As filed with the Securities and Exchange Commission
on October 31, 1996
Registration Nos. 33-
811-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
----
Post-Effective Amendment No. [ ]
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REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
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(Check appropriate box or boxes)
The Munder Framlington Funds Trust
(Exact Name of Registrant as Specified in Charter)
480 Pierce Street, Birmingham, Michigan 48009
(Address of Principal Executive Offices) (Zip code)
Registrant's Telephone Number: (810) 647-9200
Paul F. Roye, Esq.
Dechert Price & Rhoads
1500 K Street, N.W., Suite 500
Washington, D.C. 20005
(Name and Address of Agent for Service)
Copies to:
Lisa Anne Rosen, Esq.
Munder Capital Management
480 Pierce Street
Birmingham, Michigan 48009
Registrant elects to register an indefinite number of shares of common
stock under the Securities Act of 1933 pursuant to Rule 24f-2 under the
Investment Company Act of 1940. Registrant intends to file the notice required
by Rule 24f-2 with respect to its fiscal year ending June 30, 1997 on or before
August 29, 1997.
<PAGE>
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
<PAGE>
The Munder Framlington Funds Trust
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
PART A
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Prospectus for The Munder Framlington Funds Trust
(Class A, B and C Shares)
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Prospectus
Summary; Expense
Table
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page;
Prospectus
Summary;
Investment
Objective and
Policies;
Description of
Shares
5. Management of the Fund Management;
Investment
Objective and
Policies;
Dividends and
Distributions;
Performance
6. Capital Stock and Other Securities Management; How
to Purchase
Shares; How to
Redeem Shares;
Dividends and
Distributions;
Taxes;
Description of
Shares
7. Purchase of Securities Being Offered How to Purchase
Shares; Net Asset
Value
8. Redemption or Repurchase How to Redeem
Shares
<PAGE>
9. Pending Legal Proceedings Not Applicable
Prospectus for The Munder Framlington Funds Trust
(Class K Shares)
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Expense Table
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page;
Investment
Objective and
Policies;
Description of
Shares
5. Management of the Fund Management;
Investment
Objective and
Policies;
Dividends and
Distributions;
Performance
6. Capital Stock and Other Securities Management;
Purchases and
Redemptions of
Shares; Dividends
and
Distributions;
Taxes;
Description of
Shares
7. Purchase of Securities Being Offered Purchases and
Redemptions of
Shares; Net Asset
Value
8. Redemption or Repurchase Purchases and
Redemptions of
Shares
9. Pending Legal Proceedings Not Applicable
Prospectus for The Munder Framlington Funds Trust
(Class Y Shares)
<PAGE>
Item Heading
---- -------
1. Cover Page Cover Page
2. Synopsis Expense Table
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Cover Page;
Investment
Objective and
Policies;
Description of
Shares
5. Management of the Fund Management;
Investment
Objective and
Policies;
Dividends and
Distributions;
Performance
6. Capital Stock and Other Securities Management;
Purchases and
Redemptions of
Shares; Dividends
and
Distributions;
Taxes;
Description of
Shares
7. Purchase of Securities Being Offered Purchases and
Redemptions of
Shares; Net Asset
Value
8. Redemption or Repurchase Purchases and
Redemptions of
Shares
9. Pending Legal Proceedings Not Applicable
PART B
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10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History See Prospectus --
<PAGE>
"Management;"
General;
Directors and
Officers
13. Investment Objectives and Policies Fund Investments;
Additional
Investment
Limitations;
Portfolio
Transactions
14. Management of the Fund See Prospectus --
"Management;"
Directors and
Officers;
Miscellaneous
15. Control Persons and Principal See Prospectus --
Holders of Securities "Management;"
Miscellaneous
16. Investment Advisory and Other Investment
Services Advisory
Services and
Other Service
Arrangements; See
Prospectus --
"Management"
17. Brokerage Allocation and Other Portfolio
Practices Transactions
18. Capital Stock and Other Securities See Prospectus --
"Description of
Shares" and
"Management;"
Additional
Information
Concerning Shares
19. Purchase, Redemption and Pricing Purchase and
of Securities Being Offered Redemption
Information; Net
Asset Value;
Additional
Information
Concerning Shares
20. Tax Status Taxes
21. Underwriters Distribution of
Fund Shares
<PAGE>
22. Calculation of Performance Data Performance
Information
23. Financial Statements Not Applicable
<PAGE>
THE MUNDER FRAMLINGTON FUNDS TRUST
480 Pierce Street
Birmingham, Michigan 48009
Telephone (800) 438-5789
PROSPECTUS
Class A, Class B and Class C Shares
The Munder Framlington Funds Trust (the "Trust") is an open-end
investment company (a mutual fund) that currently offers a selection of three
investment portfolios. This Prospectus describes the Class Y shares of the
investment portfolios offered by the Trust (the "Funds"):
Munder Framlington International Growth Fund
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Capital Management (the "Advisor") serves as investment advisor
to the Funds. Framlington Overseas Investment Management Limited (the
"Sub-Advisor") serves as sub-advisor to the Funds.
This prospectus contains the information that a prospective investor
should know before investing in the Funds. Investors are encouraged to read this
Prospectus and retain it for future reference. A Statement of Additional
Information dated ______, 1997, as amended or supplemented from time to time,
has been filed with the Securities and Exchange Commission (the "SEC") and is
incorporated by reference into this Prospectus. The Statement of Additional
Information may be obtained free of charge by calling the Trust at (800)
438-5789. In addition, the SEC maintains a web site (http://www.sec.gov) that
contains the Statement of Additional Information and other information regarding
the Funds.
Shares of the Funds are not deposits or obligations of, or guaranteed
or endorsed by, any bank, and are not insured or guaranteed by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
An investment in the Funds involves investment risks, including the possible
loss of principal.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ____________, 1996
<PAGE>
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY 4
EXPENSE TABLE 8
THE TRUST 11
INVESTMENT OBJECTIVES AND POLICIES 11
International Growth Fund 11
Emerging Markets Fund 12
Healthcare Fund 12
Information Regarding All Funds 13
PORTFOLIO INSTRUMENTS AND PRACTICES AND
ASSOCIATED RISK FACTORS 13
INVESTMENT LIMITATIONS 23
HOW TO PURCHASE SHARES 24
HOW TO REDEEM SHARES 33
CONVERSION OF CLASS B SHARES 38
HOW TO EXCHANGE SHARES 39
DIVIDENDS AND DISTRIBUTIONS 40
NET ASSET VALUE 41
MANAGEMENT 43
Board of Trustees 43
Investment Advisor and Sub-Advisor 43
Portfolio Managers 47
Administrator, Custodian and Transfer Agent 47
TAXES 50
Taxes - Foreign Investments 51
DESCRIPTION OF SHARES 52
Reports to Shareholders 53
PERFORMANCE 53
SHAREHOLDER ACCOUNT INFORMATION 54
<PAGE>
No person has been authorized to give any information, or to make any
representations not contained in this Prospectus, or in the Funds' Statement of
Additional Information incorporated herein by reference, in connection with the
offering made by this Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Funds
or Funds Distributor, Inc. (the "Distributor"). This Prospectus does not
constitute an offering by the Funds or by the Distributor in any jurisdiction in
which such offering may not lawfully be made.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing in this Prospectus.
Investment Objectives
The investment objective of each of the Funds is to provide shareholders with
long-term capital appreciation.
Principal Investments
International Growth Fund seeks to achieve its objective through worldwide
investment in equity securities of companies that show above-average
profitability, management quality and growth. Emerging Markets Fund seeks to
achieve its objective through investing primarily in equity securities of
issuers in emerging market countries. Healthcare Fund seeks to achieve its
objective through investment in companies providing healthcare and medical
services and products worldwide. Equity securities include common stock,
preferred stock, warrants or rights to subscribe to or purchase such securities
and sponsored or unsponsored American Depositary Receipts, European Depositary
Receipts and Global Depositary Receipts. Each of the Funds may also lend its
portfolio securities and borrow money for investment purposes (i.e., "leverage"
its portfolio). In addition, each Fund may enter into transactions in options on
securities, securities indices and foreign currencies, forward foreign currency
contracts, and futures contracts and related options.
Investment Risks and Special Considerations
A Fund's performance and price per Share will change daily based on
many factors, including interest rate levels, the quality of the instruments in
each Fund's investment portfolio, national and international economic
conditions, the overall level of equity prices, general market conditions and
international exchange rates. Depending on these factors, the net asset value of
each Fund may decrease instead of increase. The Funds may seek to achieve their
investment objectives through investments in securities of foreign issuers,
including issuers in emerging market countries (that involve risks not typically
associated with U.S. issuers), and certain options and futures strategies. The
Funds may invest in the securities of emerging growth companies, which may
involve greater price volatility and risk than those incurred by funds that do
not invest in such companies. There is no assurance that any Fund will achieve
its investment objective. See "Portfolio Instruments and Practices and
Associated Risk Factors."
Purchase Plans
This Prospectus offers three classes, "Class A," "Class B," and "Class
C," respectively, of shares to investors. Investors may select Class A shares,
Class B shares or Class C shares, each with different expense levels and with a
public offering price that reflects different sales charges. Purchases in excess
of $250,000 must be for Class A or Class C shares. Each Fund also offers two
additional classes of shares, Class K shares and Class Y shares. These classes
of the Funds may have different sales charges and expense levels, which may
affect performance. Investors may call the Funds at (800) 438-5789 for more
information concerning Class K shares and Class Y shares.
Class A Shares
Offered at net asset value plus a maximum initial sales charge of
5.50%. Class A shares of each Fund pay a shareholder servicing fee at the
annual rate of .25% of the value of average daily net assets. See "How to
Purchase Shares."
Class B Shares
Offered at net asset value per share subject to a contingent deferred
sales charge ("CDSC") imposed on certain redemptions made within six years of
the date of purchase at the maximum rate of 5.00% of the lesser of the shares'
net asset value or original purchase price. Class B shares of each Fund are
subject to shareholder servicing and distribution fees at the annual rate of
1.00% of the value of average daily net assets. Class B shares will convert
automatically to Class A shares, based on relative net asset value, at the end
of six years after the date of original purchase. See "How to Purchase Shares."
Class C Shares
Offered at net asset value per share subject to a CDSC imposed on
certain redemptions made within one year of the date of purchase at the rate of
1.00% of the lesser of the shares' net asset value or original purchase price.
Class C shares of each Fund are subject to shareholder servicing and
distribution fees at the annual rate of 1.00% of the value of average daily net
assets.
Purchasing Shares
Class A shares, Class B shares and Class C shares of the Fund are
offered continuously and may be purchased from the Distributor through certain
broker-dealers and other financial institutions or through First Data Investor
Services Group, Inc. (the "Transfer Agent"). Shares are subject to the
applicable sales charge or CDSC. See "How to Purchase Shares."
Minimum Investment
$1,000 minimum investment ($50 through Automatic Investment Plan).
$50 minimum for subsequent purchases.
Exchange Privileges
Shares may be exchanged for shares of the same class of other funds of
the Trust, The Munder Funds, Inc. or The Munder Funds Trust, subject to any
applicable sales charges. See "How to Exchange Shares."
Reinvestment
Automatic reinvestment of dividends and capital gains without a sales
charge or CDSC, unless a shareholder elects to receive cash.
Other Features
Class A Shares Class B Shares Class C Shares
Automatic Investment Plan Automatic Investment Plan Automatic Investment Plan
Automatic Withdrawal Plan Automatic Withdrawal Plan Automatic Withdrawal Plan
Retirement Plans Retirement Plans Retirement Plans
Telephone Exchanges Telephone Exchanges Telephone Exchanges
Rights of Accumulation Reinvestment Privilege Reinvestment Privilege
Letter of Intent
Quantity Discounts
Reinvestment Privilege
Dividends and Other Distributions
Dividends from net investment income are declared and paid at least
annually for each of the Funds; capital gains are distributed at least annually.
Net Asset Value
Determined once daily on each Business Day (as defined below).
Redeeming Shares
Class A shares of the Funds may be redeemed at net asset value per
share by mail or telephone. Certain redemptions of Class A shares may be
subject to a CDSC. Class B and Class C shares are redeemable at net asset value
less any applicable CDSC by mail or telephone. See "How to Redeem Shares."
Investment Advisor; Sub-Advisor
As investment advisor for the Funds, Munder Capital Management provides
overall investment management for each Fund, provides research and credit
analysis, oversees the purchases and sales of portfolio securities by the
Sub-Advisor, maintains records relating to such purchases and sales, and
provides reports to the Trust's Board of Trustees. As Sub-Advisor for the Funds,
Framlington Overseas Investment Management Limited is responsible for the
management of each Fund's portfolio; including all decisions regarding purchases
and sales of portfolio securities by the Funds. See "Management -- Investment
Advisor."
Distributor
Funds Distributor, Inc.
<PAGE>
EXPENSE TABLE
The following table sets forth certain costs and expenses that an
investor is expected to incur either directly or indirectly as a shareholder of
the Funds based on estimated operating expenses for the current fiscal year.
<TABLE>
<C> <C> <C> <C>
Class A Shares
---------------- ----------------- -------------------
International Emerging Healthcare
Growth Fund Markets Fund Fund
---------------- ----------------- -------------------
Shareholder transaction expenses:
Maximum sales load on purchases * 5.50% 5.50% 5.50%
Maximum sales load on reinvested dividends None None None
Maximum contingent deferred sales charge ** None None None
Redemption fees None None None
Exchange fees None None None
Annual Fund operating fees:
(as a percentage of average net assets)
Advisory fees 1.00% 1.25% 1.00%
12b-1 fees .25% .25% .25%
Other expenses ___% ___% ___%
Total fund operating expenses ____% ____% ____%
------------------
*Maximum sales load applicable to Class A shares. Reductions and waivers of
sales loads are described under "How to Purchase Shares." **A deferred
sales charge of 1.00% is assessed on certain redemptions of Class A shares
of the Funds that are purchased with no initial sales charge as part of an
investment of $1,000,000 or more.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Class B Shares
---------------- ----------------- -------------------
International Emerging Healthcare
Growth Fund Markets Fund Fund
---------------- ----------------- -------------------
Shareholder transaction expenses:
Maximum sales load on purchases None None None
Maximum sales load on reinvested dividends None None None
Maximum contingent deferred sales charge * 5.00% 5.00% 5.00%
Redemption fees None None None
Exchange fees None None None
Annual Fund operating fees:
(as a percentage of average net assets)
Advisory fees 1.00% 1.00% __1.00%
12b-1 fees 1.00% 1.00% 1.00%
Other expenses ___% ___% ___%
Total fund operating expenses ____% ____% ____%
------------------
*Maximum CDSC applicable to Class B shares. See "How to Redeem Shares Contingent Deferred Sales Charge--Class B Shares."
Waivers of CDSC are described under "How to Redeem Shares."
</TABLE>
<TABLE>
<S> <C> <C> <C>
Class C Shares
---------------- ----------------- -------------------
International Emerging Healthcare
Growth Fund Markets Fund Fund
---------------- ----------------- -------------------
Shareholder transaction expenses:
Maximum sales load on purchases None None None
Maximum sales load on reinvested dividends None None None
Maximum contingent deferred sales charge * 1.00% 1.00% 1.00%
Redemption fees None None None
Exchange fees None None None
Annual Fund operating fees:
(as a percentage of average net assets)
Advisory fees 1.00% 1.25% 1.00%
12b-1 fees 1.00% 1.00% 1.00%
Other expenses ___% ___% ___%
Total fund operating expenses ____% ____% ____%
------------------
*A deferred sales charge of 1.00% is assessed on redemptions of Class C shares made within the first year of investing.
</TABLE>
Because of the Rule 12b-1 fees paid by Class B and Class C shares
of the Funds as shown in the above tables, long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers, Inc.
The initial sales charge applicable to Class A shares set forth in
the above table is the maximum charge imposed upon the purchase of Class A
shares. Reductions and waivers from sales loads are described under "How to
Purchase Shares." The CDSC applicable to Class B shares set forth in the above
table is the maximum sales load applicable imposed upon redemption of Class B
shares. Waivers of the CDSC are described under "How to Redeem Shares."
"Other expenses" in the above table include administrator fees,
custodial fees, legal and accounting fees, printing costs, registration fees,
fees for any portfolio valuation service, the cost of regulatory compliance, the
costs of maintaining the Fund's legal existence and the costs involved with
communicating with shareholders. With respect to each Fund, the amount of "Other
expenses" is based on estimated expenses and projected assets for the current
fiscal year. See "Management" in this Prospectus for a further description of
the Funds' operating expenses and of the nature of the services for which the
Funds are obligated to pay advisory fees. Any fees charged by institutions
directly to customer accounts for services provided in connection with
investments in shares of the Funds are in addition to the expenses shown in the
above Expense Table and the Example shown below. The Transfer Agent may deduct a
wire redemption fee of $7.50 for wire redemptions under $5,000.
Example
The following example demonstrates the projected dollar amount of
total cumulative expenses that would be incurred over various periods with
respect to a hypothetical investment in the Funds. These amounts are based on
payment by the Funds of operating expenses at the levels set forth in the above
table, and are also based on the following assumptions:
An investor would pay the following expenses on a $1,000 investment
in Class A shares (subject to the applicable sales load), assuming (1) a
hypothetical 5% annual return and (2) redemption at the end of the following
time periods.
Class A Shares
1 Year 3 Years
International Growth Fund $____ $____
Emerging Markets Fund $____ $____
Healthcare Fund $____ $____
An investor would pay the following expenses on a $1,000 investment
in Class B shares (subject to the applicable CDSC), assuming (1) a hypothetical
5% annual return and (2) redemption at the end of the following time periods
and (3) no redemption at the end of the following periods:
<TABLE>
<S> <C> <C> <C> <C>
Class B Shares
---------------- -------------------- ---- ----------------- -------------------
1 Year 3 Years
---------------- -------------------- ----------------- -------------------
Redemption No Redemption Redemption No Redemption
International Growth Fund $______ $______ $______ $______
Emerging Markets Fund $______ $______ $______ $______
Healthcare Fund $______ $______ $______ $______
</TABLE>
An investor would pay the following expenses on a $1,000 investment
in Class C shares (subject to the applicable CDSC), assuming (1) a
hypothetical 5% annual return and (2) redemption at the end of the
following time periods.
Class C Shares
1 Year 3 Years
International Growth Fund $_____ $_____
Emerging Markets Fund $_____ $_____
Healthcare Fund $_____ $_____
The foregoing Expense Table and Example are intended to assist
investors in understanding the various shareholder transaction expenses and
operating expenses of the Funds that investors bear either directly or
indirectly.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF FUTURE INVESTMENT RETURN OR OPERATING EXPENSES.
ACTUAL INVESTMENT RETURN AND OPERATING EXPENSES MAY BE MORE OR LESS
THAN THOSE SHOWN.
THE TRUST
Each of the Funds is a series of shares issued by the Trust, an
open-end management investment company. The Trust was organized under the
laws of the Commonwealth of Massachusetts on October 30, 1996 and has
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Trust's principal office is located at 480 Pierce Street,
Birmingham, Michigan 48009 and its telephone number is (800) 438-5789.
INVESTMENT OBJECTIVES AND POLICIES
This Prospectus describes the following Funds offered by the Trust:
the Munder Framlington International Growth Fund ("International Growth Fund"),
the Munder Framlington Emerging Markets Fund ("Emerging Markets Fund"), and the
Munder Framlington Healthcare Fund ("Healthcare Fund"). Purchasing shares of any
Fund should not be considered a complete investment program, but an important
segment of a well-diversified investment program.
International Growth Fund
The investment objective of International Growth Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve its
objective through worldwide investment in equity securities of companies which,
in the opinion of the Sub-Advisor, show above-average profitability, management
quality and growth.
The Fund may invest in the securities of issuers located in countries
which include, but are not limited to, the following: Argentina, Australia,
Austria, Belgium, Brazil, Canada, Chile, China, Czech Republic, Denmark, Egypt,
Finland, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Korea,
Luxembourg, Malaysia, Mexico, The Netherlands, New Zealand, Norway, Peru, The
Philippines, Poland, Portugal, Russia, Singapore, South Africa, Spain, Sweden,
Switzerland, Taiwan, Thailand, Turkey and The United Kingdom.
Under normal market conditions, at least 65% of the Fund's total assets
will be invested in the equity securities of foreign issuers and such issuers
will be located in at least three foreign countries.
Emerging Markets Fund
The investment objective of Emerging Markets Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve this
objective through investing primarily in equity securities (as defined below) of
issuers in emerging market countries. The Fund considers countries having
emerging markets to be all countries that are generally considered to be
emerging or developing countries by the International Bank for Reconstruction
and Development (more commonly referred to as the World Bank) or the
International Finance Corporation, as well as countries that are classified by
the United Nations or otherwise regarded by their authorities as emerging.
Currently, the countries not in this category include Ireland, Spain, New
Zealand, Australia, the United Kingdom, Italy, the Netherlands, Belgium,
Austria, France, Canada, Germany, Denmark, the United States, Sweden, Finland,
Norway, Japan, Iceland, Luxembourg and Switzerland. A company will be deemed to
be in an emerging market country if (i) the company is organized under the laws
of, and has a principal office in, an emerging market country; (ii) the
principal trading market for the company's equity securities is in an emerging
market country; or (iii) the company derives at least 50% of its revenues or
profits from goods produced or sold, investments made, or services performed, in
an emerging market country, or has at least 50% of its assets situated in an
emerging market country. Under normal market conditions, the Fund will invest at
least 65% of its total assets in equity securities of issuers in emerging market
countries. Determinations as to eligibility will be made by the Sub-Advisor
based on publicly available information and inquiries made to the companies.
Healthcare Fund
The investment objective of the Healthcare Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve this
objective through investment in companies providing healthcare and medical
services and products worldwide. The Fund will invest in producers of
pharmaceuticals, biotechnology firms, medical device and instrument
manufacturers, distributors of healthcare products, care providers and managers
and other healthcare services companies. Under normal market conditions, the
Fund will invest at least 65% of its total assets in healthcare companies as
described above. The Sub-Advisor considers healthcare companies to include
companies in which at least 50% of sales, earnings or assets arise from or are
dedicated to health services or medical technology activities.
Information Regarding All Funds
Each Fund may also lend its portfolio securities and borrow money for
investment purposes (i.e., "leverage" its portfolio). In addition, each Fund may
enter into transactions in options on securities, securities indices and foreign
currencies, forward foreign currency contracts, and futures contracts and
related options. When deemed appropriate by the Sub-Advisor, a Fund may invest
cash balances in repurchase agreements and other money market investments to
maintain liquidity in an amount to meet expenses or for day-to-day operating
purposes. These investment techniques are described below and under the heading
"Investment Objectives and Policies" in the Statement of Additional Information.
When the Sub-Advisor believes that market conditions warrant, a Fund
may adopt a temporary defensive position and may invest without limit in money
market securities denominated in U.S. dollars or in the currency of any foreign
country. See "Portfolio Instruments and Practices and Associated Risk Factors
- -- Liquidity Management."
PORTFOLIO INSTRUMENTS AND PRACTICES AND
ASSOCIATED RISK FACTORS
Investment strategies that are available to the Funds are set forth
below. Additional information concerning certain of these strategies and their
related risks is contained in the Statement of Additional Information.
EQUITY SECURITIES. "Equity securities," as used in this Prospectus,
refers to common stock, preferred stock, warrants or rights to subscribe to or
purchase such securities and sponsored or unsponsored American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs"), and Global Depositary
Receipts ("GDRs") (collectively, "Depositary Receipts"). Securities considered
for purchase by the Funds may be listed or unlisted, and may be issued by
companies with various levels of market capitalization.
Each Fund may invest up to 5% of its net assets at the time of
purchase in warrants and similar rights (other than those that have been
acquired in units or attached to other securities). Warrants represent rights
to purchase securities at a specific price valid for a specific period of
time. The prices of warrants do not necessarily correlate with the prices of the
underlying securities. In addition, a Fund may invest in convertible bonds and
convertible preferred stock. A convertible security is a security that may be
converted either at a stated price or rate within a specified period of time
into a specified number of shares of common stock. By investing in convertible
securities, a Fund seeks the opportunity, through the conversion feature, to
participate in the capital appreciation of the common stock into which the
securities are convertible, while earning higher current income than is
available from the common stock. Although a Fund may acquire convertible
securities that are rated below investment grade by Standard & Poor's Ratings
Service, a division of McGraw Hill Companies Inc. ("S&P") or Moody's Investors
Service, Inc. ("Moody's"), it is expected that investments in lower-rated
convertible securities will not exceed 10% of the value of the total assets of a
Fund at the time of purchase. These high yield, high risk securities are
commonly referred to as junk bonds. Securities that are rated Ba by Moody's or
BB by S&P have speculative characteristics with respect to the capacity to pay
interest and repay principal. Securities that are rated B generally lack
characteristics of a desirable investment, and assurance of interest and
principal payments over any long period of time may be small. Securities that
are rated Caa or CCC are of poor standing. These issues may be in default or
present elements of danger that may exist with respect to principal or interest.
In light of the risks, the Sub-Advisor, in evaluating the creditworthiness of an
issue, will take various factors into consideration, which may include, as
applicable, the issuer's financial resources, its sensitivity to economic
conditions and trends, the ability of the issuer's management and regulatory
matters. To the extent a Fund purchases convertibles rated below investment
grade or convertibles that are not rated, a greater risk exists as to the timely
repayment of the principal of, and the timely payment of interest or dividends
on, such securities. Particular risks include (a) the sensitivity of such
securities to interest rate and economic changes, (b) the lower payments, (c)
the relatively low trading market liquidity for the securities, (d) the impact
that legislation may have on the market for these securities (and, in turn, on a
Fund's net asset value) and (e) the creditworthiness of the issuers of such
securities. During an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which would
negatively affect their ability to meet their principal and interest payment
obligations, to meet projected business goals and to obtain additional
financing. An economic downturn could also disrupt the market for lower-rated
convertible securities and negatively affect the value of outstanding securities
and the ability of the issuers to repay principal and interest. If the issuer of
a convertible security held by a Fund defaulted, the Fund could incur additional
expenses to seek recovery. Adverse publicity and investor perceptions, whether
or not they are based on fundamental analysis, could also decrease the values
and liquidity of lower-rated convertible securities held by a Fund, especially
in a thinly traded market.
FOREIGN SECURITIES. Each Fund may invest in the securities of foreign
issuers. There are certain risks and costs involved in investing in securities
of companies and governments of foreign nations, which are in addition to the
usual risks inherent in U.S. investments. These considerations generally are
more of a concern in emerging market countries, where the possibility of
political instability (including revolution) and dependence on foreign economic
assistance may be greater than in developed countries. Investments in companies
domiciled in emerging market countries therefore may be subject to potentially
higher risks than investments in developed countries.
Investments in foreign securities involve higher costs than
investments in U.S. securities, including higher transaction costs as well as
the imposition of additional taxes by foreign governments. In addition, foreign
investments may include additional risks associated with the level of currency
exchange rates, less complete financial information about the issuers, less
market liquidity, and political instability. Future political and economic
developments, the possible imposition of withholding taxes on interest income,
the possible seizure or nationalization of foreign holdings, the possible
establishment of exchange controls, or the adoption of other governmental
restrictions might adversely a Fund's investment in foreign obligations.
Additionally, foreign banks and foreign branches of domestic banks may be
subject to less stringent reserve requirements, and to different accounting,
auditing and recordkeeping requirements. A Fund may encounter difficulties or be
unable to vote proxies, exercise shareholder rights, pursue legal remedies, and
obtain judgments in foreign courts. Also, some countries may withhold portions
of income and dividends at the source.
Foreign securities markets have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when assets of a Fund are uninvested and no return is earned
thereon. The inability of a Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of portfolio securities due to settlement
problems could result either in losses to a Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, could result in possible liability to the purchaser.
Repatriation of investment income, capital and proceeds of sales by
foreign investors may require governmental registrations and/or approval in some
emerging market countries. A Fund could be adversely affected by delays in or a
refusal to grant any required governmental registrations or approval for such
repatriation.
Further, the economies of emerging market countries generally are
heavily dependent upon international trade and, accordingly, have been and may
continue to be adversely affected by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
by the counties with which they trade.
In many emerging market countries, there is less government supervision
and regulation of business and industry practices, stock exchanges, brokers and
listed companies than in the United States. There is an increased risk,
therefore, of uninsured loss due to lost, stolen, or counterfeit stock
certificates. In addition, the foreign securities markets of many of the
countries in which the Funds may invest may also be smaller, less liquid, and
subject to greater price volatility than those in the United States.
Although the Funds may invest in securities denominated in foreign
currencies, portfolio securities and other assets held by the Funds are valued
in U.S. dollars. As a result, the net asset value of a Fund's shares may
fluctuate with U.S. dollar exchange rates as well as with price changes of its
portfolio securities in the various local markets and currencies. In addition to
favorable and unfavorable currency exchange-rate developments, the Funds are
subject to the possible imposition of exchange control regulations or freezes on
convertibility of currency.
Investments in foreign securities may be in the form of Depositary
Receipts. These securities may not be denominated in the same currency as the
securities they represent. ADRs are receipts typically issued by a United
States bank or trust company evidencing ownership of the
underlying foreign securities. EDRs are receipts issued by a European financial
institution evidencing a similar arrangement. Generally, ADRs, in registered
form, are designed for use in United States securities markets, and EDRs, in
bearer form, are designed for use in the European securities markets.
DEPOSITARY RECEIPTS. ADRs are Depositary Receipts typically issued by a
U.S. bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. EDRs and GDRs are typically issued by foreign
banks or trust companies, although they also may be issued by U.S. banks or
trust companies, and evidence ownership of underlying securities issued by
either a foreign or a United States corporation. Generally, Depositary Receipts
in registered form are designed for use in the U.S. securities market and
Depositary Receipts in bearer form are designed for use in securities markets
outside the United States. Depositary Receipts may not necessarily be
denominated in the same currency as the underlying securities into which they
may be converted. Depositary Receipts may be issued pursuant to sponsored or
unsponsored programs. In sponsored programs, an issuer has made arrangements to
have its securities traded in the form of Depositary Receipts. In unsponsored
programs, the issuer may not be directly involved in the creation of the
program. Although regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, in some cases it may be easier to
obtain financial information from an issuer that has participated in the
creation of a sponsored program. Accordingly, there may be less information
available regarding issuers of securities underlying unsponsored programs and
there may not be a correlation between such information and the market value of
the Depositary Receipts. Depositary Receipts also involve the risks of other
investments in foreign securities, as discussed above. For purposes of the
Funds' investment policies, a Fund's investments in Depositary Receipts will be
deemed to be investments in the underlying securities.
CONCENTRATION IN THE HEALTHCARE INDUSTRIES. Healthcare Fund generally
intends to invest at least 65% of its total assets in securities of companies in
the healthcare industries. These industries are characterized by rapidly
changing technology and extensive government regulation. In particular,
technological advances can render existing products obsolete, and obtaining
governmental approval for new products from regulatory authorities can be
lengthy, expensive and uncertain as to outcome. Healthcare companies also can be
highly dependent on the strength of patents for maintenance of profit margins
and market exclusivity. Moreover, cost containment measures implemented by
governmental authorities have adversely affected certain healthcare industries.
While an industry concentration may increase the risk and volatility of an
investment company's portfolio, Healthcare Fund will endeavor to reduce risk by
having a portfolio of investments that is diversified within its stated
objective and policies.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Funds may enter into
forward foreign currency exchange contracts in an effort to reduce the level of
volatility caused by changes in foreign currency exchange rates. The Funds may
not enter into these contracts for speculative purposes. A forward currency
exchange contract is an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of contract. A Fund will
segregate cash or liquid securities to cover its obligation to purchase foreign
currency under a forward foreign currency contract. Although such contracts tend
to minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time they tend to limit any potential gain that might be
realized should the value of such currency increase. A Fund will not enter into
forward foreign currency exchange contracts if as a result, the Fund will have
more than 20% of its total assets committed to consummation of such forward
foreign currency exchange contracts.
FUTURES CONTRACTS AND OPTIONS. The Funds may invest in futures
contracts and options on futures contracts for hedging purposes or to maintain
liquidity. However, a Fund may not purchase or sell a futures contract unless
immediately after any such transaction the sum of the aggregate amount of margin
deposits on its existing futures positions and the amount of premiums paid for
related options is 5% or less of its total assets.
Futures contracts obligate a Fund, at maturity, to take or make
delivery of certain securities or the cash value of a bond or securities index.
When interest rates are rising, futures contracts can offset a decline in value
of a Fund's portfolio securities. When rates are falling, these contracts can
secure higher yields for securities a Fund intends to purchase.
The Funds may purchase and sell call and put options on futures
contracts traded on an exchange or board of trade. When a Fund purchases an
option on a futures contract, it has the right to assume a position as a
purchaser or seller of a futures contract at a specified exercise price at any
time during the option period. When a Fund sells an option on a futures
contract, it becomes obligated to purchase or sell a futures contract if the
option is exercised. In anticipation of a market advance, a Fund may purchase
call options on futures contracts as a substitute for the purchase of futures
contracts to hedge against a possible increase in the price of securities which
the Fund intends to purchase. Similarly, if the value of a Fund's portfolio
securities is expected to decline, the Fund might purchase put options or sell
call options on futures contracts rather than sell futures contracts. In
connection with a Fund's position in a futures contract or option thereon, the
Fund will create a segregated account of liquid assets or will otherwise cover
its position in accordance with applicable requirements of the SEC.
In addition, the Funds may write covered call options, buy put options,
buy call options and write secured put options on particular securities or
various stock indices. Options trading is a highly specialized activity which
entails greater than ordinary investment risks. A call option for a particular
security gives the purchaser of the option the right to buy, and a writer the
obligation to sell, the underlying security at the stated exercise price at any
time prior to the expiration of the option, regardless of the market price of
the security. The premium paid to the writer is in consideration for undertaking
the obligations under the option contract. A put option for a particular
security gives the purchaser the right to sell the underlying security at the
stated exercise price at any time prior to the expiration date of the option,
regardless of the market price of the security. In contrast to an option on a
particular security, an option on a stock index provides the holder with the
right to make or receive a cash settlement upon exercise of the option.
The use of derivative instruments exposes a Fund to additional risks
and transaction costs. Risks inherent in the use of derivative instruments
include: (1) the risk that interest rates, securities prices and currency
markets will not move in the direction that a portfolio manager anticipates; (2)
imperfect correlation between the price of derivative instruments and movements
in the prices of the securities, interest rates or currencies being hedged; (3)
the fact that skills needed to use these strategies are different than those
needed to select portfolio securities; (4) inability to close out certain hedged
positions to avoid adverse tax consequences; (5) the possible absence of a
liquid secondary market for any particular instrument and possible
exchange-imposed price fluctuation limits, either of which may make it difficult
or impossible to close out a position when desired; (6) leverage risk, that is,
the risk that adverse price movements in an instrument can result in a loss
substantially greater than a Fund's initial investment in that instrument (in
some cases, the potential loss is unlimited); and (7) particularly in the case
of privately-negotiated instruments, the risk that the counterparty will fail to
perform its obligations, which could leave a Fund worse off than if it had not
entered into the position. For a further discussion, see "Fund Investments" and
the Appendix in the Statement of Additional Information.
When a Fund invests in a derivative instrument, it may be required to
segregate cash and other high-grade liquid debt securities or certain portfolio
securities to "cover" the Fund's position. Assets segregated or set aside
generally may not be disposed of so long as a Fund maintains the positions
requiring segregation or cover. Segregating assets could diminish a Fund's
return due to the opportunity losses of foregoing other potential investments
with the segregated assets.
The Funds are not commodity pools, and all futures transactions engaged in
by a Fund must constitute bona fide hedging or other permissible transactions in
accordance with the rules and regulations promulgated by the Commodity Futures
Trading Commission. Successful use of futures and options is subject to special
risk considerations.
For a further discussion see "Additional Information on Fund
Investments" and the Appendix to the Statement of Additional Information.
REPURCHASE AGREEMENTS. The Funds may agree to purchase securities from
financial institutions subject to the seller's agreement to repurchase them at
an agreed-upon time and price ("repurchase agreements"). The financial
institutions with which a Fund may enter into repurchase agreements include
member banks of the Federal Reserve System, any foreign bank or any domestic or
foreign broker/dealer which is recognized as a reporting government securities
dealer. The Advisor and/or Sub-Advisor will review and continuously monitor the
creditworthiness of the seller under a repurchase agreement, and will require
the seller to maintain liquid assets in a segregated account in an amount that
is greater than the repurchase price. Default by or bankruptcy of the seller
would, however, expose a Fund to possible loss because of adverse market action
or delays in connection with the disposition of the underlying obligations.
REVERSE REPURCHASE AGREEMENTS. The Funds may borrow funds for temporary
purposes by selling portfolio securities to financial institutions such as banks
and broker/dealers and agreeing to repurchase them at a mutually specified date
and price ("reverse repurchase agreements"). Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the repurchase price. A Fund would pay interest on amounts
obtained pursuant to a reverse repurchase agreement.
