SEC Company Response from MUNDER SERIES TRUST (CIK 0001214511) — Jul 8, 2005
MUNDER SERIES TRUST (CIK 0001214511)
Date: July 8, 2005 · CIK: 0001214511 · Accession: 0000950124-05-004180
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File numbers found in text: 333-125247, 333-125249
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State Street Bank and Trust Company
One Federal Street, 9th Floor
Boston, MA
02110
VIA EDGAR CORRESPONDENCE
July 8, 2005
Christian Sandoe
Division of Investment Management
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Munder Series Trust, on behalf of the Munder Tax-Free Bond Fund, Proxy
Statement/Prospectus on Form N-14 SEC File No. 333-125249
Munder Series Trust, on behalf of the Munder U.S. Government Income
Fund, Proxy Statement/Prospectus on Form N-14 SEC File No. 333-125247
Dear Mr. Sandoe:
We are writing on behalf of the Munder Series Trust ("Registrant") in response
to comments you provided telephonically on Thursday, June 23, 2005, with respect
to two proxy statements/prospectuses separately filed on Form N-14 for the
Registrant (each a "Proxy Statement" and together the "Proxy Statements"). The
Proxy Statements relate to the proposed reorganizations of (i) the Munder
Tax-Free Bond Fund ("Tax-Free Bond Fund") with and into the Munder Tax-Free
Short & Intermediate Bond Fund ("Tax-Free Short & Intermediate Bond Fund"), each
a series of the Registrant and (ii) the Munder U.S. Government Income Fund
("U.S. Government Fund") with and into the Munder Bond Fund ("Bond Fund"), each
a series of the Registrant.
Summaries of the comments and our responses thereto, are provided below.
PROXY STATEMENT FOR TAX-FREE BOND FUND
1. COMMENT: On page iv of the Proxy Statement, please confirm that the
documents set forth in the second paragraph as being filed with the Securities
and Exchange Commission (the "SEC") are not incorporated by reference into the
Proxy Statement.
RESPONSE: The documents set forth in the second paragraph on page iv of
the Proxy Statement as being filed with the SEC are intended to notify
shareholders of other documents that are available to them should they wish to
seek additional information about either of the Funds. By listing these
documents, Registrant does not intend for these to be incorporated by reference
into the Proxy Statement. With the exception noted below regarding the Statement
of Additional Information, the Proxy Statement includes all of the information
required by Form N-14 to be included from these other documents, rather than
incorporating such information by reference into the Proxy Statement. However,
as stated in the paragraph immediately preceding the referenced paragraph on
page iv, Registrant is incorporating by reference the Statement of Additional
Information to the Proxy Statement in accordance with the instructions to Form
N-14.
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2. COMMENT: On page 6 of the Proxy Statement, please disclose the difference
between the investment objectives for the Tax-Free Short & Intermediate Bond
Fund and the Tax-Free Bond Fund. Please highlight this difference in any section
that relates to the investment objectives for the Funds in the Proxy Statement.
RESPONSE: As stated in the Proxy Statement, the Tax-Free Bond Fund's
investment objectives are to provide as high a level of current interest income
exempt from Federal income taxes and to generate as competitive a long-term rate
of return as is consistent with prudent investment management and preservation
of capital. The disclosure on page 6 of the Proxy Statement has been amended to
add the phrase, "which objectives are consistent with bonds with longer
maturities", at the end of the statement of the Tax-Free Bond Fund's investment
objectives.
The Tax-Free Short & Intermediate Bond Fund's investment objectives are to
provide a competitive level of current interest income exempt from Federal
income taxes and a total return which, over time, exceeds the rate of inflation
and the return provided by tax-free money market instruments. The disclosure on
page 6 of the Proxy Statement has been amended to add the phrase, "which
objectives are consistent with bonds with shorter maturities", at the end of the
statement of the Tax-Free Short & Intermediate Bond Fund's investment
objectives.
In addition, the following disclosure has been added to the end of the
first paragraph under the heading "Investment Objectives, Policies and
Restrictions" on page 6 of the Proxy Statement and to the end of the first
paragraph under the heading "Investment Objectives of Each Fund" which begins on
page 28 of the Proxy Statement:
The differences between the investment objectives of the Funds primarily
reflect the differences in the maturities of the obligations in which each
Fund invests. The municipal obligations in which the Tax-Free Bond Fund
invests generally have longer maturities than the municipal obligations in
which the Tax-Free Short & Intermediate Bond Fund invests. Bonds with
longer maturities generally pay higher rates of interest and involve more
interest rate risk than bonds with shorter maturities.
