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Employee Benefits Security Administration

EBSA Federal Register Notice

Proposed Exemptions; Comerica Bank [09/10/2004]

[PDF Version]

Volume 69, Number 175, Page 54804-54812

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Application No. D-11098, et al.]

 
Proposed Exemptions; Comerica Bank

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of proposed exemptions.

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SUMMARY: This document contains notices of pendency before the 
Department of Labor (the Department) of proposed exemptions from 
certain of the prohibited transaction restrictions of the Employee 
Retirement Income Security Act of 1974 (the Act) and/or the Internal 
Revenue Code of 1986 (the Code).

Written Comments and Hearing Requests

    All interested persons are invited to submit written comments or 
requests for a hearing on the pending exemptions, unless otherwise 
stated in the Notice of Proposed Exemption, within 45 days from the 
date of publication of this Federal Register Notice. Comments and 
requests for a hearing should state: (1) The name, address, and 
telephone number of the person making the comment or request, and (2) 
the nature of the person's interest in the exemption and the manner in 
which the person would be adversely affected by the exemption. A 
request for a hearing must also state the issues to be addressed and 
include a general description of the evidence to be presented at the 
hearing.

ADDRESSES: All written comments and requests for a hearing (at least 
three copies) should be sent to the Employee Benefits Security 
Administration (EBSA), Office of Exemption Determinations, Room N-5649, 
U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 
20210. Attention: Application No. ------, stated in each Notice of 
Proposed Exemption. Interested persons are also invited to submit 
comments and/or hearing requests to EBSA via e-mail or FAX. Any such 
comments or requests should be sent either by e-mail to: 
moffitt.betty@dol.gov, or by FAX to (202) 219-0204 by the end of the 
scheduled comment period. The applications for exemption and the 
comments received will be available for public inspection in the Public 
Documents Room of the Employee Benefits Security Administration, U.S. 
Department of Labor, Room N-1513, 200 Constitution Avenue, NW., 
Washington, DC 20210.

Notice to Interested Persons

    Notice of the proposed exemptions will be provided to all 
interested persons in the manner agreed upon by the applicant and the 
Department within 15 days of the date of publication in the Federal 
Register. Such notice shall include a copy of the notice of proposed 
exemption as published in the Federal Register and shall inform 
interested persons of their right to comment and to request a hearing 
(where appropriate).

SUPPLEMENTARY INFORMATION: The proposed exemptions were requested in 
applications filed pursuant to section 408(a) of the Act and/or section 
4975(c)(2) of the Code, and in accordance with procedures set forth in 
29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 10, 1990). 
Effective December 31, 1978, section 102 of Reorganization Plan No. 4 
of 1978, 5 U.S.C. App. 1 (1996), transferred the authority of the 
Secretary of the Treasury to issue exemptions of the type requested to 
the Secretary of Labor. Therefore, these notices of proposed exemption 
are issued solely by the Department.
    The applications contain representations with regard to the 
proposed exemptions which are summarized below. Interested persons are 
referred to the applications on file with the Department for a complete 
statement of the facts and representations.

Comerica Bank, Located in Detroit, MI

[Application No. D-11098]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Employee Retirement Income Security 
Act of 1974 (ERISA or the Act) and section 4975(c)(2) of the Internal 
Revenue Code of 1986 (the Code) and in accordance with the procedures 
set forth in 29 CFR Part 2570, Subpart B (55 FR 32836, 32847, August 
10, 1990).
Section I--Proposed Exemption For Receipt of Fees
    If the proposed exemption is granted, the restrictions of sections 
406(a) and 406(b) of the Act and the sanctions resulting from the 
application of section 4975 of the Code, by reason of section 
4975(c)(1)(A) through (F) of the Code, shall not apply to the receipt 
of fees by Comerica Bank and its affiliates (Comerica) from the Munder 
Funds (the Funds), open-end investment companies registered under the 
Investment Company Act of 1940 (the 1940 Act), for acting as an 
investment adviser for the Funds, as well as for providing any other 
services to the Funds which are not investment advisory services 
(``Secondary Services'' as defined in Section III(h) below) in 
connection with the purchase and sale of shares of the Funds by certain 
defined benefit and defined contribution pension plans and funded 
employee welfare benefit plans (Client Plans) for which Comerica serves 
as fiduciary with investment discretion, provided that the following 
conditions and the General Conditions set forth in Section II are met:
    (a) No sales commissions, redemption fees, or other fees are paid 
by the Client Plans in connection with the purchase or sale of shares 
of the Funds.
    (b) The price paid or received by a Client Plan for shares in a 
Fund is the net asset value per share, as defined in Section III (e), 
at the time of the transaction, and is the same price that would have 
been paid or received for the shares by any other investor at that 
time.
    (c) Comerica, including any officer or director of Comerica, does 
not purchase or sell shares of the Funds from or to any Client Plan.
    (d) Each Client Plan receives a credit, through a cash rebate of 
such Plan's proportionate share of all fees charged to the Funds by 
Comerica for investment advisory services, including

[[Page 54805]]