INVESTMENT COMPANY SECURITIES. In connection with the management of daily
cash positions, the Funds may invest in securities issued by other investment
companies which invest in short-term debt securities and which seek to maintain
a $1.00 net asset value per share (i.e., "money market funds"). International
Growth Fund and Emerging Markets Fund may also purchase shares of investment
companies investing primarily in foreign securities, including so-called
"country funds." It is each Fund's policy not to invest in securities issued by
other investment companies which pay asset-based fees to the Advisor, the
Sub-Advisor, the Administrator, the Custodian, the Distributor or their
affiliates. Securities of other investment companies will be acquired within
limits prescribed by the 1940 Act. These limitations, among other matters,
restrict investments in securities of other investment companies to no more than
10% of the value of a Fund's total assets, with no more than 5% invested in the
securities of any one investment company. As a shareholder of another investment
company, a Fund would bear, along with other shareholders, its pro rata portion
of the other investment company's expenses, including advisory fees. These
expenses would be in addition to the expenses a Fund bears directly in
connection with its own operations.
LIQUIDITY MANAGEMENT. Pending investment, to meet anticipated redemption
requests, or as a temporary defensive measure if the Sub-Advisor determines that
market conditions warrant, the Funds may also invest without limitation in
short-term U.S. Government obligations, high quality money market instruments,
variable and floating rate instruments and repurchase agreements as described
above.
High quality money market instruments may include commercial paper, and
Europaper, which is U.S. dollar-denominated commercial paper of a foreign
issuer. The Funds may also purchase U.S. dollar-denominated bank obligations,
such as certificates of deposit, bankers' acceptances and interest-bearing
savings and time deposits, issued by U.S. or foreign banks or savings
institutions having total assets at the time of purchase in excess of $1
billion. Short-term obligations purchased by the Funds will either have
short-term debt ratings at the time of purchase in the top two categories by one
or more unaffiliated nationally recognized statistical rating organizations
("NRSROs") or be issued by issuers with such ratings. Unrated instruments
purchased by a Fund will be of comparable quality as determined by the
Sub-Advisor.
ILLIQUID SECURITIES. Each Fund may invest up to 15% of the value of its net
assets (determined at time of acquisition) in securities which are illiquid.
Illiquid securities would generally include repurchase agreements and time
deposits with notice/termination dates in excess of seven days, and certain
securities which are subject to trading restrictions because they are not
registered under the Securities Act of 1933, as amended (the "Act"). If, after
the time of acquisition, events cause this limit to be exceeded, the Fund will
take steps to reduce the aggregate amount of illiquid securities as soon as
reasonably practicable in accordance with the policies of the SEC.
The Funds may invest in commercial obligations issued in reliance on the
"private placement" exemption from registration afforded by Section 4(2) of the
Act ("Section 4(2) paper"). The Funds may also purchase securities that are not
registered under the Act, but which can be sold to qualified institutional
buyers in accordance with Rule 144A under the Act ("Rule 144A securities").
Section 4(2) paper is restricted as to disposition under the Federal securities
laws, and generally is sold to institutional investors which agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper
normally is resold to other institutional investors through or with the
assistance of the issuer or investment dealers which make a market in the
Section 4(2) paper, thus providing liquidity. Rule 144A securities generally
must be sold only to other qualified institutional buyers. If a particular
investment in Section 4(2) paper or Rule 144A securities is not determined to be
liquid, that investment will be included within the Fund's limitation on
investment in illiquid securities. The Advisor and/or Sub-Advisor will determine
the liquidity of such investments pursuant to guidelines established by the
Trust's Board of Trustees.
U.S. GOVERNMENT OBLIGATIONS. The Funds may purchase obligations issued or
guaranteed the U.S. Government and U.S. Government agencies and
instrumentalities. Obligations of certain agencies and instrumentalities of the
U.S. Government, such as those of the Government National Mortgage Association,
are supported by the full faith and credit of the U.S. Treasury. Others, such as
those of the Export-Import Bank of the United States, are supported by the right
of the issuer to borrow from the U.S. Treasury; and still others, such as those
of the Student Loan Marketing Association, are supported only by the credit of
the agency or instrumentality issuing the obligation. No assurance can be given
that the U.S. Government would provide financial support to U.S.
Government-sponsored instrumentalities if it is not obligated to do so by law.
BORROWING. Each Fund is authorized to borrow money in amounts up to 5% of
the value of the Fund's total assets at the time of such borrowing for temporary
purposes. However, a Fund is authorized to borrow money in amounts up to 33 1/3%
of its assets, as permitted by the 1940 Act, for the purpose of meeting
redemption requests. Borrowing by a Fund creates an opportunity for greater
total return but, at the same time, increases exposure to capital risk.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of portfolio securities on a Fund's net asset value. In
addition, borrowed funds are subject to interest costs that may offset or exceed
the return earned on the borrowed funds. However, a Fund will not purchase
portfolio securities while borrowings exceed 5% of the Fund's total assets. For
more detailed information with respect to the risks associated with borrowing,
see the heading "Borrowing" in the Statement of Additional Information.
LENDING OF PORTFOLIO SECURITIES. To enhance the return of the portfolio, a
Fund may lend securities in its portfolio representing up to 25% of its total
assets, taken at market value, to securities firms and financial institutions,
provided that each loan is secured continuously by collateral in the form of
cash, high quality money market instruments or short-term U.S. Government
securities adjusted daily to have a market value at least equal to the current
market value of the securities loaned. The risk in lending portfolio securities,
as with other extensions of credit, consists of possible delay in the recovery
of the securities or possible loss of rights in the collateral should the
borrower fail financially.
PORTFOLIO TRANSACTIONS AND TURNOVER. All orders for the purchase or sale of
securities on behalf of the Funds are placed by the Sub-Advisor with
broker/dealers that the Sub-Advisor selects. A high portfolio turnover rate
involves larger brokerage commission expenses or transaction costs which must be
borne directly by the Fund, and may result in the realization of short-term
capital gains which are taxable to shareholders as ordinary income. The
Sub-Advisor will not considerportfolio turnover rate a limiting factor in making
investment decisions consistent with a Fund's objective and policies. It is
anticipated that each Fund's annual portfolio turnover rate will range from 50%
to 150%.
INVESTMENT LIMITATIONS
Each Fund's investment objective and policies may be changed by the Trust's
Board of Trustees without shareholder approval. However, shareholders will be
notified in writing at least thirty days in advance of any such material change,
except where advance notice is not required. No assurance can be given that any
Fund will achieve its investment objective.
Each Fund has also adopted certain fundamental investment limitations that
may be changed only with the approval of a "majority of the outstanding shares
of the Fund" (as defined in the Statement of Additional Information). The
following descriptions summarize several of the Funds' fundamental investment
policies, which are set forth in full in the Statement of Additional
Information.
A Fund may not:
(1) purchase securities (except U.S. Government securities) if more
than 5% of its total assets will be invested in the securities of any
one issuer, except that up to 25% of the assets of the Fund may be
invested without regard to this 5% limitation;
(2) invest 25% or more of its total assets in securities issued by one
or more issuers conducting their principal business activities in the
same industry (except that the Healthcare Fund will invest more than
25% of its total assets in securities of issuers conducting their
principal business activities in the healthcare industry); and
(3) borrow money except for temporary purposes in amounts up to
one-third of the value of its total assets at the time of such
borrowing. Whenever borrowings exceed 5% of a Fund's total assets, the
Fund will not make any additional investments.
These investment limitations are applied at the time investment securities
are purchased.
HOW TO PURCHASE SHARES
Each of the Funds offers individual investors three methods of purchasing
shares, thus enabling investors to choose the class that best suits their needs
given the amount of purchase and intended duration of investment.
Shares of each Fund are sold on a continuous basis and may be purchased on
any day the New York Stock Exchange is open for business through authorized
investment dealers or directly from the Distributor or the Transfer Agent. Only
the Distributor and investment dealers which have a sales agreement with the
Distributor are authorized to sell shares of the Funds. The Distributor is a
registered broker/dealer with principal offices at 60 State Street, Boston,
Massachusetts 02109.
Shares will be credited to a shareholder's account at the public offering
price next computed after an order is received by the Distributor or a dealer,
less any applicable initial sales charges. The issuance of shares is recorded on
the books of the Funds, and share certificates are not issued unless expressly
requested in writing. The Funds' management reserves the right to reject any
purchase order if in its opinion, it is in the Funds' best interest to do so and
to suspend the offering of shares of any class for any period of time.
The minimum initial investment for Class A, Class B or Class shares is
$1,000 and subsequent investments must be at least $50. Purchases in excess of
$250,000 must be for Class A shares or Class C shares.
Differences Among the Classes
The primary distinctions among the classes of a Fund's shares are in their
sales charge structures and ongoing expenses, as summarized in the table below.
Each class has distinct advantages and disadvantages for different investors,
and investors may choose the class that best suits their circumstances and
objectives.
<TABLE>
<S> <C> <C> <C>
ANNUAL 12B-1 FEES (AS A % OF
SALES CHARGE AVERAGE DAILY NET ASSETS) OTHER INFORMATION
CLASS A Maximum initial sales charge Service fee of 0.25% Initial sales charge waived
of 5.50% of the public or reduced for certain
offering price. purchases.
CLASS B Maximum CDSC of 5% of Service fee of 0.25%; CDSC waived for certain
redemption proceeds; distribution fee of 0.75% redemptions; shares convert
declines to zero after six to Class A shares
years. approximately six years
after issuance, subject to
receipt of certain tax
rulings or opinions.
CLASS C Maximum CDSC of 1% of Service fee of 0.25%; Shares do not convert to
redemption proceeds for distribution fee of 0.75% another class.
redemptions made within the
first year after purchase.
</TABLE>
Factors to Consider in Choosing a Class of Shares
In deciding which class of shares to purchase, investors should consider
the cost of sales charges together with the cost of the ongoing annual expenses
described below, as well as any other relevant facts and circumstances:
Sales Charges
Class A shares are sold at net asset value plus an initial sales charge of
up to 5.50% of the public offering price. Because of this initial sales charge,
not all of a Class A shareholder's purchase price is invested in the Fund. Class
A shares sold pursuant to a complete waiver of the initial sales charge
applicable to large purchase are subject to a 1% CDSC if redeemed within one
year of the date of purchase.
Class B shares are sold with no initial sales charge, but a CDSC of up to
5% of the redemption proceeds applies to redemptions made within six years of
purchase. See "How to Redeem Shares -- Contingent Deferred Sales Charge -- Class
B Shares." Class B shares are subject to higher on going expenses than Class A
shares, but automatically convert to Class A shares approximately six years
after issuance subject to receipt of certain tax rulings or opinions.
Class C shares are sold without an initial sales charge or a CDSC except
for a CDSC of 1% applicable to redemptions made within the first year after
investing. Thus, the entire amount of a Class B or C shareholder's purchase
price is immediately invested in the Fund.
Waiver and Reductions of Class A Sales Charges
Class A share purchases of $25,000 or more may be made at a reduced sales
charge. In considering the combined cost of sales charges and ongoing annual
expenses, investors should take into account any applicable reduced sales
charges on Class A shares. In addition, the entire initial sales charge on Class
A shares is waived for certain eligible purchasers. See "Initial Sales Charge
Class A shares." Because Class A shares bear lower ongoing annual expenses than
Class B shares or Class C shares, investors eligible for complete initial sales
charge waivers should purchase Class A shares.
Ongoing Annual Expenses
Classes A, B and C shares pay an annual 12b-1 service fee of 0.25% of
average daily net assets. Classes B and C shares pay an annual 12b-1
distribution fee of 0.75% of average daily net assets. An investor should
consider both ongoing annual expenses and initial or contingent deferred sales
charges in estimating the costs of investing in the respective classes of Fund
shares over various time periods.
For example, assuming a constant net asset value, the cumulative
distribution fee on Class C shares would approximate the expense of the 5.5%
maximum initial sales charge on the Class A shares if the shares were held for
approximately 7 1/2 years. Because Class B shares convert to Class A shares
(which do not bear the expense of ongoing distribution fees) approximately six
years after purchase (subject to receipt of certain tax rulings or opinions), an
investor expecting to hold shares of a Fund for longer than six years would
generally pay lower cumulative expenses by purchasing Class B shares than by
purchasing Class C shares. An investor expecting to hold shares of a Fund for
less than six years would generally pay lower cumulative expenses by purchasing
Class C shares than by purchasing Class A shares, and due to the contingent
deferred sales charges that would become payable on redemption of Class B
shares, such an investor would generally pay lower cumulative expenses by
purchasing Class C shares than Class B shares. [On the other hand, an investor
expecting to hold shares of the Fund for more than six years would generally pay
lower cumulative expenses by purchasing Class B shares because of the Class B
conversion feature described under "Conversion of Class B Shares."] An investor
who qualifies for a reduction or waiver of the initial sales charge on Class A
shares may pay lower cumulative expenses by purchasing Class A shares than by
purchasing Class B or Class C shares.
The foregoing examples do not reflect, among other variables, the cost or
benefit of bearing sales charges or distribution fees at the time of purchase,
upon redemption or over time, nor can they reflect fluctuations in the net asset
value of Fund shares, which will affect the actual amount of expenses paid.
Expenses borne by classes may differ slightly because of the allocation of other
class-specific expenses, such as transfer agency fees, printing and postage
expenses related to shareholder reports, prospectuses and proxies, and
securities registration fees. The example set forth above under "Fund Expenses"
shows the cumulative expenses an investor would pay over periods of one and
three years on a hypothetical investment in each class of Fund shares, assuming
an annual return of 5%.
Other Information
Dealers may receive different levels of compensation for selling one
particular class of Fund shares rather than another. Investors should understand
that distribution fees and initial and contingent deferred sales charges all are
intended to compensate the Distributor for distribution services.
An account may be opened by mailing a check or other negotiable bank draft
(payable to The Munder Framlington Trust) for $1,000 or more for Class A, Class
B or Class C shares with a completed and signed Account Application Form to The
Munder Framlington Trust, c/o First Data Investor Services Group, Inc., P.O. Box
5130, Westborough, Massachusetts 01581-5130. An Account Application Form may be
obtained by calling (800) 438-5789. All such investments are made at the public
offering price of Fund shares next computed following receipt of payment by the
Transfer Agent. The public offering price for the shares is the per share net
asset value (see "Net Asset Value") next determined after receipt of the order
by the dealer, plus any applicable initial sales charge for Class A shares.
Confirmations of the opening of an account and of all subsequent transactions in
the account are forwarded by the Transfer Agent to the shareholder's address of
record. When placing purchase orders, investors should specify the class of
shares being purchased. All share purchase orders that fail to specify a class
will automatically be invested in Class A shares.
The completed investment application must indicate a valid taxpayer
identification number and must be certified as such. Failure to provide a
certified taxpayer identification number may result in backup withholding at the
rate of 31%. Additionally, investors may be subject to penalties if they falsify
information with respect to their taxpayer identification numbers.
In addition, investors having an account with a commercial bank that is a
member of the Federal Reserve System may purchase shares of a Fund by requesting
their bank to transmit funds by wire to Boston Safe Deposit and Trust Company,
Boston, MA, ABA #011001234, DDA #16-798-3, Fund Name, Shareholder Account
Number, Account of (Registered Shareholder). Before wiring any funds, an
investor must contact the Fund by calling (800) 438-5789 to confirm the wire
instructions. The investor's name, account number, taxpayer identification or
social security number, and address must be specified in the wire. In addition
an Account Application Form containing the investor's taxpayer identification
number should be forwarded within seven days of purchase to The Munder
Framlington Funds Trust c/o First Data Investor Services Group, Inc., P.O. Box
5130, Westborough, Massachusetts 01581-5130.
Additional investments may be made at any time through the wire procedures
described above, which must include the investor's name and account number. The
investor's bank may impose a fee for investments by wire.
Automatic Investment Plan ("AIP")
An investor in shares of any Fund may arrange for periodic investments in
that Fund through automatic deductions from a checking or savings account by
completing the AIP Application Form or by calling the Fund at (800) 438-5789.
The minimum pre-authorized investment amount is $50. Such a plan is voluntary
and may be discontinued by the shareholder at any time or by the Trust on 30
days' written notice to the shareholder.
See the Statement of Additional Information for further information
regarding purchase of the Funds' shares.
Reinvestment Privilege
Upon redemption of Class A, B or C shares of a Fund (or Class A, B or C
shares of another non-money market fund of the Trust, The Munder Funds, Inc. or
The Munder Funds Trust), a shareholder has an annual right, to be exercised
within 60 days, to reinvest the redemption proceeds in shares of the same class
of the same fund without any sales charges. The Transfer Agent must be notified
in writing by the purchaser, or by his or her broker, at the time the purchase
is made of the reinvestment in order to eliminate a sales charge.
See the Statement of Additional Information for further information
regarding purchases of the Funds' shares.
Initial Sales Charge - Class A Shares
The public offering price of Class A shares is the next determined net
asset value plus any applicable sales charge, which will vary with the size of
the purchase as shown in the following table:
<PAGE>
INITIAL SALES CHARGE SCHEDULE - CLASS A SHARES
Sales Charge as a Percentage of
<TABLE>
<S> <C> <C> <C>
Discount to
Selected Dealers
Amount of Purchase Net Amount Invested as a Percentage of
Offering Price (Net Asset Value) Offering Price
Less than $25,000 5.50% 5.82% 5.00%
$25,000 but less than $50,000 5.25% 5.54% 4.75%
$50,000 but less than $100,000 4.50% 4.71% 4.00%
$100,000 but less than $250,000 3.50% 3.63% 3.25%
$250,000 but less than $500,000 2.50% 2.56% 2.25%
$500,000 but less than $1,000,000 1.50% 1.52% 1.25%
$1,000,000 or more None* None* (see below)**
* No initial sales charge applies on investments of $1 million or more, but a CDSC of 1% is imposed on certain
redemptions within one year of the purchase. See "How to Redeem Shares -- Contingent Deferred Sales Charge --
Class A and Class C Shares."
** A 1% commission will be paid by the Distributor to dealers who initiate and are responsible for purchases of $1
million or more.
</TABLE>
The Distributor will pay the appropriate Dealers' Reallowance to
brokers purchasing Class A shares. From time to time, the Distributor may
reallow to brokers the full amount of the sales charge on Class A shares. To the
extent the Distributor reallows more than 90% of the sales charge to brokers,
such brokers may be deemed to be underwriters under the Act. In addition to the
Dealers' Reallowance, the Distributor will, from time to time, at its expense or
as an expense for which it may be reimbursed under the Class B Plan or Class C
Plan described below, pay a bonus or other consideration or incentive (which may
be in the form of merchandise or trips) to brokers or institutions which sell a
minimum dollar amount of shares of a Fund during a specified period of time.
Dealers may receive compensation from the Distributor on sales made without a
sales charge.
Sales Charge Waivers - Class A Shares
Upon notice to the Transfer Agent at the time of purchase, the initial
sales charge will be waived on sales of Class A shares to the following types of
purchasers: (1) individuals with an investment account or relationship with the
Advisor; (2) full-time employees and retired employees of the Advisor, employees
of the Funds' Administrator, Distributor and Custodian, and immediate family
members of such persons; (3) registered broker-dealers that have entered into
selling agreements with the Distributor, for their own accounts or for
retirement plans for their employees or sold to registered representatives for
full-time employees (and their families) that certify to the Distributor at the
time of purchase that such purchase is for their own account (or for the benefit
of their families); (4) certain qualified employee benefit plans as defined
below; and (5) financial institutions, financial planners or employee benefit
plan consultants acting for the accounts of their clients.
Qualified Employer Sponsored Retirement Plans
Upon notice to the Transfer Agent at the time of purchase, the initial
sales charge will be waived on purchases by employer sponsored retirement plans
which are qualified under Section 401(a) of the Code, including: 401(k) plans,
defined benefit pension plans, profit-sharing pension plans, money-purchase
pension plans and Section 457 deferred compensation plans and Section 403(b)
plans (each, a "Qualified Employee Benefit Plan") that (1) invest $1,000,000 or
more in Class A shares of investment portfolios offered by the Trust, The Munder
Funds, Inc. or The Munder Funds Trust (other than the Munder Index 500 Fund) or
(2) have at least 75 eligible plan participants. In addition, the CDSC of 1%
imposed on certain redemptions within one year of purchase will be waived for
Qualified Employee Benefit Plan purchases that meet the above criteria. A 1%
commission will be paid by the Distributor to dealers who initiate and are
responsible for Qualified Employee Benefit Plan purchases that meet the above
criteria. For purposes of the foregoing sales charge waiver, Simplified Employee
Pension Plans ("SEPs") and Individual Retirement Accounts ("IRAs") are not
considered to be Qualified Employee Benefit Plans.
Sales charges will be waived for individuals who purchase Class A
shares with the proceeds of distributions from qualified retirement plans for
which the Advisor serves as investment advisor. Sales charges will be waived for
individuals who purchase Class A shares with the proceeds of redemptions of
Class Y shares of the Funds of the Trust, The Munder Funds, Inc. or The Munder
Funds Trust if the proceeds are invested within 60 days of redemption. See
"Other Information -- Description of Shares."
If an investor intends to purchase over the next 13 months at least
$25,000 of Class A shares, the sales charge may be reduced by completing the
Letter of Intent portion of the Account Application Form or the applicable form
from the investor's broker. The Letter of Intent includes a provision for a
sales charge adjustment depending on the amount actually purchased within the
13-month period. In addition, pursuant to a Letter of Intent, the Custodian will
hold in escrow the difference between the sales charge applicable to the amount
initially purchased and the sales charge paid at the time of the investment
which is based on the amount covered by the Letter of Intent. The amount held in
escrow will be applied to the investor's account at the end of the 13-month
period unless the amount specified in the Letter of Intent is not purchased.
The Letter of Intent will not obligate the investor to purchase shares,
but if he or she does, each purchase made during the period will be at the sales
charge applicable to the total amount intended to be purchased. The letter may
be dated as of a prior date to include any purchase made within the past 90
days. The Letter of Intent will apply only to Class A shares of the Funds or
investment portfolios of The Munder Funds, Inc. and The Munder Funds Trust. The
value of Class B or Class C shares of any Fund of the Trust, The Munder Funds,
Inc. or The Munder Funds Trust will not be counted toward the fulfillment of a
Letter of Intent.
As shown in the table under "Initial Sales Charge -- Class A Shares,"
larger purchases may reduce the sales charge paid. Upon notice to the investor's
broker or the Transfer Agent, purchases of Class A shares that are made by the
investor, his or her spouse, his or her children under age 21 and his or her IRA
will be combined when calculating the sales charge. The value of Class B or
Class C shares of any Fund of the Trust, The Munder Funds, Inc. or The Munder
Funds Trust will not be counted toward the foregoing Quantity Discounts.
An investor who has previously purchased Class A shares of any of the
Funds or a non-money market fund of The Munder Funds, Inc. or The Munder Funds
Trust upon which a sales charge has already been paid may, upon request,
aggregate investments in such shares with current purchases to determine the
applicable sales charge for current purchases. An investor's aggregate
investment is the total value (based upon the greater of current net asset value
or the public offering price originally paid if provided at the time of
purchase) of: (a) current purchases, and (b) shares that are beneficially owned
by the investor for which a sales charge has already been paid. Similarly, with
respect to each subsequent investment, all Class A shares of any of the Funds or
a non-money market fund of The Munder Funds, Inc. or The Munder Funds Trust upon
which a sales charge has already been paid that are beneficially owned by the
investor at the time of investment may be combined to determine the applicable
sales charge.
Some or all of the services and privileges described herein may not be
available to certain customers of a broker, and a broker may impose conditions
on its customers which are different from those described in this Prospectus.
Investors should consult their brokers in this regard.
Pursuant to the Funds' variable pricing system, each Fund issues two
classes of shares in addition to the classes described in this Prospectus, Class
K and Class Y shares. Class K and Class Y shares have different sales charges
and expense levels, which will affect performance. Investors may call (800)
438-5789 to obtain more information concerning Class K and Class Y shares. When
placing purchase orders, investors should specify the class of shares being
purchased. All share purchase orders that fail to specify a class will
automatically be invested in Class A shares.
HOW TO REDEEM SHARES
Generally, shareholders may require a Fund to redeem their shares by
sending a written request, signed by the record owner(s), to The Munder
Framlington Funds Trust c/o First Data Investor Services Group, Inc., P.O. Box
5130, Westborough, Massachusetts 01581-5130.
Signature Guarantee
If the proceeds of the redemption are greater than $50,000, or are to
be paid to someone other than the registered holder, or to other than the
shareholder's address of record, or if the shares are to be transferred, the
owner's signature must be guaranteed by a commercial bank, trust company,
savings association or credit union as defined by the Federal Deposit Insurance
Act, or by a securities firm having membership on a recognized national
securities exchange. If the proceeds of the redemption are less than $50,000, no
signature guarantees are required for shares for which certificates have not
been issued when an application is on file with the Transfer Agent and payment
is to be made to the shareholder of record at the shareholder's address of
record. The redemption price shall be the net asset value per share next
computed after receipt of the redemption request in proper order. See "Net Asset
Value." Redemption proceeds will be reduced by the amount of any CDSC (see
below).
Expedited Redemption
In addition, a shareholder redeeming at least $1,000 of shares and who
has authorized expedited redemption on the application form filed with the
Transfer Agent may, at the time of such redemption, request that funds be mailed
to the commercial bank or registered broker-dealer previously designated on the
application form by telephoning the Trust at (800) 438-5789 prior to 4:00 p.m.
New York City time. Redemption proceeds will be sent on the next business day
following receipt of the telephone redemption request. If a shareholder seeks to
use an expedited method of redemption of shares recently purchased by check, a
Fund may withhold the redemption proceeds until it is reasonably assured of the
collection of the check representing the purchase, which may take up to 15 days.
The Trust, the Distributor and the Transfer Agent reserve the right at
any time to suspend or terminate the expedited redemption procedure or to impose
a fee for this service. During periods of unusual economic or market changes,
shareholders may experience difficulties or delays in effecting telephone
redemptions. The Transfer Agent has instituted procedures that it believes are
reasonably designed to insure that redemption instructions communicated by
telephone are genuine, and could be liable for losses caused by unauthorized or
fraudulent instructions in the absence of such procedures. The procedures
currently include a recorded verification of the shareholder's name, social
security number and account number, followed by the mailing of a statement
confirming the transaction, which is sent to the address of record. If these
procedures are followed, neither the Trust, the Distributor nor the Transfer
Agent will be responsible for any loss, damages, expense or cost arising out of
any telephone redemptions effected upon instructions believed by them to be
genuine. Redemption proceeds will be mailed only according to the previously
established instructions.
The Funds ordinarily will make payment for all shares redeemed within
seven business days after the receipt by the Transfer Agent in proper form;
however, the right of redemption and payment of redemption proceeds are subject
to suspension for any period during which the New York Stock Exchange is closed,
or when trading on the New York Stock Exchange is restricted as determined by
the SEC; during any period when an emergency as defined by the rules and
regulations of the SEC exists; or during any period when the SEC has by order
permitted such suspension. The Funds will not mail redemption proceeds until
checks (including certified checks or cashier's checks) received for the shares
purchased have cleared, which can take as long as 15 days.
There is no minimum for telephone redemptions paid by check. However,
the Transfer Agent may deduct its current wire fee from the principal in the
shareholder's account for wire redemptions under $5,000. As of the date of this
prospectus, this fee was $7.50 for each wire redemption. There is no charge for
wire redemptions of $5,000 or more.
The value of shares on repurchase may be more or less than the
investor's cost depending upon the market value of the relevant Fund's portfolio
securities at the time of redemption. No redemption fee is charged for the
redemption of shares, but a CDSC is imposed on certain redemptions of Class A,
Class B and Class C shares as described below.
Involuntary Redemption
The Funds may involuntarily redeem an investor's shares if the net
asset value of such shares is less than $500; provided that involuntary
redemptions will not result from fluctuations in the value of an investor's
shares. An investor may be notified that the value of the investor's account is
less than $500, in which case the investor would be allowed 60 days to make an
additional investment before the redemption is processed.
Automatic Withdrawal Plan ("AWP")
The Funds offer an Automatic Withdrawal Plan which may be used by
holders of Class A, Class B and Class C shares who wish to receive regular
distributions from their accounts. Upon commencement of the AWP, the account
must have a current value of $2,500 or more in a Fund. Shareholders may elect to
receive automatic cash payments of $50 or more on a monthly, quarterly,
semi-annual, or annual basis. Automatic withdrawals are normally processed on
the 20th day of the applicable month or, if such day is not a day on which the
New York Stock Exchange is open for business, on the next business day, and are
paid promptly thereafter. An investor may utilize the AWP by completing the AWP
Application Form available through the Transfer Agent.
<PAGE>
Shareholders should realize that if withdrawals exceed capital
appreciation and/or income dividends their invested principal in the account
will be depleted. Thus, depending upon the frequency and amounts of the
withdrawal payments and/or any fluctuations in the net asset value per share,
their original investment could be exhausted entirely. To participate in the
AWP, shareholders must have their dividends automatically reinvested and may not
hold share certificates. Shareholders may change or cancel the AWP at any time,
upon written notice to the Transfer Agent. Purchases of additional Class A
shares of the Funds concurrently with withdrawals may be disadvantageous to
investors because of the sales charges involved, and, therefore, are
discouraged. Class B and Class C shares, if any, that are redeemed in connection
with the AWP are still subject to the applicable CDSC.
<PAGE>
Contingent Deferred Sales Charge - Class B Shares
Class B shares that are redeemed within six years of purchase will be
subject to a CDSC as set forth below. A CDSC payable to the Distributor is
imposed on any redemption of shares that causes the current value of a
shareholder's account to fall below the dollar amount of all payments by the
shareholder for the purchase of shares during the preceding six years.
The CDSC will be waived for certain exchanges as described below. In
addition, Class B shares that are redeemed will not be subject to a CDSC to the
extent that the value of such shares represents (1) reinvestment of dividends or
capital gain distributions, (2) shares held more than six years, or (3) capital
appreciation of shares redeemed. In determining the applicability and rate of
any CDSC, it will be assumed that a redemption of Class B shares is made first
of shares representing reinvestment of dividends and capital gains
distributions, then any appreciation on shares redeemed, and then of remaining
shares held by the shareholders for the longest period of time. The purchase
payment from which a redemption is made is assumed to be the earliest purchase
payment from which a full redemption has not already been effected. The holding
period of Class B shares of a Fund acquired through an exchange of Class B
shares of The Munder Money Market Fund (which are available only by exchange of
Class B shares of the Funds or other funds in The Munder Funds, Inc. or the
Munder Funds Trust) will be calculated from the date that the Class B shares
were initially purchased.
The amount of any applicable CDSC will be calculated by multiplying the
net asset value of shares subject to the charge at the time of redemption or at
the time of purchase, whichever is lower, by the applicable percentage shown in
the table below:
CONTINGENT DEFERRED
SALES CHARGE AS
A PERCENTAGE OF
YEAR SINCE DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
First 5.00%
Second 4.00%
Third 3.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh 0.00%
<PAGE>
For Federal income tax purposes, the amount of the CDSC will reduce the
gain or increase the loss, as the case may be, on the amount recognized on the
redemption of shares. The amount of any CDSC will be paid to the Distributor.
The Distributor will pay a commission of 4.0% of the net asset value of
Class B shares to brokers that initiate and are responsible for purchases of
Class B shares of the Funds.
The CDSC will be waived for certain exchanges, as described below. In
addition, the CDSC payable with respect to Class B shares will be waived in the
following circumstances: (1) total or partial redemptions made within one year
following the death of a shareholder or registered joint owner; (2) minimum
required distributions made in connection with an IRA or other retirement plan
following attainment of age 70 1/2; and (3) redemptions pursuant to a Fund's
right to liquidate a shareholder's account involuntarily.
Contingent Deferred Sales Charge - Class A and Class C Shares
In order to recover commissions paid to dealers on investments of $1
million or more in Class A shares and on investments in Class C shares, a CDSC
of 1% applies to certain redemptions of such shares made within the first year
after investing.
No charge is imposed to the extent that the net asset value of the
shares redeemed does not exceed (a) the current net asset value of shares
purchased through reinvestment of dividends or capital gain distributions plus
(b) the current net asset value of shares purchased more than one year prior to
the redemption, plus (c) increases in the net asset value of the shareholder's
shares above the purchase payments made during the preceding one year. The same
waivers as are available with respect to the CDSC on Class B shares also apply
to the CDSC on Class A and Class C shares.
The holding period of Class A or Class C shares of a Fund acquired
through an exchange of the corresponding class of shares of The Munder Money
Market Fund (which are available only by exchange of Class A or Class C shares
of the Funds or funds in The Munder Funds, Inc. or the Munder Funds Trust, as
the case may be) and other non-money market funds of The Munder Funds, Inc. and
The Munder Funds Trust and other Funds of the Trust will be calculated from the
date that the Class A or Class C shares were initially purchased.
See the Statement of Additional Information for further information
regarding redemption of Fund shares.
Class A shares purchased for at least $1,000,000 without a sales charge
may be exchanged for Class A shares of another fund of the Trust, The Munder
Funds, Inc. or The Munder Funds Trust without the imposition of a CDSC, although
the CDSC described above will apply to the redemption of the shares acquired
through an exchange.
In determining whether a CDSC is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
It will be assumed that the redemption is made first of amounts representing all
Class A shares on which a front-end sales charge has been assessed; then of
shares acquired pursuant to the reinvestment of dividends and distributions; and
then of amounts representing the cost of shares purchased one year or more prior
to the redemption. For Federal income tax purposes, the amount of the CDSC will
reduce the gain or increase the loss, as the case may be, on the amount realized
on redemption. The amount of any CDSC will be paid to the Distributor.
CONVERSION OF CLASS B SHARES
A shareholder's Class B shares will automatically convert to Class A
shares in a Fund on the sixth anniversary of the issuance of the Class B shares,
together with a pro rata portion of all Class B shares representing dividends
and other distributions paid in additional Class B shares. The Class B shares so
converted will no longer be subject to the higher expenses borne by Class B
shares. The conversion will be effected at the relative net asset values per
share of the two classes. If a shareholder effects one or more exchanges among
Class B shares of a Fund, other Funds of the Trust, non-money market funds of
The Munder Funds, Inc. or other funds of The Munder Funds Trust during the
six-year period, the holding periods for the shares so exchanged will be counted
toward the six-year period. Because the per share net asset value of the Class A
shares may be higher than that of the Class B shares at the time of conversion,
a shareholder may receive fewer Class A shares than the number of Class B shares
converted, although the dollar value will be the same. See "Net Asset Value."
Other
Some or all of the services and privileges described herein may not be
available to certain customers of a broker, and a broker may impose conditions
on its customers which are different from those described in this Prospectus.
Investors should consult their brokers in this regard.
<PAGE>
HOW TO EXCHANGE SHARES
General
Class A, Class B and Class C shares of each Fund may be exchanged for
shares of the same class of other funds of the Trust, The Munder Funds, Inc. or
The Munder Funds Trust, based on their respective net asset values, subject to
any applicable sales charge differential.
Class A shares of a money market fund of The Munder Funds, Inc. or The
Munder Funds Trust that were (1) acquired through the use of the exchange
privilege and (2) can be traced back to a purchase of shares in one or more
investment portfolios of The Munder Funds, Inc. or The Munder Funds Trust for
which a sales charge was paid, can be exchanged for Class A shares of a Fund of
the Trust, The Munder Funds, Inc. or The Munder Funds Trust subject to payment
of differential sales charges as applicable.
The exchange of Class B shares of one fund of the Trust, The Munder
Funds, Inc. or The Munder Funds Trust for Class B shares of another fund of the
Trust, The Munder Funds, Inc. or The Munder Funds Trust will not be subject to a
CDSC. The exchange of Class C shares of one Fund of the Trust, The Munder Funds,
Inc. or The Munder Funds Trust for Class C shares of another fund of the Trust,
The Munder Funds, Inc. or The Munder Funds Trust will not be subject to a CDSC.
For purposes of computing the applicable CDSC, the length of time of ownership
of the Class B or Class C shares will be measured from the date of the original
purchase and will not be affected by such exchanges.
Any share exchange must satisfy the requirements relating to the
minimum initial investment in an investment portfolio of the Trust, The Munder
Funds, Inc. or The Munder Funds Trust, and the shares involved must be legally
available for sale in the state of the investor's residence. For Federal income
tax purposes, a share exchange is a taxable event and, accordingly, a capital
gain or loss may be realized. Before making an exchange request, shareholders
should consult a tax or other financial advisor and should consider the
investment objective, policies and restrictions of the investment portfolio into
which the shareholder is making an exchange, as set forth in the applicable
prospectus. An investor who is considering an exchange may obtain a copy of the
prospectus for any investment portfolio of the Trust, The Munder Funds, Inc. or
The Munder Funds Trust by contacting his or her broker or the Trust at (800)
438-5789. Certain brokers may charge a fee for handling exchanges.
The Trust reserves the right to modify or terminate the exchange
privilege at any time. Notice will be given to shareholders of any material
modifications except where notice is not required.
Exchange by Telephone
A shareholder may give exchange instructions to the shareholder's
broker or by telephone to the Funds at (800) 438-5789. Telephone exchange
privileges are not available to shareholders who have custody of their share
certificates. The Trust reserves the right to reject any telephone exchange
request. Telephone exchanges may be subject to limitations as to amount or
frequency, and to other restrictions that may be established from time to time
to ensure that exchanges do not operate to the disadvantage of any Fund or its
shareholders.
