on any Interfund Loan would be

the average of the Repo Rate and the

Bank Loan Rate, as defined below. The

Repo Rate for any day would be the

highest rate available to the Joint

Account Participants from investments

in overnight repurchase agreements.

The Bank Loan Rate for any day would

be calculated by Janus Capital each day

an Interfund Loan is made according to

a formula established by the trustees of

the Funds (the ‘‘Trustees’’) designed to

approximate the lowest interest rate at

which bank short-term loans would be

available to the Funds. The formula

would be based upon a publicly

available rate (e.g., Federal Funds plus

25 basis points) and would vary with

this rate so as to reflect changing bank

loan rates. Each Fund’s Trustees

periodically would review the

continuing appropriateness of using the

publicly available rate, as well as the

relationship between the benchmark

rate and current bank loan rates that

would be available to the Funds. The

initial formula and any subsequent

modifications to the formula would be

subject to the approval of each Fund’s

Trustees.

10. The credit facility would be

administered by Janus Capital’s money

market investment professionals

(including the portfolio manager for the

money market funds (‘‘Money Market

Funds’’)) and fund accounting

department (collectively, the ‘‘Cash

Management Team’’). Under the

proposed credit facility, the portfolio

managers for each participating Fund

may provide standing instructions to

participate daily as a borrower or

lender. As in the case of the Joint

Account, Janus Capital on each business

day would collect data on the

uninvested cash and borrowing

requirements of all participating Funds

from the Funds’ custodians. Once it had

determined the aggregate amount of

cash available for loans and borrowing

demand the Cash Management Team

would allocate loans among borrowing

Funds without any further

communication from portfolio

managers. Applicants expect far more

available uninvested cash each day than

borrowing demand. All allocations will

require approval of at least one member

of the Cash Management Team who is

not the Money Market Funds’ portfolio

manager. After Janus Capital has

allocated cash for Interfund Loans, it

will invest any remaining cash in

accordance with the standing

instructions from portfolio managers or

return remaining amounts for

investment directly by the portfolio

manager of the Money Market Funds.

The Money Market Funds typically

would not participate as borrowers

because they rarely need to borrow cash

to meet redemptions.

11. The Cash Management Team

would allocate borrowing demand and

cash available for lending among the

Funds on what the Team believed to be

an equitable basis, subject to certain

administrative procedures applicable to

all Funds, such as the time of filing

requests to participate, minimum loan

lot sizes, and the need to minimize the

number of transactions and associated

administrative costs. To reduce

transaction costs, each loan normally

would be allocated in a manner

intended to minimize the number of

participants necessary to complete the

loan transaction.

12. Janus Capital would: (i) Monitor

the interest rates charged and the other

terms and conditions of the loans, (ii)

limit the borrowings and loans entered

into by each Fund to ensure that they

comply with the Fund’s investment

policies and limitations, (iii) ensure

equitable treatment of each Fund, and

(iv) make quarterly reports to the

Trustees concerning any transactions by

the Funds under the credit facility and

the interest rates charged. The method

of allocation and related administrative

procedures would be approved by each

Fund’s Trustees, including a majority of

Trustees who are not ‘‘interested

persons’’ of the Funds, as defined in

section 2(a)(19) of the Act

(‘‘Independent Trustees’’), to ensure that

both borrowing and lending Funds

participate on an equitable basis.

13. Janus Capital would administer

the credit facility as part of its duties

under its existing management or

advisory and service contract with each

Fund and would receive no additional

fee as compensation for its services.

Janus Capital or companies affiliated

with it may collect standard pricing,

recordkeeping, bookkeeping and

accounting fees applicable to repurchase

and lending transactions generally,

including transactions effected through

the credit facility. Fees would be no

higher than those applicable for

comparable bank loan transactions.

14. Each Fund’s participation in the

proposed credit facility will be

consistent with its organizational

documents and its investment policies

and limitations. The prospectus of each

Fund discloses that the Fund may

borrow money for temporary purposes

in amounts up to 25% of its total assets.