any investment advisory fees paid by Comerica to third-party 
subadvisers. Cash rebates for investment advisory services provided to 
the Client Funds are received by a Plan on or before the date Comerica 
charges the Client Plan for plan-level investment management services. 
Comerica management fees and Munder advisory fees are paid in arrears 
for services provided to the Client Plans and the Funds, respectively. 
The crediting of all such fees is audited by Comerica through a system 
of internal controls to verify the proper crediting of the fees to each 
Client Plan.
    (e) Comerica will supply, annually and upon request, to the second 
fiduciary acting for a Client Plan, who is independent of and unrelated 
to Comerica (the Second Fiduciary), all information reasonably 
necessary for such fiduciary to verify that the fee credit calculation 
is correct and any additional information that the Second Fiduciary may 
require to determine that the conditions of this exemption are being 
met by Comerica.
    (f) For each Client Plan, the combined total of all fees received 
by Comerica for the provision of services to a Client Plan, and in 
connection with the provision of services to the Funds in which the 
Client Plan may invest, is not in excess of ``reasonable compensation'' 
within the meaning of section 408(b)(2) of ERISA.
    (g) Comerica does not receive any fees payable pursuant to Rule 
12b-1 under the 1940 Act in connection with the transactions.
    (h) The Client Plans are not employee benefit plans sponsored or 
maintained by Comerica.
    (i) The Second Fiduciary receives, in advance of any initial 
investment by the Client Plan in a Fund, full and detailed written 
disclosure of information concerning the Fund, including, but not 
limited to:
    (1) A current prospectus for each Fund in which a Client Plan is 
considering investing;
    (2) A statement describing the fees for investment advisory or 
similar services and any Secondary Services as defined in Section III 
(h), and all other fees to be charged to or paid by the Client Plan and 
by the Funds, including the nature and extent of any differential 
between the rates of such fees;
    (3) The reasons why Comerica may consider such investment to be 
appropriate for the Client Plan;
    (4) A statement describing whether there are any limitations 
applicable to Comerica with respect to which assets of a Client Plan 
may be invested in the Funds, and if so, the nature of such 
limitations; and
    (5) Upon the request of the Second Fiduciary, a copy of the 
proposed exemption and/or a copy of the final exemption, if granted, 
once such documents is published in the Federal Register.
    (j) After consideration of the information described in paragraph 
(i) above, the Second Fiduciary authorizes in writing the investment of 
assets of the Client Plan in each particular Fund, the fees to be paid 
by such Fund to Comerica, and the cash rebate to the Client Plan of 
fees received by Comerica from the Funds for investment advisory 
services.
    (k) All authorizations made by a Second Fiduciary regarding 
investments in a Fund and the fees paid to Comerica are subject to an 
annual reauthorization wherein any such prior authorization referred to 
in paragraph (j) above shall be terminable at will by the Client Plan, 
without penalty to the Plan, upon receipt by Comerica of written notice 
of termination. A form expressly providing an election to terminate the 
authorization described in paragraph (j) above (the Termination Form) 
with instructions on the use of the form must be supplied to the Second 
Fiduciary no less than annually. However, if the Termination Form has 
been provided to the Second Fiduciary pursuant to paragraph (m) below, 
then the Termination Form need not be provided again for an annual 
reauthorization pursuant to this paragraph unless at least six months 
have elapsed since the form was provided in connection with the 
additional service or fee increase. The instructions for the 
Termination Form must include the following information:
    (1) The authorization is terminable at will by any of the Client 
Plans, without penalty to such Client Plans, upon receipt by Comerica 
of written notice from the Second Fiduciary; and
    (2) Failure by the Second Fiduciary to return the Termination Form 
on behalf of a Client Plan will result in continued authorization of 
Comerica to engage in the transactions described in paragraph (j) above 
on behalf of the Client Plan.
    (3) A copy of the Termination Form will be sent to the Second 
Fiduciary for the Client Plan upon request.
    (l) The Second Fiduciary receives full written disclosure, prior to 
the effective date, in a Fund prospectus or otherwise, of any increases 
in the rates of fees charged by Comerica to the Funds for investment 
advisory services even though such fees will be rebated as required by 
paragraph (d) above.
    (m) In the event that Comerica provides an additional Secondary 
Service to a Fund for which a fee is charged or there is an increase in 
the rate of any fee paid by the Funds to Comerica for any Secondary 
Services that results from either an increase in the rate of such fee 
or a decrease in the number or kind of services performed by Comerica 
for such fees in connection with a previously authorized Secondary 
Service, Comerica will, at least 30 days in advance of the 
implementation of such additional service for which a fee is charged or 
fee increase, provide written notice (that is separate from the 
prospectus of the Fund) to the Second Fiduciary explaining the nature 
and the amount of the additional services or of the effective increase 
in fees of the affected Fund. Such notice shall be accompanied by the 
Termination Form.
    (n) On an annual basis, Comerica provides the Second Fiduciary of a 
Client Plan investing in the Funds with:
    (1) A copy of the current prospectus for the Funds and, upon such 
Second Fiduciary's request, a copy of the Statement of Additional 
Information for such Funds that contains a description of all fees paid 
by the Funds to Comerica (including fees for investment advisory 
services);
    (2) A copy of the annual financial disclosure report of the Funds 
in which such Client Plan is invested, which includes information about 
the Fund portfolios; and
    (3) Oral or written responses to inquiries of the Second Fiduciary 
as they arise.
    (o) All dealings between the Client Plans and the Funds are on a 
basis no less favorable to the Client Plans than dealings with other 
shareholders of the Funds.
Section II--General Conditions
    (a) Comerica maintains for a period of six years the records 
necessary to enable the persons described in paragraph (b) of Section 
II to determine whether the conditions of this exemption have been met, 
except that:
    (1) A prohibited transaction will not be considered to have 
occurred if, due to circumstances beyond the control of Comerica, the 
records are lost or destroyed prior to the end of the six-year period, 
and
    (2) No party in interest other than Comerica shall be subject to 
the civil penalty that may be assessed under section 502(i) of ERISA or 
to the taxes imposed by section 4975(a) and (b) of the Code if the 
records are not maintained or not available for examination as required 
by paragraph (b) below.

[[Page 54806]]