Exchange by Mail
Exchange orders may be sent by mail to the shareholder's broker or to
the Transfer Agent at the address set forth in "Shareholder Account
Information."
DIVIDENDS AND DISTRIBUTIONS
Each Fund expects to pay dividends and distributions from the net
income and capital gains, if any, earned on investments held by the Fund.
Dividends from net income are declared and paid at least annually. Each Fund's
net realized capital gains (including net short-term capital gains), if any, are
distributed at least annually. Dividends and other distributions paid by each
Fund with respect to its Class A, Class B and Class C shares are calculated at
the same time.
Dividends and capital gains are paid in the form of additional shares
of the same class of a Fund unless a shareholder requests that dividends and
capital gains be paid in cash. In the absence of this request on the Account
Application Form or in a subsequent request, each purchase of shares is made on
the understanding that the Transfer Agent is automatically appointed to receive
the dividends upon all shares in the shareholder's account and to reinvest them
in full and fractional shares of the same class of the Fund at the net asset
value in effect at the close of business on the reinvestment date. Dividends are
automatically paid in cash (along with any redemption proceeds) not later than
seven business days after a shareholder closes an account.
The per share dividends on Class B and Class C shares of a Fund
generally will be lower than the per share dividends on Class A shares of that
Fund as a result of the higher annual service and distribution fees applicable
with respect to Class B and Class C shares.
Each Fund's expenses are deducted from the income of the Fund before
dividends are declared and paid. These expenses include, but are not limited to,
fees paid to the Advisor, Administrator, Custodian and Transfer Agent; fees and
expenses of officers and Trustees; taxes; interest; legal and auditing fees;
brokerage fees and commissions; certain fees and expenses in registering and
qualifying the Funds and their shares for distribution under Federal and state
securities laws; expenses of preparing prospectuses and statements of additional
information and of printing and distributing prospectuses and statements of
additional information to existing shareholders; the expense of reports to
shareholders, shareholders' meetings and proxy solicitations; fidelity bond and
Trustees' and officers' liability insurance premiums; the expense of using
independent pricing services; and other expenses which are not assumed by the
Administrator. Any general expenses of the Trust that are not readily
identifiable as belonging to a particular fund of the Trust are allocated among
all funds of the Trust by or under the direction of the Board of Trustees in a
manner that the Board determines to be fair and equitable. Except as noted in
this Prospectus and the Statement of Additional Information, the Funds' service
contractors bear expenses in connection with the performance of their services,
and each Fund bears the expenses incurred in its operations. The Advisor,
Administrator, Custodian and Transfer Agent may voluntarily waive all or a
portion of their respective fees from time to time.
Each Fund's net investment income available for distribution to the
holders of shares will be reduced by the amount of service and distribution fees
payable under the Class A Plan, the Class B Plan and Class C Plan described
below.
NET ASSET VALUE
Net asset value for a particular class of shares in a Fund is
calculated by dividing the value of all securities and other assets belonging to
the Fund allocable to that class, less the liabilities charged to that class, by
the number of outstanding shares of that class.
The net asset value per share of each Fund for the purpose of pricing
purchase and redemption orders is determined as of the close of regular trading
hours on the New York Stock Exchange (currently 4:00 p.m., New York time) on
each business day.
Securities traded on a national securities exchange or on the NASDAQ
National Market System are valued at the last sale price on such exchange or
market as of the close of business on the date of valuation. Securities traded
on a national securities exchange or on the NASDAQ National Market System for
which there were no sales on the date of valuation and securities traded on
other over-the-counter markets, including listed securities for which the
primary market is believed to be over-the-counter, are valued at the mean
between the most recently quoted bid and asked prices. Options will be valued at
market value or fair value if no market exists. Futures contracts will be valued
in like manner, except that open futures contract sales will be valued using the
closing settlement price or, in the absence of such a price, the most recently
quoted asked price. Portfolio securities primarily traded on the London Stock
Exchange are generally valued at the mid-price between the current bid and asked
prices. Portfolio securities which are primarily traded on foreign securities
exchanges, other than the London Stock Exchange, are generally valued at the
preceding closing values of such securities on their respective exchanges,
except when an occurrence subsequent to the time a value was so established is
likely to have changed such value. In such an event, the fair value of those
securities will be determined through the consideration of other factors by or
under the direction of the Boards of Trustees. Restricted securities and
securities and assets for which market quotations are not readily available are
valued at fair value by the Advisor under the supervision of the Board of
Trustees. Debt securities with remaining maturities of 60 days or less are
valued at amortized cost, unless the Board of Trustees determines that such
valuation does not constitute fair value at that time. Under this method, such
securities are valued initially at cost on the date of purchase (or the 61st day
before maturity).
The Funds do not accept purchase and redemption orders on days on which
the New York Stock Exchange is closed. The New York Stock Exchange is currently
scheduled to be closed on New Year's Day, Presidents' Day, Good Friday, Memorial
Day (observed), Independence Day, Labor Day, Thanksgiving and Christmas, and on
the preceding Friday or subsequent Monday when one of these holidays falls on a
Saturday or Sunday, respectively.
The different expenses borne by each Class of shares will result in
different net asset values and dividends. The per share net asset value of the
Class B and Class C shares of a Fund generally will be lower than that of the
Class A shares of that Fund because of the higher expenses borne by the Class B
and Class C shares.
MANAGEMENT
Board of Trustees
The Trust is managed under the direction of its Board of Trustees. The
Statement of Additional Information contains the name and background information
of each Trustee.
Investment Advisor and Sub-Advisor
Munder Capital Management, a Delaware general partnership with its
principal offices at 480 Pierce Street, Birmingham, Michigan 48009, serves as
the Funds' investment advisor. The Advisor was formed in December 1994. The
principal partners of the Advisor are Old MCM, Inc. ("MCM"), Munder Group LLC,
Woodbridge Capital Management, Inc. ("Woodbridge") and WAM Holdings, Inc.
("WAM"). MCM was founded in February 1985 as a Delaware corporation and was a
registered investment advisor. Woodbridge and WAM are indirect, wholly-owned
subsidiaries of Comerica Incorporated. Mr. Lee P. Munder, the Advisor's chief
executive officer, indirectly owns or controls a majority of the partnership
interests in the Advisor. As of June 30, 1996, the Advisor and its affiliates
had approximately $34 billion in assets under active management, of which $17
billion were invested in equity securities, $6 billion were invested in money
market or other short-term instruments, and $11 billion were invested in other
fixed income securities.
Subject to the supervision of the Board of Trustees of the Trust, the
Advisor provides overall investment management for the Funds, provides research
and credit analysis, oversees the purchases and sales of portfolio securities by
the Sub-Advisor, maintains books and records with respect to the Funds'
securities transactions and provides periodic and special reports to the Board
of Trustees as requested.
For the advisory services provided and expenses assumed with regard to
the International Growth Fund and the Healthcare Fund, it, the Advisor has
agreed to a fee, computed daily and payable monthly, at an annual rate of 1.00%
of each Fund's average daily net assets up to $250 million, reduced to .75% of
each Fund's average daily net assets in excess of $250 million. For the advisory
services provided and expenses assumed with regard to the Emerging Markets Fund,
the Advisor has agreed to a fee, computed daily and payable monthly, at an
annual rate of 1.25% of the Fund's average daily net assets.
The Advisor may, from time to time, make payments to banks,
broker-dealers or other financial institutions for certain services to the Funds
and/or their shareholders, including sub-administration, sub-transfer agency and
shareholder servicing. Such payments are made out of the Advisor's own resources
and do not involve additional costs to the Funds or their shareholders.
Pursuant to a sub-advisory agreement with the Advisor, Framlington
Overseas Investment Management Limited provides sub-advisory services to the
Funds. Subject to the supervision of the Advisor, the Sub-Advisor is responsible
for the management of each Fund's portfolio, including all decisions regarding
purchases and sales of portfolio securities by the Funds. The Sub-Advisor is
also responsible for arranging the execution of all portfolio management
decisions, including the selection of brokers to execute trades and the
negotiation of brokerage commissions in connection therewith. For its services
with regard to the International Growth Fund and the Healthcare Fund, the
Advisor pays the Sub-Advisor a monthly fee equal on an annual basis to 0.50% of
each Fund's average daily net assets up to $250 million, reduced to .375% of
each Fund's average daily net assets in excess of $250 million. For its services
with regard to the Emerging Markets Fund, the Advisor pays the Sub-Advisor a
monthly fee equal on an annual basis to .625% of the Fund's average daily net
assets.
The Sub-Advisor is a subsidiary of Framlington Group plc, a public
limited company incorporated in England and Wales which, through its
subsidiaries, provides a wide range of investment services. The Sub-Advisor and
its affiliates serve as investment manager to various investment trusts
organized in the United Kingdom, and provides fund management services to
pension funds and charities. Framlington Group plc is a wholly owned subsidiary
of Framlington Holdings Limited which is, in turn, owned 49% by the Advisor and
[51%] by Credit Commercial de France S.A., a French banking corporation listed
on the Societe des Bourses Francaises.
Performance of Equity Portfolios Managed by the Sub-Advisor
Set forth below are certain performance data provided by the
Sub-Advisor relating to unit trusts organized under the laws of the United
Kingdom (referred to hereafter as the "trust accounts") which are managed by the
Sub-Advisor and which have investment objectives and policies similar to those
of the corresponding Funds. See "Investment Objectives and Policies" and
"Portfolio Instruments and Practices and Associated Risk Factors." In the case
of Emerging Markets Fund, the data relates to a composite of the Framlington
Emerging Markets Unit Trust and an institutional emerging markets portfolio
managed by the same personnel of the Sub-Advisor with similar investment
objectives and policies.
The trust account performance indicates the aggregate percentage of
change in unit price for the trust accounts, on the basis of data provided by
Micropal, an independent research organization that is a recognized source of
performance data in the UK unit trust industry. The data is U.S. dollar adjusted
on the basis of exchange rates provided by Datastream using WM/Reuters closing
rates. The performance figures are net of brokerage commissions and actual
investment advisory fees and UK taxes but exclude the impact of sales loads,
custodial fees and other administrative expenses that will be applicable to the
corresponding Funds and will result in a higher expense ratio for the Funds. The
data assume the reinvestment of net income and capital gain distributions. The
trust account returns are calculated showing beginning and ending offer prices
for periods ended September 30, 1996.
Investors should not rely on the following performance data of the
Sub-Advisor's unit trust clients' accounts as an indication of future
performance of the Funds. It should be noted that the management of the Funds
will be affected by regulatory requirements under the 1940 Act and requirements
of the Internal Revenue Code of 1986, as amended, to qualify as a regulated
investment company.
Period Ended MSCI World
September 30, 1996 Framlington Health Total Return
1 Year 42.83% 14.20%
3 Years 127.10% 41.89%
5 Years 150.47% 70.80%
Inception on
May 1, 1987 437.60% 112.37%
Performance for the Health trust account is calculated on an offer-offer
basis; US Dollar adjusted total return net of UK Tax and annual management fees.
Source: Micropal.
MSCI World index performance shows total return in US Dollars but does not
reflect the deduction of fees, expenses and taxes. Source: Datastream.
<PAGE>
Period Ended Framlington International MSCI World
September 30, 1996 Growth Total Return
1 Year 11.06% 14.20%
3 Years 33.68% 41.89%
5 Years 62.79% 70.80%
10 Years 208.86% 188.38%
Performance for the International Growth trust account is calculated on an
offer-offer basis; US Dollar adjusted total return net of UK Tax and annual
management fees. Source: Micropal.
MSCI World index performance shows total return in US Dollars but does not
reflect the deduction of fees, expenses and taxes. Source: Datastream.
Period Ended Framlington Emerging MSCI WORLD
September 30, 1996 Markets Composite* Total Return
1 Year 3.46% 4.84%
3 Years 30.91% 30.51%
Inception on
December 31, 1992 67.57% 62.33%
* The Framlington Emerging Markets Composite is an equal weighted composite
of the Framlington Emerging Markets Unit Trust and a Canadian based
institutional portfolio. The Framlington Emerging Markets Fund portion of
the composite is calculated on an offer-offer basis US Dollar adjusted
total return net of UK Tax and annual management fees, but not initial
charges. The Canadian Institutional fund is measured by the World Markets
Company on a gross total return basis and on the gross tax basis of a
Canadian domiciled pension fund. The returns have been adjusted to show a
return net of the management fee charged the Canadian Institutional fund.
The inception of the Canadian institutional fund is November 1, 1994.
MSCI Indices
The MSCI World index used is maintained by Morgan Stanley Capital International
and seeks to cover the largest 65% of companies in countries in the developed
world. The companies covered are adjusted for cross ownership and the index is
balanced to show a true market representation of the sectors covered in the
underlying markets. Total return is calculated using the prices of the companies
tracked and assumes the reinvestment of dividends. The index performance does
not reflect the deduction of fees, expenses and taxes.
The MSCI Emerging Markets Index is maintained by Morgan Stanley Capital
International and covers 26 emerging markets. Total return is calculated using
the prices of the companies tracked and assumes the reinvestment of dividends.
The index performance does not reflect the deduction of fees, expenses and
taxes.
Portfolio Managers
Simon Key, Chief Investment Officer of the Sub-Advisor, is the primary
portfolio manager for the Emerging Markets Fund. Mr. Key heads the asset
allocation committee of the Sub-Advisor, and is responsible for overall asset
allocation strategy. Prior to joining Framlington in 1989, Mr. Key was with the
Bank of England as economist and deputy head of the European team. He graduated
from the University of East Anglia with a BA in economics and philosophy, and
went on to complete a MSc in economics at the University of London.
Antony Milford, Head of the Specialist Desk for the Sub-Advisor, is the
primary portfolio manager for the Healthcare Fund. Mr. Milford is a member of
the Sub-Advisor's asset allocation committee and has been managing funds for
Framlington since 1971, covering most geographic regions. Mr. Milford has
managed a healthcare portfolio for the Sub-Advisor since 1989. He graduated from
Oxford with a Classics degree.
The International Growth Fund is managed by a committee of professional
portfolio managers of the Sub-Advisor.
Administrator, Custodian and Transfer Agent
First Data Investor Services Group, Inc. ("First Data"), whose
principal business address is 53 State Street, Boston, Massachusetts 02109 (the
"Administrator"), serves as administrator for the Trust. First Data is a
wholly-owned subsidiary of First Data Corporation. The Administrator generally
assists the Trust in all aspects of its administration and operations, including
the maintenance of financial records and fund accounting.
First Data also serves as the Trust's transfer agent and dividend
disbursing agent ("Transfer Agent"). Shareholder inquiries may be directed to
First Data at P.O. Box 5130, Westborough, Massachusetts 01581-5130.
As compensation for these services, the Administrator is entitled to
receive fees, computed daily and payable monthly, at the rate of .10% of average
daily net assets with a $60,000 minimum fee per annum in the aggregate for the
Funds. The Transfer Agent is entitled to receive fees, based on the aggregate
average daily net assets of the Funds, computed daily and payable monthly at the
rate of [.02% of the first $2.8 billion of net assets, plus .015% of the next
$2.2 billion of net assets, plus .01% of all net assets in excess of $5
billion]. The Administrator and Transfer Agent are also entitled to
reimbursement for out-of-pocket expenses. The Administrator has entered into a
Sub-Administration Agreement with the Distributor under which the Distributor
provides certain administrative services with respect to the Funds. The
Administrator pays the Distributor a fee for these services out of its own
resources at no cost to the Funds.
Comerica Bank (the "Custodian"), whose principal business address is
One Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides
custodial services to the Funds. The Custodian is a wholly owned subsidiary of
Comerica Incorporated, a publicly-held bank holding company. As compensation for
its services, the Custodian is entitled to receive fees, based on the aggregate
average daily net assets of the Funds and certain other investment portfolios
that are advised by the Advisor, for which the custodian provides services,
computed daily and payable monthly at an annual rate of .03% of the first $100
million of average daily net assets, .02% of the next $500 million of net assets
and .01% of net assets in excess of $600 million. The Custodian also receives
certain transaction based fees.
For an additional description of the services performed by the
Administrator, Transfer Agent and Custodian, see the Statement of Additional
Information.
Distribution Services Arrangement
The Trust has adopted Distribution and Service Plans with respect to
Class A, Class B and Class C shares of each Fund, pursuant to which each Fund
uses its assets to finance activities relating to the distribution of its shares
to investors and the provision of certain shareholder services (collectively,
the "Plans"). Under the Class A Plan, the Distributor is paid a service fee at
an annual rate of 0.25% of the value of average daily net assets of the Class A
shares. Under the Class B and Class C Plans, the Distributor is paid a service
fee at an annual rate of 0.25%, and a distribution fee at an annual rate of
0.75%, of the value of average daily net assets of the Class B and Class C
shares.
Under the Plans, the Distributor uses the service fees primarily to pay
ongoing trail commissions to securities dealers (which may include the
Distributor itself) and other financial institutions and organizations
(collectively, the "Service Organizations") who provide shareholder services for
the Funds. These services include, among other things, processing new
shareholder account applications, preparing and transmitting to the Funds'
Transfer Agent computer processable tapes of all transactions by customers and
serving as the primary source of information to customers in answering questions
concerning the Funds and their transactions with the Funds.
The Class B and Class C Plans permit payments to be made by the Funds
to the Distributor for expenditures incurred by it in connection with the
distribution of Fund shares to investors and the provision of certain
shareholder services, including but not limited to the payment of compensation,
including incentive compensation, to Service Organizations to obtain various
distribution related services for the Funds. The Distributor is also authorized
to engage in advertising, the preparation and distribution of sales literature
and other promotional activities on behalf of the Funds. In addition, the Class
B and Class C Plans authorize payments by the Funds of the cost of preparing,
printing and distributing Fund prospectuses and statements of additional
information to prospective investors and of implementing and operating the
Plans. Distribution expenses also include an allocation of overhead of the
Distributor and accruals for interest on the amount of distribution expenses
that exceed distribution fees and CDSCs received by the Distributor.
The Distributor expects to pay or arrange for payment of sales
commissions to dealers authorized to sell Class B or Class C shares, all or a
part of which may be paid at the time of sale. The Distributor will use its own
funds (which may be borrowed) to pay such commissions pending reimbursement
pursuant to the Class B and Class C Plans. Because the payment of distribution
and service fees with respect to Class B and Class C shares is subject to the
1.00% limitation described above and will therefore be spread over a number of
years, it may take the Distributor a number of years to recoup sales commissions
paid by it to dealers and other distribution and service related expenses from
the payments received by it from the Funds pursuant to the Plans.
The Plans may be terminated at any time. The Plans provide that amounts
paid as prescribed by the Plans at any time may not cause the limitation on such
payments established by the Plans to be exceeded. The amount of daily
compensation payable to the Distributor with respect to each day will be accrued
each day as a liability of the Funds and will accordingly reduce each Fund's net
assets upon such accrual.
Payments under the Plans are not tied exclusively to the distribution
and/or shareholder service expenses actually incurred by the Distributor and the
payments may exceed distribution and/or service expenses actually incurred. The
Trust's Board of Trustees evaluates the appropriateness of the Plans and their
payment terms on a continuous basis and in so doing will consider all relevant
factors, including expenses incurred by the Distributor and the amount received
under the Plans and the proceeds of the CDSCs with respect to the Class B and
Class C shares.
TAXES
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code for 1986, as amended (the "Code").
Such qualification relieves a Fund of liability for Federal income taxes to the
extent its earnings are distributed in accordance with the Code.
Qualification as a regulated investment company under the Code for any
taxable year requires, among other things, that a Fund distribute to its
shareholders an amount equal to at least 90% of its investment company taxable
income and 90% of its net tax-exempt interest income for such year. In general a
Fund's investment company income will be its taxable income (including
dividends, interest, and short-term capital gains) subject to certain
adjustments and excluding the excess of any net long-term capital gain for the
taxable year over the net short-term capital loss, if any, for such year. Each
Fund intends to distribute substantially all of its investment company taxable
income each taxable year. Such distributions will be taxable as ordinary income
to a Fund's shareholders who are not currently exempt from Federal income taxes,
whether such income is received in cash or reinvested in additional shares.
(Federal income taxes for distributions to an IRA or qualified retirement plan
are deferred under the Code if applicable requirements are met.) The dividends
received deduction for corporations will apply to such distributions by the
Funds to the extent of the total qualifying dividends received by the
distributing Fund from domestic corporations for the taxable year and if other
applicable tax requirements are met.
Substantially all of the Funds' net realized long-term capital gains,
if any, will be distributed at least annually. The Funds will generally have no
Federal income tax liability with respect to such gains, and the distributions
will be taxable to shareholders who are not currently exempt from Federal income
taxes as long-term capital gains, no matter how long the shareholders have held
their shares.
A taxable gain or loss may also be realized by a holder of shares in a
Fund upon the redemption or transfer of shares depending upon the tax basis of
the shares and their price at the time of the transaction.
Dividends declared in October, November, or December of any year
payable to shareholders of record on a specified date in such months will be
deemed to have been received by shareholders and paid by a Fund on December 31
of such year if such dividends are actually paid during January of the following
year.
Before purchasing shares in the Funds, the impact of dividends or
distributions which are expected to be declared or have been declared, but not
paid, should be carefully considered. Any dividend or distribution declared
shortly after a purchase of such shares prior to the record date will have the
effect of reducing the per share net asset value by the per share amount of the
dividend or distribution. All or a portion of such dividend or distribution,
although in effect a return of capital, may be subject to tax.
On an annual basis, the Funds will send written notices to record
owners of shares regarding the Federal tax status of distributions made by the
Funds.
Taxes - Foreign Investments
Income or gain from investments in foreign securities may be subject to
foreign withholding or other taxes. It is expected that the Funds will be
subject to foreign withholding taxes with respect to income received from
sources within foreign countries. If more than 50% of the value of a Fund's
total assets at the close of a taxable year consists of stock or securities of
foreign corporations, the Fund may elect, for U.S. Federal income tax purposes,
to treat certain foreign taxes paid by it, including generally any withholding
taxes and other foreign income taxes, as paid by its shareholders. If a Fund
makes this election, the amount of such foreign taxes paid by the Fund will be
included in its shareholders' income pro rata (in addition to taxable
distributions actually received by them), and the shareholders would be entitled
(a) to credit their proportionate amount of such taxes against their U.S.
Federal income tax liabilities subject to certain limitations described in the
Statement of Additional Information, or (b) if they itemize their deductions, to
deduct such proportionate amount from their U.S. income.
If a Fund invests in certain "passive foreign investment companies"
("PFICs"), it will be subject to Federal income tax (and possibly additional
interest charges) on a portion of any "excess distribution" or gain from the
disposition of such shares even if it distributes such income to its
shareholders. If a Fund elects to treat the PFIC as a "qualified election fund"
("QEF") and the PFIC furnishes certain financial information in the required
form to such Fund, the Fund will instead be required to include in income each
year its allocable share of the ordinary earnings and net capital gains on the
QEF, regardless of whether received, and such amounts will be subject to the
various distribution requirements described above.
DESCRIPTION OF SHARES
Each Fund operates as one series of the Trust. The Trust was organized
as a Massachusetts business trust on October __, 1996 and is also registered
under the 1940 Act as an open-end management investment company. The Trust's
declaration of trust authorize the Trustees to classify and reclassify any
unissued shares into one or more classes of shares. Pursuant to such authority
the Trustees have authorized the issuance of shares of beneficial interest
representing interests in the Funds, each of which is classified as a
diversified investment company under the 1940 Act.
The shares of the Funds are offered as five separate classes of shares
of beneficial interest, $.01 par value per share, designated Class A shares,
Class B shares, Class C shares, Class K shares and Class Y shares. All shares of
a Fund represent interests in the same assets of the Fund and are identical in
all respects except that each class bears different service and distribution
expenses and may bear various class-specific expenses, and each class has
exclusive voting rights with respect to its service and/or distribution plan, if
any. Shares of each Fund issued are fully paid, non-assessable, fully
transferable and redeemable at the option of the holder. Investors may call the
Trust at (800) 438-5789 for more information concerning other classes of shares
of the Funds. This Prospectus relates only to the Class A, Class B and Class C
shares of the Funds.
The Trust's shareholders are entitled to one vote for each full share
held and proportionate fractional votes for fractional shares held, and will
vote in the aggregate and not by Fund, except where otherwise required by law or
when the Trustees determine that the matter to be voted upon affects only the
interests of the shareholders of a particular Fund. In addition, shareholders of
a Fund will vote in the aggregate and not by class, except as otherwise
expressly required by law or when the Trustees determine that the matter to be
voted upon affects only the interests of the holders of a particular class of
shares. The Trust is not required and does not currently intend to hold annual
meetings of shareholders for the election of Board members except as required
under the 1940 Act. A meeting of shareholders will be called upon the written
request of at least 10% of the outstanding shares of the Trust. To the extent
required by law, the Trust will assist in shareholder communications in
connection with such a meeting. For further discussion of the voting rights of
shareholders, see "Additional Information Concerning Shares" in the Statement of
Additional Information.
Reports to Shareholders
The Trust will seek to eliminate duplicate mailings of prospectuses and
shareholders reports to accounts which have the same primary record owner, and
with respect to joint tenant accounts or tenant in common accounts, accounts
which have the same address. Additional copies of prospectuses and reports to
shareholders are available upon request by calling the Trust at (800) 438-5789.
PERFORMANCE
From time to time, the Funds may quote performance data for the shares
in advertisements or in communications to shareholders. The total return of a
class of shares in a Fund may be calculated on an average annual total return
basis, and may also be calculated on an aggregate total return basis, for
various periods. Average annual total return of a Fund reflects the average
percentage change in value of an investment in a class of shares in the Fund
from the beginning date of the measuring period to the end of the measuring
period. Aggregate total return reflects the total percentage change in value
over the measuring period. Both methods of calculating total return assume that
dividends and capital gains distributions made during the period are reinvested
in the same class of shares.
Performance quotations for each class of shares will be calculated
separately. Quotations for total return for Class A shares will reflect the
maximum sales charge charged by a Fund with respect to Class A shares and
quotations of total return for Class B and Class C shares will reflect any
applicable CDSC, except that the Funds may also provide, in conjunction with
such quotations, additional quotations that do not reflect the maximum sales
charge when the quotations are being provided to investors who are subject to
waived or reduced sales charges as described in this Prospectus. Because these
additional quotations will not reflect the maximum sales charge payable by
non-exempt investors, these quotations will be higher than the performance
quotation otherwise computed.
Quotations of total return for shares will reflect the fees for certain
distribution and shareholder services as described in this prospectus.
Each Fund may compare the performance of its shares to the performance
of other mutual funds with similar investment objectives and to other relevant
indices or to rankings prepared by independent services or other financial or
industry publications that monitor the performance of mutual funds, including,
for example, Lipper Analytical Services, Inc., the Lehman Brothers
Government/Corporate Bond Index, a recognized unmanaged index of government and
corporate bonds, the Standard & Poor's 500 Index, an unmanaged index of a group
of common stocks, the Consumer Price Index, or the Dow Jones Industrial Average,
an unmanaged index of common stocks of 30 industrial companies listed on the New
York Stock Exchange. Performance data as reported in national financial
publications such as Morningstar, Inc., Money Magazine, Forbes, Barron's, The
Wall Street Journal and The New York Times, or in publications of a local or
regional nature, may also be used in comparing the performance of a class of
shares in a Fund.
Performance will fluctuate and any quotation of performance should not
be considered as representative of future performance of a class of shares in a
Fund. Shareholders should remember that performance is generally a function of
the kind and quality of the instruments held in a fund, portfolio maturity,
operating expenses, and market conditions. Any fees charged by institutions
directly to their customers' accounts in connection with investments in a Fund
will not be included in calculations of yield and performance.
SHAREHOLDER ACCOUNT INFORMATION
Shareholders are encouraged to place purchase, exchange and redemption
orders through their brokers. Shareholders may also place such orders directly
through the Transfer Agent. See "How to Purchase Shares," "How to Redeem Shares"
and "How to Exchange Shares" for more information. The Transfer Agent for the
Funds is First Data Investor Services Group, Inc.
Investment by Mail
Send the completed Account Application Form (if initial purchase) or
letter stating Fund name, share class, shareholder's registered name and account
number (if subsequent purchase) with a check to:
First Data Investor Services Group, Inc.
The Munder Funds
P.O. Box 5130
Westborough, Massachusetts 01581-5130
Investment by Bank Wire
An investor opening a new account should call the Fund at (800)
438-5789 to obtain an account number. Within seven days of purchase such an
investor must send a completed Account Application Form containing the
investor's certified taxpayer identification number to First Data Investor
Services Group, Inc. at the address provided above under "Investment by Mail."
Wire instructions must state the Fund name, share class, the shareholder's
registered name and the shareholder account number. Bank wires should be sent
through the Federal Reserve Bank Wire System to:
Boston Safe Deposit and Trust Company
Boston, MA
ABA#: 011001234
DDA#: 16-798-3
Account No.
(State Fund name, share class, shareholder's registered name and
shareholder account number)
Before writing any funds an investor must call the Fund at (800)
438-5789 to confirm the wire instructions.
Exchange by Telephone
Call your broker or the Fund at (800) 4348-5789.
Class A , Class B and Class C shares may be exchanged only for shares
of the same class of another fund of the Company or The Munder Funds Trust,
subject to any applicable sales charge.
Redemptions by Telephone
Call your broker or the Fund at (800) 438-5789.
Redemptions by Mail
Send complete instructions, including name of Fund, share class, amount
of redemption, shareholder's registered name, account number, and, if a
certificate has been issued, an endorsed share certificate, to:
First Data Investor Services Group, Inc.
The Munder Funds
P.O. Box 5130
Westborough, Massachusetts 01581-5130
Additional Questions
Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call the Fund at (800) 438-5789.
<PAGE>
THE MUNDER FRAMLINGTON FUNDS TRUST
480 Pierce Street
Birmingham, Michigan 48009
Telephone (800) 438-5789
PROSPECTUS
Class K Shares
The Munder Framlington Funds Trust (the "Trust") is an open-end
investment company (a mutual fund) that currently offers a selection of three
investment portfolios. This Prospectus describes the Class K shares of the
investment portfolios offered by the Trust (the "Funds"):
Munder Framlington International Growth Fund
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Capital Management (the "Advisor") serves as investment advisor
to the Funds. Framlington Overseas Investment Management Limited (the
"Sub-Advisor") serves as sub-advisor to the Funds.
This prospectus contains the information that a prospective investor
should know before investing in the Funds. Investors are encouraged to read this
Prospectus and retain it for future reference. A Statement of Additional
Information dated ______, 1997, as amended or supplemented from time to time,
has been filed with the Securities and Exchange Commission (the "SEC") and is
incorporated by reference into this Prospectus. The Statement of Additional
Information may be obtained free of charge by calling the Trust at (800)
438-5789. In addition, the SEC maintains a web site (http://www.sec.gov) that
contains the Statement of Additional Information and other information regarding
the Funds.
Shares of the Funds are not deposits or obligations of, or guaranteed
or endorsed by, any bank, and are not insured or guaranteed by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
An investment in the Funds involves investment risks, including the possible
loss of principal.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ____________, 1996
<PAGE>
TABLE OF CONTENTS
Page
EXPENSE TABLE 3
THE TRUST 4
INVESTMENT OBJECTIVES AND POLICIES 4
International Growth Fund 4
Emerging Markets Fund 5
Healthcare Fund 5
Information Regarding All Funds 6
PORTFOLIO INSTRUMENTS AND PRACTICES AND ASSOCIATED RISK FACTORS 6
INVESTMENT LIMITATIONS 16
PURCHASE AND REDEMPTIONS OF SHARES 17
Purchase of Shares 17
Redemption of Shares 19
DIVIDENDS AND DISTRIBUTIONS 19
NET ASSET VALUE 20
MANAGEMENT 21
Board of Trustees 21
Investment Advisor and Sub-Advisor 21
Portfolio Managers 25
Administrator, Custodian and Transfer Agent 26
Shareholder Servicing Arrangements 27
TAXES 28
Taxes - Foreign Investments 29
DESCRIPTION OF SHARES 30
Reports to Shareholders 31
PERFORMANCE 31
<PAGE>
No person has been authorized to give any information, or to make any
representations not contained in this Prospectus, or in the Funds' Statement of
Additional Information incorporated herein by reference, in connection with the
offering made by this Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Fund or
Funds Distributor, Inc. (the "Distributor"). This Prospectus does not constitute
an offering by the Fund or by the Distributor in any jurisdiction in which such
offering may not lawfully be made.
<PAGE>
EXPENSE TABLE
The following table sets forth certain costs and expenses that an
investor will incur either directly or indirectly as a shareholder of Class K
shares of the Funds based on estimated operating expenses for the current fiscal
year. Class K shares are sold without an initial or contingent deferred sales
charge to customers of banks and other institutions, and to the immediate family
members of such customers. See "Purchase and Redemption of Shares."
<TABLE>
<S> <C> <C> <C>
International Growth Emerging Markets Fund Healthcare Fund
Fund
Annual operating expenses (as a
percentage of average net assets)
Advisory fees 1.00% 1.25% 1.00%
Other Expenses ___% ___% ___%
Shareholder Servicing .25% .25% .25%
All Other Expenses ___% ___% ___%
Total Fund Operating Expenses ___% ___% ___%
</TABLE>
"Other expenses" in the above table include administrator fees,
custodial fees, legal and accounting fees, printing costs, registration fees,
fees for any portfolio valuation service, the cost of regulatory compliance, the
costs of maintaining the Fund's legal existence and the costs involved with
communicating with shareholders. With respect to each Fund, the amount of "Other
expenses" is based on estimated expenses and projected assets for the current
fiscal year. See "Management" in this Prospectus for a further description of
the Funds' operating expenses and the nature of the services for which the Funds
are obligated to pay advisory fees. Any fees charged by institutions directly to
customer accounts for services provided in connection with investments in shares
of the Funds are in addition to the expenses shown in the above Expense Table
and the Example shown below.
Example
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect to
a hypothetical investment in the Funds. These amounts are based on payment by
the Funds of operating expenses at the levels set forth in the above table, and
are also based on the following assumptions:
An investor would pay the following expenses on a $1,000 investment,
assuming (1) a hypothetical 5% annual return and (2) redemption at the end of
the following time periods:
1 Year 3 Years
International Growth Fund $____ $____
Emerging Markets Fund $____ $____
Healthcare Fund $____ $____
The foregoing Expense Table and Example are intended to assist
investors in understanding the various shareholder transaction expenses and
operating expenses of the Funds that investors bear either directly or
indirectly.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL INVESTMENT RETURN AND OPERATING
EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
THE TRUST
Each of the Funds is a series of shares issued by the Trust, an
open-end management investment company. The Trust was organized under the laws
of the Commonwealth of Massachusetts on October 30, 1996 and has registered
under the Investment Company Act of 1940, as amended (the "1940 Act"). The
Trust's principal office is located at 480 Pierce Street, Birmingham, Michigan
48009 and its telephone number is (800) 438-5789.
INVESTMENT OBJECTIVES AND POLICIES
This Prospectus describes the following Funds offered by the Trust: the
Munder Framlington International Growth Fund ("International Growth Fund"), the
Munder Framlington Emerging Markets Fund ("Emerging Markets Fund"), and the
Munder Framlington Healthcare Fund ("Healthcare Fund"). Purchasing shares of any
Fund should not be considered a complete investment program, but an important
segment of a well-diversified investment program.
International Growth Fund
The investment objective of International Growth Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve its
objective through worldwide investment in equity securities of companies which,
in the opinion of the Sub-Advisor, show above-average profitability, management
quality and growth.
The Fund may invest in the securities of issuers located in countries
which include, but are not limited to, the following: Argentina, Australia,
Austria, Belgium, Brazil, Canada, Chile, China, Czech Republic, Denmark, Egypt,
Finland, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Korea,
Luxembourg, Malaysia, Mexico, The Netherlands, New Zealand, Norway, Peru, The
Philippines, Poland, Portugal, Russia, Singapore, South Africa, Spain, Sweden,
Switzerland, Taiwan, Thailand, Turkey and The United Kingdom.
Under normal market conditions, at least 65% of the Fund's total assets
will be invested in the equity securities of foreign issuers and such issuers
will be located in at least three foreign countries.
Emerging Markets Fund
The investment objective of Emerging Markets Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve this
objective through investing primarily in equity securities (as defined below) of
issuers in emerging market countries. [The Fund considers countries having
emerging markets to be all countries that are generally considered to be
emerging or developing countries by the International Bank for Reconstruction
and Development (more commonly referred to as the World Bank) or the
International Finance Corporation, as well as countries that are classified by
the United Nations or otherwise regarded by their authorities as emerging.
