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News August 2, 2004 Issue

180-Day Fund of Funds Custody Relief Effective Immediately

The SEC effectively has provided no-action relief to advisers of funds of funds that want to wait 180 days before distributing audited financials to investors, instead of the 120 days specified in the custody rule. Going farther than the rule change announced at the SECís July 14 open meeting, the SEC added an embedded no-action position in the hedge fund proposing release (see footnote 159). The change is designed to help funds of hedge funds deal with the logistical issue of compiling the audited financials of their underlying funds.

Donít tell the Financial Planning Association.

On the same day that the SEC released the proposal containing the no-action relief, the FPA sued the SEC for violating the Administrative Procedures Act by similarly embedding a no-action position in the agencyís 1999 fee-based brokerage proposal.