    (b) Except as provided in paragraph (b)(2) below and 
notwithstanding any provisions of section 504(a)(2) and (b) of ERISA, 
the records referred to in paragraph (a) of Section II are 
unconditionally available at their customary location for examination 
during normal business hours by: (i) Any duly authorized employee or 
representative of the Department of Labor or the Internal Revenue 
Service; (ii) Any fiduciary of a Client Plan who has authority to 
acquire or dispose of shares of the Funds owned by the Client Plan, or 
any duly authorized employee or representative of such fiduciary; and 
(iii) Any participant or beneficiary of a Client Plan or duly 
authorized employee or representative of such participant or 
beneficiary.
    (1) None of the persons described in subparagraph (b)(1)(ii) and 
(iii) above shall be authorized to examine trade secrets of Comerica, 
or commercial or financial information, which is privileged or 
confidential.
Section III--Definitions
    For purposes of this exemption:
    (a) ``Comerica'' means Comerica Bank, a Michigan banking 
corporation, and any affiliate thereof (as affiliate is defined below 
in paragraph (b) of this section).
    (b) An ``affiliate'' of a person includes:
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with the person;
    (2) Any officer, director, employee, relative, or partner in any 
such person; and
    (3) Any corporation or partnership of which such person is an 
officer, director, partner, or employee.
    (c) ``Control'' means the power to exercise a controlling influence 
over the management or policies of a person other than an individual.
    (d) The term ``Fund'' or ``Funds'' shall include the Munder Funds, 
each series thereof, or any other diversified open-end investment 
company registered under the 1940 Act for which Comerica serves as an 
investment adviser and may also serve as a Fund accountant, transfer 
agent or provide some other Secondary Service (as defined below in 
paragraph (h) of Section III) which has been approved by such Funds.
    (e) ``Net asset value'' means the amount for purposes of pricing 
all purchases and sales, calculated by dividing the value of all 
securities, determined by a method as set forth in a Fund's prospectus 
and statement of additional information, and other assets belonging to 
the Fund or portfolio of the Fund, less the liabilities charged to each 
such portfolio or Fund, by the number of outstanding shares.
    (f) ``Relative'' means a ``relative'' as that term is defined in 
section 3(15) of ERISA (or a ``member of the family'' as that term is 
defined in section 4975(e) (6) of the Code), or a brother, a sister, or 
a spouse of a brother or a sister.
    (g) ``Second Fiduciary'' means a fiduciary of a Client Plan who is 
independent of and unrelated to Comerica. For purposes of this 
exemption, the Second Fiduciary will not be deemed to be independent of 
and unrelated to Comerica if:
    (1) Such fiduciary directly or indirectly controls, is controlled 
by, or is under common control with Comerica;
    (2) Such fiduciary, or any officer, director, partner, employee, or 
relative of the fiduciary is an officer, director, partner, or employee 
of Comerica (or is a relative of such persons); or
    (3) Such fiduciary directly or indirectly receives any compensation 
or other consideration for his or her own personal account in 
connection with any transaction described in this proposed exemption:
    If an officer, director, partner, or employee of Comerica (or 
relative of such persons), is a director of such Second Fiduciary, and 
if he or she abstains from participation in (i) the choice of the 
Client Plan's investment adviser, (ii) the approval of any such 
purchase or sale between the Client Plan and the Funds, and (iii) the 
approval of any change in fees charged to or paid by the Client Plan in 
connection with any of the transactions described in Section I and 
Section II above, then subparagraph (g)(2) of Section III shall not 
apply.
    (h) ``Secondary Service'' means a service other than an investment 
management, investment advisory, or similar service which is provided 
by Comerica to the Funds including (but not limited to) custodian 
services, transfer and dividend disbursing agent services, 
administrator or sub-administrator services, accounting services, and 
shareholder servicing agent services.
    However, for purposes of this exemption, the term ``Secondary 
Service'' will not include any brokerage services provided to the Funds 
by Comerica for the execution of securities transactions engaged in by 
the Funds.
    (i) ``Termination Form'' means the form supplied to the Second 
Fiduciary that expressly provides an election to the Second Fiduciary 
to terminate on behalf of a Client Plan the authorization described in 
paragraph (j) of Section I above. Such Termination Form may be used at 
will by the Second Fiduciary to terminate an authorization without 
penalty to the Plan and to notify Comerica in writing to effect a 
termination by selling the shares of the Funds held by the Client Plan 
requesting such termination within one business day following receipt 
by Comerica of the form; provided that if, due to circumstances beyond 
the control of Comerica, the sale cannot be executed within one 
business day, Comerica shall have one additional business day to 
complete such sale.
    Effective Date: The proposed exemption, if granted, will be 
effective as of the date the final exemption is published in the 
Federal Register.

Summary of Facts and Representations

    1. Comerica represents that it acts as trustee with investment 
discretion for approximately 62 Client Plans that are subject to ERISA. 
The Client Plans include defined benefit and defined contribution 
pension plans, and funded employee welfare benefit plans. Comerica Bank 
is a banking corporation chartered under the laws of the State of 
Michigan. It is a wholly owned subsidiary of Comerica Incorporated 
which is a bank holding company regulated by and registered under the 
Bank Holding Company Act of 1956 as amended.
    2. Comerica represents that it has been granted trust powers by the 
Office of Financial and Insurance Services of the State of Michigan, 
which regulates Comerica Bank pursuant to Michigan law. As to fiduciary 
matters, the Office of Financial and Insurance Services generally 
requires Michigan chartered banks to comply with the regulations 
promulgated by the United States Comptroller of Currency as well as 
Michigan law. Comerica Bank is also regulated by the Federal Reserve 
Board. As of March 31, 2004, Comerica Bank had approximately $26.8 
billion under trust management.
    3. Comerica represents that Munder Capital Management (Munder) is 
the investment advisor to several open-end investment companies 
registered under the 1940 Act (Munder Funds). Munder is a Delaware 
general partnership with three partners, two of which, WAM Holdings, 
Inc. and WAM Holdings II, Inc. own a 95.5% interest in Munder, and are 
wholly owned subsidiaries of Comerica Investment Services, Inc. which 
itself is a wholly owned subsidiary of Comerica Incorporated. Munder 
is, consequently, an affiliate of Comerica Bank as defined at 29 CFR 
2510.3-21(e).
    4. The Munder Funds are Massachusetts business trusts. The

[[Page 54807]]