Each non-Money Market Fund may

mortgage or pledge securities as security

for borrowings in amounts up to 15% of

its net assets. Each of the Money Market

Funds may mortgage or pledge

securities only to secure permitted

borrowings. As a fundamental policy,

each Fund may lend securities or other

assets if, as a result, no more than 25%

of its total assets would be lent to other

parties.

15. The prospectus of each Fund

currently discloses that Funds advised

by Janus Capital intend to seek

permission from the SEC to borrow

money from or lend money to each

other. If applicants’ requested order is

granted, the Statement of Additional

Information (‘‘SAI’’) of each Fund will

disclose all material facts about

intended participation in the credit

facility. All borrowings and loans by the

Funds will be consistent with the

organizational documents and

investment policies of the respective

Funds.

16. In connection with the credit

facility, applicants request an order

under (i) section 6(c) of the Act granting

relief from sections 18(f) and 21(b) of

the Act; (ii) section 12(d)(1)(J) of the Act

granting relief from section 12(d)(1) of

the Act; (iii) sections 6(c) and 17(b) of

the Act granting relief from sections

17(a)(1) and 17(a)(3) of the Act; and (iv)

section 17(d) of the Act and rule 17d–

1 under the Act to permit certain joint

arrangements.
Federal Register / Vol. 62, No. 235 / Monday, December 8, 1997 / Notices 64609

Applicants’ Legal Analysis

1. Section 17(a)(3) generally prohibits

any affiliated person, or affiliated

person of an affiliated person, from

borrowing money or other property from

a registered investment company.

Section 21(b) generally prohibits any

registered management investment

company from lending money or other

property to any person if that person

controls or is under common control

with the company. Section 2(a)(3)(C) of

the Act defines an ‘‘affiliated person’’ of

another person, in part, to be any person

directly or indirectly controlling,

controlled by, or under common control

with, the other person. Applicants state

that the Funds may be under common

control by virtue of having Janus Capital

as their common investment adviser.

2. Section 6(c) provides that an

exemptive order may be granted where

an exemption is necessary or

appropriate in the public interest and

consistent with the protection of

investors and the purposes fairly

intended by the policy and provisions of

the Act. Section 17(b) authorizes the

SEC to exempt a proposed transaction

from section 17(a) provided that the

terms of the transaction, including the

consideration to be paid or received, are

fair and reasonable and do not involve

overreaching on the part of any person

concerned, and the transaction is

consistent with the policy of the

investment company as recited in its

registration statement and with the

general purposes of the Act. Applicants

believe that the proposed arrangements

satisfy these standards for the reasons

discussed below.

3. Applicants submit that sections

17(a)(3) and 21(b) of the Act were

intended to prevent a party with

potential adverse interests to and

influence over the investment decisions

of a registered investment company

from causing or inducing the investment

company to engage in lending

transactions that unfairly inure to the

benefit of such party and that are

detrimental to the best interests of the

investment company and its

shareholders. Applicants assert that the

proposed credit facility transactions do

not raise these concerns because (i)

Janus Capital would administer the

program as a disinterested fiduciary; (ii)

all Interfund Loans would consist only

of uninvested cash reserves that the

Fund otherwise would invest in shortterm repurchase agreements or other

short-term instruments either directly or

through the Joint Account; (iii) the

Interfund Loans would not involve a

greater risk than such other investments;

(iv) the lending Fund would receive

interest at a rate higher than it could

obtain through such other investments;

and (v) the borrowing Fund would pay

interest at a rate lower than otherwise

available to it under its bank loan

agreements and avoid the up-front

commitment fees associated with

committed lines of credit. Moreover,

applicants believe that the other

conditions in the application would

effectively preclude the possibility of

any Fund obtaining an undue advantage

over any other Fund.

4. Section 17(a)(1) generally prohibits

an affiliated person of a registered

investment company, or an affiliated

person of an affiliated person, from

selling any securities or other property

to the company. Section 12(d)(1) of the

Act generally makes it unlawful for a

registered investment company to

purchase or otherwise acquire any

security issued by any other investment

company except in accordance with the

limitations set forth in that section.