3. COMMENT: On page 7 of the Proxy Statement, there is a discussion on the
differences in maturity of the obligations in which each Fund invests and each
Fund's dollar-weighted average maturity. Please include this disclosure in all
applicable sections in the Proxy Statement that relate to the investment
objectives, policies and restrictions.
RESPONSE: The disclosure in the Proxy Statement has been revised to comply
with the comment.
4. COMMENT: On page 36 of the Proxy Statement under the section "Publication
of Portfolio Holdings," please revise the disclosure to comply with Item
11(f)(2), Instruction 3, or otherwise confirm to the Staff that the Registrant
is relying on 11(f)(2), Instruction 2 for any non-public disclosures.
RESPONSE: The disclosure has been revised in its entirety as follows:
Each Fund publishes a complete list of its portfolio holdings as of the end
of each calendar month not earlier than 30 days after the end of such month
on the Munder Funds website (www.munder.com) under the "All Holdings" link
on the Fund's Profile Page. The three most recent previously published
month-end portfolio holdings lists can be accessed through the "Historical
All Holdings" link on the Fund's Profile Page. Each Fund may also publish
other information on the Fund's Profile Page relating to its
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portfolio holdings (e.g., top ten holdings, sector information and other
portfolio characteristic data) as of the end of the calendar month not
earlier than 15 days after the end of such month. A description of the
Funds' policies and procedures with respect to the disclosure of
information regarding the Funds' portfolio securities is available in the
Funds' Statement of Additional Information.
5. COMMENT: On page 80 under the section "Portfolio Managers," please provide
a brief description of each person's role on the team (e.g., lead member),
including a description of any limitations on the person's role and the
relationship between the person's role and the roles of other persons who have
responsibility for the day-to-day management of the Fund's portfolio.
RESPONSE: The following disclosure has been added after the first sentence
under the section "Portfolio Managers" on page 80:
Mr. Soderstrom is primarily responsible for the day-to-day management of
each Fund's assets. He determines the strategy for each Fund and initiates
trades. Mr. Thayer provides analytical support and assists in trading.
STATEMENT OF ADDITIONAL INFORMATION FOR TAX-FREE SHORT & INTERMEDIATE BOND FUND
6. COMMENT: On page B-28 of the Pro Forma Combining Schedule of Investments
footnote (a), Registrant states, "No holdings of the Tax-Free Bond Fund are
expected to require liquidation in the merged environment due to prospectus or
other limitations." Please explain this statement.
RESPONSE: In order for the reorganization of the Tax-Free Short &
Intermediate Bond Fund and the Tax-Free Bond Fund to qualify as a tax-free
reorganization under applicable federal tax laws, the Funds must satisfy certain
continuity of business tests. As a result, the Tax-Free Short & Intermediate
Bond Fund must continue to hold a specified portion of the Tax-Free Bond Fund's
assets following the Reorganization, which the referenced statement is intended,
at least in part, to convey. In addition, the statement was added upon advice of
the Funds' external legal counsel, who has received a request to include a
similar statement from the accounting staff of the SEC's Division of Investment
Management in the proxy statements/prospectuses concerning other
reorganizations.
7. COMMENT: On pages B-31 to B-33 under the section "Portfolio Managers,"
please make the following changes pursuant to Item 5 of Form N-1A:
a. On page B-31, please confirm to the Staff that no advisory fee with
respect to any account listed in the table is based on the performance of
any such accounts, or otherwise revise the disclosure in accordance with
Item 15(a)(3).
RESPONSE: To the best of the Registrant's knowledge, no advisory fee
with respect to any account listed in the table is based on the performance
of any such account. Accordingly, no changes to the disclosure have been
made.
b. On page B-32, under the "Portfolio Manager Compensation" sub-section,
revise the description of "base salary" to confirm whether it is fixed or
variable.
RESPONSE: The disclosure has been revised to state "fixed base
salary."
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8. COMMENT: On pages B-33 to B-36 under the section "Disclosure of Portfolio
Holdings," please make the following changes:
a. Under the "Service Providers" sub-section, please confirm to the Staff
that the service providers enumerated is an exhaustive list or otherwise
revise the list.