Currently, the countries not in this category include Ireland, Spain, New
Zealand, Australia, the United Kingdom, Italy, the Netherlands, Belgium,
Austria, France, Canada, Germany, Denmark, the United States, Sweden, Finland,
Norway, Japan, Iceland, Luxembourg and Switzerland.] A company will be deemed to
be in an emerging market country if (i) the company is organized under the laws
of, and has a principal office in, an emerging market country; (ii) the
principal trading market for the company's equity securities is in an emerging
market country; or (iii) the company derives at least 50% of its revenues or
profits from goods produced or sold, investments made, or services performed, in
an emerging market country, or has at least 50% of its assets situated in an
emerging market country. Under normal market conditions, the Fund will invest at
least 65% of its total assets in equity securities of issuers in emerging market
countries. Determinations as to eligibility will be made by the Sub-Advisor
based on publicly available information and inquiries made to the companies.
Healthcare Fund
The investment objective of the Healthcare Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve this
objective through investment in companies providing healthcare and medical
services and products worldwide. The Fund will invest in producers of
pharmaceuticals, biotechnology firms, medical device and instrument
manufacturers, distributors of healthcare products, care providers and managers
and other healthcare services companies. Under normal market conditions, the
Fund will invest at least 65% of its total assets in healthcare companies as
described above. The Sub-Advisor considers healthcare companies to include
companies in which at least 50% of sales, earnings or assets arise from or are
dedicated to health services or medical technology activities.
Information Regarding All Funds
Each Fund may also lend its portfolio securities and borrow money for
investment purposes (i.e., "leverage" its portfolio). In addition, each Fund may
enter into transactions in options on securities, securities indices and foreign
currencies, forward foreign currency contracts, and futures contracts and
related options. When deemed appropriate by the Sub-Advisor, a Fund may invest
cash balances in repurchase agreements and other money market investments to
maintain liquidity in an amount to meet expenses or for day-to-day operating
purposes. These investment techniques are described below and under the heading
"Investment Objectives and Policies" in the Statement of Additional
Information.]
When the Sub-Advisor believes that market conditions warrant, a Fund may
adopt a temporary defensive position and may invest without limit in money
market securities denominated in U.S. dollars or in the currency of any foreign
country. See "Portfolio Instruments and Practices and Associated Risk Factors --
Liquidity Management."
PORTFOLIO INSTRUMENTS AND PRACTICES AND ASSOCIATED RISK FACTORS
Investment strategies that are available to the Funds are set forth
below. Additional information concerning certain of these strategies and their
related risks is contained in the Statement of Additional Information.
EQUITY SECURITIES. "Equity securities," as used in this Prospectus,
refers to common stock, preferred stock, warrants or rights to subscribe to or
purchase such securities [and sponsored or unsponsored American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs"), and Global Depositary
Receipts ("GDRs") (collectively, "Depositary Receipts").] Securities considered
for purchase by the Funds may be listed or unlisted, and may be issued by
companies with various levels of market capitalization.
Each Fund may invest up to 5% of its net assets at the time of purchase
in warrants and similar rights (other than those that have been acquired in
units or attached to other securities). Warrants represent rights to purchase
securities at a specific price valid for a specific period of time. The prices
of warrants do not necessarily correlate with the prices of the underlying
securities. In addition, a Fund may invest in convertible bonds and convertible
preferred stock. A convertible security is a security that may be converted
either at a stated price or rate within a specified period of time into a
specified number of shares of common stock. By investing in convertible
securities, a Fund seeks the opportunity, through the conversion feature, to
participate in the capital appreciation of the common stock into which the
securities are convertible, while earning higher current income than is
available from the common stock. Although a Fund may acquire convertible
securities that are rated below investment grade by Standard & Poor's Ratings
Service, a division of McGraw Hill Companies Inc. ("S&P") or Moody's Investors
Service, Inc. ("Moody's"), it is expected that investments in lower-rated
convertible securities will not exceed 10% of the value of the total assets of a
Fund at the time of purchase. These high yield, high risk securities are
commonly referred to as junk bonds. Securities that are rated Ba by Moody's or
BB by S&P have speculative characteristics with respect to the capacity to pay
interest and repay principal. Securities that are rated B generally lack
characteristics of a desirable investment, and assurance of interest and
principal payments over any long period of time may be small. Securities that
are rated Caa or CCC are of poor standing. These issues may be in default or
present elements of danger that may exist with respect to principal or interest.
In light of the risks, the Sub-Advisor, in evaluating the creditworthiness of an
issue, will take various factors into consideration, which may include, as
applicable, the issuer's financial resources, its sensitivity to economic
conditions and trends, the ability of the issuer's management and regulatory
matters. To the extent a Fund purchases convertibles rated below investment
grade or convertibles that are not rated, a greater risk exists as to the timely
repayment of the principal of, and the timely payment of interest or dividends
on, such securities. Particular risks include (a) the sensitivity of such
securities to interest rate and economic changes, (b) the lower payments, (c)
the relatively low trading market liquidity for the securities, (d) the impact
that legislation may have on the market for these securities (and, in turn, on a
Fund's net asset value) and (e) the creditworthiness of the issuers of such
securities. During an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which would
negatively affect their ability to meet their principal and interest payment
obligations, to meet projected business goals and to obtain additional
financing. An economic downturn could also disrupt the market for lower-rated
convertible securities and negatively affect the value of outstanding securities
and the ability of the issuers to repay principal and interest. If the issuer of
a convertible security held by a Fund defaulted, the Fund could incur additional
expenses to seek recovery. Adverse publicity and investor perceptions, whether
or not they are based on fundamental analysis, could also decrease the values
and liquidity of lower-rated convertible securities held by a Fund, especially
in a thinly traded market.
FOREIGN SECURITIES. Each Fund may invest in the securities of foreign
issuers. There are certain risks and costs involved in investing in securities
of companies and governments of foreign nations, which are in addition to the
usual risks inherent in U.S. investments. These considerations generally are
more of a concern in emerging market countries, where the possibility of
political instability (including revolution) and dependence on foreign economic
assistance may be greater than in developed countries. Investments in companies
domiciled in emerging market countries therefore may be subject to potentially
higher risks than investments in developed countries.
Investments in foreign securities involve higher costs than investments
in U.S. securities, including higher transaction costs as well as the imposition
of additional taxes by foreign governments. In addition, foreign investments may
include additional risks associated with the level of currency exchange rates,
less complete financial information about the issuers, less market liquidity,
and political instability. Future political and economic developments, the
possible imposition of withholding taxes on interest income, the possible
seizure or nationalization of foreign holdings, the possible establishment of
exchange controls, or the adoption of other governmental restrictions might
adversely a Fund's investment in foreign obligations. Additionally, foreign
banks and foreign branches of domestic banks may be subject to less stringent
reserve requirements, and to different accounting, auditing and recordkeeping
requirements. A Fund may encounter difficulties or be unable to vote proxies,
exercise shareholder rights, pursue legal remedies, and obtain judgments in
foreign courts. Also, some countries may withhold portions of income and
dividends at the source.
Foreign securities markets have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when assets of a Fund are uninvested and no return is earned
thereon. The inability of a Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of portfolio securities due to settlement
problems could result either in losses to a Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, could result in possible liability to the purchaser.
Repatriation of investment income, capital and proceeds of sales by
foreign investors may require governmental registrations and/or approval in some
emerging market countries. A Fund could be adversely affected by delays in or a
refusal to grant any required governmental registrations or approval for such
repatriation.
Further, the economies of emerging market countries generally are
heavily dependent upon international trade and, accordingly, have been and may
continue to be adversely affected by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
by the counties with which they trade.
In many emerging market countries, there is less government supervision
and regulation of business and industry practices, stock exchanges, brokers and
listed companies than in the United States. There is an increased risk,
therefore, of uninsured loss due to lost, stolen, or counterfeit stock
certificates. In addition, the foreign securities markets of many of the
countries in which the Funds may invest may also be smaller, less liquid, and
subject to greater price volatility than those in the United States.
Although the Funds may invest in securities denominated in foreign
currencies, portfolio securities and other assets held by the Funds are valued
in U.S. dollars. As a result, the net asset value of a Fund's shares may
fluctuate with U.S. dollar exchange rates as well as with price changes of its
portfolio securities in the various local markets and currencies. In addition to
favorable and unfavorable currency exchange-rate developments, the Funds are
subject to the possible imposition of exchange control regulations or freezes on
convertibility of currency.
Investments in foreign securities may be in the form of Depositary
Receipts. These securities may not be denominated in the same currency as the
securities they represent. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying foreign securities.
EDRs are receipts issued by a European financial institution evidencing a
similar arrangement. Generally, ADRs, in registered form, are designed for use
in United States securities markets, and EDRs, in bearer form, are designed for
use in the European securities markets.
DEPOSITARY RECEIPTS. ADRs are Depositary Receipts typically issued by a
U.S. bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. EDRs and GDRs are typically issued by foreign
banks or trust companies, although they also may be issued by U.S. banks or
trust companies, and evidence ownership of underlying securities issued by
either a foreign or a United States corporation. Generally, Depositary Receipts
in registered form are designed for use in the U.S. securities market and
Depositary Receipts in bearer form are designed for use in securities markets
outside the United States. Depositary Receipts may not necessarily be
denominated in the same currency as the underlying securities into which they
may be converted. Depositary Receipts may be issued pursuant to sponsored or
unsponsored programs. In sponsored programs, an issuer has made arrangements to
have its securities traded in the form of Depositary Receipts. In unsponsored
programs, the issuer may not be directly involved in the creation of the
program. Although regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, in some cases it may be easier to
obtain financial information from an issuer that has participated in the
creation of a sponsored program. Accordingly, there may be less information
available regarding issuers of securities underlying unsponsored programs and
there may not be a correlation between such information and the market value of
the Depositary Receipts. Depositary Receipts also involve the risks of other
investments in foreign securities, as discussed above. For purposes of the
Funds' investment policies, a Fund's investments in Depositary Receipts will be
deemed to be investments in the underlying securities.
CONCENTRATION IN THE HEALTHCARE INDUSTRIES. Healthcare Fund generally
intends to invest at least 65% of its total assets in securities of companies in
the healthcare industries. These industries are characterized by rapidly
changing technology and extensive government regulation. In particular,
technological advances can render existing products obsolete, and obtaining
governmental approval for new products from regulatory authorities can be
lengthy, expensive and uncertain as to outcome. Healthcare companies also can be
highly dependent on the strength of patents for maintenance of profit margins
and market exclusivity. Moreover, cost containment measures implemented by
governmental authorities have adversely affected certain healthcare industries.
While an industry concentration may increase the risk and volatility of an
investment company's portfolio, Healthcare Fund will endeavor to reduce risk by
having a portfolio of investments that is diversified within its stated
objective and policies.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Funds may enter into
forward foreign currency exchange contracts in an effort to reduce the level of
volatility caused by changes in foreign currency exchange rates. The Funds may
not enter into these contracts for speculative purposes. A forward currency
exchange contract is an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of contract. A Fund will
segregate cash or liquid securities to cover its obligation to purchase foreign
currency under a forward foreign currency contract. Although such contracts tend
to minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time they tend to limit any potential gain that might be
realized should the value of such currency increase. A Fund will not enter into
forward foreign currency exchange contracts if as a result, the Fund will have
more than 20% of its total assets committed to consummation of such forward
foreign currency exchange contracts.
FUTURES CONTRACTS AND OPTIONS. The Funds may invest in futures
contracts and options on futures contracts for hedging purposes or to maintain
liquidity. However, a Fund may not purchase or sell a futures contract unless
immediately after any such transaction the sum of the aggregate amount of margin
deposits on its existing futures positions and the amount of premiums paid for
related options is 5% or less of its total assets.
Futures contracts obligate a Fund, at maturity, to take or make
delivery of certain securities or the cash value of a bond or securities index.
When interest rates are rising, futures contracts can offset a decline in value
of a Fund's portfolio securities. When rates are falling, these contracts can
secure higher yields for securities a Fund intends to purchase.
The Funds may purchase and sell call and put options on futures
contracts traded on an exchange or board of trade. When a Fund purchases an
option on a futures contract, it has the right to assume a position as a
purchaser or seller of a futures contract at a specified exercise price at any
time during the option period. When a Fund sells an option on a futures
contract, it becomes obligated to purchase or sell a futures contract if the
option is exercised. In anticipation of a market advance, a Fund may purchase
call options on futures contracts as a substitute for the purchase of futures
contracts to hedge against a possible increase in the price of securities which
the Fund intends to purchase. Similarly, if the value of a Fund's portfolio
securities is expected to decline, the Fund might purchase put options or sell
call options on futures contracts rather than sell futures contracts. In
connection with a Fund's position in a futures contract or option thereon, the
Fund will create a segregated account of liquid assets or will otherwise cover
its position in accordance with applicable requirements of the SEC.
In addition, the Funds may write covered call options, buy put options,
buy call options and write secured put options on particular securities or
various stock indices. Options trading is a highly specialized activity which
entails greater than ordinary investment risks. A call option for a particular
security gives the purchaser of the option the right to buy, and a writer the
obligation to sell, the underlying security at the stated exercise price at any
time prior to the expiration of the option, regardless of the market price of
the security. The premium paid to the writer is in consideration for undertaking
the obligations under the option contract. A put option for a particular
security gives the purchaser the right to sell the underlying security at the
stated exercise price at any time prior to the expiration date of the option,
regardless of the market price of the security. In contrast to an option on a
particular security, an option on a stock index provides the holder with the
right to make or receive a cash settlement upon exercise of the option.
The use of derivative instruments exposes a Fund to additional risks
and transaction costs. Risks inherent in the use of derivative instruments
include: (1) the risk that interest rates, securities prices and currency
markets will not move in the direction that a portfolio manager anticipates; (2)
imperfect correlation between the price of derivative instruments and movements
in the prices of the securities, interest rates or currencies being hedged; (3)
the fact that skills needed to use these strategies are different than those
needed to select portfolio securities; (4) inability to close out certain hedged
positions to avoid adverse tax consequences; (5) the possible absence of a
liquid secondary market for any particular instrument and possible
exchange-imposed price fluctuation limits, either of which may make it difficult
or impossible to close out a position when desired; (6) leverage risk, that is,
the risk that adverse price movements in an instrument can result in a loss
substantially greater than a Fund's initial investment in that instrument (in
some cases, the potential loss is unlimited); and (7) particularly in the case
of privately-negotiated instruments, the risk that the counterparty will fail to
perform its obligations, which could leave a Fund worse off than if it had not
entered into the position. For a further discussion, see "Fund Investments" and
the Appendix in the Statement of Additional Information.
When a Fund invests in a derivative instrument, it may be required to
segregate cash and other high-grade liquid debt securities or certain portfolio
securities to "cover" the Fund's position. Assets segregated or set aside
generally may not be disposed of so long as a Fund maintains the positions
requiring segregation or cover. Segregating assets could diminish a Fund's
return due to the opportunity losses of foregoing other potential investments
with the segregated assets.
The Funds are not commodity pools, and all futures transactions engaged
in by a Fund must constitute bona fide hedging or other permissible transactions
in accordance with the rules and regulations promulgated by the Commodity
Futures Trading Commission. Successful use of futures and options is subject to
special risk considerations.
For a further discussion see "Additional Information on Fund
Investments" and the Appendix to the Statement of Additional Information.
REPURCHASE AGREEMENTS. A Fund may agree to purchase securities from
financial institutions subject to the seller's agreement to repurchase them at
an agreed-upon time and price ("repurchase agreements"). The financial
institutions with which a Fund may enter into repurchase agreements include
member banks of the Federal Reserve System, any foreign bank or any domestic or
foreign broker/dealer which is recognized as a reporting government securities
dealer. The Advisor and/or Sub-Advisor will review and continuously monitor the
creditworthiness of the seller under a repurchase agreement, and will require
the seller to maintain liquid assets in a segregated account in an amount that
is greater than the repurchase price. Default by or bankruptcy of the seller
would, however, expose a Fund to possible loss because of adverse market action
or delays in connection with the disposition of the underlying obligations.
REVERSE REPURCHASE AGREEMENTS. The Funds may borrow funds for temporary
purposes by selling portfolio securities to financial institutions such as banks
and broker/dealers and agreeing to repurchase them at a mutually specified date
and price ("reverse repurchase agreements"). Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the repurchase price. A Fund would pay interest on amounts
obtained pursuant to a reverse repurchase agreement.
INVESTMENT COMPANY SECURITIES. In connection with the management of
daily cash positions, the Funds may invest in securities issued by other
investment companies which invest in short-term debt securities and which seek
to maintain a $1.00 net asset value per share (i.e., "money market funds").
International Growth Fund and Emerging Markets Fund may also purchase shares of
investment companies investing primarily in foreign securities, including
so-called "country funds." It is each Fund's policy not to invest in securities
issued by other investment companies which pay asset-based fees to the Advisor,
the Sub-Advisor, the Administrator, the Custodian, the Distributor or their
affiliates. Securities of other investment companies will be acquired within
limits prescribed by the 1940 Act. These limitations, among other matters,
restrict investments in securities of other investment companies to no more than
10% of the value of a Fund's total assets, with no more than 5% invested in the
securities of any one investment company. As a shareholder of another investment
company, a Fund would bear, along with other shareholders, its pro rata portion
of the other investment company's expenses, including advisory fees. These
expenses would be in addition to the expenses a Fund bears directly in
connection with its own operations.
LIQUIDITY MANAGEMENT. Pending investment, to meet anticipated
redemption requests, or as a temporary defensive measure if the Sub-Advisor
determines that market conditions warrant, the Funds may also invest without
limitation in short-term U.S. Government obligations, high quality money market
instruments, variable and floating rate instruments and repurchase agreements as
described above.
High quality money market instruments may include commercial paper, and
Europaper, which is U.S. dollar-denominated commercial paper of a foreign
issuer. The Funds may also purchase U.S. dollar-denominated bank obligations,
such as certificates of deposit, bankers' acceptances and interest-bearing
savings and time deposits, issued by U.S. or foreign banks or savings
institutions having total assets at the time of purchase in excess of $1
billion. Short-term obligations purchased by the Funds will either have
short-term debt ratings at the time of purchase in the top two categories by one
or more unaffiliated nationally recognized statistical rating organizations
("NRSROs") or be issued by issuers with such ratings. Unrated instruments
purchased by a Fund will be of comparable quality as determined by the
Sub-Advisor.
ILLIQUID SECURITIES. Each Fund may invest up to 15% of the value of its
net assets (determined at time of acquisition) in securities which are illiquid.
Illiquid securities would generally include repurchase agreements and time
deposits with notice/termination dates in excess of seven days, and certain
securities which are subject to trading restrictions because they are not
registered under the Securities Act of 1933, as amended (the "Act"). If, after
the time of acquisition, events cause this limit to be exceeded, the Fund will
take steps to reduce the aggregate amount of illiquid securities as soon as
reasonably practicable in accordance with the policies of the SEC.
The Funds may invest in commercial obligations issued in reliance on
the "private placement" exemption from registration afforded by Section 4(2) of
the Act ("Section 4(2) paper"). The Funds may also purchase securities that are
not registered under the Act, but which can be sold to qualified institutional
buyers in accordance with Rule 144A under the Act ("Rule 144A securities").
Section 4(2) paper is restricted as to disposition under the Federal securities
laws, and generally is sold to institutional investors which agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper
normally is resold to other institutional investors through or with the
assistance of the issuer or investment dealers which make a market in the
Section 4(2) paper, thus providing liquidity. Rule 144A securities generally
must be sold only to other qualified institutional buyers. If a particular
investment in Section 4(2) paper or Rule 144A securities is not determined to be
liquid, that investment will be included within the Fund's limitation on
investment in illiquid securities. The Advisor and/or Sub-Advisor will determine
the liquidity of such investments pursuant to guidelines established by the
Trust's Board of Trustees.
U.S. GOVERNMENT OBLIGATIONS. The Funds may purchase obligations issued or
guaranteed the U.S. Government and U.S. Government agencies and
instrumentalities. Obligations of certain agencies and instrumentalities of the
U.S. Government, such as those of the Government National Mortgage Association,
are supported by the full faith and credit of the U.S. Treasury. Others, such as
those of the Export-Import Bank of the United States, are supported by the right
of the issuer to borrow from the U.S. Treasury; and still others, such as those
of the Student Loan Marketing Association, are supported only by the credit of
the agency or instrumentality issuing the obligation. No assurance can be given
that the U.S. Government would provide financial support to U.S.
Government-sponsored instrumentalities if it is not obligated to do so by law.
BORROWING. Each Fund is authorized to borrow money in amounts up to 5%
of the value of the Fund's total assets at the time of such borrowing for
temporary purposes. However, a Fund is authorized to borrow money in amounts up
to 33 1/3% of its assets, as permitted by the 1940 Act, for the purpose of
meeting redemption requests. Borrowing by a Fund creates an opportunity for
greater total return but, at the same time, increases exposure to capital risk.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of portfolio securities on a Fund's net asset value. In
addition, borrowed funds are subject to interest costs that may offset or exceed
the return earned on the borrowed funds. However, a Fund will not purchase
portfolio securities while borrowings exceed 5% of the Fund's total assets. For
more detailed information with respect to the risks associated with borrowing,
see the heading "Borrowing" in the Statement of Additional Information.
LENDING OF PORTFOLIO SECURITIES. To enhance the return of the
portfolio, a Fund may lend securities in its portfolio representing up to 25% of
its total assets, taken at market value, to securities firms and financial
institutions, provided that each loan is secured continuously by collateral in
the form of cash, high quality money market instruments or short-term U.S.
Government securities adjusted daily to have a market value at least equal to
the current market value of the securities loaned. The risk in lending portfolio
securities, as with other extensions of credit, consists of possible delay in
the recovery of the securities or possible loss of rights in the collateral
should the borrower fail financially.
PORTFOLIO TRANSACTIONS AND TURNOVER. All orders for the purchase or
sale of securities on behalf of the Funds are placed by the Sub-Advisor with
broker/dealers that the Sub-Advisor selects. A high portfolio turnover rate
involves larger brokerage commission expenses or transaction costs which must be
borne directly by the Fund, and may result in the realization of short-term
capital gains which are taxable to shareholders as ordinary income. The
Sub-Advisor will not consider portfolio turnover rate a limiting factor in
making investment decisions consistent with a Fund's objective and policies. It
is anticipated that each Fund's annual portfolio turnover rate will range from
50% to 150%.
INVESTMENT LIMITATIONS
Each Fund's investment objective and policies may be changed by the
Trust's Board of Trustees without shareholder approval. However, shareholders
will be notified in writing at least thirty days in advance of any such material
change, except where advance notice is not required. No assurance can be given
that any Fund will achieve its investment objective.
Each Fund has also adopted certain fundamental investment limitations
that may be changed only with the approval of a "majority of the outstanding
shares of the Fund" (as defined in the Statement of Additional Information). The
following descriptions summarize several of the Funds' fundamental investment
policies, which are set forth in full in the Statement of Additional
Information.
A Fund may not:
(1) purchase securities (except U.S. Government securities) if
more than 5% of its total assets will be invested in the
securities of any one issuer, except that up to 25% of the
assets of the Fund may be invested without regard to this 5%
limitation;
(2) invest 25% or more of its total assets in securities
issued by one or more issuers conducting their principal
business activities in the same industry (except that the
Healthcare Fund will invest more than 25% of its total assets
in securities of issues conducting their principal business
activities in the healthcare industry; and
(3) borrow money except for temporary purposes in amounts up
to one-third of the value of its total assets at the time of
such borrowing. Whenever borrowings exceed 5% of a Fund's
total assets, the Fund will not make any additional
investments.
These investment limitations are applied at the time investment
securities are purchased.
PURCHASE AND REDEMPTIONS OF SHARES
Shares of each Fund are sold on a continuous basis by the Distributor.
The Distributor is a registered broker/dealer with principal offices at 60 State
Street, Boston, Massachusetts 02109.
Purchase of Shares
Class K shares of the Funds are sold without an initial or contingent
sales charge to customers ("Customers") of banks and other institutions, and the
immediate family members of such customers, that have entered into agreements
with the Trust providing for shareholder services for Customers. Customers may
include individuals, trusts, partnerships and corporations. all share purchases
are effected through a Customer's account at an institution through procedures
established in connection with the requirements of the account, and
confirmations of share purchases and redemptions will be sent to the institution
involved. Institutions (or their nominees) will normally be the holders of
record of Fund shares acting on behalf of their Customers, and will reflect
their Customers' beneficial ownership of shares in the account statements
provided by them to their Customers. The exercise of voting rights and the
delivery to Customers of shareholder communications from the Trust will be
governed by the Customers' account agreements with the institution. Investors
wishing to purchase shares of a Fund should contact their account
representatives.
Shares of each Fund are sold at net asset value per share next
determined on that day after receipt of a purchase order. Purchase orders by an
institution for Class K shares must be received by the Distributor or the
Transfer Agent before the close of regular trading hours (currently 4:00 p.m.
New York City time) on the New York Stock Exchange (the "Exchange"), on any
Business Day (as defined below). Payment for such shares must be made by
institutions in Federal funds or other funds immediately available to the
Custodian no later than 4:00 p.m. (New York City time) on the next Business Day
following the receipt of the purchase order.
It is the responsibility of the institution to transmit orders for
purchases by its customers and to deliver required funds on a timely basis. If
funds are not received within the periods described above, the order will be
canceled, notice thereof will be given, and the institution will be responsible
for any loss to a Fund or its shareholders. Institutions may charge certain
account fees depending on the type of account the investor has established with
the institution. In addition, an institution may receive fees from a Fund with
respect to the investments of its customers as described below under
"Management." Payments for Class K shares of a Fund may, in the discretion of
the Advisor, be made in the form of securities that are permissible investments
for the Fund. For further information see "In-Kind Purchases" in the Statement
of Additional Information.
Purchases may be effected on days on which the Exchange is open for
business (a "Business Day"). The Trust reserves the right to reject any purchase
order. Payment for orders which are not received or accepted will be returned
after prompt inquiry. The issuance of shares is recorded on the books of the
Trust, and share certificates are not issued unless expressly requested in
writing. Certificates are not issued for fractional shares.
Neither the Trust, the Distributor nor the Transfer Agent will be
responsible for the authenticity of telephone instructions for the purchase or
redemption of shares where such instructions are reasonably believed to be
genuine. Accordingly, the Institution will bear the risk of loss. The Trust will
attempt to confirm that telephone instructions are genuine and will use such
procedures as are considered reasonable. To the extent that the Trust fails to
use reasonable procedures to verify the genuineness of telephone instructions,
it or its service providers may be liable for such instructions that prove to be
fraudulent or unauthorized.
Redemption of Shares
Redemption orders are effected at the net asset value per share next
determined after receipt of the order. Shares held by an institution on behalf
of its customers must be redeemed in accordance with instructions and
limitations pertaining to the account at the institution. The Funds intend to
pay cash for all shares redeemed, but in unusual circumstances may make payment
wholly or partly in portfolio securities at their then market value equal to the
redemption price. In such cases, an investor may incur brokerage costs in
converting such securities to cash.
Share balances may be redeemed pursuant to arrangements between
institutions and investors. It is the responsibility of an institution to
transmit redemption orders to the Transfer Agent and to credit its Customers'
accounts with the redemption proceeds on a timely basis. If the Transfer Agent
receives a redemption order prior to 4:00 p.m. (New York City time), the
redemption proceeds for shares of a Fund are normally wired to the redeeming
institution the following Business Day. The Funds reserve the right to delay the
wiring of redemption proceeds for up to seven days after receipt of a redemption
order if, in the judgment of the Investment Advisor, an earlier payment could
adversely affect a Fund.
DIVIDENDS AND DISTRIBUTIONS
Each Fund expects to pay dividends and distributions from the net
income and capital gains, if any, earned on investments held by the Fund.
Dividends from net income are declared and paid at least annually. Each Fund's
net realized capital gains (including net short-term capital gains), if any, are
distributed at least annually. Dividends and capital gains are paid in the form
of additional shares of the same class of a Fund unless a shareholder requests
that dividends and capital gains be paid in cash. In the absence of this request
on the Account Application Form or in a subsequent request, each purchase of
shares is made on the understanding that the Transfer Agent is automatically
appointed to receive the dividends upon all shares in the shareholder's account
and to reinvest them in full and fractional shares of the same class of the Fund
at the net asset value in effect at the close of business on the reinvestment
date. Dividends are automatically paid in cash (along with any redemption
proceeds) not later than seven business days after a shareholder closes an
account.
A Fund's expenses are deducted from the income of the Fund before
dividends are declared and paid. These expenses include, but are not limited to,
fees paid to the Advisor, Administrator, Custodian and Transfer Agent; fees and
expenses of officers and Trustees; taxes; interest; legal and auditing fees;
brokerage fees and commissions; certain fees and expenses in registering and
qualifying the Funds and their shares for distribution under Federal and state
securities laws; expenses of preparing prospectuses and statements of additional
information and of printing and distributing prospectuses and statements of
additional information to existing shareholders; the expense of reports to
shareholders, shareholders' meetings and proxy solicitations; fidelity bond and
Trustees' and officers' liability insurance premiums; the expense of using
independent pricing services; and other expenses which are not assumed by the
Administrator. Any general expenses of the Trust that are not readily
identifiable as belonging to a particular fund of the Trust are allocated among
all funds of the Trust by or under the direction of the Board of Trustees in a
manner that the Board determines to be fair and equitable. Except as noted in
this Prospectus and the Statement of Additional Information, the Funds' service
contractors bear expenses in connection with the performance of their services,
and each Fund bears the expenses incurred in its operations. The Advisor,
Administrator, Custodian and Transfer Agent may voluntarily waive all or a
portion of their respective fees from time to time.
Each Fund's net investment income and/or capital gains available for
distribution to the holders of Class K shares will be reduced by the amount of
service and distribution fees payable under the Class K Plan described below.
NET ASSET VALUE
Net asset value for Class K shares in a Fund is calculated by dividing
the value of all securities and other assets belonging to the Fund allocable to
that class, less the liabilities charged to that class, by the number of
outstanding shares of that class.
The net asset value per share of each Fund for the purpose of pricing
purchase and redemption orders is determined as of the close of regular trading
hours on the New York Stock Exchange (currently 4:00 p.m., New York time) on
each business day. Securities traded on a national securities exchange or on the
NASDAQ National Market System are valued at the last sale price on such exchange
or market as of the close of business on the date of valuation. Securities
traded on a national securities exchange or on the NASDAQ National Market System
for which there were no sales on the date of valuation and securities traded on
other over-the-counter markets, including listed securities for which the
primary market is believed to be over-the-counter, are valued at the mean
between the most recently quoted bid and asked prices. Options will be valued at
market value or fair value if no market exists. Futures contracts will be valued
in like manner, except that open futures contract sales will be valued using the
closing settlement price or, in the absence of such a price, the most recently
quoted asked price. Portfolio securities primarily traded on the London Stock
Exchange are generally valued at the mid-price between the current bid and asked
prices. Portfolio securities which are primarily traded on foreign securities
exchanges, other than the London Stock Exchange, are generally valued at the
preceding closing values of such securities on their respective exchanges,
except when an occurrence subsequent to the time a value was so established is
likely to have changed such value. In such an event, the fair value of those
securities will be determined through the consideration of other factors by or
under the direction of the Boards of Trustees. Restricted securities and
securities and assets for which market quotations are not readily available are
valued at fair value by the Advisor under the supervision of the Board of
Trustees. Debt securities with remaining maturities of 60 days or less are
valued at amortized cost, unless the Board of Trustees determines that such
valuation does not constitute fair value at that time. Under this method, such
securities are valued initially at cost on the date of purchase (or the 61st day
before maturity).
The Trust does not accept purchase and redemption orders on days on
which the New York Stock Exchange is closed. The New York Stock Exchange is
currently scheduled to be closed on New Year's Day, Presidents' Day, Good
Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving and
Christmas, and on the preceding Friday or subsequent Monday when one of these
holidays falls on a Saturday or Sunday, respectively.
MANAGEMENT
Board of Trustees
The Trust is managed under the direction of its Board of Trustees. The
Statement of Additional Information contains the name and background information
of each Trustee.
Investment Advisor and Sub-Advisor
Munder Capital Management, a Delaware general partnership with its
principal offices at 480 Pierce Street, Birmingham, Michigan 48009, serves as
the Funds' investment advisor. The Advisor was formed in December 1994. The
principal partners of the Advisor are Old MCM, Inc. ("MCM"), Munder Group LLC,
Woodbridge Capital Management, Inc. ("Woodbridge") and WAM Holdings, Inc.
("WAM"). MCM was founded in February 1985 as a Delaware corporation and was a
registered investment advisor. Woodbridge and WAM are indirect, wholly-owned
subsidiaries of Comerica Incorporated. Mr. Lee P. Munder, the Advisor's chief
executive officer, indirectly owns or controls a majority of the partnership
interests in the Advisor. As of June 30, 1996, the Advisor and its affiliates
had approximately $34 billion in assets under active management, of which $17
billion were invested in equity securities, $6 billion were invested in money
market or other short-term instruments, and $11 billion were invested in other
fixed income securities.
Subject to the supervision of the Board of Trustees of the Trust, the
Advisor provides overall investment management for the Funds, provides research
and credit analysis, oversees the purchases and sales of portfolio securities by
the Sub-Advisor, maintains books and records with respect to the Funds'
securities transactions and provides periodic and special reports to the Board
of Trustees as requested.
For the advisory services provided and expenses assumed with regard to
the International Growth Fund and the Healthcare Fund, it, the Advisor has
agreed to a fee, computed daily and payable monthly, at an annual rate of 1.00%
of each Fund's average daily net assets up to $250 million, reduced to .75% of
each Fund's average daily net assets in excess of $250 million. For the advisory
services provided and expenses assumed with regard to the Emerging Markets Fund,
the Advisor has agreed to a fee, computed daily and payable monthly, at an
annual rate of 1.25% of the Fund's average daily net assets.
The Advisor may, from time to time, make payments to banks,
broker-dealers or other financial institutions for certain services to the Funds
and/or their shareholders, including sub-administration, sub-transfer agency and
shareholder servicing. Such payments are made out of the Advisor's own resources
and do not involve additional costs to the Funds or their shareholders.
Pursuant to a sub-advisory agreement with the Advisor, Framlington
Overseas Investment Management Limited provides sub-advisory services to the
Funds. Subject to the supervision of the Advisor, the Sub-Advisor is responsible
for the management of each Fund's portfolio, including all decisions regarding
purchases and sales of portfolio securities by the Funds. The Sub-Advisor is
also responsible for arranging the execution of all portfolio management
decisions, including the selection of brokers to execute trades and the
negotiation of brokerage commissions in connection therewith. For its services
with regard to the International Growth Fund and the Healthcare Fund, the
Advisor pays the Sub-Advisor a monthly fee equal on an annual basis to 0.50% of
each Fund's average daily net assets up to $250 million, reduced to .375% of
each Fund's average daily net assets in excess of $250 million. For its services
with regard to the Emerging Markets Fund, the Advisor pays the Sub-Advisor a
monthly fee equal on an annual basis to .625% of the Fund's average daily net
assets.
The Sub-Advisor is a subsidiary of Framlington Group plc, a public
limited company incorporated in England and Wales which, through its
subsidiaries, provides a wide range of investment services. The Sub-Advisor and
its affiliates serve as investment manager to various investment trusts
organized in the United Kingdom, and provides fund management services to
pension funds and charities. Framlington Group plc is a wholly owned subsidiary
of Framlington Holdings Limited which is, in turn, owned 49% by the Advisor and
[51%] by Credit Commercial de France S.A., a French banking corporation listed
on the Societe des Bourses Francaises.
Performance of Equity Portfolios Managed by the Sub-Advisor
Set forth below are certain performance data provided by the
Sub-Advisor relating to unit trusts organized under the laws of the United
Kingdom (referred to hereafter as the "trust accounts") which are managed by the
Sub-Advisor and which have investment objectives and policies similar to those
of the corresponding Funds. See "Investment Objectives and Policies" and
"Portfolio Instruments and Practices and Associated Risk Factors." In the case
of Emerging Markets Fund, the data relates to a composite of the Framlington
Emerging Markets Unit Trust and an institutional emerging markets portfolio
managed by the same personnel of the Sub-Advisor with similar investment
objectives and policies.
The trust account performance indicates the aggregate percentage of
change in unit price for the trust accounts, on the basis of data provided by
Micropal, an independent research organization that is a recognized source of
performance data in the UK unit trust industry. The data is U.S. dollar adjusted
on the basis of exchange rates provided by Datastream using WM/Reuters closing
rates. The performance figures are net of brokerage commissions and actual
investment advisory fees and UK taxes but exclude the impact of sales loads,
custodial fees and other administrative expenses that will be applicable to the
corresponding Funds and will result in a higher expense ratio for the Funds. The
data assume the reinvestment of net income and capital gain distributions. The
trust account returns are calculated showing beginning and ending offer prices
for periods ended September 30, 1996.
Investors should not rely on the following performance data of the
Sub-Advisor's unit trust clients' accounts as an indication of future
performance of the Funds. It should be noted that the management of the Funds
will be affected by regulatory requirements under the 1940 Act and requirements
of the Internal Revenue Code of 1986, as amended, to qualify as a regulated
investment company.
<TABLE>
<S> <C> <C> <C>
Period Ended Framlington MSCI World
September 30, 1996 Health Total Return
1 Year 42.83% 14.20%
3 Years 127.10% 41.89%
5 Years 150.47% 70.80%
Inception on
May 1, 1987 437.60% 112.37%
Performance for the Health trust account is calculated on an offer-offer basis; US Dollar adjusted total return net of UK
Tax and annual management fees. Source: Micropal.