Munder Funds involved in the exemption transactions are: Munder Bond 
Fund B Class Y, Munder Fram Emerging Mkts B Y, Munder Fram Healthcare 
FD-Y, Munder Framlington Intl GRW, Munder Fund of Funds, Munder Future 
Technology CL Y, Munder Index 500 Fund B CL K, Munder Index 500 Fund B 
CL Y, Munder Inst S&P Midcap 400, Munder Instl S&P Smallcap 600, Munder 
Instl S&P 500 Idx Equ Fd, Munder Instl S&P 600 Fd CL K, Munder Intermed 
Bd Fd (K Shs), Munder Intermediate Bd-Y, Munder International Eq-Y, 
Munder Intl Bond Fund--CL Y, Munder Intl Equity Fund (K Shs), Munder 
Intl Net Net CL Y, Munder Large Cap Growth Fd CL Y, Munder Large Cap 
Value Fund CL Y, Munder Micro Cap Equity B Y, Munder Midcap Select Fund 
CL Y, Munder Multi-Seas Gwth Fd (CL K), Munder Multi-Season Growth B Y, 
Munder Net Net Fund CL Y, Munder Power Plus Fund CL Y, Munder Real 
Estate Eq Inv-Y, Munder Small Cap Value Fd-Y, Munder Small Co GRY Shrs, 
Munder U.S. GVT Income FD (K SHS), Munder U.S. Govt Income FD-Y (the 
Funds). Comerica anticipates that other Munder Funds may be established 
in the future, and it intends to offer appropriate Munder Funds to its 
Client Plans as they are organized.
    5. Comerica represents that it uses its fiduciary authority to 
invest Client Plan assets in the Funds and that all investments in the 
Funds on behalf of the Client Plans are made by Comerica pursuant to 
initial written authorizations and annual reauthorizations of the 
investments by an independent fiduciary of each of the Client Plans 
after receipt by that fiduciary of the current prospectus for the 
relevant Munder Funds and written disclosure of the investment advisory 
fees charged to the Client Plan and the Munder Funds.
    6. The Applicant believes that the advantages of permitting 
Comerica to invest the assets of Client Plans in the Funds include the 
fact that the Funds are valued daily, and their market values are 
quoted in daily publications of mass circulation. This permits the 
independent fiduciaries of the Client Plans to monitor their plans' 
investment performance on a daily basis without the need to communicate 
with Comerica Bank, unlike the case with Comerica's collective 
investment funds. The Funds also have the advantage of permitting 
investment and redemption on a daily basis, so that funds may be 
immediately invested in the desired medium, whereas some investments, 
such as some of Comerica's collective funds, are only available for 
investment and redemption monthly.
    7. The Applicant states that all investments of Client Plan assets 
in the Funds occur either through the direct purchase of shares of the 
Funds for a Client Plan by Comerica Bank, the liquidation of shares 
owned by a Client Plan in one Munder Fund and the simultaneous purchase 
of shares in another Munder Fund at the direction of Comerica, or an 
automated sweep of uninvested cash of a Client Plan by Comerica Bank 
into one or more Funds previously designated by the Client Plan for 
that purpose. Comerica states that the terms and conditions of these 
transactions are at least as favorable to the Client Plans as offered 
to other customers of Comerica Bank. The Client Plans pay no sales 
commissions or redemption fees in connection with transactions in the 
Fund shares executed at Comerica Bank's instruction. Comerica 
represents that it does not and will not receive fees payable pursuant 
to Rule 12b-1 in connection with transactions for Client Plans 
involving shares of the Funds.
    8. Comerica states that it charges management fees to its Client 
Plans in accordance with written fee agreements. These agreements are 
individually negotiated between the independent fiduciaries of the 
Client Plans and Comerica Bank. The fee agreements establish base 
management fees calculated as a percentage of assets under management 
and per-transaction fees for Secondary Services. Comerica represents 
that the fees charged to Client Plans for services performed are exempt 
from the prohibited transaction provisions of ERISA by Section 
408(b)(2) and the regulations under that Section at 29 CFR 2550.408b-
2.\1\
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    \1\ The Department notes that no relief is being proposed herein 
for prohibited transactions under the Act that arise in connection 
with the provision of services directly to the Client Plans that are 
not otherwise covered by section 408(b)(2) of the Act.
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    9. The Applicant represents that Munder is compensated for acting 
as investment advisor to each of the Munder Funds. Munder charges a 
uniform fee for acting as investment advisor to each of the Munder 
Funds equal to 0.75% of average net daily assets of each of the 
respective Munder Funds. The fee agreements between Munder and the 
Funds are approved by the Board of Directors of the Munder Funds in 
accordance with the applicable provisions of the 1940 Act. As described 
in detail below, Comerica states that it regularly rebates to Client 
Plans their proportional shares of Munder's investment advisory fee, so 
that Client Plans do not pay duplicative fees for investment advisory 
services to both Munder and Comerica Bank.
    10. The Applicant represents that all investments of Client Plans 
in the Funds occur through direct purchases of Fund shares from the 
Funds' distributor, Funds Distributors, Inc., which is not an affiliate 
of Comerica Bank. The Applicant represents that Client Plans pay no 
commissions or redemption fees in connection with purchases or sales of 
Fund shares, but Funds Distributors, Inc. is compensated by the Funds 
under a distribution plan adopted by the Funds pursuant to Rule 12b-1 
under the 1940 Act equal to an annual rate of 0.25% of the Funds' 
average daily net assets. The distribution fee is calculated daily and 
paid monthly.\2\
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    \2\ With respect to any fees paid by the Funds to parties 
unrelated to Comerica and its affiliates, the Department notes that 
Comerica, as a trustee or investment manager for a Client Plan's 
assets that are invested in the Funds, has a fiduciary duty to 
ensure that the fees indirectly paid by a plan to third parties are 
reasonable. The Department notes further that Comerica should ensure 
that services performed by Comerica or an affiliate for a fund are 
not duplicative of any similar services performed by third parties.
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    11. The Applicant states that Comerica Bank provides shareholder 
services to the Funds. Comerica Bank further notes that it receives 
shareholder servicing fees from the Funds of 0.25% of the average daily 
net asset value of Class K shares of equity and bond Munder Funds, and 
.15% of the average daily net asset value of Class K shares of money 
market Munder Funds under the Munder Funds' shareholder servicing 
plans. These services are not investment advisory services to the 
Funds, and consequently do not duplicate the fees for asset management 
charged by Comerica Bank to the Client Plans. Moreover, the Applicant 
represents that the shareholder services that Comerica Bank provides to 
the Funds are not duplicative of secondary trustee services for which 
Comerica Bank is compensated by the Client Plans or their sponsors 
either as part of the base management fee or from per-transaction fees. 
These secondary trustee services include processing distributions, 
maintaining participant accounts, executing investment directions, 
valuing plan assets, filing required reports, and compiling participant 
and plan sponsor reports. These trustee services are necessary whether 
or not a Client Plan's assets are invested in a Fund and may involve 
maintenance of Client Plan accounts reflecting ownership of Fund 
shares, whereas Comerica Bank's services to the Funds relate to 
securities owned by the

[[Page 54808]]