RESPONSE: The disclosure has been revised to include a list that, to
the best of Registrant's knowledge, is exhaustive, other than with respect
to the various broker-dealers with whom MCM places trades for the Funds:
MCM and/or the Funds may disclose portfolio holdings information to
the Funds' primary service providers (i.e., the Funds' adviser,
custodian, distributor, fund accountant, administrator,
sub-administrator, independent public accountants, and external legal
counsel) and to other service providers (such as proxy voting
services, pricing information vendors, broker-dealers who effect
portfolio securities transactions, broker-dealers who provide pricing
information, and providers of printing and/or regulatory filing
services) who need access to such information to perform services for
the benefit of the Funds. Portfolio holdings information will be
disclosed to a service provider to the extent and as frequently as
necessary to allow such service provider to perform its duties and
responsibilities, which may be immediate with no lag time. These
service providers are subject to duties of confidentiality, including
a duty not to trade on non-public information, imposed by law and/or
contract. The Funds' current primary service providers are MCM, State
Street Bank and Trust, Funds Distributor, Inc., PFPC Inc., Ernst
&Young LLP, Dechert LLP, and Morgan Lewis & Bockius LLP. Other service
providers who routinely receive portfolio holdings information from
the Funds include Institutional Shareholder Services, FT Interactive,
Reuters, Thomsen Financial/ILX, R.R. Donnelley, Bowne & Co., as well
as various broker-dealers with whom MCM places trades for the Funds or
who provide pricing information.
b. Under the "Other" sub-section, disclosure of portfolio holdings
pursuant to the sub-section is subject to the condition that it "must be
disclosed pursuant to the terms of a written confidentiality agreement
between the recipient and the Funds..." Please revise the disclosure to
state whether such condition also includes prohibitions on trading or, if
not, confirm to the Staff that such condition is not placed on any such
disclosures.
RESPONSE: The Registrant believes that the disclosure in the third
paragraph on page B-35 of the Statement of Additional Information, which
summarizes the general terms of the confidentiality agreement, addresses
the Staff's comment. Accordingly, no changes to the disclosure have been
made.
c. Under the sub-sections which describe various persons (i.e., service
providers) that portfolio holdings information is being disclosed to prior
to the time such information is publicly disclosed, please provide the
information required pursuant to Item 11(f)(1)(iii) for each person.
RESPONSE: The following disclosure has been added after the first
sentence of the sub-paragraph entitled "Service Providers": "Portfolio
holdings information will be disclosed to a service provider to the extent
and as frequently as necessary to allow such service provider to perform
its duties and responsibilities, which may be immediate with no lag time."
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The Registrant believes that the disclosure in the second sentence of
the sub-paragraph entitled "Comerica Bank and Affiliates" addresses the
Staff's comment. Accordingly, no changes to the disclosure in that section
have been made.
d. Disclose pursuant to Item 11(f)(1)(iii) of Form N-1A any procedures to
monitor the use of information.
RESPONSE: The Registrant has not adopted any procedures with respect
to monitoring the use of information that is disclosed about portfolio
securities.
PROXY STATEMENT FOR U.S. GOVERNMENT FUND
9. COMMENT: On page iii of the Proxy Statement, the statement "While the
investment objectives and policies of the U.S. Government Fund and the Bond Fund
are similar, there are certain differences in investment policies..." Please
disclose the differences between the Funds including the credit quality of the
instruments that each Fund may invest in.
RESPONSE: The disclosure in the Proxy Statement has been revised to comply
with the comment.
10. COMMENT: On page 1 of the Proxy Statement - Proposal 1 "Why is the
Reorganization being recommended?", please explain in more detail the statement
"As a result, it is MCM's view that only by combining these two Funds into a
single Fund will the Funds have sufficient assets in order to be sustainable."
In addition, please highlight the different investment risks for the Funds.
RESPONSE: In the second paragraph on page 1 of the Proxy Statement,
Registrant notes that both Funds have been experiencing asset declines in recent
years. Consequently, the U.S. Government Fund and the Bond Fund have each
experienced an increase in total annual operating expenses. Please note that the
Proxy Statement has been revised to include information concerning the adverse
impact this decline in assets has had on the expense ratio of the U.S.
Government Fund.
As disclosed in the Proxy Statement, this continually declining asset base
and rising operating expenses led MCM to re-evaluate its current fixed income
fund offerings and recommend that the Board approve