[Federal Register Volume 63, Number 110 (Tuesday, June 9, 1998)]
[Notices]
[Pages 31537-31539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15277]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-23240; 812-11102]


The Munder Funds, Inc., et al.; Notice of Application

June 3, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application under section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from section 15(a) 
of the Act.

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SUMMARY OF APPLICATION: Applicants seek an order to permit the 
implementation, without prior shareholder approval, of new investment 
advisory and sub-advisory agreements (``New Management Agreements'') 
for a period of up to 150 days following the date on which a transfer 
of a controlling interest in Munder Capital Management (``MCM'') occurs 
(but in no event later than November 30, 1998) (the ``Interim 
Period''). The order also would permit MCM, World Asset Management 
(``World''), and Framlington Overseas Investment Management Limited 
(``Framlington Management''), following shareholder approval, to 
receive all fees earned under the New Management Agreements during the 
Interim Period.

APPLICANTS: The Munder Funds, Inc. (``Munder''), The Munder Funds Trust 
(``Munder Trust''), The Munder Framlington Funds Trust 
(``Framlington''), St. Clair Funds, Inc. (``St. Clair''), Select Asset 
Fund, Series 1, Inc. (``Select 1'') Select Asset Fund, Series 2, Inc. 
(``Select 2''), Great Lakes Fund, Inc. (``Great Lakes''), Huron 
Investment Fund, Inc. (``Huron''), Central Asset Fund, Inc. (``Central 
Asset''), Central Investment Fund, Inc. (``Central Investment''), 
Lernoult Investment Fund, Inc. (``Lernoult''), INVESCO Specialty Funds, 
Inc. (``INVESCO Specialty''), SEI Index Funds (``SEI Index'') 
(collectively, the ``Investment Companies''), MCM, World, Framlington 
Management, and INVESCO Funds Group, Inc. (``INVESCO'').

FILING DATES: The application was filed on April 8, 1998. 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 June 29, 1998, 
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 may request 
notification of a hearing by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C. 
20549. Applicants: Munder, Munder Trust, Framlington, St. Clair, and 
MCM, 480 Pierce Street, Birmingham, Michigan 48009; World, 225 E. Brown 
Street, Suite 250, Birmingham, Michigan, 48009; Select 1, Select 2, 
Great Lakes, Huron, Central Asset, Central Investment, Lernoult, 411 W. 
Fafayette, Detroit, Michigan, 48226; INVESCO Specialty and INVESCO, 
7800 E. Union Avenue, Denver, Colorado 80237; SEI, c/o CT Corporation, 
2 Oliver Street, Boston, Massachusetts 02109; and Framlington 
Management, 155 Bishopsgate, London England EC2M 3XJ.

FOR FURTHER INFORMATION CONTACT: J. Amanda Machen, Senior Counsel, at 
(202) 942-7120, or Christine Y. Greenlees, Branch Chief, at (202) 942-
0564 (Division of Investment Management, Office of Investment Company 
Regulation).

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 Fifth Street, NW., Washington, DC 
20549 (tel. 202-942-8090).