Applicants believe that the obligation of

a borrowing Fund to repay an Interfund

Loan may constitute a security under

sections 17(a)(1) and 12(d)(1). Section

12(d)(1)(J) provides that the SEC may

exempt persons or transactions from any

provision of section 12(d)(1) if and to

the extent such exception is consistent

with the public interest and the

protection of investors. Applicants

contend that the standards under

sections 6(c), 17(b) and 12(d)(1) are

satisfied for all the reasons set forth

above in support of their request for

relief from sections 17(a)(3) and 21(b)

and for the reasons discussed below.

5. Applicants state that section 12(d)

was intended to prevent the pyramiding

of investment companies in order to

avoid duplicative costs and fees

attendant upon multiple layers of

investment companies. Applicants

submit that the proposed credit facility

does not involve these abuses.

Applicants note that there would be no

duplicative costs or fees to the Funds or

shareholders, and that Janus Capital

would receive no additional

compensation for its services in

administering the credit facility.

Applicants also note that the purpose of

the proposed credit facility is to provide

economic benefits for all the

participating Funds.

6. Section 18(f)(1) prohibits open-end

investment companies from issuing any

senior security except that a company is

permitted to borrow from any bank;

provided, that immediately after any

such borrowing there is an asset

coverage of at least 300 per centum for

all borrowings of the company. Under

section 18(g) of the Act, the term ‘‘senior

security’’ includes any bond, debenture,

note, or similar obligation or instrument

constituting a security and evidencing

indebtedness. Applicants request

exemptive relief from section 18(f)(1) to

the limited extent necessary to

implement the credit facility (because

the lending Funds are not banks).

7. Applicants believe that granting

relief under section 6(c) is appropriate

because the Funds would remain

subject to the requirement of section

18(f)(1) that all borrowings of the Fund,

including combined credit facility and

bank borrowings, have at least 300%

asset coverage. Based on the conditions

and safeguards described in the

application, applicants also submit that

to allow the Funds to borrow from other

Funds pursuant to the proposed credit

facility is consistent with the purposes

and policies of section 18(f)(1).

8. Section 17(d) and rule 17d–1

generally prohibit any affiliated person

of a registered investment company, or

affiliated person of an affiliated person,

when acting as principal, from effecting

any joint transaction in which the

company participates unless the

transaction is approved by the SEC.

Rule 17d–1 provides that in passing

upon applications for exemptive relief

from section 17(d), the SEC will

consider whether the participation of a

registered investment company in a

joint enterprise on the basis proposed is

consistent with the provisions, policies,

and purposes of the Act and the extent

to which the company’s participation is

on a basis different from or less

advantageous than that of other

participants.

9. Applicants submit that the purpose

of section 17(d) is to avoid overreaching

by and unfair advantages to investment

company insiders. Applicants believe

that the credit facility is consistent with

the provisions, policies and purposes of

the Act in that it offers both reduced

borrowing costs and enhanced returns

on loaned funds to all participating

Funds and their shareholders.

Applicants note that each Fund would

have an equal opportunity to borrow

and lend on equal terms consistent with

its investment policies and fundamental

investment limitations. Applicants

therefore believe that each Fund’s

participation in the credit facility will

be on terms which are no different from

or less advantageous than that of other

participating Funds.

Applicants’ Conditions

Applicants agree that the order

granting the requested relief will be

subject to the following conditions:

1. The interest rates to be charged to

the Funds under the credit facility will
64610 Federal Register / Vol. 62, No. 235 / Monday, December 8, 1997 / Notices

be the average of the Repo Rate and the

Bank Loan Rate.

2. On each business day, Janus Capital

will compare the Bank Loan Rate with

the Repo Rate and will make cash

available for Interfund Loans only if the

Interfund Loan Rate is more favorable to

the lending Fund than the Repo Rate

and more favorable to the borrowing

Fund than the quoted Bank Loan Rate.