Funds and procedures necessary for servicing the Funds' 
shareholders.\3\
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    \3\ Paragraph (f) of Section I provides that the combined total 
of all fees received by Comerica directly and indirectly from the 
Client Plans for the provision of services to the Client Plans and/
or to the Funds may not be in excess of ``reasonable compensation'' 
within the meaning of section 408(b)(2) of the Act.
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    12. Comerica represents that it does not and will not provide 
securities brokerage services to either the Funds or the Client Plans, 
so that Comerica Bank will not generate brokerage fees with respect to 
securities transactions for the Client Plans.
    13. Comerica Bank represents that it uses automatic data systems to 
manage its fee arrangements with Client Plans. The automatic data 
systems create cash rebates of the appropriate amounts of Munder fees 
rather than crediting the Munder fees against Comerica Bank's 
management fees. It is solely for this reason that Comerica Bank cannot 
rely upon Prohibited Transaction Class Exemption 77-4 \4\ for the 
transactions described herein.
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    \4\ PTE 77-4, in pertinent part, permits the purchase and sale 
by an employee benefit plan of shares of a registered, open-end 
investment company when a fiduciary with respect to the plan is also 
the investment adviser for the investment company, provided that, 
among other things, the plan does not pay an investment management, 
investment advisory or similar fee with respect to the plan assets 
invested in such shares for the entire period of such investment. 
Section II(c) of PTE 77-4 states that this condition does not 
preclude the payment of investment advisory fees by the investment 
company under the terms of an investment advisory agreement adopted 
in accordance with section 15 of the 1940 Act. Section II(c) states 
further that this condition does not preclude payment of an 
investment advisory fee by the plan based on total plan assets from 
which a credit has been subtracted representing the plan's pro rata 
share of investment advisory fees paid by the investment company.
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    14. With respect to transactions that occurred prior to the 
effective date of this proposed exemption, Comerica notes the 
following: ``Comerica Bank's ERISA compliance officer was not aware 
until recently that the Department intended that PTE 77-4 be followed 
literally in crediting fund investment management fees rather than in 
rebating them. When the compliance officer was made aware of the 
distinction by published commentary, an assessment of the operation of 
Comerica Bank's trust fee systems was instituted and it was discovered 
that the computer system maintained by Comerica Bank generated rebates, 
not credits. The compliance officer then caused the Comerica exemption 
application to be prepared and filed. Comerica continues to rebate fund 
level investment management fees. Because the Department has issued 
other individual exemptions permitting the rebate of investment 
management fees and because the Client Plans reap financial advantages 
from Comerica Bank's rebating procedures, it was decided that the 
current procedures will be continued and be adjusted, if necessary, to 
secure the Department's approval of the individual exemption.'' 
Comerica further notes that: ``Correction of the exemption transactions 
would require the Client Plans to refund the investment returns 
received by virtue of receiving fee rebates earlier than fee credits 
would have been received under the requirements of PTE 77-4. Comerica 
Bank believes that the correction of the transactions is inappropriate 
under the circumstances.'' \5\
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    \5\ The Department expresses no opinion herein on whether the 
previous receipt of fees by Comerica from the Funds violated any of 
the provisions of Part 4 of Title I of the Act. The Department is 
providing no retroactive exemptive relief herein with respect to 
Comerica's previous receipt of fees from the Funds.
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    15. Comerica represents that it either charges a Client Plan 
directly for management fees or it invoices the Client Plan's plan 
sponsor for management fees. In some cases, a portion of a Client 
Plan's management fees are charged directly and a portion invoiced to 
the plan sponsor. Comerica states that it utilizes an automated system 
for Client Plans to which all management fees are charged directly. The 
automated system calculates the appropriate Munder fee rebate for each 
month on the last day of that month. The transfer of funds by Comerica 
Bank to Client Plans to rebate the Munder fees takes place on the 15th 
of the next month or the next business day if the fifteenth is not a 
business day.
    Depending on the management agreement between Comerica Bank and the 
Client Plan, the charge to Client Plans for Comerica Bank management 
fees or other fees occurs monthly, quarterly, semi-annually or 
annually, as appropriate, on the 15th day of the month (or the next 
business day, if later) after the fee calculation period and 
concurrently with the Munder fee rebate for the prior month. The 
Applicant states that the phrase ``after the fee calculation period'' 
means the Comerica management fees are paid in arrears.
    Comerica represents that for Client Plans for which some or all of 
the management fees are invoiced to the plan sponsor, Comerica has and 
continues to utilize an automated billing system. The automated fee 
calculation system calculates the Munder fee rebate for each such 
Client Plan on the last day of each month and transfers the rebate to 
each Client Plan on 15th day of the next month (or the next business 
day, if later). The automated billing system invoices Comerica 
management fees to the plan sponsor no later than the third to the last 
business day of the month after the end of the monthly, quarterly, 
semi-annual or annual fee calculation period. If a portion of the 
Comerica Bank management fees are charged directly to the Client Plan, 
the charge is made on the third to the last day of the month after the 
fee calculation period, and in no event before the posting of the 
Munder fee rebate for the prior month. The Applicant provides the 
following example. If Comerica charges its trust management fee 
monthly, then it earns its fee for January and is paid on February 15. 
The automated system calculates the appropriate cash rebate for Munder 
fees for January on January 31 and pays it to the trust account no 
later than February 15. If the trust account pays its management fee 
quarterly, then it would pay Comerica's management fees for January 
through March on April 15. The rebates of the Munder fees nevertheless 
proceed monthly on February 15, March 15 and April 15.
    16. Comerica Bank prefers the method it uses for rebating Munder 
fees because it permits the Client Plans to confirm that the fees paid 
to Comerica Bank are in accordance with its fee agreement, and Comerica 
Bank desires to avoid the expense of changing its data processing 
systems to calculate a credit of the Munder fees against the Comerica 
Bank management fees. Comerica represents that the Client Plans in many 
cases receive an advantage by the rebating method because they receive 
their rebates in advance of paying the Comerica Bank management fee, 
but in no case does a Client Plan receive its appropriate rebate later 
than the time at which it pays Comerica Bank's management fees. 
Moreover, Client Plans whose sponsors pay the management fees are in a 
better position under Comerica Bank's rebate program, since the Client 
Plans receive a greater return on their investments in Munder Funds.\6\
---------------------------------------------------------------------------

    \6\ To the extent that the Department of the Treasury determines 
that this arrangement should be deemed a contribution by an employer 
to a Client Plan of the rebated fees, the transaction must be 
examined under the applicable provisions of the Code, including 
sections 401(a)(4), 404 and 415.
---------------------------------------------------------------------------

    17. Comerica represents that it has established a system of 
internal controls to ensure the proper rebating of Munder investment 
management fees to clients. The calculation of asset management fees 
and rebate of Munder fees is an automated function of the computer 
program that controls the rebates and is accomplished with minimal 
human

[[Page 54809]]

intervention. The asset management fee and Munder rebate calculation 
logic is coded into the computer program. Thus, once the calculation 
logic is confirmed as producing the intended rebates, the opportunity 
for error in the rebate calculation method is nil. Access to the 
computer application files in which the computer program is maintained 
is strictly controlled, and any changes must be reviewed by authorized 
personnel in both the Trust Systems Department and the Information 
Systems Department. In addition, Comerica states that its Information 
Technology audit group performs periodic internal audits of the 
controls over all mainframe computer system changes, including changes 
to the program that controls the Munder fee rebates. The Comerica Bank 
Trust Operations group maintains a computer spreadsheet of the 
investment management fee rates applicable to each trust asset. Each 
month a review is conducted to ensure the system rate and the 
spreadsheet rate are the same. Munder's fees charged to the Munder 
Funds are extracted from the Funds' published prospectuses, and once 
entered into the computer files are also protected from unauthorized 
access. All data changes are reviewed and approved by appropriate 
personnel in the Trust Operations Department. Comerica Bank Trust 
Operations handles the actual transfer of cash used for fee rebates 
from a Munder account to a Comerica account. It performs a monthly 
reconciliation between cash received from Munder and rebates calculated 
by the computer system. Comerica Bank Trust Operations performs a 
quarterly review of Munder fees/rebates and Munder reviews the results 
of this self-audit. Additionally, Comerica Bank Institutional Trust and 
Private Banking management receive reports of the results and conduct 
an independent review.
    Comerica Bank's internal audit department performs annual reviews 
of fee income reconciliation including Munder fee rebates. In the event 
an error is made in the rebating of fees to the Client Plans, Comerica 
asserts that it will correct the error and conduct further audits to 
determine whether the error occurred with respect to other Client 
Accounts. With respect to any shortfall in rebated fees to a Client 
Plan, Comerica Bank will make a cash payment to the Client Plan equal 
to the amount of the error with interest computed on the same yield as 
that paid by the Client Plan's money market fund or the Federal Funds 
rate if no money market fund is used for the period involved. Any 
excess rebates made to a Client Plan will be corrected, to the extent 
possible, by an appropriate reduction of cash rebate to the Client Plan 
during the next payment period.
    18. Comerica Bank represents that the independent fiduciary of each 
Client Plan who approves the investment of assets in the Munder Funds 
receives full and detailed disclosure of information concerning the 
fees paid by the Funds, including the investment advisory fees of 
Munder Capital Management and fees paid for shareholder services to 
Comerica Bank both before the authorization of the investments by the 
independent fiduciary and at least 30 days before any increase in the 
fees.\7\ In the event that Comerica Bank provides an additional service 
to a Fund for which a fee is charged or there is an increase in the 
amount of fees paid by the Funds to Comerica Bank for any services 
resulting from a decrease in the number or kinds of services performed 
by Comerica Bank, it will provide thirty day's advance written notice 
of the such additional services or fee increase, provide written notice 
to the independent fiduciaries explaining the nature and the amount of 
the additional services for which a fee will be charged or the nature 
and the amount of the increase in fees from the affected Munder Fund. 
Such notice will be made separate from the Munder Fund prospectuses and 
will be accompanied by a Termination Form. The independent fiduciary 
will also receive full written disclosure in a Munder Fund prospectus 
of any increase in the rate of fees charged by Munder Capital 
Management for investment advisory services even though such fees will 
be rebated to the Client Plans.
---------------------------------------------------------------------------