Applicants' Representations

    1. The Investment Companies, each of which is organized either as a 
Maryland corporation or a Massachusetts business trust, are registered 
under the Act as open-end management investment companies. Munder and 
the Munder Trust each offer fifteen investment portfolios. Framlington 
offers four investment portfolios, and St. Clair offers eleven. INVESCO 
Specialty is organized as a series fund.
    2. MCM, World, and Framlington Management are investment advisers 
registered under the Investment Advisers Act of 1940. MCM serves as 
investment adviser to each portfolio of Munder, the Munder Trust, 
Framlington, and St. Clair. World serves as investment adviser to 
Select 1, Select 2, Great Lakes, Huron, Central Asset, Central 
Investment, Lernoult, and SEI Index, and as sub-adviser to a series of 
INVESCO Specialty. Framlington Management serves as sub-adviser to the 
portfolios of Framlington. INVESCO, a subsidiary of AMVESCAP, PLC, an 
international investment management company, serves as the investment 
adviser, administrator, and transfer agent for INVESCO Specialty.
    3. MCM is a general partnership, whose interests are owned by Old 
MCM, Inc. (44%) (``Old MCM''), World Holdings, Inc. (44%), and Munder 
Group L.L.C. (12%) (the ``Munder Group''). Mr. Lee P. Munder (``Mr. 
Munder''), Chairman of MCM, indirectly owns 44% of MCM through his 
ownership interests in Old MCM and the Munder Group. Comerica 
Incorporated (``Comerica''), a bank holding company, indirectly owns 
44% of MCM through its wholly-owned subsidiary, World Holdings, Inc. 
World is wholly-owned by MCM.
    4. Comerica and Mr. Munder have reached an agreement under which 
Comerica will purchase 85% of Old MCM's interest in MCM and 85% of Mr. 
Munder's interest in the Munder Group (the ``Transaction''), after 
which Comerica will own or control 88% of the partnership interests in 
MCM.
    5. Applicants state that consummation of the Transaction will 
result in a transfer of a controlling block of MCM's outstanding voting 
securities. Applicants believe, therefore, that consummation of the 
Transaction may result in an assignment and, thus, the termination of 
the current management agreements between MCM or World and each of the 
Investment Companies, the current sub-advisory agreements between MCM, 
Framlington and Framlington Management, and the current sub-advisory 
agreement between World and INVESCO (collectively, the ``Current 
Management Agreements''). Applicants request an exemption to permit the 
implementation, without prior shareholder approval, of the New 
Management Agreements. The requested exemption would cover an Interim 
Period of not more than 150 days,

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beginning on the date on which the Transaction is consummated and 
continuing with respect to each Investment Company through the date on 
which each New Advisory Agreement is approved or disapproved by the 
Investment Company's shareholders, but in no event after November 30, 
1998. Applicants state that the terms and conditions of the 
corresponding Current and New Management Agreements will be the same in 
all material respects. While the scheduled closing of the Transaction 
is expected on or before June 30, 1998, applicants state that the 
closing will not occur until receipt of the requested order.
    6. The boards of directors/trustees of the Investment Companies 
(the ``Boards'') met, in accordance with section 15(c) of the Act, to 
consider the implications of the Transaction.\1\ After a full 
evaluation, the Boards, including a majority of the non-interested 
directors/trustees, voted to approve the New Management Agreements as 
consistent with the best interests of each Investment Company and its 
shareholders, and to submit the New Management Agreements to 
shareholders.
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    \1\ The Boards of Munder, Munder Trust, Framlington, and St. 
Clair met on April 7, 1998. The Boards of Select 1, Select 2, Great 
Lakes, Huron, Central Asset, Central Investment, and Lernoult met on 
May 7, 1998. The INVESCO Specialty Board met on May 13, 1998, and 
the Board of SEI Index Funds met on May 18, 1998.
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    7. Applicants propose to enter into an escrow arrangement with an 
unaffiliated financial institution (``Escrow Agent''), and fees earned 
under the New Management Agreements during the Interim Period will be 
paid into an account maintained by the Escrow Agent. The Escrow Agent 
will release the amounts held in the escrow account (including any 
interest earned): (a) to MCM, World, or Framlington only upon approval 
by the shareholders of the relevant Investment Company; or (b) to the 
relevant Investment Company in the absence of approval by its 
shareholders. Before any amounts are released from the escrow account, 
the relevant Board will be notified.

Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in pertinent part, that it 
shall be unlawful for any person to serve or act as an investment 
adviser of a registered investment company, except pursuant to a 
written contract that has been approved by the vote of a majority of 
the outstanding voting securities of the registered investment company. 
Section 15(a) of the Act further requires that the written contract 
provide for automatic termination in the event of its ``assignment.'' 
Section 2(a)(4) of the Act defines ``assignment'' to include any direct 
or indirect transfer of a contract by the assignor, or of a controlling 
block of the assignor's outstanding voting securities by a security 
holder of the assignor.
    2. Applicants state that the consummation of the Transaction will 
result in a transfer of a controlling block of MCM's outstanding voting 
securities. Applicants believe, therefore, that the consummation of the 
Transaction may result in an ``assignment'' of the Current Management 
Agreements and that the Current Management Agreements may terminate by 
their terms and in accordance with the Act as a result of the 
Transaction.
    3. Rule 15a-4 under the Act provides, in pertinent part, that if an 
investment advisory contract with an investment company is terminated 
by an assignment in which the adviser does not directly or indirectly 
receive a benefit, the adviser may continue to serve for 120 days under 
a written contract that has not been approved by the company's 
shareholders, provided that: (a) the new contract is approved by the 
company's board of directors (including a majority of the non-
interested directors); (b) the compensation to be paid under the new 
contract does not exceed the compensation that would have been paid 
under the contract most recently approved by the company's 
shareholders; and (c) neither the adviser nor any controlling person of 
the adviser ``directly or indirectly receives money or other benefit'' 
in connection with the assignment. Applicants state that they cannot 
rely on rule 15a-4 because Mr. Munder and Comerica may be deemed to 
receive a benefit in connection with consummation of the Transaction.
    4. Section 6(c) provides that the SEC may exempt any person, 
security, or transaction from any provision of the Act, if and to the 
extent that such 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. 
Applicants assert that the requested relief meets this standard.
    5. Applicants submit that the terms and timing of the closing of 
the Transaction were dictated by a partnership agreement entered into 
by Mr. Munder and Comerica upon formation of MCM in 1994 and, 
therefore, were determined by factors beyond the scope of the Act and 
substantially unrelated to the Investment Companies. Applicants state 
that there is insufficient time to gain shareholder approval of the New 
Management Agreements before closing of the Transaction. Applicants 
also state that the requested relief would permit continuity of 
investment management of the Investment Companies, without 
interruption, following consummation of the Transaction.
    6. Applicants submit that the scope and quality of investment 
advisory services provided for the Investment Companies during the 
Interim Period will not be diminished. Applicants assert that the 
Investment Companies should receive, during the Interim Period, 
equivalent investment management services, provided in substantially 
the same manner and at the same fee level, by substantially the same 
personnel, as they receive under the Current Management Agreements. 
Applicants state that, in the event of any material change in 
personnel, MCM, World, and Framlington Management will apprise and 
consult the Boards to assure that the Boards, including a majority of 
the non-interested directors/trustees, are satisfied that the services 
provided by MCM, World, and Framlington Management will not be 
diminished in scope or quality.
    7. Applicants note that the fees payable to MCM, World, and 
Framlington Management under the New Management Agreements have been 
approved by the appropriate Board, including a majority of the non-
interested directors/trustees, and that the fees are the same as are 
payable under the Current Management Agreements. Applicants also state 
that the fees will not be released to MCM, World, or Framlington 
Management by the Escrow Agent without the approval of the New 
Management Agreements by the relevant Investment Company's 
shareholders.

Applicants' Conditions

    Applicants agree that any order of the SEC granting the requested 
relief will be subject to the following conditions:
    1. The New Management Agreements will have the same terms and 
conditions as the Current Management Agreements, except for their 
effective and termination dates.
    2. Fees earned by MCM, World, and Framlington Management during the 
Interim Period will be maintained in an interest-bearing account with 
an unaffiliated financial institution, and amounts in the account 
(including interest earned on such amounts) will be paid (a) to MCM, 
World, and Framlington Management in accordance

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with the New Management Agreements, after the requisite shareholder 
approval of the New Management Agreements is obtained, or (b) to such 
Investment Company in the absence of shareholder approval.
    3. The Investment Companies will convene special meetings of 
shareholders to approve the New Management Agreements on or before the 
150th day following termination of the Current Management Agreements 
(but in no event later than November 30, 1998).
    4. The Investment Companies will not bear the costs of preparing 
and filing the Application, or any costs relating to the solicitation 
of approval of each Investment Company's shareholders of the New 
Management Agreements. These costs will be borne by MCM and World.
    5. MCM, World, and Framlington will take all appropriate actions to 
ensure that the scope and quality of investment management services 
provided to the Investment Companies during the Interim Period will be 
at least equivalent, in the judgment of the Boards, including a 
majority of the non-interested directors/trustees, to the scope and 
quality of such services provided prior to the Interim Period. In the 
event of any material change in personnel providing services pursuant 
to the New Management Agreements, MCM, World, or Framlington 
Management, as appropriate, will apprise and consult with each Board to 
assure that the Board, including a majority of the non-interested 
directors/trustees, is satisfied that the services provided will not be 
diminished in scope or quality.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-15277 Filed 6-8-98; 8:45 am]
BILLING CODE 8010-01-M