U.S. Bancorp Fund Services, LLCFebruary 5, 2004 VIA ELECTRONIC MAIL Jonathan G. Katz, Secretary
Dear Mr. Katz: RE: S7-03-03 - COMMENTS ON FINAL RULE: COMPLIANCE PROGRAMS OF INVESTMENT COMPANIES AND INVESTMENT ADVISERS U.S. Bancorp Fund Services, LLC (USBFS) is writing to express its support for the compliance rules provided by the Securities and Exchange Commission. USBFS would like to offer a suggestion, however, that would make Rule 38a-1 under the Investment Company Act of 1940 more practical. As an administrator to nearly 400 fund portfolios with more services offered over 900 fund portfolios, USBFS recognizes that it has the unique perspective of being intimately aware of compliance issues concerning many funds. Accordingly, those funds would naturally look to USBFS to fill this new chief compliance officer (CCO) role. Service providers like USBFS could serve just as effectively in this role as an employee of the investment adviser could serve. One of the factors of Rule 38a-1 in its proposed form that would deter USBFS from taking on such a role, is the suggestion that the fund's board is to approve the CCO's compensation. If USBFS were to provide an individual to multiple fund clients to be named as the CCO for their funds, it would be impractical for each board to be able to control or approve the CCO's compensation. Rather, it would be more feasible to have a service provider like USBFS contract with mutual funds to offer the services of a CCO to fund boards. Boards would then be able to approve the fees paid to USBFS for those services. Boards would also have the power to cancel agreements with service providers for the CCO service if they were displeased. Thank you for considering this amendment to proposed Rule 38a-1. Sincerely, U.S. BANCORP FUND SERVICES, LLC |