3. If a Fund has outstanding

borrowings, any Interfund Loans to the

Fund (a) will be at an interest rate equal

to or lower than any outstanding bank

loan, (b) will be secured at least on an

equal priority basis with at least an

equivalent percentage of collateral to

loan value as any outstanding bank loan

that requires collateral, (c) will have a

maturity no longer than any outstanding

bank loan (and in any event not over

seven days), and (d) will provide that,

if an event of default occurs under any

agreement evidencing an outstanding

bank loan to the Fund, that event of

default will automatically (without need

for action or notice by the lending Fund)

constitute an immediate event of default

under the Interfund Lending Agreement

entitling the lending Fund to call the

Interfund Loan (and exercise all rights

with respect to any collateral) and that

such call will be made if the lending

bank exercises its right to call its loan

under its agreement with the borrowing

Fund.

4. A Fund may make an unsecured

borrowing through the credit facility if

its outstanding borrowings from all

sources immediately after the interfund

borrowing total less than 10% of its total

assets, provided that if the Fund has a

secured loan outstanding from any other

lender, including but not limited to

another Fund, the Fund’s interfund

borrowing will be secured on at least an

equal priority basis with at least an

equivalent percentage of collateral to

loan value as any outstanding loan that

requires collateral. If a Fund’s total

outstanding borrowings immediately

after interfund borrowing would be

greater than 10% of its total assets, the

Fund may borrow through the credit

facility on a secured basis only. A Fund

may not borrow through the credit

facility or from any other source if its

total outstanding borrowings

immediately after the interfund

borrowing would be more than 25% of

its total assets.

5. Before any Fund that has

outstanding interfund borrowings may,

through additional borrowings, cause its

outstanding borrowings from all sources

to exceed 10% of its total assets, the

Fund must first secure each outstanding

Interfund Loan by the pledge of

segregated collateral with a market

value at least equal to 102% of the

outstanding principal value of the loan.

If the total outstanding borrowings of a

Fund with outstanding Interfund Loans

exceeds 10% of its total assets for any

other reason (such as decline in net

asset value or because of shareholder

redemptions), the Fund will within one

business day thereafter: (a) repay all its

outstanding Interfund Loans, (b) reduce

its outstanding indebtedness to 10% or

less of its total assets, or (c) secure each

outstanding Interfund Loan by the

pledge of segregated collateral with a

market value at least equal to 102% of

the outstanding principal value of the

loan until the Fund’s total outstanding

borrowings cease to exceed 10% of its

total assets, at which time the collateral

called for by this condition (5) shall no

longer be required. Until each Interfund

Loan that is outstanding at any time that

a Fund’s total outstanding borrowings

exceeds 10% is repaid or the Fund’s

total outstanding borrowings cease to

exceed 10% of its total assets, the Fund

will mark the value of the collateral to

market each day and will pledge such

additional collateral as is necessary to

maintain the market value of the

collateral that secures each outstanding

Interfund Loan at least equal to 102% of

the outstanding principal value of the

loan.

6. No equity, taxable bond or Money

Market Fund may lend to another Fund

through the credit facility if the loan

would cause its aggregate outstanding

loans through the credit facility to

exceed 5%, 7.5% or 10%, respectively,

of its net assets at the time of the loan.

7. A Fund’s Interfund Loans to any

one Fund shall not exceed 5% of the

lending Fund’s net assets.

8. The duration of Interfund Loans

will be limited to the time required to

receive payment for securities sold to

cover either shareholder redemptions or

sales fails, but in no event more than

seven days. Loans effected within seven

days of each other will be treated as

separate loan transactions for purposes

of this condition.

9. A Fund’s borrowings through the

credit facility, as measured on the day

the most recent loan was made, will not

exceed the greater of 125% of the fund’s

total net cash redemptions and 102% of

sales fails for the preceding seven

calendar days.

10. Each Interfund Loan may be called

on one business day’s notice by the

lending Fund and may be repaid on any

day by the borrowing Fund.

11. A Fund’s participation in the

credit facility must be consistent with

its investment policies and limitations

and organizational documents.

