Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices 31537

to comments and suggestions submitted

in writing within 60 days of this

publication.

Please direct your written comments

to Michael E. Bartell, Associate

Executive Director, Office of

Information Technology, Securities and

Exchange Commission, 450 5th Street,

N.W., Washington, DC 20549.

Dated: June 1, 1998.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–15279 Filed 6–8–98; 8:45 am]

BILLING CODE 8010–01–M

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.

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,
31538 Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices

1The 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.

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.

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 noninterested 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 noninterested 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
Federal Register / Vol. 63, No. 110 /Tuesday, June 9, 1998 / Notices 31539

1 15 U.S.C. 78s(b)(1).

2The complete text of the proposed rule change

is attached as Exhibit A to GSCC’s filing, which is

available for inspection and copying at the

Commission’s public reference room and through

GSCC.

3The Commission has modified the text of the

summaries prepared by GSCC.

4Currently, GSCC’s clearing banks are The Bank

of New York and The Chase Manhattan Bank.

Under the proposed rule change, any clearing bank

that meets GSCC’s operational requirements will be

able to provide GCF Repo settlement services to

GSCC netting members.

5Because GCF Repo trades will be conducted on

a blind-brokered basis, the specific collateral will

not be know at the time of the trade. Brokers will

submit all GCF Repo trades to GSCC using generic

general collateral CUSIPs that denote the

underlying security. GSCC expects that the initial

types of generic CUSIPs that will be used for GCF

Repo activity will denote the following categories

of securities: all Treasury securities, Treasury

securities with a remaining maturity of ten years

and under, all Fedwire-eligible Agency securities,

and all Fedwire-eligible mortgage-backed securities.

GSCC will continuously review with the members

of its Repo Implementation Committee and with

appropriate Bond Market Association committees

the appropriateness of making eligible other types

of generic CUSIPs.

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 noninterested 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

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40057; File No. SR–GSCC–

98–02]

Self-Regulatory Organizations;

Government Securities Clearing

Corporation; Notice of a Proposed

Rule Change Regarding the

Implementation of the GCF Repo

Service

June 2, 1998.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

April 10, 1998, the Government

Securities Clearing Corporation

(‘‘GSCC’’) filed with the Securities and

Exchange Commission (‘‘Commission’’)

the proposed rule change as described

in Items I, II, and III below, which items

have been prepared primarily by GSCC.

The Commission is publishing this

notice to solicit comments from

interested persons on the proposed rule

change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change will allow

GSCC to implement a new service called

the ‘‘GCF Repo service.’’ The GCF Repo

service will allow GSCC’s dealer

members to trade general collateral

repos involving Government securities

throughout the day without requiring

intraday, trade-for-trade settlement on a

delivery-versus-payment (‘‘DVP’’)

basis.2

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

GSCC included statements concerning

the purpose of and basis for the

proposed rule change and discussed any

comments it received on the proposed

rule change. The text of these statements

may be examined at the places specified

in Item IV below. GSCC has prepared

summaries, set forth in sections (A), (B),

and (C) below, of the most significant

aspects of such statements.3

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The GCF Repo service has been

developed as part of a collaborative

effort among GSCC, its clearing banks,4

industry representatives service on

GSCC’s Repo Implementation

Committee, and its associated GCF Repo

Working Group.

(1) General

The GCF Repo service will enable

netting members of GSCC that are not

interdealer brokers (‘‘dealers’’) to trade

general collateral repos, based on rate

and term, with interdealer broker

netting members of GSCC (‘‘brokers’’) on

a blind basis throughout each day.

Brokers will be required to submit GCF

Repo trade data to GSCC within five

minutes of trade execution through a

new terminal function. Brokers will not

be able to submit GCF Repo trades in

batch. Upon receipt of the trade data,

GSCC immediately will report

transaction details to dealers through a

terminal dynamic display facility, and

the GCF Repos will receive GSCC’s

settlement guarantee. Standardized,

generic CUSIP numbers established

exclusively for the GCF Repo service

will be used to specify the acceptable

type of underlying Fedwire book-entry

eligible collateral, which will include

Treasuries, Agencies, and mortgagebacked securities.5

Daily submission cutoff for GCF Repo

trades will occur five minutes after a

predetermined trading deadline, which

initially will be 3:30 p.m. GSCC will

reject all trades submitted for same-day

processing that are received after the

cutoff. Dealers initially will have until

3:45 p.m. to affirm or disaffirm trade

data submitted against them by a broker.

If a dealer takes no action either to

affirm or to disaffirm trade data, the

trade automatically will be deemed to

be affirmed. GSCC will then conduct an

afternoon net exclusively for GCF Repo

activity and will establish a single net

receive or deliver obligation for dealer

members in each generic CUSIP.

Each dealer with a net deliver

obligation will allocate acceptable

securities (determined by the generic

CUSIP) and will deliver those securities

on a DVP basis to a GSCC account

within the dealer’s clearing bank using

a modified triparty arrangement. GSCC

will then instruct the clearing bank to

deliver those securities to dealers that

have net receive obligations. All GCF

Repo activity will settle between dealers