diff -r cb612c5f30cb Doc/faq/programming.rst
--- a/Doc/faq/programming.rst	Thu Nov 15 18:22:23 2012 +0000
+++ b/Doc/faq/programming.rst	Tue Jul 16 17:49:17 2013 -0400
@@ -1439,15 +1439,12 @@
 How do I create a .pyc file?
 ----------------------------
 
-When a module is imported for the first time (or when the source is more recent
-than the current compiled file) a ``.pyc`` file containing the compiled code
-should be created in the same directory as the ``.py`` file.
-
-One reason that a ``.pyc`` file may not be created is permissions problems with
-the directory. This can happen, for example, if you develop as one user but run
-as another, such as if you are testing with a web server.  Creation of a .pyc
-file is automatic if you're importing a module and Python has the ability
+A ``.pyc`` file, a byte code cache file, is created when a module is imported
+for the first time or when the module source is updated.  Creation of a .pyc
+file is automatic if you're importing a module (provided Python has the ability
 (permissions, free space, etc...) to write the compiled module back to the
+directory).  The ``.pyc`` file is placed in the ``__pycache__`` directory.  If the
+``__pycache__`` directory does not already exist, it will be created in the package
 directory.
 
 Running Python on a top level script is not considered an import and no ``.pyc``
@@ -1466,7 +1463,7 @@
    >>> import py_compile
    >>> py_compile.compile('abc.py')
 
-This will write the ``.pyc`` to the same location as ``abc.py`` (or you can
+This will write the ``.pyc`` to the ``__pycache__`` directory (or you can
 override that with the optional parameter ``cfile``).
 
 You can also automatically compile all files in a directory or directories using
@@ -1476,6 +1473,10 @@
 
        python -m compileall .
 
+One reason that a ``.pyc`` file may not be created is permissions problems with
+the directory. This can happen, for example, if you develop as one user but run
+as another, such as if you are testing with a web server.
+
 
 How do I find the current module name?
 --------------------------------------