    \7\ With respect to increases in fees, the Department notes that 
an increase in the amount of a fee for an existing Secondary Service 
(other than through an increase in the value of the underlying 
assets in the Funds) or the imposition of a fee for a newly 
established Secondary Service shall be considered an increase in the 
rate of such fees. However, in the event a Secondary Service fee has 
already been described in writing to the Second Fiduciary and the 
Second Fiduciary has provided authorization for the fee, and such 
fee was temporarily waived, no further action by Comerica would be 
required in order for Comerica to receive such fee at a later time. 
Thus, for example, no further disclosure would be necessary if 
Comerica had received authorization for a fee for custodial services 
from Plan investors and subsequently determined to waive the fee for 
a period of time in order to attract new investors but later charged 
the fee.
---------------------------------------------------------------------------

    19. Any authorizations by an independent fiduciary regarding the 
investment of a Client Plan's assets in a Fund and the fees to be paid 
to Munder and Comerica Bank, including any future increases in rates of 
fees for Secondary Services, are or will be terminable at will by the 
independent fiduciary, without penalty to the Client Plan, upon receipt 
by Comerica Bank of written notice of termination. Comerica states that 
a termination form expressly providing an election to terminate the 
authorization will be supplied to the independent fiduciary upon 
initial authorization. Instructions on the use of the Termination Form 
will be supplied to the independent fiduciary no less than annually. 
The instructions for the termination form include the following 
information:
    (a) The authorization is terminable at will by the Client Plan, 
without penalty to the Client Plan, upon receipt by Comerica Bank of 
written notice from the independent fiduciary; and
    (b) Failure to return the form will result in continued 
authorization of Comerica Bank to engage in the subject transactions on 
behalf of the Client Plan.
    (c) Additional Termination Forms are available at any time from 
Comerica Bank upon request.
    The Termination Form may be used to notify Comerica Bank in writing 
to effect a termination by selling the shares of the Funds held by the 
Client Plan requesting such termination within one business day 
following receipt by Comerica Bank of the form. Comerica states that 
if, due to circumstances beyond its control, the sale cannot be 
executed within one business day, it will complete the sale within the 
next business day.
    20. Comerica represents that any disclosure of information 
regarding a proposed increase in the rate of any fees for Secondary 
Services will be accompanied by an additional Termination Form with 
instructions on the use of the form as described above. Therefore, the 
independent fiduciary will have prior notice of the proposed increase 
and an opportunity to withdraw from the Funds in advance of the date 
the increase becomes effective. Although the independent fiduciary will 
also have notice of any increase in the rates of fees charged by Munder 
to the Funds for investment advisory services, through an updated 
prospectus or otherwise, such notice will not be accompanied by a 
Termination Form since all increases in investment advisory fees will 
be rebated by Comerica Bank to the Client Plans and will be subject to 
an annual reauthorization as described above.
    21. Comerica states that the independent fiduciary always receives 
a current prospectus for each Munder Fund and a written statement 
giving full disclosure of the fee structure prior to any investment in 
the Funds. The disclosure statement explains why

[[Page 54810]]

Comerica believes that the investment of assets of the Client Plan in 
the Fund is appropriate. The disclosure statement also describes any 
limitations on Comerica with respect to which Client Plan assets may be 
invested in shares of the Munder Funds and the nature of such 
limitations.\8\ Comerica provides further that the independent 
fiduciary receives an updated prospectus for each Fund at least 
annually and annual financial reports for each Fund. Comerica Bank also 
provides monthly reports to the independent fiduciary of all 
transactions engaged in by the Client Plan, including purchases and 
sales of Fund shares.
---------------------------------------------------------------------------

    \8\ See section II(d) of PTE 77-4 requires, in pertinent part, 
that an independent plan fiduciary receive a current prospectus 
issued by the investment company and a full and detailed written 
disclosure of the investment advisory and other fees charged to or 
paid by the plan and the investment company, including a discussion 
of whether there are any limitations on the fiduciary/investment 
adviser with respect to which plan assets may be invested in shares 
of the investment company and, if so, the nature of such 
limitations.
---------------------------------------------------------------------------

    22. In summary, Comerica represents that the transactions described 
above satisfy the statutory criteria of section 408(a) of the Act and 
section 4975(c)(2) of the Code because: (a) The Funds provide the 
Client Plans with a more effective investment vehicle than collective 
investment funds maintained by Comerica Bank without any increase in 
investment management, advisory or similar fees paid to Comerica; (b) 
Comerica Bank's automated system of fee rebates and its controls and 
auditing procedures for protecting the system and periodically 
verifying the accuracy of rebates to Client Plans will insure that the 
proper rebates are credited to the Client Plans; (c) with respect to 
any investments in a Fund by the Client Plans and the payment of any 
fees by the Fund to Comerica Bank for services, an independent 
fiduciary receives full written disclosure of information concerning 
the Fund, including a current prospectus and a statement describing the 
fee structure, and authorizes in writing the investment of the Client 
Plan's assets in the Munder Fund and the fees paid by the Fund to 
Comerica Bank; (d) any authorizations made by a Client Plan regarding 
investments in a Fund and fees paid to Munder, or any increases in the 
rates of fees for secondary services which are retained by Comerica 
Bank, are or will be terminable at will by the Client Plan, without 
penalty to the Client Plan, upon receipt by Comerica Bank of written 
notice of termination from the independent fiduciary; (e) no 
commissions or redemption fees are paid by the Client Plan in 
connection with either the acquisition or sale of Fund shares; (f) 
Comerica Bank does not receive any fees payable pursuant to Rule 12b-1 
under the 1940 Act in connection with transactions in Fund shares for 
Client Plans; and (g) all dealing between the Client Plans, the Funds 
and Comerica Bank, are on a basis which is at least as favorable to the 
Client Plans as such dealings are with other shareholders of the Munder 
Funds.

