Jeffrey A. Dalke

February 6, 2004

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-0609

RE: File No. S7-27-03: Proposed Amendments to Rules Governing Pricing of Mutual Fund Shares

Dear Mr. Katz:

In Release No. IC-26288 (the "Release"), the Commission has proposed amendments to Rule 22c-1 under the Investment Company Act of 1940 (the "1940 Act"). The proposed amendments would provide that an order to purchase or redeem fund shares would receive the current day's price only if the fund, its designated transfer agent, or a registered securities clearing agency received the order by the time that the fund establishes for calculating its net asset value.

"Order" is defined in the Release to mean "a direction to purchase or redeem a specific number of fund shares or an indeterminate number of fund shares of a specific value." Each order would be deemed to be irrevocable as of the next pricing time after the fund, its designated transfer agent, or registered clearing agency receives it. The Release states that this definition "is designed to prevent the cancellation or modification of orders after the pricing time applicable to the order."

The purpose of this letter is to ask the Commission to consider the possible effect of the definition of "order" in the Release on the money market cash "sweep" exemptions that have been granted by the Commission with respect to Section 17(d) of the 1940 Act and Rule 17d-1 thereunder.*

These exemptions permit money market funds registered under the 1940 Act and their investment advisers to jointly enter into repurchase agreements and, in some cases, other types of short-term high quality investments. The joint transactions are intended to assure that the money market funds are fully invested and earn a return on the cash balances that are invested in the funds each day as a result of same-day cash "sweep" programs offered by the advisers (or their affiliates) to their customers.

More specifically, as described in detail in the applications and public notices related to these exemptions, the money market funds seek to maintain a stable $1.00 net asset value per share pursuant to Rule 2a-7 under the 1940 Act. Each business day, excess cash balances in customer accounts maintained at the advisers (or their affiliates) are automatically invested in shares of the money market funds. However, the machine processing required to calculate the amounts of these excess balances is not completed until that same night, and the exact amounts of the excess balances that are invested in the funds through the "sweep" are not known at the time a fund prices its shares that day (the "pricing time"). To address this situation, the money market funds and their advisers enter into joint investments which are allocated between them on a daily basis depending upon the exact amounts that are "swept" into the funds. (That is, a fund owns that amount of a joint investment that corresponds to the amount that is determined to have been automatically swept into the fund that day and the adviser owns the remainder of the joint investment, if any). In this manner, a fund is able to pay a daily dividend on the amounts that are swept into the fund without holding uninvested cash that dilutes the amount of that dividend.

As stated above, the exact amount of the excess balance that is "swept" into a money market fund on any day, and therefore the exact number of money market shares purchased (or redeemed) as a result of the "sweep," is not known at a fund's pricing time. Rather, this is not known until later that night. However, the definition of "order" in the Release refers to "a direction to purchase or redeem a specific number of fund shares or an indeterminate number of fund shares of a specific value," which becomes irrevocable at the pricing time. (Emphasis added.)

The effect of the definition of "order" in the Release on the money market "cash sweep" exemptions referred to in this letter is unclear. We believe that the definition should have no effect, and hope that the Commission will provide clarification on this point. In this regard we note that, to our knowledge, money market funds have not been the subject of the ongoing regulatory inquiries into late trading and market timing and are not the reason that the Commission is proposing to amend Rule 22c-1.

Questions regarding this letter may be directed to the undersigned at (215) 988-2607.

Very truly yours,

/s/Jeffrey A. Dalke

Jeffrey A. Dalke


* See In re BT Investment Portfolios and Bankers Trust Company, Release No. IC-22167 (notice, August 22, 1996) and Release No. IC-22227 (order, September 17, 1996); The Benchmark Funds and The Northern Trust Company, Release No. IC-21808 (notice, March 5, 1996) and Release No. IC-21867 (order, April 2, 1996); The 231 Funds and Continental Bank N.A., Release No. IC-20306 (notice, May 17, 1994) and Release No. IC-20353 (order, June 14, 1994); Mutual Fund Group, Release No. IC-18845 (notice, July 13, 1992) and Release No. IC-18887 (order, August 10, 1992); The Horizon Funds, Release No. IC-16204 (notice, January 6, 1988) and Release No. IC-16251 (order, February 3, 1988); and Pacific Horizon Funds, Inc., Release No. IC-13759 (notice, February 10, 1984) and Release No. IC-13812 (order, March 9, 1984).