12. Janus Capital’s Cash Management

Team will calculate total Fund

borrowing and lending demand through

the credit facility, and allocate loans on

an equitable basis among the Funds

without intervention of the portfolio

manager of the Fund (except the

portfolio manager of the Money Market

Funds acting in her or his capacity as a

member of the Cash Management

Team). All allocations will require

approval of at least one member of the

Cash Management Team who is not the

Money Market Funds’ portfolio

manager. The Cash Management Team

will not solicit cash for the credit

facility from any Fund or prospectively

publish or disseminate loan demand

data to portfolio managers (except to the

extent that the portfolio manager of the

Money Market Funds has access to loan

demand data). Janus Capital will invest

any amounts remaining after satisfaction

of borrowing demand in accordance

with the standing instructions from

portfolio managers or return remaining

amounts for investment directly by the

portfolio manager of the Money Market

Funds.

13. Janus Capital will monitor the

interest rates charged and the other

terms and conditions of the Interfund

Loans and will make a quarterly report

to the Boards of Trustees concerning the

participation of the Funds in the credit

facility and the terms and other

conditions of any extensions of credit

thereunder.

14. The Trustees of each Fund,

including a majority of the Independent

Trustees: (a) will review no less

frequently than quarterly the Fund’s

participation in the credit facility during

the preceding quarter for compliance

with the conditions of any order

permitting such transactions; (b) will

establish the Bank Loan Rate formula

used to determine the interest rate on

Interfund Loans and review no less

frequently than annually the continuing

appropriateness of such Bank Loan Rate

formula; and (c) will review no less

frequently than annually the continuing

appropriateness of the Fund’s

participation in the credit facility.

15. In the event an Interfund Loan is

not paid according to its terms and such

default is not cured within two business

days from its maturity or from the time

the lending Fund makes a demand for

payment under the provisions of the

Interfund Lending Agreement, Janus

Capital will promptly refer such loan for

arbitration to an independent arbitrator

selected by the Trustees of any Fund

involved in the loan who will serve as

arbitrator of disputes concerning
Federal Register / Vol. 62, No. 235 / Monday, December 8, 1997 / Notices 64611

2 If the dispute involves Funds with separate

Boards of Trustees, the Trustees of each Fund will

select an independent arbitrator that is satisfactory

to each party.

1OPRA is a National Market System Plan

approved by the Commission pursuant to Section

11A of the Exchange Act and Rule 11Aa3–2

thereunder. Securities Exchange Act Release No.

17638 (Mar. 18, 1981).

The Plan provides for the collection and

dissemination of last sale and quotation information

on options that are traded on the member

exchanges. The five exchanges which agreed to the

OPRA Plan are the American Stock Exchange

(‘‘AMEX’’); the Chicago Board Options Exchange

(‘‘CBOE’’); the New York Stock Exchange (‘‘NYSE’’);

the Pacific Exchange (‘‘PCX’’); and the Philadelphia

Stock Exchange (‘‘PHLX’’).

Interfund Loans.2 The arbitrator will

resolve any problem promptly, and the

arbitrator’s decision will be binding on

both Funds. The arbitrator will submit,

at least annually, a written report to the

Trustees setting forth a description of

the nature of any dispute and the

actions taken by the Funds to resolve

the dispute.

16. Each Fund will maintain and

preserve for a period of not less than six

years from the end of the fiscal year in

which any transaction under the credit

facility occurred, the first two years in

an easily accessible place, written

records of all such transactions setting

forth a description of the terms of the

transaction, including the amount, the

maturity, and the rate of interest on the

loan, the rate of interest available at the

time on short-term repurchase

agreements and commercial bank

borrowings, and such other information

presented to the Fund’s Trustees in

connection with the review required by

conditions 13 and 14.

17. Janus Capital will prepare and

submit to the Trustees for review an

initial report describing the operations

of the credit facility and the procedures

to be implemented to ensure that all

funds are treated fairly. After the credit

facility commences operations, Janus

Capital will report on the operations of

the credit facility at the Trustees’

quarterly meetings.