MSCI World index performance shows total return in US Dollars but does not reflect the deduction of fees, expenses and
taxes. Source: Datastream.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Period Ended Framlington MSCI World
September 30, 1996 International Total Return
Growth
1 Year 11.06% 14.20%
3 Years 33.68% 41.89%
5 Years 62.79% 70.80%
10 Years 208.86% 188.38%
Performance for the International Growth trust account is calculated on an offer-offer basis; US Dollar adjusted total
return net of UK Tax and annual management fees. Source: Micropal.
MSCI World index performance shows total return in US Dollars but does not reflect the deduction of fees, expenses and
taxes. Source: Datastream.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Period Ended Framlington Emerging MSCI WORLD
September 30, 1996 Markets Composite* Total Return
1 Year 3.46% 4.84%
3 Years 30.91% 30.51%
Inception on
December 31, 1992 67.57% 62.33%
* The Framlington Emerging Markets Composite is an equal weighted
composite of the Framlington Emerging Markets Unit Trust and a Canadian
based institutional portfolio. The Framlington Emerging Markets Fund
portion of the composite is calculated on an offer-offer basis US
Dollar adjusted total return net of UK Tax and annual management fees,
but not initial charges. The Canadian Institutional fund is measured by
the World Markets Company on a gross total return basis and on the
gross tax basis of a Canadian domiciled pension fund. The returns have
been adjusted to show a return net of the management fee charged the
Canadian Institutional fund.
The inception of the Canadian institutional fund is November 1, 1994.
</TABLE>
MSCI Indices
The MSCI World index used is maintained by Morgan Stanley Capital
International and seeks to cover the largest 65% of companies in countries in
the developed world. The companies covered are adjusted for cross ownership and
the index is balanced to show a true market representation of the sectors
covered in the underlying markets. Total return is calculated using the prices
of the companies tracked and assumes the reinvestment of dividends. The index
performance does not reflect the deduction of fees, expenses and taxes.
The MSCI Emerging Markets Index is maintained by Morgan Stanley Capital
International and covers 26 emerging markets. Total return is calculated using
the prices of the companies tracked and assumes the reinvestment of dividends.
The index performance does not reflect the deduction of fees, expenses and
taxes.
Portfolio Managers
Simon Key, Chief Investment Officer of the Sub-Advisor, is the primary
portfolio manager for the Emerging Markets Fund. Mr. Key heads the asset
allocation committee of the Sub-Advisor, and is responsible for overall asset
allocation strategy. Prior to joining Framlington in 1989, Mr. Key was with the
Bank of England as economist and deputy head of the European team. He graduated
from the University of East Anglia with a BA in economics and philosophy, and
went on to complete a MSc in economics at the University of London.
Antony Milford, Head of the Specialist Desk for the Sub-Advisor, is the
primary portfolio manager for the Healthcare Fund. Mr. Milford is a member of
the Sub-Advisor's asset allocation committee and has been managing funds for
Framlington since 1971, covering most geographic regions. Mr. Milford has
managed a healthcare portfolio for the Sub-Advisor since 1989. He graduated from
Oxford with a Classics degree.
The International Growth Fund is managed by a committee of professional
portfolio managers of the Sub-Advisor.
Administrator, Custodian and Transfer Agent
First Data Investor Services Group, Inc. ("First Data"), whose
principal business address is 53 State Street, Boston, Massachusetts 02109 (the
"Administrator"), serves as administrator for the Trust. First Data is a
wholly-owned subsidiary of First Data Corporation. The Administrator generally
assists the Trust in all aspects of its administration and operations, including
the maintenance of financial records and fund accounting.
First Data also serves as the Trust's transfer agent and dividend
disbursing agent ("Transfer Agent"). Shareholder inquiries may be directed to
First Data at P.O. Box 5130, Westborough, Massachusetts 01581-5130.
As compensation for these services, the Administrator is entitled to
receive fees, computed daily and payable monthly, at the rate of .10% of average
daily net assets with a $60,000 minimum fee per annum in the aggregate for the
Funds. The Transfer Agent is entitled to receive fees, based on the aggregate
average daily net assets of the Funds, computed daily and payable monthly at the
rate of [.02% of the first $2.8 billion of net assets, plus .015% of the next
$2.2 billion of net assets, plus .01% of all net assets in excess of $5
billion]. The Administrator and Transfer Agent are also entitled to
reimbursement for out-of-pocket expenses. The Administrator has entered into a
Sub-Administration Agreement with the Distributor under which the Distributor
provides certain administrative services with respect to the Funds. The
Administrator pays the Distributor a fee for these services out of its own
resources at no cost to the Funds.
Comerica Bank (the "Custodian"), whose principal business address is
One Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides
custodial services to the Funds. The Custodian is a wholly owned subsidiary of
Comerica Incorporated, a publicly-held bank holding company. As compensation for
its services, the Custodian is entitled to receive fees, based on the aggregate
average daily net assets of the Funds and certain other investment portfolios
that are advised by the Advisor, for which the custodian provides services,
computed daily and payable monthly at an annual rate of .03% of the first $100
million of average daily net assets, .02% of the next $500 million of net assets
and .01% of net assets in excess of $600 million. The Custodian also receives
certain transaction based fees.
For an additional description of the services performed by the
Administrator, Transfer Agent and Custodian, see the Statement of Additional
Information.
Shareholder Servicing Arrangements
The Trust, on behalf of each Fund, has adopted a Shareholder Servicing
Plan (the "Class K Plan") under which Class K shares are sold through
institutions which enter into shareholder servicing agreements with the Trust.
The agreements require the institutions to provide shareholder services to their
customers ("Customers") who from time to time own of record or beneficially
Class K shares in return for payment by each Fund at a rate not exceeding .25%
(on an annualized basis) of the average daily net asset value of the Class K
shares beneficially owned by the Customers. Class K shares bear all fees paid to
institutions under the Class K Plan.
The services provided by institutions under the Class K Plan may
include processing purchase, exchange and redemption requests from Customers and
placing orders with the Transfer Agent; processing dividend and distribution
payments from a Fund on behalf of Customers; providing information periodically
to Customers showing their positions in Class K shares; providing sub-accounting
with respect to Class K shares beneficially owned by Customers or the
information necessary for sub-accounting; responding to inquiries from Customers
concerning their investment in Class K shares; arranging for bank wires; and
providing such other similar services as may be reasonably requested.
The Trust understands that institutions may charge fees to their
Customers who are the owners of Class K shares of the Funds in connection with
their Customer accounts. These fees would be in addition to any amounts which
may be received by an institution under its agreements with the Trust. The
agreements require an institution to disclose to its Customers any compensation
payable to the institution by a Fund and any other compensation payable by the
Customers in connection with the investment of their assets in Class K shares.
Customers of institutions should read this Prospectus in light of the terms
governing their accounts with their institutions. Conflict of interest
restrictions may apply to the receipt by institutions of compensation from the
Distributor with respect to the investment of fiduciary assets in Class K
shares.
Payments under the Class K Plan are not tied exclusively to the
shareholder service expenses actually incurred by the institutions and the
payments may exceed service expenses actually incurred. The Trust's Board of
Trustees evaluates the appropriateness of the Class K Plan and its payment terms
on a periodic basis.
TAXES
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code for 1986, as amended (the "Code").
Such qualification relieves a Fund of liability for Federal income taxes to the
extent its earnings are distributed in accordance with the Code.
Qualification as a regulated investment company under the Code for any
taxable year requires, among other things, that a Fund distribute to its
shareholders an amount equal to at least 90% of its investment company taxable
income and 90% of its net tax-exempt interest income for such year. In general a
Fund's investment company income will be its taxable income (including
dividends, interest, and short-term capital gains) subject to certain
adjustments and excluding the excess of any net long-term capital gain for the
taxable year over the net short-term capital loss, if any, for such year. Each
Fund intends to distribute substantially all of its investment company taxable
income each taxable year. Such distributions will be taxable as ordinary income
to a Fund's shareholders who are not currently exempt from Federal income taxes,
whether such income is received in cash or reinvested in additional shares.
(Federal income taxes for distributions to an IRA or qualified retirement plan
are deferred under the Code if applicable requirements are met.) The dividends
received deduction for corporations will apply to such distributions by the
Funds to the extent of the total qualifying dividends received by the
distributing Fund from domestic corporations for the taxable year and if other
applicable tax requirements are met.
Substantially all of the Funds' net realized long-term capital gains,
if any, will be distributed at least annually. The Funds will generally have no
Federal income tax liability with respect to such gains, and the distributions
will be taxable to shareholders who are not currently exempt from Federal income
taxes as long-term capital gains, no matter how long the shareholders have held
their shares.
A taxable gain or loss may also be realized by a holder of shares in a
Fund upon the redemption or transfer of shares depending upon the tax basis of
the shares and their price at the time of the transaction.
Dividends declared in October, November, or December of any year
payable to shareholders of record on a specified date in such months will be
deemed to have been received by shareholders and paid by a Fund on December 31
of such year if such dividends are actually paid during January of the following
year.
Before purchasing shares in the Funds, the impact of dividends or
distributions which are expected to be declared or have been declared, but not
paid, should be carefully considered. Any dividend or distribution declared
shortly after a purchase of such shares prior to the record date will have the
effect of reducing the per share net asset value by the per share amount of the
dividend or distribution. All or a portion of such dividend or distribution,
although in effect a return of capital, may be subject to tax.
On an annual basis, the Trust will send written notices to record
owners of shares regarding the Federal tax status of distributions made by the
Funds.
Taxes - Foreign Investments
Income or gain from investments in foreign securities may be subject to
foreign withholding or other taxes. It is expected that the Funds will be
subject to foreign withholding taxes with respect to income received from
sources within foreign countries. If more than 50% of the value of a Fund's
total assets at the close of a taxable year consists of stock or securities of
foreign corporations, the Fund may elect, for U.S. Federal income tax purposes,
to treat certain foreign taxes paid by it, including generally any withholding
taxes and other foreign income taxes, as paid by its shareholders. If a Fund
makes this election, the amount of such foreign taxes paid by the Fund will be
included in its shareholders' income pro rata (in addition to taxable
distributions actually received by them), and the shareholders would be entitled
(a) to credit their proportionate amount of such taxes against their U.S.
Federal income tax liabilities subject to certain limitations described in the
Statement of Additional Information, or (b) if they itemize their deductions, to
deduct such proportionate amount from their U.S. income.
If a Fund invests in certain "passive foreign investment companies"
("PFICs"), it will be subject to Federal income tax (and possibly additional
interest charges) on a portion of any "excess distribution" or gain from the
disposition of such shares even if it distributes such income to its
shareholders. If a Fund elects to treat the PFIC as a "qualified election fund"
("QEF") and the PFIC furnishes certain financial information in the required
form to such Fund, the Fund will instead be required to include in income each
year its allocable share of the ordinary earnings and net capital gains on the
QEF, regardless of whether received, and such amounts will be subject to the
various distribution requirements described above.
DESCRIPTION OF SHARES
Each Fund operates as one series of the Trust. The Trust was organized
as a Massachusetts business trust on October __, 1996 and is also registered
under the 1940 Act as an open-end management investment company. The Trust's
declaration of trust authorize the Trustees to classify and reclassify any
unissued shares into one or more classes of shares. Pursuant to such authority
the Trustees have authorized the issuance of shares of beneficial interest
representing interests in the Funds, each of which is classified as a
diversified investment company under the 1940 Act.
The shares of the Funds are offered as five separate classes of shares
of beneficial interest, $.01 par value per share, designated Class A shares,
Class B shares, Class C shares, Class K shares and Class Y shares. All shares of
a Fund represent interests in the same assets of the Fund and are identical in
all respects except that each class bears different service and distribution
expenses and may bear various class-specific expenses, and each class has
exclusive voting rights with respect to its service and/or distribution plan, if
any. Shares of each Fund issued are fully paid, non-assessable, fully
transferable and redeemable at the option of the holder. Investors may call the
Trust at (800) 438-5789 for more information concerning other classes of shares
of the Funds. This Prospectus relates only to the Class K shares of the Funds.
The Trust's shareholders are entitled to one vote for each full share
held and proportionate fractional votes for fractional shares held, and will
vote in the aggregate and not by Fund, except where otherwise required by law or
when the Trustees determine that the matter to be voted upon affects only the
interests of the shareholders of a particular Fund. In addition, shareholders of
a Fund will vote in the aggregate and not by class, except as otherwise
expressly required by law or when the Trustees determine that the matter to be
voted upon affects only the interests of the holders of a particular class of
shares. The Trust is not required and does not currently intend to hold annual
meetings of shareholders for the election of Board members except as required
under the 1940 Act. A meeting of shareholders will be called upon the written
request of at least 10% of the outstanding shares of the Trust. To the extent
required by law, the Trust will assist in shareholder communications in
connection with such a meeting. For further discussion of the voting rights of
shareholders, see "Additional Information Concerning Shares" in the Statement of
Additional Information.
Reports to Shareholders
The Trust will seek to eliminate duplicate mailings of prospectuses and
shareholders reports to accounts which have the same primary record owner, and
with respect to joint tenant accounts or tenant in common accounts, accounts
which have the same address. Additional copies of prospectuses and reports to
shareholders are available upon request by calling the Trust at (800) 438-5789.
PERFORMANCE
From time to time, the Funds may quote performance data for Class K
shares in advertisements or in communications to shareholders. The total return
of a class of shares in a Fund may be calculated on an average annual total
return basis, and may also be calculated on an aggregate total return basis, for
various periods. Average annual total return of a Fund reflects the average
percentage change in value of an investment in a class of shares in the Fund
from the beginning date of the measuring period to the end of the measuring
period. Aggregate total return reflects the total percentage change in value
over the measuring period. Both methods of calculating total return assume that
dividends and capital gains distributions made during the period are reinvested
in the same class of shares.
[The yield of a class of shares in a Fund is computed based on the net
income of such class in the Fund during a 30-day (or one month) period (which
period will be identified in connection with the particular yield quotation).
More specifically, a Fund's yield for a class of shares is computed by dividing
the per share net income for the class during a 30-day (or one-month) period by
the maximum offering price per share on the last day of the period and
annualizing the result on a semi-annual basis.]
A Fund may compare the performance of its shares to the performance of
other mutual funds with similar investment objectives and to other relevant
indices or to rankings prepared by independent services or other financial or
industry publications that monitor the performance of mutual funds, including,
for example, Lipper Analytical Services, Inc., the Lehman Brothers
Government/Corporate Bond Index, a recognized unmanaged index of government and
corporate bonds, the Standard & Poor's 500 Index, an unmanaged index of a group
of common stocks, the Consumer Price Index, or the Dow Jones Industrial Average,
an unmanaged index of common stocks of 30 industrial companies listed on the New
York Stock Exchange. Performance data as reported in national financial
publications such as Morningstar, Inc., Money Magazine, Forbes, Barron's, The
Wall Street Journal and The New York Times, or in publications of a local or
regional nature, may also be used in comparing the performance of a class of
shares in a Fund.
Performance will fluctuate and any quotation of performance should not
be considered as representative of future performance of a class of shares in a
Fund. Shareholders should remember that performance is generally a function of
the kind and quality of the instruments held in a fund, portfolio maturity,
operating expenses, and market conditions. Any fees charged by institutions
directly to their customers' accounts in connection with investments in a Fund
will not be included in calculations of yield and performance.
Quotations of total return for Class K shares will reflect the fees for
certain shareholders services described in this Prospectus.
<PAGE>
THE MUNDER FRAMLINGTON FUNDS TRUST
480 Pierce Street
Birmingham, Michigan 48009
Telephone (800) 438-5789
PROSPECTUS
Class Y Shares
The Munder Framlington Funds Trust (the "Trust") is an open-end
investment company (a mutual fund) that currently offers a selection of
investment portfolios. This Prospectus describes the Class Y shares of the
investment portfolios offered by the Trust (the "Funds"):
Munder Framlington International Growth Fund
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Capital Management (the "Advisor") serves as investment advisor
to the Funds. Framlington Overseas Investment Management Limited (the
"Sub-Advisor") serves as sub-advisor to the Funds.
This prospectus contains the information that a prospective investor
should know before investing in the Funds. Investors are encouraged to read this
Prospectus and retain it for future reference. A Statement of Additional
Information dated ______, 1997, as amended or supplemented from time to time,
has been filed with the Securities and Exchange Commission (the "SEC") and is
incorporated by reference into this Prospectus. The Statement of Additional
Information may be obtained free of charge by calling the Trust at (800)
438-5789. In addition, the SEC maintains a web site (http://www.sec.gov) that
contains the Statement of Additional Information and other information regarding
the Funds.
Shares of the Funds are not deposits or obligations of, or guaranteed
or endorsed by, any bank, and are not insured or guaranteed by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
An investment in the Funds involves investment risks, including the possible
loss of principal.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ____________, 1996
<PAGE>
TABLE OF CONTENTS
Page
EXPENSE TABLE 3
THE TRUST 4
INVESTMENT OBJECTIVES AND POLICIES 4
International Growth Fund 4
Emerging Markets Fund 5
Healthcare Fund 5
Information Regarding All Funds 6
PORTFOLIO INSTRUMENTS AND PRACTICES AND
ASSOCIATED RISK FACTORS 6
INVESTMENT LIMITATIONS 16
PURCHASE AND REDEMPTION OF SHARES 17
Purchase of Shares 17
Automatic Investment Plan ("AIP") 19
Redemption of Shares 19
Exchanges 19
DIVIDENDS AND DISTRIBUTIONS 20
NET ASSET VALUE 21
MANAGEMENT 22
Board of Trustees 22
Investment Advisor and Sub-Advisor 22
Portfolio Managers 26
Administrator, Custodian and Transfer Agent 26
TAXES 27
Taxes - Foreign Investments 29
DESCRIPTION OF SHARES 29
Reports to Shareholders 30
PERFORMANCE 30
<PAGE>
No person has been authorized to give any information, or to make any
representations not contained in this Prospectus, or in the Funds' Statement of
Additional Information incorporated herein by reference, in connection with the
offering made by this Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Fund or
Funds Distributor, Inc. (the "Distributor"). This Prospectus does not constitute
an offering by the Fund or by the Distributor in any jurisdiction in which such
offering may not lawfully be made.
<PAGE>
EXPENSE TABLE
The following table sets forth certain costs and expenses that an
investor will incur either directly or indirectly as a shareholder of Class Y
shares of the Funds based on estimated operating expenses for the current fiscal
year. Class Y shares are sold without an initial or contingent deferred sales
change to fiduciary and discretionary accounts of institutions, "institutional
investors" (as defined herein), directors, trustees, officers and employees of
the Trust, The Munder Funds, Inc., The Munder Funds Trust, The Advisor and the
Distributor, the Advisor's investment advisory clients and family members of
employees of the Advisor.
<TABLE>
<S> <C> <C> <C>
International Growth Emerging Markets Fund Healthcare Fund
Fund
Annual operating expenses (as a
percentage of average net assets)
Advisory fees 1.00% 1.25% 1.00%
Other Expenses ___% ___% ___%
Total Fund Operating Expenses ___% ___% ___%
</TABLE>
"Other expenses" in the above table include administrator fees,
custodial fees, legal and accounting fees, printing costs, registration fees,
fees for any portfolio valuation service, the cost of regulatory compliance, the
costs of maintaining the Fund's legal existence and the costs involved with
communicating with shareholders. With respect to each Fund, the amount of "Other
expenses" is based on estimated expenses and projected assets for the current
fiscal year. See "Management" in this Prospectus for a further description of
the Funds' operating expenses and the nature of the services for which the Funds
are obligated to pay advisory fees. Any fees charged by institutions directly to
customer accounts for services provided in connection with investments in shares
of the Funds are in addition to the expenses shown in the above Expense Table
and the Example shown below.
Example
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect to
a hypothetical investment in the Funds. These amounts are based on payment by
the Funds of operating expenses at the levels set forth in the above table, and
are also based on the following assumptions:
An investor would pay the following expenses on a $1,000 investment,
assuming (1) a hypothetical 5% annual return and (2) redemption at the end of
the following time periods:
1 Year 3 Years
International Growth Fund $____ $____
Emerging Markets Fund $____ $____
Healthcare Fund $____ $____
The foregoing Expense Table and Example are intended to assist
investors in understanding the various shareholder transaction expenses and
operating expenses of the Funds that investors bear either directly or
indirectly.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL INVESTMENT RETURN AND OPERATING
EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
THE TRUST
Each of the Funds is a series of shares issued by the Trust, an
open-end management investment company. The Trust was organized under the laws
of the Commonwealth of Massachusetts on October 30, 1996 and has registered
under the Investment Company Act of 1940, as amended (the "1940 Act"). The
Trust's principal office is located at 480 Pierce Street, Birmingham, Michigan
48009 and its telephone number is (800) 438-5789.
INVESTMENT OBJECTIVES AND POLICIES
This Prospectus describes the following Funds offered by the Trust: the
Munder Framlington International Growth Fund ("International Growth Fund"), the
Munder Framlington Emerging Markets Fund ("Emerging Markets Fund"), and the
Munder Framlington Healthcare Fund ("Healthcare Fund"). Purchasing shares of any
Fund should not be considered a complete investment program, but an important
segment of a well-diversified investment program.
International Growth Fund
The investment objective of International Growth Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve its
objective through worldwide investment in equity securities of companies which,
in the opinion of the Sub-Advisor, show above-average profitability, management
quality and growth.
The Fund may invest in the securities of issuers located in countries
which include, but are not limited to, the following: Argentina, Australia,
Austria, Belgium, Brazil, Canada, Chile, China, Czech Republic, Denmark, Egypt,
Finland, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Korea,
Luxembourg, Malaysia, Mexico, The Netherlands, New Zealand, Norway, Peru, The
Philippines, Poland, Portugal, Russia, Singapore, South Africa, Spain, Sweden,
Switzerland, Taiwan, Thailand, Turkey and The United Kingdom.
Under normal market conditions, at least 65% of the Fund's total assets
will be invested in the equity securities of foreign issuers and such issuers
will be located in at least three foreign countries.
Emerging Markets Fund
The investment objective of Emerging Markets Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve this
objective through investing primarily in equity securities (as defined below) of
issuers in emerging market countries. The Fund considers countries having
emerging markets to be all countries that are generally considered to be
emerging or developing countries by the International Bank for Reconstruction
and Development (more commonly referred to as the World Bank) or the
International Finance Corporation, as well as countries that are classified by
the United Nations or otherwise regarded by their authorities as emerging.
Currently, the countries not in this category include Ireland, Spain, New
Zealand, Australia, the United Kingdom, Italy, the Netherlands, Belgium,
Austria, France, Canada, Germany, Denmark, the United States, Sweden, Finland,
Norway, Japan, Iceland, Luxembourg and Switzerland. A company will be deemed to
be in an emerging market country if (i) the company is organized under the laws
of, and has a principal office in, an emerging market country; (ii) the
principal trading market for the company's equity securities is in an emerging
market country; or (iii) the company derives at least 50% of its revenues or
profits from goods produced or sold, investments made, or services performed, in
an emerging market country, or has at least 50% of its assets situated in an
emerging market country. Under normal market conditions, the Fund will invest at
least 65% of its total assets in equity securities of issuers in emerging market
countries. Determinations as to eligibility will be made by the Sub-Advisor
based on publicly available information and inquiries made to the companies.
Healthcare Fund
The investment objective of the Healthcare Fund is to provide
shareholders with long-term capital appreciation. The Fund seeks to achieve this
objective through investment in companies providing healthcare and medical
services and products worldwide. The Fund will invest in producers of
pharmaceuticals, biotechnology firms, medical device and instrument
manufacturers, distributors of healthcare products, care providers and managers
and other healthcare services companies. Under normal market conditions, the
Fund will invest at least 65% of its total assets in healthcare companies as
described above. The Sub-Advisor considers healthcare companies to include
companies in which at least 50% of sales, earnings or assets arise from or are
dedicated to health services or medical technology activities.
Information Regarding All Funds
Each Fund may also lend its portfolio securities and borrow money for
investment purposes (i.e., "leverage" its portfolio). In addition, each Fund may
enter into transactions in options on securities, securities indices and foreign
currencies, forward foreign currency contracts, and futures contracts and
related options. When deemed appropriate by the Sub-Advisor, a Fund may invest
cash balances in repurchase agreements and other money market investments to
maintain liquidity in an amount to meet expenses or for day-to-day operating
purposes. These investment techniques are described below and under the heading
"Investment Objectives and Policies" in the Statement of Additional Information.
When the Sub-Advisor believes that market conditions warrant, a Fund may
adopt a temporary defensive position and may invest without limit in money
market securities denominated in U.S. dollars or in the currency of any foreign
country. See "Portfolio Instruments and Practices and Associated Risk Factors --
Liquidity Management."
PORTFOLIO INSTRUMENTS AND PRACTICES AND
ASSOCIATED RISK FACTORS
Investment strategies that are available to the Funds are set forth
below. Additional information concerning certain of these strategies and their
related risks is contained in the Statement of Additional Information.
EQUITY SECURITIES. "Equity securities," as used in this Prospectus,
refers to common stock, preferred stock, warrants or rights to subscribe to or
purchase such securities [and sponsored or unsponsored American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs"), and Global Depositary
Receipts ("GDRs") (collectively, "Depositary Receipts").] Securities considered
for purchase by the Funds may be listed or unlisted, and may be issued by
companies with various levels of market capitalization.
Each Fund may invest up to 5% of its net assets at the time of purchase
in warrants and similar rights (other than those that have been acquired in
units or attached to other securities). Warrants represent rights to purchase
securities at a specific price valid for a specific period of time. The prices
of warrants do not necessarily correlate with the prices of the underlying
securities. In addition, each Fund may invest in convertible bonds and
convertible preferred stock. A convertible security is a security that may be
converted either at a stated price or rate within a specified period of time
into a specified number of shares of common stock. By investing in convertible
securities, a Fund seeks the opportunity, through the conversion feature, to
participate in the capital appreciation of the common stock into which the
securities are convertible, while earning higher current income than is
available from the common stock. Although a Fund may acquire convertible
securities that are rated below investment grade by Standard & Poor's Ratings
Service, a division of McGraw Hill Companies Inc. ("S&P") or Moody's Investors
Service, Inc. ("Moody's"), it is expected that investments in lower-rated
convertible securities will not exceed 10% of the value of the total assets of a
Fund at the time of purchase. These high yield, high risk securities are
commonly referred to as junk bonds. Securities that are rated Ba by Moody's or
BB by S&P have speculative characteristics with respect to the capacity to pay
interest and repay principal. Securities that are rated B generally lack
characteristics of a desirable investment, and assurance of interest and
principal payments over any long period of time may be small. Securities that
are rated Caa or CCC are of poor standing. These issues may be in default or
present elements of danger that may exist with respect to principal or interest.
In light of the risks, the Sub-Advisor, in evaluating the creditworthiness of an
issue, will take various factors into consideration, which may include, as
applicable, the issuer's financial resources, its sensitivity to economic
conditions and trends, the ability of the issuer's management and regulatory
matters. To the extent a Fund purchases convertibles rated below investment
grade or convertibles that are not rated, a greater risk exists as to the timely
repayment of the principal of, and the timely payment of interest or dividends
on, such securities. Particular risks include (a) the sensitivity of such
securities to interest rate and economic changes, (b) the lower payments, (c)
the relatively low trading market liquidity for the securities, (d) the impact
that legislation may have on the market for these securities (and, in turn, on a
Fund's net asset value) and (e) the creditworthiness of the issuers of such
securities. During an economic downturn or substantial period of rising interest
rates, highly leveraged issuers may experience financial stress which would
negatively affect their ability to meet their principal and interest payment
obligations, to meet projected business goals and to obtain additional
financing. An economic downturn could also disrupt the market for lower-rated
convertible securities and negatively affect the value of outstanding securities
and the ability of the issuers to repay principal and interest. If the issuer of
a convertible security held by a Fund defaulted, the Fund could incur additional
expenses to seek recovery. Adverse publicity and investor perceptions, whether
or not they are based on fundamental analysis, could also decrease the values
and liquidity of lower-rated convertible securities held by a Fund, especially
in a thinly traded market.
FOREIGN SECURITIES. Each Fund may invest in the securities of foreign
issuers. There are certain risks and costs involved in investing in securities
of companies and governments of foreign nations, which are in addition to the
usual risks inherent in U.S. investments. These considerations generally are
more of a concern in emerging market countries, where the possibility of
political instability (including revolution) and dependence on foreign economic
assistance may be greater than in developed countries. Investments in companies
domiciled in emerging market countries therefore may be subject to potentially
higher risks than investments in developed countries.
Investments in foreign securities involve higher costs than investments
in U.S. securities, including higher transaction costs as well as the imposition
of additional taxes by foreign governments. In addition, foreign investments may
include additional risks associated with the level of currency exchange rates,
less complete financial information about the issuers, less market liquidity,
and political instability. Future political and economic developments, the
possible imposition of withholding taxes on interest income, the possible
seizure or nationalization of foreign holdings, the possible establishment of
exchange controls, or the adoption of other governmental restrictions might
adversely a Fund's investment in foreign obligations. Additionally, foreign
banks and foreign branches of domestic banks may be subject to less stringent
reserve requirements, and to different accounting, auditing and recordkeeping
requirements. A Fund may encounter difficulties or be unable to vote proxies,
exercise shareholder rights, pursue legal remedies, and obtain judgments in
foreign courts. Also, some countries may withhold portions of income and
dividends at the source.
Foreign securities markets have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when assets of a Fund are uninvested and no return is earned
thereon. The inability of a Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of portfolio securities due to settlement
problems could result either in losses to a Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, could result in possible liability to the purchaser.
Repatriation of investment income, capital and proceeds of sales by
foreign investors may require governmental registrations and/or approval in some
emerging market countries. A Fund could be adversely affected by delays in or a
refusal to grant any required governmental registrations or approval for such
repatriation.
Further, the economies of emerging market countries generally are
heavily dependent upon international trade and, accordingly, have been and may
continue to be adversely affected by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
by the counties with which they trade.
In many emerging market countries, there is less government supervision
and regulation of business and industry practices, stock exchanges, brokers and
listed companies than in the United States. There is an increased risk,
therefore, of uninsured loss due to lost, stolen, or counterfeit stock
certificates. In addition, the foreign securities markets of many of the
countries in which the Funds may invest may also be smaller, less liquid, and
subject to greater price volatility than those in the United States.
Although the Funds may invest in securities denominated in foreign
currencies, portfolio securities and other assets held by the Funds are valued
in U.S. dollars. As a result, the net asset value of a Fund's shares may
fluctuate with U.S. dollar exchange rates as well as with price changes of its
portfolio securities in the various local markets and currencies. In addition to
favorable and unfavorable currency exchange-rate developments, the Funds are
subject to the possible imposition of exchange control regulations or freezes on
convertibility of currency.
Investments in foreign securities may be in the form of Depositary
Receipts. These securities may not be denominated in the same currency as the
securities they represent. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying foreign securities.
EDRs are receipts issued by a European financial institution evidencing a
similar arrangement. Generally, ADRs, in registered form, are designed for use
in United States securities markets, and EDRs, in bearer form, are designed for
use in the European securities markets.
DEPOSITARY RECEIPTS. ADRs are Depositary Receipts typically issued by a
U.S. bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. EDRs and GDRs are typically issued by foreign
banks or trust companies, although they also may be issued by U.S. banks or
trust companies, and evidence ownership of underlying securities issued by
either a foreign or a United States corporation. Generally, Depositary Receipts
in registered form are designed for use in the U.S. securities market and
Depositary Receipts in bearer form are designed for use in securities markets
outside the United States. Depositary Receipts may not necessarily be
denominated in the same currency as the underlying securities into which they
may be converted. Depositary Receipts may be issued pursuant to sponsored or
unsponsored programs. In sponsored programs, an issuer has made arrangements to
have its securities traded in the form of Depositary Receipts. In unsponsored
programs, the issuer may not be directly involved in the creation of the
program. Although regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, in some cases it may be easier to
obtain financial information from an issuer that has participated in the
creation of a sponsored program. Accordingly, there may be less information
available regarding issuers of securities underlying unsponsored programs and
there may not be a correlation between such information and the market value of
the Depositary Receipts. Depositary Receipts also involve the risks of other
investments in foreign securities, as discussed above. For purposes of the
Funds' investment policies, a Fund's investments in Depositary Receipts will be
deemed to be investments in the underlying securities.
CONCENTRATION IN THE HEALTHCARE INDUSTRIES. Healthcare Fund generally
intends to invest at least 65% of its total assets in securities of companies in
the healthcare industries. These industries are characterized by rapidly
changing technology and extensive government regulation. In particular,
technological advances can render existing products obsolete, and obtaining
governmental approval for new products from regulatory authorities can be
lengthy, expensive and uncertain as to outcome. Healthcare companies also can be
highly dependent on the strength of patents for maintenance of profit margins
and market exclusivity. Moreover, cost containment measures implemented by
governmental authorities have adversely affected certain healthcare industries.
While an industry concentration may increase the risk and volatility of an
investment company's portfolio, Healthcare Fund will endeavor to reduce risk by
having a portfolio of investments that is diversified within its stated
objective and policies.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Funds may enter into
forward foreign currency exchange contracts in an effort to reduce the level of
volatility caused by changes in foreign currency exchange rates. The Funds may
not enter into these contracts for speculative purposes. A forward currency
exchange contract is an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of contract. A Fund will
segregate cash or liquid securities to cover its obligation to purchase foreign
currency under a forward foreign currency contract. Although such contracts tend
to minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time they tend to limit any potential gain that might be
realized should the value of such currency increase. A Fund will not enter into
forward foreign currency exchange contracts if as a result, the Fund will have
more than 20% of its total assets committed to consummation of such forward
foreign currency exchange contracts.
FUTURES CONTRACTS AND OPTIONS. The Funds may invest in futures
contracts and options on futures contracts for hedging purposes or to maintain
liquidity. However, a Fund may not purchase or sell a futures contract unless
immediately after any such transaction the sum of the aggregate amount of margin
deposits on its existing futures positions and the amount of premiums paid for
related options is 5% or less of its total assets.
Futures contracts obligate a Fund, at maturity, to take or make
delivery of certain securities or the cash value of a bond or securities index.
When interest rates are rising, futures contracts can offset a decline in value
of the Fund's portfolio securities. When rates are falling, these contracts can
secure higher yields for securities the Fund intends to purchase.
The Funds may purchase and sell call and put options on futures
contracts traded on an exchange or board of trade. When a Fund purchases an
option on a futures contract, it has the right to assume a position as a
purchaser or seller of a futures contract at a specified exercise price at any
time during the option period. When a Fund sells an option on a futures
contract, it becomes obligated to purchase or sell a futures contract if the
option is exercised. In anticipation of a market advance, a Fund may purchase
call options on futures contracts as a substitute for the purchase of futures
contracts to hedge against a possible increase in the price of securities which
the Fund intends to purchase. Similarly, if the value of a Fund's portfolio
securities is expected to decline, the Fund might purchase put options or sell
call options on futures contracts rather than sell futures contracts. In
connection with a Fund's position in a futures contract or option thereon, the
Fund will create a segregated account of liquid assets or will otherwise cover
its position in accordance with applicable requirements of the SEC.
In addition, the Funds may write covered call options, buy put options,
buy call options and write secured put options on particular securities or
various stock indices. Options trading is a highly specialized activity which
entails greater than ordinary investment risks. A call option for a particular
security gives the purchaser of the option the right to buy, and a writer the
obligation to sell, the underlying security at the stated exercise price at any
time prior to the expiration of the option, regardless of the market price of
the security. The premium paid to the writer is in consideration for undertaking
the obligations under the option contract. A put option for a particular
security gives the purchaser the right to sell the underlying security at the
stated exercise price at any time prior to the expiration date of the option,
regardless of the market price of the security. In contrast to an option on a
particular security, an option on a stock index provides the holder with the
right to make or receive a cash settlement upon exercise of the option.
The use of derivative instruments exposes a Fund to additional risks
and transaction costs. Risks inherent in the use of derivative instruments
include: (1) the risk that interest rates, securities prices and currency
markets will not move in the direction that a portfolio manager anticipates; (2)
imperfect correlation between the price of derivative instruments and movements
in the prices of the securities, interest rates or currencies being hedged; (3)
the fact that skills needed to use these strategies are different than those
needed to select portfolio securities; (4) inability to close out certain hedged
positions to avoid adverse tax consequences; (5) the possible absence of a
liquid secondary market for any particular instrument and possible
exchange-imposed price fluctuation limits, either of which may make it difficult
or impossible to close out a position when desired; (6) leverage risk, that is,
the risk that adverse price movements in an instrument can result in a loss
substantially greater than a Fund's initial investment in that instrument (in
some cases, the potential loss is unlimited); and (7) particularly in the case
of privately-negotiated instruments, the risk that the counterparty will fail to
perform its obligations, which could leave a Fund worse off than if it had not
entered into the position. For a further discussion, see "Fund Investments" and
the Appendix in the Statement of Additional Information.