Notice to Interested Persons

    Notice of the proposed exemption shall be given to all Second 
Fiduciaries of Client Plans that are currently invested in the Funds, 
as of the date the notice of the proposed exemption is published in the 
Federal Register, where Comerica Bank provides services to the Funds 
and receives fees that would be covered by the exemption, if granted. 
Notice to interested persons shall be provided by first class mail 
within fifteen (15) days following publication of the proposed 
exemption in the Federal Register. Such notice shall include a copy of 
the notice of proposed exemption as published in the Federal Register 
and a supplemental statement (see 29 CFR 2570.43(b)(2)) which informs 
all interested persons of their right to comment on and/or request a 
hearing with respect to the proposed exemption. Comments and requests 
for a public hearing are due within forty-five (45) days following 
publication of the proposed exemption in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Ms. Wendy McColough of the Department, 
telephone (202) 693-8561. This is not a toll-free number.

Linda Ann Smith, M.D. Profit Sharing Plan and Trust (the Plan), Located 
in Albuquerque, NM

[Application No. D-11223]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Act and section 4975(c)(2) of the 
Code and in accordance with the procedures set forth in 29 CFR Part 
2570, Subpart B (55 FR 32836, August 10, 1990).\9\ If the exemption is 
granted, the restrictions of sections 406(a), 406(b)(1) and (b)(2) of 
the Act and the sanctions resulting from the application of section 
4975 of the Code by reason of section 4975(c)(1)(A) through (E) of the 
Code shall not apply to the proposed exchange of an unimproved tract of 
land located in Nathrop, Colorado (Lot 154), which is owned by the Plan 
and allocated to the individually-directed account (the Account) in the 
Plan of Linda Ann Smith, M.D., for one unimproved tract of land (Lot 
85) located in San Pedro Creek Estates, New Mexico, which is owned 
jointly by Dr. Smith, and her spouse, Mr. Harold G. Field (the 
Applicants).
---------------------------------------------------------------------------

    \9\ For purposes of this proposed exemption, references to 
specific provisions of the Title I of Act, unless otherwise 
specified, refer also to the corresponding provisions of the Code.
---------------------------------------------------------------------------

    This proposed exemption is subject to the following conditions:
    (a) The exchange of Lot 154 by the Account for Lot 85 owned by the 
Applicants is a one-time transaction.
    (b) The fair market value of Lot 154 and Lot 85 is determined by 
qualified, independent appraisers, who will update their appraisal 
reports at the time the exchange is consummated.
    (c) For purposes of the exchange, Lot 85 has a fair market value 
that is more than the fair market value of Lot 154.
    (d) The terms and conditions of the exchange are at least as 
favorable to the Account as those obtainable in an arm's length 
transaction with an unrelated party.
    (e) The exchange does not involve more than 25 percent of the 
Account's assets.
    (f) Dr. Smith is the only participant in the Plan whose Account is 
affected by the exchange and she desires that the transaction be 
consummated.
    (g) The Account does not pay any real estate fees or commissions in 
conjunction with the exchange.

Summary of Facts and Representations

    1. Dr. Smith, a surgeon, is the sole practitioner in the Linda Ann 
Smith, M.D., LLC (the Employer). Her medical practice, which employs 
three full-time employees and four part-time employees, is located in 
Albuquerque, New Mexico.
    2. The Plan is a profit sharing plan that was established by the 
Employer, effective February 1, 1993, for the benefit of Dr. Smith's 
employees. As of December 31, 2003, which is the date the most recent 
financial information is available, the Plan had 3 participants and 
assets having an aggregate fair market value of $946,888. Of this 
total, the Account had total assets of approximately of $847,393.
    3. The trustee of the Plan (the Trustee) is Harold G. Field, the 
husband of Dr. Smith. Mr. Field does not have an individually-directed 
account in the Plan. Pursuant to provisions of the Plan, each 
participant has the right to direct investments under the Plan for his 
or her own respective account. In such instances, the investments are

[[Page 54811]]