In addition, for two years following

the commencement of the credit facility,

the independent public accountant for

each Fund that is a registered

investment company shall prepare an

annual report that evaluates Janus

Capital’s assertion that it has established

procedures reasonably designed to

achieve compliance with the conditions

of the order. The report shall be

prepared in accordance with the

Statements on Standards for Attestation

Engagements No. 3 and it shall be filed

pursuant to Item 77Q3 of Form N–SAR.

In particular, the report shall address

procedures designed to achieve the

following objectives: (a) that the

Interfund Rate will be higher than the

Repo Rate but lower than the Bank Loan

Rate; (b) compliance with the collateral

requirements as set forth in the

application; (c) compliance with the

percentage limitations on interfund

borrowing and lending; (d) allocation of

interfund borrowing and lending

demand in an equitable manner and in

accordance with procedures established

by the Trustees; and (e) that the interest

rate on any Interfund Loan does not

exceed the interest rate on any third

party borrowings of a borrowing Fund at

the time of the Interfund Loan.

After the final report is filed, the

Fund’s external auditors, in connection

with their Fund audit examinations,

will continue to review the operation of

the credit facility for compliance with

the conditions of the application and

their review will form the basis, in part,

of the auditor’s report on internal

accounting controls in Form N–SAR.

18. No Fund will participate in the

credit facility unless it has fully

disclosed in its SAI all material facts

about its intended participation.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–32029 Filed 12–5–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

Sunshine Act Meeting

Notice is hereby given, pursuant to

the provisions of the Government in the

Sunshine Act, Pub. L. 94–409, that the

Securities and Exchange Commission

will hold the following meeting during

the week of December 8, 1997.

A closed meeting will be held on

Thursday, December 11, 1997, at 2:30

p.m.

Commissioners, Counsel to the

Commissioners, the Secretary to the

Commission, and recording secretaries

will attend the closed meeting. Certain

staff members who have an interest in

the matters may also be present.

The General Counsel of the

Commission, or his designee, has

certified that, in his opinion, one or

more of the exemptions set forth in 5

U.S.C. 552b(c) (4), (8), (9)(A) and (10)

and 17 CFR 200.402(a) (4), (8), (9)(i) and

(10), permit consideration of the

scheduled matters at the closed meeting.

Commissioner Unger, as duty officer,

voted to consider the items listed for the

closed meeting in a closed session.

The subject matter of the closed

meeting scheduled for Thursday,

December 11, 1997, at 2:30 p.m., will be:

Institution and settlement of

injunctive actions.

Institution and settlement of

administrative proceedings of an

enforcement nature.

At times, changes in Commission

priorities require alterations in the

scheduling of meeting items. For further

information and to ascertain what, if

any, matters have been added, deleted

or postponed, please contact:

The Office of the Secretary at (202)

942–7070.

Dated: December 4, 1997.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–32168 Filed 12–4–97; 11:06 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39380; File No. SR–OPRA–

97–5]

Options Price Reporting Authority;

Notice of Filing and Immediate

Effectiveness of Amendment to OPRA

Plan Revising the Allocation of

Revenues Between OPRA’s Basic

Accounting Center and OPRA’s Index

Option Accounting Center

December 1, 1997.

Pursuant to Rule 11Aa3–2 under the

Securities Exchange Act of 1934

(‘‘Exchange Act’’), notice is hereby given

that on November 5, 1997, the Options

Price Reporting Authority (‘‘OPRA’’),1

submitted to the Securities and

Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) an amendment to the

Plan for Reporting of Consolidated

Options Last Sale Reports and

Quotation Information (‘‘Plan’’). The

amendment revises the allocation of

revenues between OPRA’s basic

accounting center and the index option

accounting center. OPRA has designated

this proposal as concerned solely with

administration of the Plan, permitting

the proposal to become effective upon

filing pursuant to Rule 11Aa3–2(c)(3)(i)

under the Exchange Act. The

Commission is publishing this notice to

solicit comments from interested

persons on the amendment.

I. Description and Purpose of the

Amendment

The purpose of the amendment is to

revise revenue allocations under the

Plan between OPRA’s basic accounting

center and the index option accounting

center. Currently, the Plan provides for