When a Fund invests in a derivative instrument, it may be required to
segregate cash and other high-grade liquid debt securities or certain portfolio
securities to "cover" the Fund's position. Assets segregated or set aside
generally may not be disposed of so long as a Fund maintains the positions
requiring segregation or cover. Segregating assets could diminish a Fund's
return due to the opportunity losses of foregoing other potential investments
with the segregated assets.
The Funds are not commodity pools, and all futures transactions engaged
in by a Fund must constitute bona fide hedging or other permissible transactions
in accordance with the rules and regulations promulgated by the Commodity
Futures Trading Commission. Successful use of futures and options is subject to
special risk considerations.
For a further discussion see "Additional Information on Fund
Investments" and the Appendix to the Statement of Additional Information.
REPURCHASE AGREEMENTS. The Funds may agree to purchase securities from
financial institutions subject to the seller's agreement to repurchase them at
an agreed-upon time and price ("repurchase agreements"). The financial
institutions with which a Fund may enter into repurchase agreements include
member banks of the Federal Reserve System, any foreign bank or any domestic or
foreign broker/dealer which is recognized as a reporting government securities
dealer. The Advisor and/or Sub-Advisor will review and continuously monitor the
creditworthiness of the seller under a repurchase agreement, and will require
the seller to maintain liquid assets in a segregated account in an amount that
is greater than the repurchase price. Default by or bankruptcy of the seller
would, however, expose a Fund to possible loss because of adverse market action
or delays in connection with the disposition of the underlying obligations.
REVERSE REPURCHASE AGREEMENTS. The Funds may borrow funds for temporary
purposes by selling portfolio securities to financial institutions such as banks
and broker/dealers and agreeing to repurchase them at a mutually specified date
and price ("reverse repurchase agreements"). Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the repurchase price. A Fund would pay interest on amounts
obtained pursuant to a reverse repurchase agreement.
INVESTMENT COMPANY SECURITIES. In connection with the management of
daily cash positions, the Funds may invest in securities issued by other
investment companies which invest in short-term debt securities and which seek
to maintain a $1.00 net asset value per share (i.e., "money market funds").
International Growth Fund and Emerging Markets Fund may also purchase shares of
investment companies investing primarily in foreign securities, including so
called "country funds." It is each Fund's policy not to invest in securities
issued by other investment companies which pay asset-based fees to the Advisor,
the Sub-Advisor, the Administrator, the Custodian, the Distributor or their
affiliates. Securities of other investment companies will be acquired within
limits prescribed by the 1940 Act. These limitations, among other matters,
restrict investments in securities of other investment companies to no more than
10% of the value of a Fund's total assets, with no more than 5% invested in the
securities of any one investment company. As a shareholder of another investment
company, a Fund would bear, along with other shareholders, its pro rata portion
of the other investment company's expenses, including advisory fees. These
expenses would be in addition to the expenses a Fund bears directly in
connection with its own operations.
LIQUIDITY MANAGEMENT. Pending investment, to meet anticipated
redemption requests, or as a temporary defensive measure if the Sub-Advisor
determines that market conditions warrant, the Funds may also invest without
limitation in short-term U.S. Government obligations, high quality money market
instruments, variable and floating rate instruments and repurchase agreements as
described above.
High quality money market instruments may include commercial paper, and
Europaper, which is U.S. dollar-denominated commercial paper of a foreign
issuer. The Funds may also purchase U.S. dollar-denominated bank obligations,
such as certificates of deposit, bankers' acceptances and interest-bearing
savings and time deposits, issued by U.S. or foreign banks or savings
institutions having total assets at the time of purchase in excess of $1
billion. Short-term obligations purchased by the Funds will either have
short-term debt ratings at the time of purchase in the top two categories by one
or more unaffiliated nationally recognized statistical rating organizations
("NRSROs") or be issued by issuers with such ratings. Unrated instruments
purchased by a Fund will be of comparable quality as determined by the
Sub-Advisor.
ILLIQUID SECURITIES. Each Fund may invest up to 15% of the value of its
net assets (determined at time of acquisition) in securities which are illiquid.
Illiquid securities would generally include repurchase agreements and time
deposits with notice/termination dates in excess of seven days, and certain
securities which are subject to trading restrictions because they are not
registered under the Securities Act of 1933, as amended (the "Act"). If, after
the time of acquisition, events cause this limit to be exceeded, the Fund will
take steps to reduce the aggregate amount of illiquid securities as soon as
reasonably practicable in accordance with the policies of the SEC.
The Funds may invest in commercial obligations issued in reliance on
the "private placement" exemption from registration afforded by Section 4(2) of
the Act ("Section 4(2) paper"). The Funds may also purchase securities that are
not registered under the Act, but which can be sold to qualified institutional
buyers in accordance with Rule 144A under the Act ("Rule 144A securities").
Section 4(2) paper is restricted as to disposition under the Federal securities
laws, and generally is sold to institutional investors which agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper
normally is resold to other institutional investors through or with the
assistance of the issuer or investment dealers which make a market in the
Section 4(2) paper, thus providing liquidity. Rule 144A securities generally
must be sold only to other qualified institutional buyers. If a particular
investment in Section 4(2) paper or Rule 144A securities is not determined to be
liquid, that investment will be included within the Fund's limitation on
investment in illiquid securities. The Advisor and/or Sub-Advisor will determine
the liquidity of such investments pursuant to guidelines established by the
Trust's Board of Trustees.
U.S. GOVERNMENT OBLIGATIONS. The Funds may purchase obligations issued or
guaranteed the U.S. Government and U.S. Government agencies and
instrumentalities. Obligations of certain agencies and instrumentalities of the
U.S. Government, such as those of the Government National Mortgage Association,
are supported by the full faith and credit of the U.S. Treasury. Others, such as
those of the Export-Import Bank of the United States, are supported by the right
of the issuer to borrow from the U.S. Treasury; and still others, such as those
of the Student Loan Marketing Association, are supported only by the credit of
the agency or instrumentality issuing the obligation. No assurance can be given
that the U.S. Government would provide financial support to U.S.
Government-sponsored instrumentalities if it is not obligated to do so by law.
BORROWING. Each Fund is authorized to borrow money in amounts up to 5%
of the value of the Fund's total assets at the time of such borrowing for
temporary purposes. However, a Fund is authorized to borrow money in amounts up
to 33 1/3% of its assets, as permitted by the 1940 Act, for the purpose of
meeting redemption requests. Borrowing by a Fund creates an opportunity for
greater total return but, at the same time, increases exposure to capital risk.
Leveraging by means of borrowing may exaggerate the effect of any increase or
decrease in the value of portfolio securities on a Fund's net asset value. In
addition, borrowed funds are subject to interest costs that may offset or exceed
the return earned on the borrowed funds. However, a Fund will not purchase
portfolio securities while borrowings exceed 5% of the Fund's total assets. For
more detailed information with respect to the risks associated with borrowing,
see the heading "Borrowing" in the Statement of Additional Information.
LENDING OF PORTFOLIO SECURITIES. To enhance the return of the
portfolio, a Fund may lend securities in its portfolio representing up to 25% of
its total assets, taken at market value, to securities firms and financial
institutions, provided that each loan is secured continuously by collateral in
the form of cash, high quality money market instruments or short-term U.S.
Government securities adjusted daily to have a market value at least equal to
the current market value of the securities loaned. The risk in lending portfolio
securities, as with other extensions of credit, consists of possible delay in
the recovery of the securities or possible loss of rights in the collateral
should the borrower fail financially.
PORTFOLIO TRANSACTIONS AND TURNOVER. All orders for the purchase or
sale of securities on behalf of the Funds are placed by the Sub-Advisor with
broker/dealers that the Sub-Advisor selects. A high portfolio turnover rate
involves larger brokerage commission expenses or transaction costs which must be
borne directly by the Fund, and may result in the realization of short-term
capital gains which are taxable to shareholders as ordinary income. The
Sub-Advisor will not consider portfolio turnover rate a limiting factor in
making investment decisions consistent with a Fund's objective and policies. It
is anticipated that each Fund's annual portfolio turnover rate will range from
50% to 150%.
INVESTMENT LIMITATIONS
Each Fund's investment objective and policies may be changed by the
Trust's Board of Trustees without shareholder approval. However, shareholders
will be notified in writing at least thirty days in advance of any such material
change, except where advance notice is not required. No assurance can be given
that any Fund will achieve its investment objective.
Each Fund has also adopted certain fundamental investment limitations
that may be changed only with the approval of a "majority of the outstanding
shares of the Fund" (as defined in the Statement of Additional Information). The
following descriptions summarize several of the Funds' fundamental investment
policies, which are set forth in full in the Statement of Additional
Information.
A Fund may not:
(1) purchase securities (except U.S. Government securities) if
more than 5% of its total assets will be invested in the
securities of any one issuer, except that up to 25% of the
assets of the Fund may be invested without regard to this 5%
limitation;
(2) invest 25% or more of its total assets in securities
issued by one or more issuers conducting their principal
business activities in the same industry (except that the
Healthcare Fund will invest more than 25% of its total assets
in securities of issues conducting their principal business
activities in the healthcare industry; and
(3) borrow money except for temporary purposes in amounts up
to one-third of the value of its total assets at the time of
such borrowing. Whenever borrowings exceed 5% of a Fund's
total assets, the Fund will not make any additional
investments.
These investment limitations are applied at the time investment
securities are purchased.
PURCHASE AND REDEMPTION OF SHARES
Shares of each Fund are sold on a continuous basis by the Distributor.
The Distributor is a registered broker/dealer with principal offices at 60 State
Street, Boston, Massachusetts 02109.
Purchase of Shares
Class Y shares of the Funds are sold without an initial or contingent
sales charge to fiduciary and discretionary accounts of institutions,
"institutional investors," directors, trustees, officers and employees of the
Trust, The Munder Funds, Inc., The Munder Funds Trust, the Investment Advisor,
the Distributor and the Investment Advisor's investment advisory clients and
family members of the Advisor's employees. "Institutional investors" may include
financial institutions (such as banks, savings institutions and credit unions);
pension and profit sharing and employee benefit plans and trusts; insurance
companies; investment companies; investment advisers; and broker-dealers acting
for their own accounts or for the accounts of such institutional investors. A
minimum initial investment of $500,000 for Class Y shares of a Fund is required
for fiduciary and discretionary accounts of institutions and institutional
investors.
Shares of each Fund are sold at net asset value per share next
determined on that day after receipt of a purchase order. Purchase orders by an
institution for Class Y shares must be received by the Distributor or the
Transfer Agent before the close of regular trading hours (currently 4:00 p.m.
New York City time) on the New York Stock Exchange (the "Exchange"), on any
Business Day (as defined below). Payment for such shares must be made by
institutions in Federal funds or other funds immediately available to the
Custodian no later than 4:00 p.m. (New York City time) on the next Business Day
following the receipt of the purchase order.
It is the responsibility of the institution to transmit orders for
purchases by its customers and to deliver required funds on a timely basis. If
funds are not received within the periods described above, the order will be
canceled, notice thereof will be given, and the institution will be responsible
for any loss to a Fund or its shareholders. Institutions may charge certain
account fees depending on the type of account the investor has established with
the institution. In addition, an institution may receive fees from a Fund with
respect to the investments of its customers as described below under
"Management." Payments for Class Y shares of a Fund may, in the discretion of
the Advisor, be made in the form of securities that are permissible investments
for the Fund. For further information see "In-Kind Purchases" in the Statement
of Additional Information.
Purchases may be effected on days on which the Exchange is open for
business (a "Business Day"). The Trust reserves the right to reject any purchase
order. Payment for orders which are not received or accepted will be returned
after prompt inquiry. The issuance of shares is recorded on the books of the
Trust, and share certificates are not issued unless expressly requested in
writing. Certificates are not issued for fractional shares.
Neither the Trust, the Distributor nor the Transfer Agent will be
responsible for the authenticity of telephone instructions for the purchase or
redemption of shares where such instructions are reasonably believed to be
genuine. Accordingly, the Institution will bear the risk of loss. The Trust will
attempt to confirm that telephone instructions are genuine and will use such
procedures as are considered reasonable. To the extent that the Trust fails to
use reasonable procedures to verify the genuineness of telephone instructions,
it or its service providers may be liable for such instructions that prove to be
fraudulent or unauthorized. Automatic Investment Plan ("AIP")
An investor in Class Y shares of a Fund may arrange for periodic
investments in the Fund through automatic deductions from a checking or savings
account by completing the AIP Application Form. The minimum pre-authorized
investment is $50.
Redemption of Shares
Redemption orders are effected at the net asset value per share next
determined after receipt of the order. Shares held by an institution on behalf
of its customers must be redeemed in accordance with instructions and
limitations pertaining to the account at the institution. The Funds intend to
pay cash for all shares redeemed, but in unusual circumstances may make payment
wholly or partly in portfolio securities at their then market value equal to the
redemption price. In such cases, an investor may incur brokerage costs in
converting such securities to cash.
Share balances may be redeemed pursuant to arrangements between
institutions and investors. It is the responsibility of an institution to
transmit redemption orders to the Transfer Agent and to credit its Customers'
accounts with the redemption proceeds on a timely basis. If the Transfer Agent
receives a redemption order prior to 4:00 p.m. (New York City time), the
redemption proceeds for shares of a Fund are normally wired to the redeeming
institution the following Business Day. The Funds reserve the right to delay the
wiring of redemption proceeds for up to seven days after receipt of a redemption
order if, in the judgment of the Investment Advisor, an earlier payment could
adversely affect a Fund.
Exchanges
Class Y shares of a Fund may be exchanged for Class Y shares of other
funds of the Trust, The Munder Funds, Inc. and The Munder Funds Trust, based on
their respective net asset values, without the imposition of any sales charges.
Any shares involved in an exchange must satisfy the requirements relating
to the minimum initial investment in an investment portfolio of the Trust, The
Munder Funds, Inc. or The Munder Funds Trust, and the shares involved must be
legally available for sale in the state of the investor's residence. For Federal
income tax purposes, a share exchange is a taxable event and, accordingly, a
capital gain or loss may be realized. Before making an exchange request,
shareholders should consult a tax or other financial advisor and should consider
the investment objective, policies and restrictions of the investment portfolio
into which the shareholder is making an exchange, as set forth in the applicable
prospectus. Certain brokers may charge a fee for handling exchanges.
The Trust reserves the right to modify or terminate the exchange
privilege at any time. Notice will be given to shareholders of any material
modifications, except where notice is not required.
DIVIDENDS AND DISTRIBUTIONS
Each Fund expects to pay dividends and distributions from the net
income and capital gains, if any, earned on investments held by the Fund.
Dividends from net income are declared and paid at least annually. Each Fund's
net realized capital gains (including net short-term capital gains), if any, are
distributed at least annually. Dividends and capital gains are paid in the form
of additional shares of the same class of a Fund unless a shareholder requests
that dividends and capital gains be paid in cash. In the absence of this request
on the Account Application Form or in a subsequent request, each purchase of
shares is made on the understanding that the Transfer Agent is automatically
appointed to receive the dividends upon all shares in the shareholder's account
and to reinvest them in full and fractional shares of the same class of the Fund
at the net asset value in effect at the close of business on the reinvestment
date. Dividends are automatically paid in cash (along with any redemption
proceeds) not later than seven business days after a shareholder closes an
account.
A Fund's expenses are deducted from the income of the Fund before
dividends are declared and paid. These expenses include, but are not limited to,
fees paid to the Advisor, Administrator, Custodian and Transfer Agent; fees and
expenses of officers and Trustees; taxes; interest; legal and auditing fees;
brokerage fees and commissions; certain fees and expenses in registering and
qualifying the Funds and their shares for distribution under Federal and state
securities laws; expenses of preparing prospectuses and statements of additional
information and of printing and distributing prospectuses and statements of
additional information to existing shareholders; the expense of reports to
shareholders, shareholders' meetings and proxy solicitations; fidelity bond and
Trustees' and officers' liability insurance premiums; the expense of using
independent pricing services; and other expenses which are not assumed by the
Administrator. Any general expenses of the Trust that are not readily
identifiable as belonging to a particular fund of the Trust are allocated among
all funds of the Trust by or under the direction of the Board of Trustees in a
manner that the Board determines to be fair and equitable. Except as noted in
this Prospectus and the Statement of Additional Information, the Funds' service
contractors bear expenses in connection with the performance of their services,
and each Fund bears the expenses incurred in its operations. The Advisor,
Administrator, Custodian and Transfer Agent may voluntarily waive all or a
portion of their respective fees from time to time.
NET ASSET VALUE
Net asset value for Class Y shares in a Fund is calculated by dividing
the value of all securities and other assets belonging to the Fund allocable to
that class, less the liabilities charged to that class, by the number of
outstanding shares of that class.
The net asset value per share of each Fund for the purpose of pricing
purchase and redemption orders is determined as of the close of regular trading
hours on the New York Stock Exchange (currently 4:00 p.m., New York time) on
each business day. Securities traded on a national securities exchange or on the
NASDAQ National Market System are valued at the last sale price on such exchange
or market as of the close of business on the date of valuation. Securities
traded on a national securities exchange or on the NASDAQ National Market System
for which there were no sales on the date of valuation and securities traded on
other over-the-counter markets, including listed securities for which the
primary market is believed to be over-the-counter, are valued at the mean
between the most recently quoted bid and asked prices. Options will be valued at
market value or fair value if no market exists. Futures contracts will be valued
in like manner, except that open futures contract sales will be valued using the
closing settlement price or, in the absence of such a price, the most recently
quoted asked price. Portfolio securities primarily traded on the London Stock
Exchange are generally valued at the mid-price between the current bid and asked
prices. Portfolio securities which are primarily traded on foreign securities
exchanges, other than the London Stock Exchange, are generally valued at the
preceding closing values of such securities on their respective exchanges,
except when an occurrence subsequent to the time a value was so established is
likely to have changed such value. In such an event, the fair value of those
securities will be determined through the consideration of other factors by or
under the direction of the Boards of Trustees. Restricted securities and
securities and assets for which market quotations are not readily available are
valued at fair value by the Advisor under the supervision of the Board of
Trustees. Debt securities with remaining maturities of 60 days or less are
valued at amortized cost, unless the Board of Trustees determines that such
valuation does not constitute fair value at that time. Under this method, such
securities are valued initially at cost on the date of purchase (or the 61st day
before maturity).
The Trust does not accept purchase and redemption orders on days on
which the New York Stock Exchange is closed. The New York Stock Exchange is
currently scheduled to be closed on New Year's Day, Presidents' Day, Good
Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving and
Christmas, and on the preceding Friday or subsequent Monday when one of these
holidays falls on a Saturday or Sunday, respectively.
MANAGEMENT
Board of Trustees
The Trust is managed under the direction of its Board of Trustees. The
Statement of Additional Information contains the name and background information
of each Trustee.
Investment Advisor and Sub-Advisor
Munder Capital Management, a Delaware general partnership with its
principal offices at 480 Pierce Street, Birmingham, Michigan 48009, serves as
the Funds' investment advisor. The Advisor was formed in December 1994. The
principal partners of the Advisor are Old MCM, Inc. ("MCM"), Munder Group LLC,
Woodbridge Capital Management, Inc. ("Woodbridge") and WAM Holdings, Inc.
("WAM"). MCM was founded in February 1985 as a Delaware corporation and was a
registered investment advisor. Woodbridge and WAM are indirect, wholly-owned
subsidiaries of Comerica Incorporated. Mr. Lee P. Munder, the Advisor's chief
executive officer, indirectly owns or controls a majority of the partnership
interests in the Advisor. As of June 30, 1996, the Advisor and its affiliates
had approximately $34 billion in assets under active management, of which $17
billion were invested in equity securities, $6 billion were invested in money
market or other short-term instruments, and $11 billion were invested in other
fixed income securities.
Subject to the supervision of the Board of Trustees of the Trust, the
Advisor provides overall investment management for the Funds, provides research
and credit analysis, oversees the purchases and sales of portfolio securities by
the Sub-Advisor, maintains books and records with respect to the Funds'
securities transactions and provides periodic and special reports to the Board
of Trustees as requested.
For the advisory services provided and expenses assumed with regard to
the International Growth Fund and the Healthcare Fund, the Advisor has agreed to
a fee, computed daily and payable monthly, at an annual rate of 1.00% of each
Fund's average daily net assets up to $250 million, reduced to .75% of each
Fund's average daily net assets in excess of $250 million. For the advisory
services provided and expenses assumed with regard to the Emerging Markets Fund,
the Advisor has agreed to a fee, computed daily and payable monthly, at an
annual rate of 1.25% of the Fund's average daily net assets.
The Advisor may, from time to time, make payments to banks,
broker-dealers or other financial institutions for certain services to the Funds
and/or their shareholders, including sub-administration, sub-transfer agency and
shareholder servicing. Such payments are made out of the Advisor's own resources
and do not involve additional costs to the Funds or their shareholders.
Pursuant to a sub-advisory agreement with the Advisor, Framlington
Overseas Investment Management Limited provides sub-advisory services to the
Funds. Subject to the supervision of the Advisor, the Sub-Advisor is responsible
for the management of each Fund's portfolio, including all decisions regarding
purchases and sales of portfolio securities by the Funds. The Sub-Advisor is
also responsible for arranging the execution of all portfolio management
decisions, including the selection of brokers to execute trades and the
negotiation of brokerage commissions in connection therewith. For its services
with regard to the International Fund and the Healthcare Fund, the Advisor pays
the Sub-Advisor a monthly fee equal on an annual basis to 0.50% of each Fund's
average daily net assets up to $250 million, reduced to .375% of each Fund's
average daily net assets in excess of $250 million. For its services with regard
to the Emerging Markets Fund, the Advisor pays the Sub-Advisor a monthly fee
equal on an annual basis to .625% of the Fund's average daily net assets.
The Sub-Advisor is a subsidiary of Framlington Group plc, a public
limited company incorporated in England and Wales which, through its
subsidiaries, provides a wide range of investment services. The Sub-Advisor and
its affiliates serve as investment manager to various investment trusts
organized in the United Kingdom, and provides fund management services to
pension funds and charities. Framlington Group plc is a wholly owned subsidiary
of Framlington Holdings Limited which is, in turn, owned 49% by the Advisor and
51% by Credit Commercial de France S.A., a French banking corporation listed on
the Societe des Bourses Francaises.
Performance of Equity Portfolios Managed by the Sub-Advisor
Set forth below are certain performance data provided by the
Sub-Advisor relating to unit trusts organized under the laws of the United
Kingdom (referred to hereafter as the "trust accounts") which are managed by the
Sub-Advisor and which have investment objectives and policies similar to those
of the corresponding Funds. See "Investment Objectives and Policies" and
"Portfolio Instruments and Practices and Associated Risk Factors." In the case
of Emerging Markets Fund, the data relates to a composite of the Framlington
Emerging Markets Unit Trust and an institutional emerging markets portfolio
managed by the same personnel of the Sub-Advisor with similar investment
objectives and policies.
The trust account performance indicates the aggregate percentage of
change in unit price for the trust accounts, on the basis of data provided by
Micropal, an independent research organization that is a recognized source of
performance data in the UK unit trust industry. The data is U.S. dollar adjusted
on the basis of exchange rates provided by Datastream using WM/Reuters closing
rates. The performance figures are net of brokerage commissions and actual
investment advisory fees and UK taxes but exclude the impact of sales loads,
custodial fees and other administrative expenses that will be applicable to the
corresponding Funds and will result in a higher expense ratio for the Funds. The
data assume the reinvestment of net income and capital gain distributions. The
trust account returns are calculated showing beginning and ending offer prices
for periods ended September 30, 1996.
Investors should not rely on the following performance data of the
Sub-Advisor's unit trust clients' accounts as an indication of future
performance of the Funds. It should be noted that the management of the Funds
will be affected by regulatory requirements under the 1940 Act and requirements
of the Internal Revenue Code of 1986, as amended, to qualify as a regulated
investment company.
<TABLE>
<S> <C> <C> <C>
Period Ended MSCI World
September 30, 1996 Framlington Health Total Return
1 Year 42.83% 14.20%
3 Years 127.10% 41.89%
5 Years 150.47% 70.80%
Inception on
May 1, 1987 437.60% 112.37%
Performance for the Health trust account is calculated on an offer-offer basis; US Dollar adjusted total return net of UK
Tax and annual management fees. Source: Micropal.
MSCI World index performance shows total return in US Dollars but does not reflect the deduction of fees, expenses and
taxes. Source: Datastream.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Framlington
Period Ended International MSCI World
September 30, 1996 Growth Total Return
1 Year 11.06% 14.20%
3 Years 33.68% 41.89%
5 Years 62.79% 70.80%
10 Years 208.86% 188.38%
Performance for the International Growth trust account is calculated on an offer-offer basis; US Dollar adjusted total
return net of UK Tax and annual management fees. Source: Micropal.
MSCI World index performance shows total return in US Dollars but does not reflect the deduction of fees, expenses and
taxes. Source: Datastream.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Period Ended Framlington Emerging MSCI WORLD
September 30, 1996 Markets Composite* Total Return
1 Year 3.46% 4.84%
3 Years 30.91% 30.51%
Inception on
December 31, 1992 67.57% 62.33%
* The Framlington Emerging Markets Composite is an equal weighted
composite of the Framlington Emerging Markets Unit Trust and a Canadian
based institutional portfolio. The Framlington Emerging Markets Fund
portion of the composite is calculated on an offer-offer basis US
Dollar adjusted total return net of UK Tax and annual management fees,
but not initial charges. The Canadian Institutional fund is measured by
the World Markets Company on a gross total return basis and on the
gross tax basis of a Canadian domiciled pension fund. The returns have
been adjusted to show a return net of the management fee charged the
Canadian Institutional fund.
The inception of the Canadian institutional fund is November 1, 1994.
</TABLE>
MSCI Indices
The MSCI World index used is maintained by Morgan Stanley Capital International
and seeks to cover the largest 65% of companies in countries in the developed
world. The companies covered are adjusted for cross ownership and the index is
balanced to show a true market representation of the sectors covered in the
underlying markets. Total return is calculated using the prices of the companies
tracked and assumes the reinvestment of dividends. The index performance does
not reflect the deduction of fees, expenses and taxes.
The MSCI Emerging Markets Index is maintained by Morgan Stanley Capital
International and covers 26 emerging markets. Total return is calculated using
the prices of the companies tracked and assumes the reinvestment of dividends.
The index performance does not reflect the deduction of fees, expenses and
taxes.
Portfolio Managers
Simon Key, Chief Investment Officer of the Sub-Advisor, is the primary
portfolio manager for the Emerging Markets Fund. Mr. Key heads the asset
allocation committee of the Sub-Advisor, and is responsible for overall asset
allocation strategy. Prior to joining Framlington in 1989, Mr. Key was with the
Bank of England as economist and deputy head of the European team. He graduated
from the University of East Anglia with a BA in economics and philosophy, and
went on to complete a MSc in economics at the University of London.
Antony Milford, Head of the Specialist Desk for the Sub-Advisor, is the
primary portfolio manager for the Healthcare Fund. Mr. Milford is a member of
the Sub-Advisor's asset allocation committee and has been managing funds for
Framlington since 1971, covering most geographic regions. Mr. Milford has
managed a healthcare portfolio for the Sub-Advisor since 1989. He graduated from
Oxford with a Classics degree.
The International Growth Fund is managed by a committee of professional
portfolio managers of the Sub-Advisor.
Administrator, Custodian and Transfer Agent
First Data Investor Services Group, Inc. ("First Data"), whose
principal business address is 53 State Street, Boston, Massachusetts 02109 (the
"Administrator"), serves as administrator for the Trust. First Data is a
wholly-owned subsidiary of First Data Corporation. The Administrator generally
assists the Trust in all aspects of its administration and operations, including
the maintenance of financial records and fund accounting.
First Data also serves as the Trust's transfer agent and dividend
disbursing agent ("Transfer Agent"). Shareholder inquiries may be directed to
First Data at P.O. Box 5130, Westborough, Massachusetts 01581-5130.
As compensation for these services, the Administrator is entitled to
receive fees, computed daily and payable monthly, at the rate of .10% of average
daily net assets with a $60,000 minimum fee per annum in the aggregate for the
Funds. The Transfer Agent is entitled to receive fees, based on the aggregate
average daily net assets of the Funds, computed daily and payable monthly at the
rate of [.02% of the first $2.8 billion of net assets, plus .015% of the next
$2.2 billion of net assets, plus .01% of all net assets in excess of $5
billion]. The Administrator and Transfer Agent are also entitled to
reimbursement for out-of-pocket expenses. The Administrator has entered into a
Sub-Administration Agreement with the Distributor under which the Distributor
provides certain administrative services with respect to the Funds. The
Administrator pays the Distributor a fee for these services out of its own
resources at no cost to the Funds.
Comerica Bank (the "Custodian"), whose principal business address is
One Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides
custodial services to the Funds. The Custodian is a wholly owned subsidiary of
Comerica Incorporated, a publicly-held bank holding company. As compensation for
its services, the Custodian is entitled to receive fees, based on the aggregate
average daily net assets of the Funds and certain other investment portfolios
that are advised by the Advisor, for which the custodian provides services,
computed daily and payable monthly at an annual rate of .03% of the first $100
million of average daily net assets, .02% of the next $500 million of net assets
and .01% of net assets in excess of $600 million. The Custodian also receives
certain transaction based fees.
For an additional description of the services performed by the
Administrator, Transfer Agent and Custodian, see the Statement of Additional
Information.
TAXES
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code for 1986, as amended (the "Code").
Such qualification relieves a Fund of liability for Federal income taxes to the
extent its earnings are distributed in accordance with the Code.
Qualification as a regulated investment company under the Code for any
taxable year requires, among other things, that a Fund distribute to its
shareholders an amount equal to at least 90% of its investment company taxable
income and 90% of its net tax-exempt interest income for such year. In general a
Fund's investment company income will be its taxable income (including
dividends, interest, and short-term capital gains) subject to certain
adjustments and excluding the excess of any net long-term capital gain for the
taxable year over the net short-term capital loss, if any, for such year. Each
Fund intends to distribute substantially all of its investment company taxable
income each taxable year. Such distributions will be taxable as ordinary income
to a Fund's shareholders who are not currently exempt from Federal income taxes,
whether such income is received in cash or reinvested in additional shares.
(Federal income taxes for distributions to an IRA or qualified retirement plan
are deferred under the Code if applicable requirements are met.) The dividends
received deduction for corporations will apply to such distributions by the
Funds to the extent of the total qualifying dividends received by the
distributing Fund from domestic corporations for the taxable year and if other
applicable tax requirements are met.
Substantially all of the Funds' net realized long-term capital gains,
if any, will be distributed at least annually. The Funds will generally have no
Federal income tax liability with respect to such gains, and the distributions
will be taxable to shareholders who are not currently exempt from Federal income
taxes as long-term capital gains, no matter how long the shareholders have held
their shares.
A taxable gain or loss may also be realized by a holder of shares in a
Fund upon the redemption or transfer of shares depending upon the tax basis of
the shares and their price at the time of the transaction.
Dividends declared in October, November, or December of any year
payable to shareholders of record on a specified date in such months will be
deemed to have been received by shareholders and paid by a Fund on December 31
of such year if such dividends are actually paid during January of the following
year.
Before purchasing shares in the Funds, the impact of dividends or
distributions which are expected to be declared or have been declared, but not
paid, should be carefully considered. Any dividend or distribution declared
shortly after a purchase of such shares prior to the record date will have the
effect of reducing the per share net asset value by the per share amount of the
dividend or distribution. All or a portion of such dividend or distribution,
although in effect a return of capital, may be subject to tax.
On an annual basis, the Trust will send written notices to record
owners of shares regarding the Federal tax status of distributions made by the
Funds.
Taxes - Foreign Investments
Income or gain from investments in foreign securities may be subject to
foreign withholding or other taxes. It is expected that the Funds will be
subject to foreign withholding taxes with respect to income received from
sources within foreign countries. If more than 50% of the value of a Fund's
total assets at the close of a taxable year consists of stock or securities of
foreign corporations, the Fund may elect, for U.S. Federal income tax purposes,
to treat certain foreign taxes paid by it, including generally any withholding
taxes and other foreign income taxes, as paid by its shareholders. If a Fund
makes this election, the amount of such foreign taxes paid by the Fund will be
included in its shareholders' income pro rata (in addition to taxable
distributions actually received by them), and the shareholders would be entitled
(a) to credit their proportionate amount of such taxes against their U.S.
Federal income tax liabilities subject to certain limitations described in the
Statement of Additional Information, or (b) if they itemize their deductions, to
deduct such proportionate amount from their U.S. income.
If a Fund invests in certain "passive foreign investment companies"
("PFICs"), it will be subject to Federal income tax (and possibly additional
interest charges) on a portion of any "excess distribution" or gain from the
disposition of such shares even if it distributes such income to its
shareholders. If a Fund elects to treat the PFIC as a "qualified election fund"
("QEF") and the PFIC furnishes certain financial information in the required
form to such Fund, the Fund will instead be required to include in income each
year its allocable share of the ordinary earnings and net capital gains on the
QEF, regardless of whether received, and such amounts will be subject to the
various distribution requirements described above.
DESCRIPTION OF SHARES
Each Fund operates as one series of the Trust. The Trust was organized
as a Massachusetts business trust on October __, 1996 and is also registered
under the 1940 Act as an open-end management investment company. The Trust's
declaration of trust authorize the Trustees to classify and reclassify any
unissued shares into one or more classes of shares. Pursuant to such authority
the Trustees have authorized the issuance of shares of beneficial interest
representing interests in the Funds, each of which is classified as a
diversified investment company under the 1940 Act.
The shares of the Funds are offered as five separate classes of shares
of beneficial interest, $.01 par value per share, designated Class A shares,
Class B shares, Class C shares, Class K shares and Class Y shares. All shares of
a Fund represent interests in the same assets of the Fund and are identical in
all respects except that each class bears different service and distribution
expenses and may bear various class-specific expenses, and each class has
exclusive voting rights with respect to its service and/or distribution plan, if
any. Shares of each Fund issued are fully paid, non-assessable, fully
transferable and redeemable at the option of the holder. Investors may call the
Trust at (800) 438-5789 for more information concerning other classes of shares
of the Funds. This Prospectus relates only to the Class Y shares of the Funds.
The Trust's shareholders are entitled to one vote for each full share
held and proportionate fractional votes for fractional shares held, and will
vote in the aggregate and not by Fund, except where otherwise required by law or
when the Trustees determine that the matter to be voted upon affects only the
interests of the shareholders of a particular Fund. In addition, shareholders of
a Fund will vote in the aggregate and not by class, except as otherwise
expressly required by law or when the Trustees determine that the matter to be
voted upon affects only the interests of the holders of a particular class of
shares. The Trust is not required and does not currently intend to hold annual
meetings of shareholders for the election of Board members except as required
under the 1940 Act. A meeting of shareholders will be called upon the written
request of at least 10% of the outstanding shares of the Trust. To the extent
required by law, the Trust will assist in shareholder communications in
connection with such a meeting. For further discussion of the voting rights of
shareholders, see "Additional Information Concerning Shares" in the Statement of
Additional Information.
Reports to Shareholders
The Trust will seek to eliminate duplicate mailings of prospectuses and
shareholders reports to accounts which have the same primary record owner, and
with respect to joint tenant accounts or tenant in common accounts, accounts
which have the same address. Additional copies of prospectuses and reports to
shareholders are available upon request by calling the Trust at (800) 438-5789.
PERFORMANCE
From time to time, the Funds may quote performance data for Class Y
shares in advertisements or in communications to shareholders. The total return
of a class of shares in a Fund may be calculated on an average annual total
return basis, and may also be calculated on an aggregate total return basis, for
various periods. Average annual total return of a Fund reflects the average
percentage change in value of an investment in a class of shares in the Fund
from the beginning date of the measuring period to the end of the measuring
period. Aggregate total return reflects the total percentage change in value
over the measuring period. Both methods of calculating total return assume that
dividends and capital gains distributions made during the period are reinvested
in the same class of shares.
[The yield of a class of shares in a Fund is computed based on the net
income of such class in the Fund during a 30-day (or one month) period (which
period will be identified in connection with the particular yield quotation).
More specifically, a Fund's yield for a class of shares is computed by dividing
the per share net income for the class during a 30-day (or one-month) period by
the maximum offering price per share on the last day of the period and
annualizing the result on a semi-annual basis.]
A Fund may compare the performance of its shares to the performance of
other mutual funds with similar investment objectives and to other relevant
indices or to rankings prepared by independent services or other financial or
industry publications that monitor the performance of mutual funds, including,
for example, Lipper Analytical Services, Inc., the Lehman Brothers
Government/Corporate Bond Index, a recognized unmanaged index of government and
corporate bonds, the Standard & Poor's 500 Index, an unmanaged index of a group
of common stocks, the Consumer Price Index, or the Dow Jones Industrial Average,
an unmanaged index of common stocks of 30 industrial companies listed on the New
York Stock Exchange. Performance data as reported in national financial
publications such as Morningstar, Inc., Money Magazine, Forbes, Barron's, The
Wall Street Journal and The New York Times, or in publications of a local or
regional nature, may also be used in comparing the performance of a class of
shares in a Fund.