earmarked for the accounts of the participants directing such 
investments.
    4. Among the assets in Dr. Smith's Account in the Plan is Lot 154. 
Lot 154 is an unimproved parcel of land located at 3 Mesa Antero 
Subdivision Nathrop, Colorado. Lot 154, which consists of approximately 
3.7 acres, was acquired by the Account in 1996 for investment purposes 
from an unrelated third party. The Account paid $29,007.90 for Lot 154. 
The consideration was paid in cash. Lot 154 is also located in close 
proximity to another property, which is jointly owned by the 
Applicants. Since the time of acquisition, the only expenses associated 
with the Account's ownership of Lot 154 have been real estate taxes, 
totaling $6,682.58. These expenses have been paid by the Applicants.
    5. Lot 154 has been appraised by Ms. Judee Nuechter, CRA, a 
qualified, independent appraiser. Ms. Nuechter is affiliated with the 
real estate appraisal firm of Mountain Appraisal Associates, Inc. of 
Salida, Colorado. In an appraisal report dated November 5, 2003, Ms. 
Nuechter placed the fair market value of a fee simple interest in Lot 
154 at $160,000 as of November 24, 2003 on an ``as is'' basis. In 
valuing Lot 154, Ms. Nuechter utilized the Sales Comparison Approach 
because she believed this method would yield the most reliable 
indication of fair market value since other valuation methods were not 
applicable to the unimproved vacant lots in the subject neighborhood.
    6. In addition, on June 9, 2004, Ms. Nuechter assessed the unique 
value of Lot 154 since the Applicants own a lot adjacent to the subject 
lot. According to Ms. Nuechter, the value of each lot is separate from 
any other lot because each lot is considered a single family 
residential site. Ownership of an individual lot or parcel is 
considered a separate unit, which is unable to be combined for building 
purposes, and neither lot impacts the value of the other, regardless of 
lot ownership of record. Ms. Nuechter explained that each lot located 
within vicinity of Lot 154 is valued as a single parcel that offers the 
same amenities and potential for development only as a single family 
residential site. Therefore, Ms. Nuechter concludes that ownership of 
an adjacent parcel would have no impact on the valuation of other 
parcels within Lot 154's vicinity. On the basis of Ms. Nuechter's 
appraisal, Lot 154 currently represents approximately 19% of the 
Account's assets.
    7. Lot 85 is presently owned jointly by the Applicants. This 
unimproved parcel of land is located in San Pedro Creek Estates, New 
Mexico, approximately 25 miles northeast of Albuquerque in the 
foothills of the Sandia Mountains. Lot 85, which consists of about 10 
acres of land, was acquired in March 27, 1997 by the Applicants for 
investment purposes. The seller was the Campbell Farming Corporation, 
an unrelated third party and the original developer of the subdivision. 
The Applicants paid $98,268 in cash for Lot 85. Since 1997, all 
expenses associated with Lot 85 have been paid by the Applicants. These 
costs have included $450 for a septic tank, $1,200 for a transformer, 
and $4,456.19 in real estate taxes.
    8. Lot 85 has been appraised by Mr. Darrell Ratchner, SRA, a 
qualified, independent appraiser, who is affiliated with the appraisal 
firm of Darrell Ratchner & Associate of Salida, Colorado. In an 
appraisal report dated August 23, 2003, Mr. Ratchner placed the fair 
market value of a fee simple interest in Lot 85 at $175,000 also as of 
August 23, 2003. In valuing Lot 85, Mr. Ratchner utilized the Sales 
Comparison Approach. Mr. Ratchner noted that sales of vacant sites in 
the subject subdivision where Lot 85 is located have continued at a 
steady pace, with modest price increases over the past several years. 
According to Mr. Ratchner, Lot 85's good access, topography, location 
and vegetation all support a market estimate near the mid to upper end 
of the range.
    9. Because the Applicants own a parcel of real property adjacent to 
Lot 154, they wish to avoid engaging in a future prohibited transaction 
by inadvertently using Lot 154. Therefore, the Applicant's legal 
representative has suggested that the Applicant's exchange the 
aforementioned unimproved real estate property (i.e., Lot 154) for Lot 
85, which is owned by the Account in a like-kind exchange under section 
1031 of the Code.\10\ Thus, the Applicants have requested an 
administrative exemption from the Department to exchange Lot 85 for Lot 
154. Following the exchange, Lot 154 will represent approximately 21% 
of the Account's assets.
---------------------------------------------------------------------------

    \10\ Section 1031 of the Code, which covers like-kind exchanges 
(i.e., 1031 Exchanges), refers to the exchange of business or 
investment property solely for business or investment property of a 
like-kind. No gain or loss is recognized under section 1031 of the 
Code. If, as part of a 1031 Exchange, one also receives other 
property or money, gain is recognized to the extent of the other 
property and money received, but a loss is not recognized. Section 
1031 of the Code does not apply to exchanges of inventory, stocks, 
bonds, notes, other securities or evidence of indebtedness, or 
certain other assets. Properties eligible for a 1031 Exchange are of 
the same nature or character, even if they differ in grade or 
quality. Personal property of a like-class are permissible for the 
purpose of a 1031 Exchange. The terms concerning the subject 1031 
Exchange are listed in the exchange agreement.
---------------------------------------------------------------------------

    10. The exchange will be a one-time transaction between the 
Applicants and the Account. For purposes of the exchange, the fair 
market value of Lot 154 and Lot 85 will be updated on the date of the 
transaction by the independent appraisers who previously valued the 
properties. Moreover, the Account will not be required to pay any real 
estate fees or commissions in connection with the transaction.
    11. In summary, it is represented that the proposed transaction 
will satisfy the statutory requirement for an exemption under section 
408(a) of the Act because:
    (a) The exchange of Lot 154 by the Account for Lot 85 owned by the 
Applicants will be a one-time transaction.
    (b) The fair market value of Lot 154 and Lot 85 will be determined 
by qualified, independent appraisers who will update their appraisal 
reports at the time the exchange is consummated.
    (c) For purposes of the exchange, Lot 85 will have a fair market 
value that will be more than the fair market value of Lot 154.
    (d) The terms and conditions of the exchange will be at least as 
favorable to the Account as those obtainable in an arm's length 
transaction with an unrelated party.
    (e) The exchange will not involve more than 25 percent of the 
Account's assets.
    (f) Dr. Smith is the only participant in the Plan whose Account 
will be affected by the exchange and she desires that the transaction 
be consummated.
    (g) The Account will not pay any real estate fees or commissions in 
conjunction with the exchange.

Notice To Interested Persons

    Because Dr. Smith is the only participant in the Plan whose Account 
will be affected by the proposed transaction, it has been determined 
that there is no need to distribute the notice of proposed exemption to 
interested persons. Therefore, comments and requests for a hearing are 
due 30 days after publication of the notice of pendency in the Federal 
Register.

FOR FURTHER INFORMATION CONTACT: Mr. Arjumand A. Ansari of the 
Department at (202) 693-8566. (This is not a toll-free number.)

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve

[[Page 54812]]

a fiduciary or other party in interest or disqualified person from 
certain other provisions of the Act and/or the Code, including any 
prohibited transaction provisions to which the exemption does not apply 
and the general fiduciary responsibility provisions of section 404 of 
the Act, which, among other things, require a fiduciary to discharge 
his duties respecting the plan solely in the interest of the 
participants and beneficiaries of the plan and in a prudent fashion in 
accordance with section 404(a)(1)(b) of the Act; nor does it affect the 
requirement of section 401(a) of the Code that the plan must operate 
for the exclusive benefit of the employees of the employer maintaining 
the plan and their beneficiaries;
    (2) Before an exemption may be granted under section 408(a) of the 
Act and/or section 4975(c)(2) of the Code, the Department must find 
that the exemption is administratively feasible, in the interests of 
the plan and of its participants and beneficiaries, and protective of 
the rights of participants and beneficiaries of the plan;
    (3) The proposed exemptions, if granted, will be supplemental to, 
and not in derogation of, any other provisions of the Act and/or the 
Code, including statutory or administrative exemptions and transitional 
rules. Furthermore, the fact that a transaction is subject to an 
administrative or statutory exemption is not dispositive of whether the 
transaction is in fact a prohibited transaction; and
    (4) The proposed exemptions, if granted, will be subject to the 
express condition that the material facts and representations contained 
in each application are true and complete, and that each application 
accurately describes all material terms of the transaction which is the 
subject of the exemption.

    Signed at Washington, DC, this 7th day of September, 2004.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. 04-20537 Filed 9-9-04; 8:45 am]

BILLING CODE 4510-29-P