Performance will fluctuate and any quotation of performance should not
be considered as representative of future performance of a class of shares in a
Fund. Shareholders should remember that performance is generally a function of
the kind and quality of the instruments held in a fund, portfolio maturity,
operating expenses, and market conditions. Any fees charged by institutions
directly to their customers' accounts in connection with investments in a Fund
will not be included in calculations of yield and performance.
<PAGE>
THE MUNDER FRAMLINGTON FUNDS TRUST
STATEMENT OF ADDITIONAL INFORMATION
The Munder Framlington Funds Trust (the "Trust") is an open-end
management investment company. Currently, the Trust offers three investment
portfolios, Munder Framlington International Growth Fund, Munder Framlington
Emerging Markets Fund, and Munder Framlington Healthcare Fund (each a "Fund",
collectively, the "Funds"). The Funds' investment advisor is Munder Capital
Management (the "Advisor"). Framlington Overseas Investment Management Limited
(the "Sub-Advisor") serves as sub-advisor to the Funds.
This Statement of Additional Information is intended to supplement the
information provided to investors in the Funds' Prospectuses dated October __,
1996 and has been filed with the Securities and Exchange Commission ("SEC") as
part of the Trust's Registration Statement. This Statement of Additional
Information is not a prospectus, and should be read only in conjunction with the
Funds' Prospectuses dated October __, 1996. The contents of this Statement of
Additional Information are incorporated by reference in the Prospectuses in
their entirety. A copy of the Prospectus may be obtained through Funds
Distributor, Inc. (the "Distributor"), or by calling (800) 438-5789. This
Statement of Additional Information is dated ______ __, 1996.
Shares of the Funds are not deposits or obligations of, or guaranteed
or endorsed by any bank, and are not insured or guaranteed by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
Investment in the Funds involves investment risks, including the possible loss
of principal.
TABLE OF CONTENTS
Page
General................................................................. __
Fund Investments........................................................ __
Investment Limitations.................................................. __
Trustees and Officers................................................... __
Investment Advisory, Sub-Advisory
and Other Service Arrangements..................................... __
Portfolio Transactions.................................................. __
Purchase and Redemption Information..................................... __
Net Asset Value......................................................... __
Performance Information................................................. __
Taxes................................................................... __
Additional Information Concerning Shares................................ __
Miscellaneous........................................................... __
Registration Statement.................................................. __
Appendix................................................................ __
<PAGE>
No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional Information or in
the Prospectuses in connection with the offering made by the Prospectuses and,
if given or made, such information or representations must not be relied upon as
having been authorized by the Funds or the Distributor. The Prospectuses do not
constitute an offering by the Funds or by the Distributor in any jurisdiction in
which such offering may not lawfully be made.
GENERAL
The Trust was organized under the laws of the Commonwealth of
Massachusetts on October __, 1996 and has registered under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Trust's principal office
is located at 480 Pierce Street, Birmingham, Michigan 48009 and its telephone
number is (800) 438-5789.
As stated in the Prospectuses, the investment advisor of the Funds is
Munder Capital Management (the "Advisor"). The principal partners of the Advisor
are Old MCM, Inc., Munder Group LLC, Woodbridge Capital Management, Inc.
("Woodbridge") and WAM Holdings, Inc. ("WAM"). Mr. Lee P. Munder, the Advisor's
Chief Executive Officer, indirectly owns or controls a majority of the
partnership interests of the Advisor. Capitalized terms used herein and not
otherwise defined have the same meanings as are given to them in the Prospectus.
The sub-advisor is Framlington Overseas Investment Management Limited
(the "Sub-Advisor"). The Sub-Advisor is a subsidiary of Framlington Group plc, a
public limited company incorporated in England and Wales which, through its
subsidiaries, provides a wide range of investment services. Framlington Group
plc is a wholly owned subsidiary of Framlington Holdings Limited which is, in
turn, owned 49% by the Advisor and 51% by Credit Commercial de France S.A., a
French banking corporation listed on the Societe des Bourses Francaises.
FUND INVESTMENTS
The following supplements the information contained in the Prospectuses
concerning the investment objective and policies of the Funds. Each Fund's
investment objective is a non-fundamental policy and may be changed without the
authorization of the holders of a majority of the Fund's outstanding shares.
There can be no assurance that any of the Funds will achieve its investment
objective.
Borrowing. Each Fund is authorized to borrow money in amounts up to 5%
of the value of its total assets at the time of such borrowings for temporary
purposes, and is authorized to borrow money in excess of the 5% limit as
permitted by the Investment Company Act of 1940, as amended (the "1940 Act") to
meet redemption requests. This borrowing may be unsecured. The 1940 Act requires
each Fund to maintain continuous asset coverage of 300% of the amount borrowed.
If the 300% asset coverage should decline as a result of market fluctuations or
other reasons, a Fund may be required to sell some of its portfolio holdings
within three days to reduce the debt and restore the 300% asset coverage, even
though it may be disadvantageous from an investment standpoint to sell
securities at that time. Borrowing may exaggerate the effect on net asset value
of any increase or decrease in the market value of securities purchased with
borrowed funds. Money borrowed will be subject to interest costs which may or
may not be recovered by an appreciation of the securities purchased. The Funds
may also be required to maintain a minimum average balance in connection with
such borrowing or to pay a commitment or other fees to maintain a line of
credit; either of these requirements would increase the cost of borrowing over
the stated interest rate. The Funds may, in connection with permissible
borrowings, transfer as collateral, securities owned by the Funds.
Foreign Securities. The Funds may invest in securities of foreign
issuers. Investments in foreign securities may be in the form of American
Depositary Receipts ("ADRs") listed on a domestic securities exchange or
included in the NASDAQ National Market System, or foreign securities listed
directly on a domestic securities exchange or included in the NASDAQ National
Market System. ADRs are receipts typically issued by a United States bank or
trust company evidencing ownership of the underlying foreign securities. Certain
such institutions issuing ADRs may not be sponsored by the issuer. A
non-sponsored depositary may not provide the same shareholder information that a
sponsored depositary is required to provide under its contractual arrangements
with the issuer.
Income and gains on such securities may be subject to foreign
withholding taxes. Investors should consider carefully the substantial risks
involved in securities of companies and governments of foreign nations, which
are in addition to the usual risks inherent in domestic investments.
There may be less publicly available information about foreign
companies comparable to the reports and ratings published about companies in the
United States. Foreign companies are not generally subject to uniform
accounting, auditing and financial reporting standards, and auditing practices
and requirements may not be comparable to those applicable to United States
companies. Foreign markets have substantially less volume than the New York
Stock Exchange and securities of some foreign companies are less liquid and more
volatile than securities of comparable United States companies. Commission rates
in foreign countries, which are generally fixed rather than subject to
negotiation as in the United States, are likely to be higher. In many foreign
countries there is less government supervision and regulation of stock
exchanges, brokers, and listed companies than in the United States.
Investments in companies domiciled in developing countries may be
subject to potentially higher risks than investments in developed countries.
These risks include (i) less social, political and economic stability; (ii) the
small current size of the markets for such securities and the currently low or
nonexistent volume of trading, which result in a lack of liquidity and in
greater price volatility; (iii) certain national policies which may restrict the
Fund's investment opportunities, including restrictions on investment in issuers
or industries deemed sensitive to national interest; (iv) foreign taxation; (v)
the absence of developed legal structures governing private or foreign
investment or allowing for judicial redress for injury to private property; (vi)
the absence, until recently in certain Eastern European countries, of a capital
market structure or market-oriented economy; and (vii) the possibility that
recent favorable economic developments in Eastern Europe may be slowed or
reversed by unanticipated political or social events in such countries.
Investments in Eastern European countries may involve risks of
nationalization, expropriation and confiscatory taxation. The Communist
governments of a number of East European countries expropriated large amounts of
private property in the past, in many cases without adequate compensation, and
there can be no assurance that such expropriation will not occur in the future.
In the event of such expropriation, the Fund could lose a substantial portion of
any investments it has made in the affected countries. Further, no accounting
standards exist in Eastern European countries. Finally, even though certain
Eastern European currencies may be convertible into United States dollars, the
conversion rates may be artificial to the actual market values and may be
adverse to Fund shareholders.
The Sub-Advisor endeavors to buy and sell foreign currencies on as
favorable a basis as practicable. Some price spread on currency exchange (to
cover service charges) may be incurred, particularly when a Fund changes
investments from one country to another or when proceeds of the sale of Fund
shares in U.S. dollars are used for the purchase of securities in foreign
countries. Also, some countries may adopt policies which would prevent a Fund
from transferring cash out of the country or withhold portions of interest and
dividends at the source. There is the possibility of expropriation,
nationalization or confiscatory taxation, withholding and other foreign taxes on
income or other amounts, foreign exchange controls (which may include suspension
of the ability to transfer currency from a given country), default in foreign
government securities, political or social instability or diplomatic
developments that could affect investments in securities of issuers in foreign
nations.
A Fund may be affected either unfavorably or favorably by fluctuations
in the relative rates of exchange between the currencies of different nations,
by exchange control regulations and by indigenous economic and political
developments. Changes in foreign currency exchange rates will influence values
within a Fund from the perspective of U.S. investors, and may also affect the
value of dividends and interest earned, gains and losses realized on the sale of
securities, and net investment income and gains, if any, to be distributed to
shareholders by a Fund. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors. The Sub-Advisor will attempt to avoid unfavorable
consequences and to take advantage of favorable developments in particular
nations where, from time to time, it places a Fund's investments.
The exercise of this flexible policy may include decisions to purchase
securities with substantial risk characteristics and other decisions such as
changing the emphasis on investments from one nation to another and from one
type of security to another. Some of these decisions may later prove profitable
and others may not. No assurance can be given that profits, if any, will exceed
losses.
Forward Foreign Currency Transactions. In order to protect against a
possible loss on investments resulting from a decline or appreciation in the
value of a particular foreign currency against the U.S. dollar or another
foreign currency, the Funds are authorized to enter into forward foreign
currency exchange contracts. These contracts involve an obligation to purchase
or sell a specified currency at a future date at a price set at the time of the
contract. Forward currency contracts do not eliminate fluctuations in the values
of portfolio securities but rather allow the Funds to establish a rate of
exchange for a future point in time.
When entering into a contract for the purchase or sale of a security,
the Funds may enter into a forward foreign currency exchange contract for the
amount of the purchase or sale price to protect against variations, between the
date the security is purchased or sold and the date on which payment is made or
received, in the value of the foreign currency relative to the U.S. dollar or
other foreign currency.
When the Sub-Advisor anticipates that a particular foreign currency may
decline substantially relative to the U.S. dollar or other leading currencies,
in order to reduce risk, the Funds may enter into a forward contract to sell,
for a fixed amount, the amount of foreign currency approximating the value of
some or all of the Funds' securities denominated in such foreign currency.
Similarly, when the obligations held by the Funds create a short position in a
foreign currency, the Funds may enter into a forward contract to buy, for a
fixed amount, an amount of foreign currency approximating the short position.
With respect to any forward foreign currency contract, it will not generally be
possible to match precisely the amount covered by that contract and the value of
the securities involved due to the changes in the values of such securities
resulting from market movements between the date the forward contract is entered
into and the date it matures. In addition, while forward contracts may offer
protection from losses resulting from declines or appreciation in the value of a
particular foreign currency, they also limit potential gains which might result
from changes in the value of such currency. The Funds will also incur costs in
connection with forward foreign currency exchange contracts and conversions of
foreign currencies and U.S. dollars.
A separate account consisting of cash or liquid securities equal to the
amount of the Funds' assets that could be required to consummate forward
contracts will be established with the Trust's Custodian except to the extent
the contracts are otherwise "covered." For the purpose of determining the
adequacy of the securities in the account, the deposited securities will be
valued at market or fair value. If the market or fair value of such securities
declines, additional cash or securities will be placed in the account daily so
that the value of the account will equal the amount of such commitments by the
Funds. A forward contract to sell a foreign currency is "covered" if a Fund owns
the currency (or securities denominated in the currency) underlying the
contract, or holds a forward contract (or call option) permitting the Fund to
buy the same currency at a price no higher than the Funds' price to sell the
currency. A forward contract to buy a foreign currency is "covered" if the Fund
holds a forward contract (or put option) permitting the Fund to sell the same
currency at a price as high as or higher than the Fund's price to buy the
currency.
Futures Contracts and Related Options. The Funds currently expect that
they may purchase and sell futures contracts on securities or securities
indices, and may purchase and sell call and put options on futures contracts.
For a detailed description of futures contracts and related options, see the
Appendix to this Statement of Additional Information.
Investment Company Securities. The Funds may invest in securities
issued by other investment companies. As a shareholder of another investment
company, a Fund would bear its pro rata portion of the other investment
company's expenses, including advisory fees. These expenses would be in addition
to the expenses the Fund bears directly in connection with its own operations.
The Funds currently intend to limit their investments in securities issued by
other investment companies so that, as determined immediately after a purchase
of such securities is made: (i) not more than 5% of the value of each Fund's
total assets will be invested in the securities of any one investment company;
(ii) not more than 10% of the value of its total assets will be invested in the
aggregate in securities of investment companies as a group; and (iii) not more
than 3% of the outstanding voting stock of any one investment company will be
owned by a Fund. It is each Fund's policy not to invest in securities issued by
other investment companies which pay asset-based fees to the Advisor, the
Sub-Advisor the Administrator, the Custodian, the Distributor or their
affiliates.
Lending of Portfolio Securities. To enhance the return on its
portfolio, each Fund may lend securities in its portfolio (subject to a limit of
25% of the Fund's total assets) to securities firms and financial institutions,
provided that each loan is secured continuously by collateral in the form of
cash, high quality money market instruments or short-term U.S. Government
securities adjusted daily to have a market value at least equal to the current
market value of the securities loaned. These loans are terminable at any time,
and the Fund will receive any interest or dividends paid on the loaned
securities. In addition, it is anticipated that each Fund may share with the
borrower some of the income received on the collateral for the loan or the Fund
will be paid a premium for the loan. The risk in lending portfolio securities,
as with other extensions of credit, consists of possible delay in recovery of
the securities or possible loss of rights in the collateral should the borrower
fail financially. In determining whether a Fund will lend securities, the
Sub-Advisor will consider all relevant facts and circumstances. A Fund will only
enter into loan arrangements with broker-dealers, banks or other institutions
which the Sub-Advisor has determined are creditworthy under guidelines
established by the Board of Trustees.
Options. Each Fund may write covered call options, buy put options, buy
call options and write secured put options in an amount not exceeding 5% of its
net assets. Such options may relate to particular securities and may or may not
be listed on a national securities exchange and issued by the Options Clearing
Corporation. Options trading is a highly specialized activity which entails
greater than ordinary investment risk. Options on particular securities may be
more volatile than the underlying securities, and therefore, on a percentage
basis, an investment in options may be subject to greater fluctuation than an
investment in the underlying securities themselves.
A call option for a particular security gives the purchaser of the
option the right to buy, and a writer the obligation to sell, the underlying
security at the stated exercise price at any time prior to the expiration of the
option, regardless of the market price of the security. The premium paid to the
writer is in consideration for undertaking the obligations under the option
contract. A put option for a particular security gives the purchaser the right
to sell the underlying security at the stated exercise price at any time prior
to the expiration date of the option, regardless of the market price of the
security.
The writer of an option that wished to terminate its obligation may
effect a "closing purchase transaction." This is accomplished by buying an
option of the same series as the option previously written. The effect of the
purchase is that the writer's position will be canceled by the clearing
corporation. However, a writer may not effect a closing purchase transaction
after being notified of the exercise of an option. Likewise, an investor who is
the holder of an option may liquidate its position by effecting a "closing sale
transaction." The cost of such a closing purchase plus transaction costs may be
greater than the premium received upon the original option, in which event the
Fund will have incurred a loss in writing the option contract. There is no
guarantee that either a closing purchase or a closing sale transaction can be
effected.
Effecting a closing transaction in the case of a written call option
will permit the Fund to write another call option on the underlying security
with either a different exercise price or expiration date or both, or in the
case of a written put option, will permit the Fund to write another put option
to the extent that the exercise price thereof is secured by deposited cash or
short-term securities. Also, effecting a closing transaction will permit the
cash or proceeds from the concurrent sale of any securities subject to the
option to be used for other Fund investments. If the Fund desires to sell a
particular security from its portfolio on which it has written a call option, it
will effect a closing transaction prior to or concurrent with the sale of the
security.
Each Fund may write options in connection with buy-and-write
transactions; that is, the Fund may purchase a security and then write a call
option against that security. The exercise price of the call the Fund determines
to write will depend upon the expected price movement of the underlying
security. The exercise price of a call option may be below ("in-the-money"),
equal to ("at-the-money") or above ("out-of-the-money") the current value of the
underlying security at the time the option is written. Buy-and-write
transactions using in-the-money call options may be used when it is expected
that the price of the underlying security will remain flat or decline moderately
during the option period. Buy-and-write transactions using out-of-the-money call
options may be used when it is expected that the premiums received from writing
the call option plus the appreciation in the market price of the underlying
security up to the exercise price will be greater than the appreciation in the
price of the underlying security alone. If the call options are exercised in
such transactions, the Fund's maximum gain will be the premium received by it
for writing the option, adjusted upwards or downwards by the difference between
the Fund's purchase price of the security and the exercise price. If the options
are not exercised and the price of the underlying security declines, the amount
of such decline will be offset in part, or entirely, by the premium received.
Each Fund will write call options only if they are "covered." In the
case of a call option on a security, the option is "covered" if the portfolio
owns the security underlying the call or has an absolute and immediate right to
acquire that security without additional cash consideration (or, if additional
cash consideration is required, cash or cash equivalents in such amount as are
held in a segregated account by its custodian) upon conversion or exchange of
other securities held by it. For a call option on an index, the option is
covered if the portfolio maintains with its Custodian cash or cash equivalents
equal to the contract value. A call option is also covered if the Fund holds a
call on the same security or index as the call written where the exercise price
of the call held is (i) equal to or less than the exercise price of the call
written, or (ii) greater than the exercise price of the call written provided
the difference is maintained by the portfolio in cash or cash equivalents in a
segregated account with its custodian. Each Fund may also write call options
that are not covered for cross-hedging purposes. Each Fund will limit its
investment in uncovered put and call options purchased or written by the Fund to
5% of the Fund's total assets. Each Fund will write put options only if they are
"secured" by cash or cash equivalents maintained in a segregated account by the
Fund's custodian in an amount not less than the exercise price of the option at
all times during the option period.
The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, the Fund may elect to close the position or take
delivery of the security at the exercise price and the Fund's return will be the
premium received from the put option minus the amount by which the market price
of the security is below the exercise price.
Each Fund may purchase put options to hedge against a decline in the
value of its portfolio. By using put options in this way, the Fund will reduce
any profit it might otherwise have realized in the underlying security by the
amount of the premium paid for the put option and by transaction costs. Each
Fund may purchase call options to hedge against an increase in the price of
securities that it anticipates purchasing in the future. The premium paid for
the call option plus any transaction costs will reduce the benefit, if any,
realized by the Fund upon exercise of the option, and, unless the price of the
underlying security rises sufficiently, the option may expire worthless to the
Fund.
When a Fund purchases an option, the premium paid by it is recorded as
an asset of the Fund. When a Fund writes an option, an amount equal to the net
premium (the premium less the commission) received by the Fund is included in
the liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of this asset or deferred credit will be
subsequently marked-to-market to reflect the current value of the option
purchased or written. The current value of the traded option is the last sale
price or, in the absence of a sale, the average of the closing bid and asked
prices. If an option purchased by a Fund expires unexercised the Fund realizes a
loss equal to the premium paid. If a Fund enters into a closing sale transaction
on an option purchased by it, the Fund will realize a gain if the premium
received by the Fund on the closing transaction is more than the premium paid to
purchase the option, or a loss if it is less. If an option written by a Fund
expires on the stipulated expiration date or if a Fund enters into a closing
purchase transaction, it will realize a gain (or loss if the cost of a closing
purchase transaction exceeds the net premium received when the option is sold)
and the deferred credit related to such option will be eliminated. If an option
written by a Fund is exercised, the proceeds of the sale will be increased by
the net premium originally received and the Fund will realize a gain or loss.
There are several risks associated with transactions in options on
securities and indices. For example, there are significant differences between
the securities and options markets that could result in an imperfect correlation
between these markets, causing a given transaction not to achieve its
objectives. An option writer, unable to effect a closing purchase transaction,
will not be able to sell the underlying security (in the case of a covered call
option) or liquidate the segregated account (in the case of a secured put
option) until the option expires or the optioned security is delivered upon
exercise with the result that the writer in such circumstances will be subject
to the risk of market decline or appreciation in the security during such
period.
There is no assurance that a Fund will be able to close an unlisted
option position. Furthermore, unlisted options are not subject to the
protections afforded purchasers of listed options by the Options Clearing
Corporation, which performs the obligations of its members who fail to do so in
connection with the purchase or sale of options.
In addition, a liquid secondary market for particular options, whether
traded over-the-counter or on a national securities exchange ("Exchange") may be
absent for reasons which include the following: there may be insufficient
trading interest in certain options; restrictions may be imposed by an Exchange
on opening transactions or closing transactions or both; trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options or underlying securities; unusual or unforeseen
circumstances may interrupt normal operations on an Exchange; the facilities of
an Exchange or the Options Clearing Corporation may not at all times be adequate
to handle current trading value; or one or more Exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that Exchange (or in that class or series of options)
would cease to exist, although outstanding options that had been issued by the
Options Clearing Corporation as a result of trades on that Exchange would
continue to be exercisable in accordance with their terms.
Currency transactions, including options on currencies and currency
futures, are subject to risks different from those of other portfolio
transactions. Because currency control is of great importance to the issuing
governments and influences economic planning and policy, purchases and sales of
currency and related instruments can be negatively affected by government
exchange controls, blockages, and manipulations or exchange restrictions imposed
by governments. These can result in losses to a Fund if it is unable to deliver
or receive currency or funds in settlement of obligations and could also cause
hedges it has entered into to be rendered useless, resulting in full currency
exposure as well as the incurring of transaction costs. Buyers and sellers of
currency futures are subject to the same risks that apply to the use of futures
generally. Further, settlement of a currency futures contract for the purchase
of most currencies must occur at a bank based in the issuing nation. Trading
options on currency futures is relatively new, and the ability to establish and
close out positions on such options is subject to the maintenance of a liquid
market which may not always be available. Currency exchange rates may fluctuate
based on factors extrinsic to that country's economy.
A Fund will not write covered call options against more than 30% of the
value of the equity securities held in its portfolio.
Repurchase Agreements. Each Fund may agree to purchase securities from
financial institutions such as member banks of the Federal Reserve System, any
foreign bank or any domestic or foreign broker/dealer that is recognized as a
reporting government securities dealer, subject to the seller's agreement to
repurchase them at an agreed-upon time and price ("repurchase agreements"). The
Sub-Advisor will review and continuously monitor the creditworthiness of the
seller under a repurchase agreement, and will require the seller to maintain
liquid assets in a segregated account in an amount that is greater than the
repurchase price. Default by, or bankruptcy of, the seller would, however,
expose a Fund to possible loss because of adverse market action or delays in
connection with the disposition of underlying obligations except with respect to
repurchase agreements secured by U.S. Government securities.
The repurchase price under the repurchase agreements described in the
Prospectus generally equals the price paid by a Fund plus interest negotiated on
the basis of current short-term rates (which may be more or less than the rate
on the securities underlying the repurchase agreement).
Securities subject to repurchase agreements will be held by the Trust's
Custodian (or sub-custodian) in the Federal Reserve/Treasury book-entry system
or by another authorized securities depositary. Repurchase agreements are
considered to be loans by a Fund under the 1940 Act.
Reverse Repurchase Agreements. Each Fund may borrow funds for temporary
or emergency purposes by selling portfolio securities to financial institutions
such as banks and broker/dealers and agreeing to repurchase them at a mutually
specified date and price ("reverse repurchase agreements"). Reverse repurchase
agreements involve the risk that the market value of the securities sold by a
Fund may decline below the repurchase price. A Fund will pay interest on amounts
obtained pursuant to a reverse repurchase agreement. While reverse repurchase
agreements are outstanding, the Fund will maintain in a segregated account cash,
U.S. Government securities or other liquid high-grade debt securities of an
amount at least equal to the market value of the securities, plus accrued
interest, subject to the agreement.
Rights and Warrants. Each Fund may purchase warrants, which are
privileges issued by corporations enabling the owners to subscribe to and
purchase a specified number of shares of the corporation at a specified price
during a specified period of time. Subscription rights normally have a short
life span to expiration. The purchase of warrants involves the risk that a Fund
could lose the purchase value of a warrant if the right to subscribe to
additional shares is not exercised prior to the warrant's expiration. Also, the
purchase of warrants involves the risk that the effective price paid for the
warrant added to the subscription price of the related security may exceed the
value of the subscribed security's market price such as when there is no
movement in the level of the underlying security. Each Fund will not invest more
than 5% of its total assets, taken at market value, in warrants, or more than 2%
of its total assets, taken at market value, in warrants not listed on the New
York or American Stock Exchanges. Warrants acquired by a Fund in units or
attached to other securities are not subject to this restriction.
Stock Index Futures, Options on Stock and Bond Indices and Options on
Stock and Bond Index Futures Contracts. Each Fund may purchase and sell stock
index futures, options on stock and bond indices and options on stock and bond
index futures contracts as a hedge against movements in the equity and bond
markets.
A stock index futures contract is an agreement in which one party
agrees to deliver to the other an amount of cash equal to a specific dollar
amount times the difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at which the
agreement is made. No physical delivery of securities is made.
Options on stock and bond indices are similar to options on specific
securities, described above, except that, rather than the right to take or make
delivery of the specific security at a specific price, an option on a stock or
bond index gives the holder the right to receive, upon exercise of the option,
an amount of cash if the closing level of that stock or bond index is greater
than, in the case of a call option, or less than, in the case of a put option,
the exercise price of the option. This amount of cash is equal to such
difference between the closing price of the index and the exercise price of the
option expressed in dollars times a specified multiple. The writer of the option
is obligated, in return for the premium received, to make delivery of this
amount. Unlike options on specific securities, all settlements of options on
stock or bond indices are in cash, and gain or loss depends on general movements
in the stocks included in the index rather than price movements in particular
stocks.
If the Sub-Advisor expects general stock or bond market prices to rise,
it might purchase a stock index futures contract, or a call option on that
index, as a hedge against an increase in prices of particular securities it
ultimately wants to buy. If in fact the index does rise, the price of the
particular securities intended to be purchased may also increase, but that
increase would be offset in part by the increase in the value of a Fund's
futures contract or index option resulting from the increase in the index. If,
on the other hand, the Sub-Advisor expects general stock or bond market prices
to decline, it might sell a futures contract, or purchase a put option, on the
index. If that index does in fact decline, the value of some or all of the
securities in the Fund's portfolio may also be expected to decline, but that
decrease would be offset in part by the increase in the value of the Fund's
position in such futures contract or put option.
Each Fund may purchase and write call and put options on stock or bond
index futures contracts. A Fund may use such options on futures contracts in
connection with its hedging strategies in lieu of purchasing and selling the
underlying futures or purchasing and writing options directly on the underlying
securities or indices. For example, a Fund may purchase put options or write
call options on stock and bond index futures, rather than selling futures
contracts, in anticipation of a decline in general stock or bond market prices
or purchase call options or write put options on stock or bond index futures,
rather than purchasing such futures, to hedge against possible increases in the
price of securities which the Fund intends to purchase.
In connection with transactions in stock or bond index futures, stock
or bond index options and options on stock index or bond futures, a Fund will be
required to deposit as "initial margin" an amount of cash and short-term U.S.
Government securities equal to from 5% to 8% of the contract amount. Thereafter,
subsequent payments (referred to as "variation margin") are made to and from the
broker to reflect changes in the value of the option or futures contract. Each
Fund may not at any time commit more than 5% of its total assets to initial
margin deposits on futures contracts, index options and options on futures
contracts.]
U.S. Government Obligations. Each Fund may purchase obligations issued
or guaranteed by the U.S. Government and U.S. Government agencies and
instrumentalities. Obligations of certain agencies and instrumentalities of the
U.S. Government, such as those of the GNMA, are supported by the full faith and
credit of the U.S. Treasury. Others, such as those of the Export-Import Bank of
the United States, are supported by the right of the issuer to borrow from the
U.S. Treasury; and still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the agency or instrumentality
issuing the obligation. No assurance can be given that the U.S. Government would
provide financial support to U.S. government-sponsored instrumentalities if it
is not obligated to do so by law. Examples of the types of U.S. Government
obligations that may be acquired by a Fund includes U.S. Treasury Bills,
Treasury Notes and Treasury Bonds and the obligations of Federal Home Loan
Banks, Federal Farm Credit Banks, Federal Land Banks, the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, FNMA, Government National Mortgage
Association, General Services Administration, Student Loan Marketing
Association, Central Bank for Cooperatives, FHLMC, Federal Intermediate Credit
Banks and Maritime Administration.
<PAGE>
INVESTMENT LIMITATIONS
Each Fund is subject to the investment limitations enumerated in this
section which may be changed with respect to a particular Fund only by a vote of
the holders of a majority of the Fund's outstanding shares (as defined under
"Miscellaneous - Shareholder Approvals").
Each Fund may not:
1. Purchase securities (except U.S. Government securities) if
more than 5% of its total assets will be invested in the
securities of any one issuer, except that up to 25% of the
assets of the Fund may be invested without regard to this 5%
limitation;
2. invest 25% or more of its total assets in securities issued by
one or more issuers conducting their principal business
activities in the same industry (except that the Healthcare
Fund will invest more than 25% of its total assets in
securities of issuers conducting their principal business
activities in the healthcare industry);
3. borrow money except for temporary purposes in amounts up to
one-third the value of its total assets at the time of such
borrowing. Whenever borrowings exceed 5% of a Fund's total
assets, the Fund will not make any additional investments;
4. Pledge, mortgage or hypothecate its assets other than to
secure borrowings permitted by restriction 3 above (collateral
arrangements with respect to margin requirements for options
and futures transactions are not deemed to be pledges or
hypothecations for this purpose);
5. Make loans of securities to other persons in excess of 25% of
the Fund's total assets; provided the Fund may invest without
limitation in short-term debt obligations (including
repurchase agreements) and publicly distributed debt
obligations;
6. Underwrite securities of other issuers, except insofar as the
Fund may be deemed an underwriter under the Securities Act of
1933, as amended, in selling portfolio securities;
7. Purchase or sell real estate or any interest therein,
including interests in real estate limited partnerships,
except securities issued by companies (including real estate
investment trusts) that invest in real estate or interests
therein.
8. Purchase securities on margin, or make short sales of
securities, except for the use of short-term credit necessary
for the clearance of purchases and sales of portfolio
securities, but the Fund may make margin deposits in
connection with transactions in options, futures and options
on futures;
9. Make investments for the purpose of exercising control or
management; or
10. Invest in commodities or commodity futures contracts, provided
that this limitation shall not prohibit the purchase or sale
by the Fund of forward foreign currency exchange contracts,
financial futures contracts and options on financial futures
contracts, foreign currency futures contracts, and options on
securities, foreign currencies and securities indices, as
permitted by the Fund's Prospectus.
Additional investment restrictions adopted by each Fund, which may be
changed by the Board of Trustees, provide that each Fund may not:
1. Invest more than 15% of its net assets in illiquid securities;
2. Own more than 10% (taken at market value at the time of
purchase) of the outstanding voting securities of any single
issuer;
3. Invest in other investment companies except as permitted under
the 1940 Act.
If a percentage limitation is satisfied at the time of investment, a
later increase or decrease in such percentage resulting from a change in the
value of the Fund's investments will not constitute a violation of such
limitation, except that any borrowing by the Fund that exceeds the fundamental
investment limitations stated above must be reduced to meet such limitations
within the period required by the 1940 Act (currently three days). Otherwise,
the Fund may continue to hold a security even though it causes the Fund to
exceed a percentage limitation because of fluctuation in the value of the Fund's
assets.
TRUSTEES AND OFFICERS
The trustees and executive officers of the Trust, and their business
addresses and principal occupations during the past five years, are:
<TABLE>
<S> <C> <C>
Principal Occupation
Name, Address and Age Positions with Trust During Past Five Years
Charles W. Elliott 1/ Chairman of the Board of Trustees Senior Advisor to the President -
3338 Bronson Boulevard Western Michigan University since
Kalamazoo, MI 490008 July 1995; prior to that Executive
Age: 62 Vice President - Administration &
Chief Financial Officer, Kellogg
Company from January 1987 through
June 1995; before that Price
Waterhouse. Board of Directors,
Steelcase Financial Corporation.
John Rakolta, Jr. Trustee and Vice Chairman of the Chairman, Walbridge Aldinger Company
1876 Rathmor Board of Trustees
Bloomfield Hills, MI 48304
Age: 47
Thomas B. Bender Trustee Investment Advisor, Financial &
7 Wood Ridge Road Investment Management Group (since
Glen Arbor, MI 49636 April, 1991); Vice President
Age: 61 Institutional Sales, Kidder,
Peabody & Co. (Retired April, 1991).
David J. Brophy Trustee Professor, University of Michigan;
1025 Martin Place Director, River Place Financial
Ann Arbor, MI 48104 Corp.; Trustee, Renaissance Assets
Age: 58 Trust.
Dr. Joseph E. Champagne Trustee Corporate and Executive Consultant
319 Snell Road since September 1995; prior to that
Rochester, MI 48306 Chancellor, Lamar University from
Age: 56 September 1994 until September
1995; before that Consultant to
Management, Lamar University; President
and Chief Executive Officer,
Crittenton Corporation, Crittenton
Development Corporation until August
1993; before that President,
Oakland University of Rochester,
MI, until August 1991; Member,
Board of Directors, Ross Operating
Valve of Troy, MI
Thomas D. Eckert Trustee President and COO, Mid-Atlantic
10726 Falls Pointe Drive Group of Pulte Home Corporation
Great Falls, VA 22066
Age: 47
Jack L. Otto Trustee Retired; Director of Standard
6532 W. Beech Tree Road Federal Bank; Executive Director,
Glen Arbor, MI 49636 McGregor Fund (a private
Age: 69 philanthropic foundation) 1981-1985;
Managing Partner, Detroit officer
of Ernst & Young, until 1981.
Arthur DeRoy Rodecker Trustee President, Rodecker & Company,
4000 Town Center Investment Brokers, Inc. since
Suite 101 November 1976; President, RAC
Southfield, MI 48075 Advisors, Inc., Registered
Age: 68 Investment Advisor since February
1979; President and Trustee,
Helen L. DeRoy Foundation, a
charitable foundation; Vice
President and Trustee, DeRoy
Testamentary Foundation, a
charitable foundation; Trustee,
Providence Hospital Foundation.
Lee P. Munder President President and CEO of the Advisor;
480 Pierce Street Chief Executive Officer and
Suite 300 President of Old MCM, Inc.;
Birmingham, MI 48009 Director, LPM Investment Services,
Age: 50 Inc. ("LPM").
Terry H. Gardner Vice President, Chief Financial Vice President and Chief Financial
480 Pierce Street Officer and Treasurer Officer of the Advisor and World
Suite 300 Asset Management; Vice President
Birmingham, MI 48009 and Chief Financial Officer of Old
Age: 35 MCM, Inc. (February 1993 to
present); Audit Manager of Arthur
Andersen & Co. (1991 to February
1993); Secretary of LPM
Paul Tobias Vice President Executive Vice President and Chief
480 Pierce Street Operating Officer of the Advisor
Suite 300 (since April 1995) and Executive
Birmingham, MI 48009 Vice President of Comerica, Inc.
Age: 43
Gerald Seizert Vice President Executive Vice President and Chief
480 Pierce Street Investment Officer/Equities of the
Suite 300 Advisor (since April 1995);
Birmingham, MI 48009 Managing Director (1991-1995),
Age: 44 Director (1992-1995) and Vice
President (1984-1991) of Loomis,
Sayles and Company, L.P.
Elyse G. Essick Vice President Vice President and Director of
480 Pierce Street Marketing for the Advisor; Vice
Suite 300 President and Director of Client
Birmingham, MI 48009 Services of Old MCM, Inc. (August
Age: 37 1988 to December 1994).
James C. Robinson Vice President Vice President and Chief Investment
480 Pierce Street Officer/Fixed Income for the
Suite 300 Advisor; Vice President and
Birmingham, MI 48009 Director of Fixed Income of Old
Age: 34 MCM, Inc. (1987-1994).
Leonard J. Barr, II Vice President Vice President and Director of Core
480 Pierce Street Equity Research of the Advisor;
Suite 300 Director and Senior Vice President
Birmingham, MI 48009 of Old MCM, Inc. (since 1988);
Age: 51 Director of LPM.
Ann F. Putallaz Vice President Vice President and Director of
480 Pierce Street Fiduciary Services (since January
Suite 300 1995); Director of Client and
Birmingham, MI 48009 Marketing Services of Woodbridge
Age: 50 Capital Management, Inc.
Richard H. Rose Assistant Treasurer Senior Vice President, First Data
First Data Investor Services Investor Services Group, Inc.
Group, Inc. (since May 6, 1994). Formerly,
One Exchange Place Senior Vice President, The Boston
6th Floor Company Advisors, Inc. since
Boston, MA 02109 November 1989.
Age: 41
Lisa A. Rosen Secretary General Counsel of the Advisor
480 Pierce Street since May, 1996; Formerly Counsel,
Suite 300 First Data Investor Services Group,
Birmingham, MI 48009 Inc.; Assistant Vice President and
Age: 28 Counsel with The Boston Company
Advisors, Inc.; Associate with
Hutchins, Wheller & Dittmar.
Teresa M.R. Hamlin Assistant Secretary Counsel, First Data Investor
First Data Investor Services Services Group, Inc.; Formerly
Group, Inc. Paralegal Manager, The boston
One Exchange Place Company Advisors, Inc.
Boston, MA 02109
Age: 32
1/ Trustee is an "interested person" of the Trust as defined in the 1940 Act.
</TABLE>
Trustees of the Trust receive an aggregate fee from the Trust, the Munder
Funds Trust, The Munder Funds, Inc. and St. Clair Funds, Inc. comprised of an
annual retainer fee, and a fee for each Board meeting attended; and are
reimbursed for all out-of-pocket expenses relating to attendance at meetings.
The following table summarizes the compensation paid by the Trust to
the Trustees of the Trust for the period year ended June 30, 1996.
<TABLE>
<S> <C> <C> <C>
Pension
Aggregate Retirement Estimated
Compensation Benefits Accrued Annual Total
from the as Part of Benefits from the
Name of Person Position Trust Fund Expenses upon Retirement Fund Complex
Charles W. Elliott None None None $14,000
Chairman
John Rakolta, Jr. None None None $14,000
Vice Chairman
Thomas B. Bender None None None $14,000
David J. Brophy None None None $14,000
Trustee
Dr. Joseph E. Champagne None None None $14,000
Trustee
Thomas D. Eckert None None None $14,000
Trustee
Jack L. Otto None None None $14,000
Trustee
Arthur DeRoy Rodecker None None None $14,000
Trustee
</TABLE>
No officer, director or employee of the Advisor, Sub-Advisor, Comerica,
the Distributor, the Administrator or Transfer Agent currently receives any
compensation from the Trust.
The Trust will not employ Rodecker & Company, Investment Brokers, Inc. to
effect brokerage transactions for the Funds.
Shareholder and Trustee Liability. Under Massachusetts law,
shareholders of a business trust may, under certain circumstances, be held
personally liable as partners for the obligations of the trust. However, that
Trust's Declaration of Trust, as amended provides that shareholders shall not be
subject to any personal liability in connection with the assets of the Trust for
the acts or obligations of the Trust, and that every note, bond, contract, order
or other undertaking made by the Trust shall contain a provision to the effect
that the shareholders are not personally liable thereunder. The Declaration of
Trust, as amended provides for indemnification out of the trust property of any
shareholder held personally liable solely by reason of his or her being or
having been a shareholder and not because of his or her acts or omissions or
some other reason. The Declaration of Trust, as amended also provides that the
Trust shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Trust, and shall satisfy any
judgment thereon. Thus, the risk of a shareholder's incurring financial loss on
account of shareholder liability is limited to circumstances in which the Trust
itself would be unable to meet its obligations.
The Declaration of Trust, as amended further provides that all persons
having any claim against the trustees or the Trust shall look solely to the
trust property for payment; that no trustee of the Trust shall be personally
liable for or on account of any contract, debt, tort, claim, damage, judgment or
decree arising out of or connected with the administration or preservation of
the trust property or the conduct of any business of the Trust; and that no
trustee shall be personally liable to any person for any action or failure to
act except by reason of his own bad faith, willful misfeasance, gross negligence
or reckless disregard of his duties as a trustee. With the exception stated, the
Declaration of Trust, as amended provides that a Trustee is entitled to be
indemnified against all liabilities and expenses reasonably incurred by him in
connection with the defense or disposition of any proceeding in which he may be
involved or with which he may be threatened by reason of being or having been a
Trustee, and that the trustees will indemnify officers, representatives and
employees of the Trust to the same extent that Trustees are entitled to
indemnification.
INVESTMENT ADVISORY, SUB-ADVISORY AND OTHER
SERVICE ARRANGEMENTS
Investment Advisor. The Advisor of the Funds is Munder Capital
Management, a Delaware general partnership. The general partners of the Advisor
are Woodbridge, WAM, Old MCM, and Munder Group, LLC. Woodbridge and WAM are
wholly-owned subsidiaries of Comerica Bank -- Ann Arbor, which, in turn is a
wholly-owned subsidiary of Comerica Incorporated, a publicly-held bank holding
company.
Under the terms of the Advisory Agreement, the Advisor furnishes
overall investment management for the Funds, provides research and credit
analysis, oversees the purchase and sales of portfolio securities by the
Sub-Advisor, maintains books and records with respect the Funds' securities
transactions and provides periodic and special reports to the Board of Trustees
as requested.
For the advisory services provided and expenses assumed by it, the
Advisor has agreed to a fee from each Fund, computed daily and payable monthly,
at an annual rate of 1.00% of average daily net assets up to $250 million,
reduced to .75% of average daily net assets in excess of $250 million for the
International Growth Fund and the Healthcare Fund, and 1.25% of average daily
net assets for the Emerging Markets Fund.
The Trust's Advisory Agreement, with respect to each Fund, will
continue in effect for a period of two years from its effective date. If not
sooner terminated, the Advisory Agreement will continue in effect for successive
one year periods thereafter, provided that each continuance is specifically
approved annually by (a) the vote of a majority of the Board of Trustees who are
not parties to the Advisory Agreement or interested persons (as defined in the
1940 Act), cast in person at a meeting called for the purpose of voting on
approval, and (b) either (i) with respect to a Fund, the vote of a majority of
the outstanding voting securities of that Fund, or (ii) the vote of a majority
of the Board of Trustees. The Advisory Agreement is terminable by vote of the
Board of Trustees, or with respect to a Fund, by the holders of a majority of
the outstanding voting securities of that Fund, at any time without penalty, on
60 days' written notice to the Advisor. The Advisor may also terminate its
advisory relationship with a Fund without penalty on 90 days' written notice to
the Trust. The Advisory Agreement terminates automatically in the event of its
assignment (as defined in the 1940 Act).
The Sub-Advisor of the Funds is Framlington Overseas Investment
Management Limited. The Sub-Advisor is a subsidiary of Framlington Group plc, a
public limited company incorporated in England and Wales which, through its
subsidiaries, provides a wide range of investment services. Framlington Group
plc is a wholly owned subsidiary of Framlington Holdings Limited which is, in
turn, owned 49% by the Advisor and 51% by Credit Commercial de France S.A., a
French banking corporation listed on the Societe des Bourses Francaises.
Under the terms of the sub-advisory agreement with the Sub-Advisor, the
Sub-Advisor provides sub-advisory services to the Funds. Subject to supervision
of the Advisor, the Sub-Advisor is responsible for the management of each Fund's
portfolio, including all decisions regarding purchases and sales of portfolio
securities by the Funds. The Sub-Advisor is also responsible for arranging the
execution of all portfolio management decisions, including the selection of
brokers to execute trades and the negotiation of brokerage commissions in
connection therewith. For its services, the Advisor pays the Sub-Advisor a
monthly fee equal on an annual basis to 0.50% of average daily net assets up to
$250 million, reduced to .375% of average daily net assets in excess of $250
million for the International Growth Fund and the Healthcare Fund, and .625% of
average daily net assets for the Emerging Markets Fund.
The Trust's Sub-Advisory Agreement, with respect to each Fund, will
continue in effect with respect to each Fund for a period of two years from its
effective date. If not sooner terminated, the Sub-Advisory Agreement will
continue in effect for successive one year periods thereafter, provided that
each continuance is specifically approved annually by (a) the vote of a majority
of the Board of Trustees who are not parties to the Sub-Advisory Agreement or
interested persons (as defined in the 1940 Act), cast in person at a meeting
called for the purpose of voting on approval, and (b) either (i) with respect to
a Fund, the vote of a majority of the outstanding voting securities of that
Fund, or (ii) the vote of a majority of the Board of Trustees. The Sub-Advisory
Agreement is terminable by vote of the Board of Trustees, or, with respect to a
Fund, by the holders of a majority of the outstanding voting securities of that
Fund, at any time without penalty, on 60 days' written notice to the
Sub-Advisor, or by the Advisor on 90 days' written notice to the Sub-Advisor.
The Sub-Advisor may also terminate its sub-advisory relationship with a Fund
without penalty on 90 days' written notice to the Trust. The Sub-Advisory
Agreement terminates automatically in the event of its assignment (as defined in
the 1940 Act).
Distribution Agreement. The Trust has entered into a distribution
agreement, under which the Distributor, as agent, sells shares of each Fund on a
continuous basis. The Distributor has agreed to use appropriate efforts to
solicit orders for the purchase of shares of the Funds, although it is not
obligated to sell any particular amount of shares. The Distributor pays the cost
of printing and distributing prospectuses to persons who are not holders of
shares of a Fund (excluding preparation and printing expenses necessary for the
continued registration of the shares) and of printing and distributing all sales
literature. The Distributor's principal offices are located at 60 State Street,
Boston, Massachusetts 02109.
Distribution Services Arrangements. Distribution Services Arrangements
- - Class A, Class B and Class C shares. Each Fund has adopted a Service Plan with
respect to its Class A shares pursuant to which it uses its assets to finance
activities relating to the provision of certain shareholder services. Under the
Service Plans, the Distributor is paid an annual service fee at the rate of
0.25% of the value of average daily net assets of the Class A shares of the
Fund. Each Fund has adopted a Service and Distribution Plan with respect to its
Class B and Class C shares, pursuant to which it uses its assets to finance
activities relating to the distribution of its shares to investors and the
provision of certain shareholder services. Under the Service and Distribution
Plans, the Distributor is paid an annual service fee of 0.25% of the value of
average daily net assets of the Class B and Class C shares of the Fund and an
annual distribution fee at the rate of 0.75% of the value of average daily net
assets of the Class B and Class C shares of the Fund.
Under the terms of the Service Plan and both Service and Distribution
Plans (collectively, the "Plans"), each Plan continues from year to year,
provided such continuance is approved annually by vote of the Board of Trustees,
including a majority of the Board of Trustees who are not interested persons of
the Trust, as applicable, and who have no direct or indirect financial interest
in the operation of that Plan (the "Non-Interested Plan Trustees"). The Plans
may not be amended to increase the amount to be spent for the services provided
by the Distributor without shareholder approval, and all amendments of the Plans
also must be approved by the Trustees in the manner described above. Each Plan
may be terminated at any time, without penalty, by vote of a majority of the
Non-Interested Plan Trustees or, with respect to a Fund, by a vote of a majority
of the outstanding voting securities of the relevant class of that Fund (as
defined in the 1940 Act) upon not more than 30 days' written notice to any other
party to the Plan. Pursuant to each Plan, the Distributor will provide the Board
of Trustees periodic reports of amounts expended under the Plan and the purposes
for which such expenditures were made.
The Trustees have determined that the Plans will benefit the Trust,
each Fund, and their shareholders by (i) providing an incentive for broker or
bank personnel to provide continuous shareholder servicing after the time of
sale; (ii) retention of existing accounts; (iii) facilitating portfolio
management flexibility through continued cash flow into the Funds; and (iv)
maintaining a competitive sales structure in the mutual fund industry.
With respect to Class B and Class C shares of each Fund, the
Distributor expects to pay sales commissions to dealers authorized to sell the
Fund's Class B and Class C shares at the time of sale. The Distributor will use
its own funds (which may be borrowed) to pay such commissions pending
reimbursement pursuant to the relevant Service and Distribution Plan. In
addition, the Advisor may use its own resources to make payments to the
Distributor or dealers authorized to sell the Fund's shares to support their
sales efforts.
Shareholder Servicing Arrangements - Class K shares. As stated in the
Prospectus, Class K shares are sold to investors through institutions which
enter into Shareholder Servicing Agreements with the Trust to provide support
services to their Customers who beneficially own Class K shares in consideration
of each Fund's payment of not more than 0.25% (on an annualized basis) of the
average daily net asset value of the Class K shares beneficially owned by the
Customers.
Services provided by institutions under their service agreements may
include (i) aggregating and processing purchase and redemption requests for
Class K shares from Customers and placing net purchase and redemption orders
with the Distributor; (ii) providing customers with a service that invests the
assets of their accounts in Class K shares pursuant to specific or
pre-authorized instructions; (iii) processing dividend payments on behalf of
Customers; (iv) providing information periodically to Customers showing their
positions in Class K shares; (v) arranging for bank wires; (vi) responding to
Customer inquiries relating to the services performed by the institutions; (vii)
providing subaccounting with respect to Class K shares beneficially owned by
Customers or the information necessary for subaccounting; (viii) if required by
law, forwarding shareholder communications from the Trust (such as proxies,
shareholder reports, annual and semi-annual financial statements and dividend
distribution and tax notices) to Customers; (ix) forwarding to Customers proxy
statements and proxies containing any proposals regarding the Trust's
arrangements with institutions; and (x) providing such other similar services
the Trust may reasonably request to the extent the institutions are permitted to
do so under applicable statues, rules and regulations.
Pursuant to the Trust's agreements with such institutions, the Board of
Trustees will review, at least quarterly, a written report of the amounts
expended under the Trust's agreements with institutions and the purposes for
which the expenditures were made. In addition, the arrangements with
institutions must be approved annually by a majority of the Board of Trustees
including a majority of the Trustees who are not "interested persons" as defined
in the 1940 Act, and have no direct or indirect financial interest in such
arrangements.
The Board of Trustees has approved the arrangements with the
institutions based on information provided by the service contractors that there
is a reasonable likelihood that the arrangements will benefit each Fund and its
shareholders by affording the Funds greater flexibility in connection with the
servicing of the accounts of the beneficial owners of their shares in an
efficient manner.
Administration Agreement. First Data Investor Services Group, Inc.
("First Data" or the "Administrator") located at 53 State Street, Boston,
Massachusetts 02109 serves as administrator for the Trust pursuant to an
administration agreement, (the "Administration Agreement"). First Data has
agreed to maintain office facilities for the Trust; provided accounting and
bookkeeping services for the Funds, including the computation of the Funds' net
asset value, net income and realized capital gains, if any; furnish statistical
and research data, clerical services, and stationery and office supplies;
prepare and file various reports with the appropriate regulatory agencies; and
prepare various materials required by the SEC or any state securities commission
having jurisdiction over the Trust.
The Administration Agreement provides that the Administrator performing
services thereunder shall not be liable under the Agreement except for its
willful misfeasance, bad faith or gross negligence in the performance of its
duties or from the reckless disregard by it of its duties and obligations
thereunder.
Custodian and Transfer Agency Agreements. Comerica Bank (the
"Custodian") whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, MI 48226, maintains custody of the Funds' assets
pursuant to a custodian agreement (each, a "Custody Agreement") with the Trust.
The Custodian is a wholly owned subsidiary of Comerica Incorporated, a
publicly-held bank holding company. Under the Custody Agreement, the Custodian
(i) maintains a separate account in the name of each Fund, (ii) holds and
transfers portfolio securities on account of the Funds, (iii) accepts receipts
and makes disbursements of money on behalf of the Funds, (iv) collects and
receives all income and other payments and distributions on account of the
Funds' securities and (v) makes periodic reports to the Board of Trustees
concerning the Funds' operations. The Custodian is authorized to select one or
more domestic or foreign banks or trust companies to serve as sub-custodian on
behalf of the Funds. In addition, the Trust and the Custodian have entered into
a sub-custody agreement with Morgan Stanley Trust Company ("Morgan Stanley")
relating to the custody of foreign securities held by the Funds, and Morgan
Stanley, in turn, has entered into additional agreements with financial
institutions and depositories located in foreign countries with respect to the
custody of such securities.
First Data also serves as the transfer and dividend disbursing agent
for the Funds pursuant to a transfer agency agreement (the "Transfer Agency
Agreement") with the Trust, under which First Data (i) issues and redeems shares
of the Funds, (ii) addresses and mails all communications by each Fund to its
record owners, including reports to shareholders, dividend and distribution
notices and proxy materials for its meetings of shareholders, (iii) maintains
shareholder accounts, (iv) responds to correspondence by shareholders of the
Funds and (v) makes periodic reports to the Board of Trustees concerning the
operations of each Fund.
Comerica. As stated in the Funds' Class K shares Prospectus, Class K
shares of each Fund are sold to customers of banks and other institutions. Such
banks and institutions may include Comerica Incorporated (a publicly-held bank
holding company), its affiliates and subsidiaries ("Comerica") and other
institutions that have entered into agreements with the Trust providing for
shareholder services for their customers.
Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from underwriting securities, but such banking laws and regulations do not
prohibit such a holding company or affiliate or banks generally from acting as
investment advisor, administrator, transfer agent or custodian to such an
investment company, or from purchasing shares of such a company as agent for and
upon the order of customers. The Advisor and the Custodian are subject to such
banking laws and regulations.
The Advisor and the Custodian believe they may perform the services for
the Trust contemplated by their respective agreements with the Trust without
violation of applicable banking laws or regulations. It should be noted,
however, that there have been no cases deciding whether bank and non-bank
subsidiaries of a registered bank holding company may perform services
comparable to those that are to be performed by these companies, and future
changes in either Federal or state statutes and regulations relating to
permissible activities of banks and their subsidiaries or affiliates, as well as
future judicial or administrative decisions or interpretations of current and
future statutes and regulations, could prevent these companies from continuing
to perform such service for the Trust.
Should future legislative, judicial or administrative action prohibit
or restrict the activities of such companies in connection with the provision of
services on behalf of the Trust, the Trust might be required to alter materially
or discontinue its arrangements with such companies and change its method of
operations. It is not anticipated, however, that any change in the Trust's
method of operations would affect the net asset value per share of the Funds or
result in a financial loss to any shareholder of the Funds.
It should be noted that future changes in either Federal or state
statutes and regulations relating to permissible activities of banks and their
subsidiaries or affiliates, as well as future judicial or administrative
decisions or interpretations of current and future statutes and regulations,
could prevent Comerica and certain other institutions from continuing to perform
certain services for Class K shares of the Funds.
Should future legislative, judicial or administrative action prohibit
or restrict the activities of Comerica and/or other institutions in connection
with the provision of services on behalf of Class K shares of the Funds, the
Trust might be required to alter materially or discontinue its arrangements with
the institutions and change its method of operations with respect to Comerica
and certain other institutions. It is not anticipated, however, that any change
in the Funds' method of operations would affect the net asset value per share of
the Funds or result in a financial loss to any holder of Class K shares of the
Funds.
Other Information Pertaining to Distribution, Administration, Custodian
and Transfer Agency Agreements. [As stated in the Prospectus, the Transfer Agent
receives, as compensation for its services, fees from the Funds based on the
aggregate average daily net assets of the Funds and other investment portfolios
advised by the Advisor.] The Administrator and the Custodian receives a separate
fee for its services. In approving the Administration Agreement and Transfer
Agency Agreement, the Board of Trustees did consider the services that are to be
provided under their respective agreements, the experience and qualifications of
the respective service contractors, the reasonableness of the fees payable by
the Trust in comparison to the charges of competing vendors, the impact of the
fees on the estimated total ordinary operating expense ratio of the Fund and the
fact that neither the Administrator nor the Transfer Agent is affiliated with
the Trust or the Advisor. The Board also considered its responsibility under
federal and state law in approving these agreements.
Comerica Bank provides custodial services to the Funds. As compensation
for its services, Comerica Bank is entitled to receive fees, based on the
aggregate average daily net assets of each Fund and certain other investment
portfolios for which Comerica Bank provides services, computed daily and payable
monthly at an annual rate of 0.03% of the first $100 million of average daily
net assets, plus 0.02% of the next $500 million of net assets, plus 0.01% of all
net assets in excess of $600 million. Comerica Bank also receives certain
transaction based fees.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board Members and the
Advisor, the Sub-Advisor makes decisions with respect to and places orders for
all purchases and sales of portfolio securities for the Funds.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. Transactions on foreign
stock exchanges involve payment for brokerage commissions which are generally
fixed.
Over-the-counter issues, including corporate debt and government
securities, are normally traded on a "net" basis (i.e., without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument. With respect to over-the-counter transactions, the Sub-Advisor
will normally deal directly with dealers who make a market in the instruments
involved except in those circumstances where more favorable prices and execution
are available elsewhere. The cost of foreign and domestic securities purchased
from underwriters includes an underwriting commission or concession, and the
prices at which securities are purchased from and sold to dealers include a
dealer's mark-up or mark-down.
The Funds may participate, if and when practicable, in bidding for the
purchase of portfolio securities directly from an issuer in order to take
advantage of the lower purchase price available to members of a bidding group.
The Funds will engage in this practice, however, only when the Sub-Advisor
believes such practice to be in the Funds' interests.
In assessing the terms available for any transaction, the Sub-Advisor
shall consider all factors it deems relevant, including the breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker-dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing basis.
In addition, the Sub-Advisory Agreement authorizes the Sub-Advisor, subject to
the prior approval of the Trust's Board of Trustees, to cause a Fund to pay a
broker-dealer which furnishes brokerage and research services a higher
commission than that which might be charged by another broker-dealer for
effecting the same transaction, provided that the Sub-Advisor determines in good
faith that such commission is reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer, viewed in terms
of either the particular transaction or the overall responsibilities of the
Sub-Advisor to the Fund. Such brokerage and research services might consist of
reports and statistics on specific companies or industries, general summaries of
groups of bonds and their comparative earnings and yields, or broad overviews of
the securities markets and the economy.
Supplementary research information so received is in addition to, and
not in lieu of, services required to be performed by the Sub-Advisor and does
not reduce the advisory fees payable to the Advisor or Sub-Advisor by a Fund. It
is possible that certain of the supplementary research or other services
received will primarily benefit one or more other investment companies or other
accounts for which investment discretion is exercised. Conversely, a Fund may be
the primary beneficiary of the research or services received as a result of
portfolio transactions effected for such other account or investment company.
Portfolio securities will not be purchased from or sold to the Advisor,
Sub-Advisor, the Distributor or any affiliated person (as defined in the 1940
Act) of the foregoing entities except to the extent permitted by SEC exemptive
order or by applicable law.
Investment decisions for the Funds and for other investment accounts
managed by the Advisor and Sub-Advisor are made independently of each other in
the light of differing conditions. However, the same investment decision may be
made for two or more of such accounts. In such cases, simultaneous transactions
are inevitable. Purchases or sales are then averaged as to price and allocated
as to amount in a manner deemed equitable to each such account. While in some
cases this practice could have a detrimental effect on the price or value of the
security as far as a Fund is concerned, in other cases it is believed to be
beneficial to the Funds. To the extent permitted by law, the Sub-Advisor may
aggregate the securities to be sold or purchased for the Funds with those to be
sold or purchased for other investment companies or accounts in executing
transactions.
The Funds will not purchase securities during the existence of any
underwriting or selling group relating to such securities of which the Advisor,
Sub-Advisor or any affiliated person (as defined in the 1940 Act) thereof is a
member except pursuant to procedures adopted by the Trust's Board of Trustees in
accordance with Rule 10f-3 under the 1940 Act.
Except as noted in the Prospectuses and this Statement of Additional
Information the Funds' service contractors bear all expenses in connection with
the performance of its services and the Funds bear the expenses incurred in its
operations. These expenses include, but are not limited to, fees paid to the
Advisor, Administrator, Custodian and Transfer Agent; fees and expenses of
officers and directors; taxes; interest; legal and auditing fees; brokerage fees
and commissions; certain fees and expenses in registering and qualifying the
Trust and its shares for distribution under Federal and state securities laws;
expenses of preparing prospectuses and statements of additional information and
of printing and distributing prospectuses and statements of additional
information to existing shareholders; the expense of reports to shareholders,
shareholders' meetings and proxy solicitations; fidelity bond and trustees' and
officers' liability insurance premiums; the expense of using independent pricing
services; and other expenses which are not assumed by the Administrator. Any
general expenses of the Trust that are not readily identifiable as belonging to
a particular investment portfolio of the Trust are allocated among all
investment portfolios of the Trust by or under the direction of the Board of
Trustees in a manner that the Board of Trustees determine to be fair and
equitable. The Advisor, Administrator, Custodian and Transfer Agent may
voluntarily waive all or a portion of their respective fees from time to time.
PURCHASE AND REDEMPTION INFORMATION
Purchases and redemptions are discussed in each Prospectus and such
information is incorporated herein by reference.
Purchases. In addition to the methods of purchasing shares described in
the Prospectuses, the Funds also offer a pre-authorized checking plan by which
investors may accumulate shares of a Fund regularly each month by means of
automatic debits to their checking accounts. There is a $50 minimum on each
automatic debit. Shareholders may choose this option by checking the appropriate
part of the application form or by calling the Funds at (800) 438-5789. Such a
plan is voluntary and may be discontinued by the shareholder at any time or by
the Trust on 30 days' written notice to the shareholder.
Letter of Intent. Purchasers who intend to invest $100,000 or more in
Class A shares of a Fund within 13 months (whether in one lump sum or in
installments the first of which may not be less than 5% of the total intended
amount and each subsequent installment not less than $100, including automatic
investment and payroll deduction plans), and to beneficially hold the total
amount of such shares fully paid for and outstanding simultaneously for at least
one full business day before the expiration of that period, should complete the
Letter of Intent ("LOI") section in the Application. Payment for not less than
5% of the total intended amount must accompany the executed LOI. Those shares
purchased with the first 5% of the intended amount stated in the LOI will be
held as "escrowed shares" for as long as the LOI remains unfulfilled. Although
the escrowed shares are registered in the investor's name, his full ownership of
them is conditional upon fulfillment of the LOI. No escrowed shares can be
redeemed by the investor for any purpose until the LOI is fulfilled or
terminated. If the LOI is terminated for any reason other than fulfillment, the
Transfer Agent will redeem that portion of the escrowed shares required and
apply the proceeds to pay any adjustment that may be appropriate to the sales
commission on all shares (including the escrowed shares) already purchased under
the LOI and apply any unused balance to the investor's account. The LOI is not a
binding obligation to purchase any amount of shares, but its execution will
result in the purchaser paying a lower sales charge at the appropriate quantity
purchase level. A purchase not originally made pursuant to an LOI may be
included under a subsequent LOI executed within 90 days of such purchase. In
this case, an adjustment will be made at the end of 13 months from the effective
date of the LOI at the net asset value per share then in effect, unless the
investor makes an earlier written request to the Funds' Distributor upon
fulfilling the purchase of shares under the LOI. In addition, the aggregate
value of any shares purchased prior to the 90-day period referred to above may
be applied to purchases under a current LOI in fulfilling the total intended
purchases under the LOI. However, no adjustment of sales charge previously paid
on purchases prior to the 90-day period will be made. Shares acquired through
reinvestment of dividends and capital gain distributions are considered in
connection with an investor's fulfillment of the LOI.
Retirement Plans. Shares of the Funds may be purchased in connection
with various types of tax deferred retirement plans, including individual
retirement accounts ("IRAs"), qualified plans, deferred compensation for public
schools and charitable organizations (403(b) plans) and simplified employee
pension IRAs. An individual or organization considering the establishment of a
retirement plan should consult with an attorney and/or an accountant with
respect to the terms and tax aspects of the plan. A $10.00 annual custodial fee
is also charged on IRAs. This custodial fee is due by December 15 of each year
and may be paid by check or shares liquidated from a shareholder's account.
Redemptions
Systematic Withdrawals. In addition to the methods of redemption
described in the Prospectuses, a systematic withdrawal plan is available in
which a shareholder of a Fund may elect to receive a fixed amount ($50 minimum),
monthly, quarterly, semi-annually, or annually, for accounts with a value of
$2,500 or more. Checks are mailed on or about the 10th of each designated month.
All certified shares must be placed on deposit under the plan and dividends and
capital gain distributions, if any, are automatically reinvested at net asset
value for shareholders participating in the plan. If the checks received by a
shareholder through the systematic withdrawal plan exceed the dividends and
capital appreciation of the shareholder's account, the systematic withdrawal
plan will have the effect of reducing the value of the account. Any gains and/or
losses realized from redemptions through the systematic withdrawal plan are
considered a taxable event by the Internal Revenue Service and must be reported
on the shareholders' income tax return. Shareholders should consult with a tax
advisor for information on their specific financial situations. At the time of
initial investment, a shareholder may request that the check for the systematic
withdrawal be sent to an address other than the address of record. The address
to which the payment is mailed may be changed by submitting a written request,
signed by all registered owners, with their signatures guaranteed. Shareholders
may add this option after the account is already established or change the
amount on an existing account by calling the Funds at (800) 438-5789. The Trust
may terminate the plan on 30 days' written notice to the shareholder.
Redemption proceeds are normally paid in cash; however, each Fund may
pay the redemption price in whole or part by a distribution in kind of
securities from the portfolio of the particular Fund, in lieu of cash, in
conformity with applicable rules of the SEC. If shares are redeemed in kind, the
redeeming Shareholder might incur transaction costs in converting the assets
into cash. The Funds are obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of its net assets during any 90-day period for any one
Shareholder.
Other Information. The Funds reserve the right to suspend or postpone
redemptions during any period when: (i) trading on the New York Stock Exchange
is restricted, as determined by the SEC, or the New York Stock Exchange is
closed for other than customary weekend and holiday closings; (ii) the SEC has
by order permitted such suspension or postponement for the protection of
shareholders; or (iii) an emergency, as determined by the SEC, exists, making
disposal of portfolio securities or valuation of net assets of a Fund not
reasonably practicable.
Each Fund may involuntarily redeem an investor's shares if the net
asset value of such shares is less than $500; provided that involuntary
redemptions will not result from fluctuations in the value of an investor's
shares. A notice of redemption, sent by first-class mail to the investor's
address of record, will fix a date not less than 30 days after the mailing date,
and shares will be redeemed at the net asset value at the close of business on
that date unless sufficient additional shares are purchased to bring the
aggregate account value up to $500 or more. A check for the redemption proceeds
payable to the investor will be mailed to the investor at the address of record.
Exchanges. In addition to the method of exchanging shares described in
the Prospectuses, a shareholder exchanging at least $1,000 of shares (for which
certificates have been issued) and who has authorized expedited exchanges on the
application form filed with the Transfer Agent may exchange shares by
telephoning the Funds at (800) 438-5789. Telephone exchange instructions must be
received by the Transfer Agent by 4:00 p.m., New York City time. The Trust,
Distributor and Transfer Agent reserve the right at any time to suspend or
terminate the expedited exchange procedure or to impose a fee for this service.
During periods of unusual economic or market changes, shareholders may
experience difficulties or delays in effecting telephone exchanges. Neither the
Trust nor the Transfer Agent will be responsible for any loss, damages, expense
or cost arising out of any telephone exchanges effected upon instructions
believed by them to be genuine. The Transfer Agent has instituted procedures
that it believes are reasonably designed to insure that exchange instructions
communicated by telephone are genuine, and could be liable for losses caused by
unauthorized or fraudulent instructions in the absence of such procedures. The
procedures currently include a recorded verification of the shareholder's name,
social security number and account number, followed by the mailing of a
statement confirming the transaction, which is sent to the address of record.
NET ASSET VALUE
In determining the approximate market value of portfolio investments,
the Trust may employ outside organizations, which may use matrix or formula
methods that take into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix or
formula methods not been used. All cash, receivables and current payables are
carried on the Trust's books at their face value. Other assets, if any, are
valued at fair value as determined in good faith under the supervision of the
Board of Trustees.
In-Kind Purchases
Payment for shares of a Fund may, in the discretion of the Advisor, be
made in the form of securities that are permissible investments for a Fund as
described in the Prospectus. For further information about this form of payment
please contact the Transfer Agent. In connection with an in-kind securities
payment, a Fund will require, among other things, that the securities be valued
on the day of purchase in accordance with the pricing methods used by the Fund
and that the Fund receive satisfactory assurances that (1) it will have good and
marketable title to the securities received by it; (2) that the securities are
in proper form for transfer to the Fund; and (3) adequate information will be
provided concerning the basis and other tax matters relating to the securities.
PERFORMANCE INFORMATION
The Trust, in advertising its "average annual total return" of the
Funds computes return by determining the average annual compounded rate of
return during specified periods that equates the initial amount invested to the
ending redeemable value of such investment according to the following formula:
T = (ERV)1/n -1
P
Where: T = average annual total return;
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the
1, 5 or 10 year (or other) periods at the
end of the applicable period (or a
fractional portion thereof);
P = hypothetical initial payment of $1,000;
and
n = period covered by the computation, expressed
in years.
Each Fund, in advertising its "aggregate total return" computes its
returns by determining the aggregate compounded rates of return during specified
periods that likewise equate the initial amount invested to the ending
redeemable value of such investment. The formula for calculating aggregate total
return is as follows:
(ERV)
Aggregate Total Return = ----- - 1
P
The calculations are made assuming that (1) all dividends and capital
gain distributions are reinvested on the reinvestment dates at the price per
share existing on the reinvestment date, (2) all recurring fees charged to all
shareholder accounts are included, and (3) for any account fees that vary with
the size of the account, a mean (or median) account size in the Fund during the
periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all non-recurring charges at the end of the
measuring period. Each Fund's average annual total return and aggregate total
return quotations for Class A shares will reflect the deduction of the maximum
sales charge charged in connection with the purchase of such shares; and the
Fund's average annual total return and aggregate total return quotations for
Class B shares will reflect any applicable CDSC; provided that Fund may also
advertise total return data without reflecting any applicable CDSC sales charge
imposed on the purchase of Class A shares or Class B shares in accordance with
the views of the SEC. Quotations which do not reflect the sales charge will, of
course, be higher than quotations which do.
The performance of any investment is generally a function of portfolio
quality and maturity, type of investment and operating expenses.
From time to time, in advertisements or in reports to shareholders, each
Fund's total returns may be quoted and compared to those of other mutual funds
with similar investment objectives and to stock or other relevant indices.
TAXES
The following summarizes certain additional tax considerations generally
affecting the Funds and their shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Funds or their shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning. Potential
investors should consult their tax advisors with specific reference to their own
tax situations.
General. Each Fund will elect to be taxed separately as a regulated
investment company under Subchapter M, of the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, a Fund generally is
exempt from Federal income tax on its net investment income and realized capital
gains which it distributes to shareholders, provided that it distributes an
amount equal to the sum of (a) at least 90% of its investment company taxable
income (net investment income and the excess of net short-term capital gain over
net long-term capital loss), if any, for the year and (b) at least 90% of its
net tax-exempt interest income, if any, for the year (the "Distribution
Requirement") and satisfies certain other requirements of the Code that are
described below. Distributions of investment company taxable income and net
tax-exempt interest income made during the taxable year or, under specified
circumstances, within twelve months after the close of the taxable year will
satisfy the Distribution Requirement.
In addition to satisfaction of the Distribution Requirement, each Fund
must derive with respect to a taxable year at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans and gains
from the sale or other disposition of stock or securities or foreign currencies,
or from other income derived with respect to its business of investing in such
stock, securities, or currencies (the "Income Requirement") and derive less than
30% of its gross income from the sale or other disposition of securities and
certain other investments held for less than three months (the "Short-Short Gain
Test"). Interest (including original issue discount and "accrued market
discount") received by the Fund at maturity or on disposition of a security held
for less than three months will not be treated (in contrast to other income
which is attributable to realized market appreciation) as gross income from the
sale or other disposition of securities held for less than three months for this
purpose.
In addition to the foregoing requirements, at the close of each quarter
of its taxable year, at least 50% of the value of each Fund's assets must
consist of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which the
Fund has not invested more than 5% of the value of its total assets in
securities of such issuer and as to which the Fund does not hold more than 10%
of the outstanding voting securities of such issuer) and no more than 25% of the
value of the Fund's total assets may be invested in the securities of any one
issuer (other than U.S. Government securities and securities of other regulated
investment companies), or in two or more issuers which the Fund controls and
which are engaged in the same or similar trades or businesses.
Distributions of net investment income received by each Fund from
investments in debt securities and any net realized short-term capital gains
distributed by the Fund will be taxable to shareholders as ordinary income and
will not be eligible for the dividends received deduction for corporations.
Each Fund intends to distribute to shareholders any excess of net
long-term capital gain over net short-term capital loss ("net capital gain") for
each taxable year. Such gain is distributed as a capital gain dividend and is
taxable to shareholders as long-term capital gain, regardless of the length of
time the shareholder has held the shares, whether such gain was recognized by
the Fund prior to the date on which a shareholder acquired shares of the Fund
and whether the distribution was paid in cash or reinvested in shares. In
addition, investors should be aware that any loss realized upon the sale,
exchange or redemption of shares held for six months or less will be treated as
a long-term capital loss to the extent any capital gain dividends have been paid
with respect to such shares.
In the case of corporate shareholders, distributions of the Funds for
any taxable year generally qualify for the dividends received deduction to the
extent of the gross amount of "qualifying dividends" received by a Fund for the
year and if certain holding period requirements are met. Generally, a dividend
will be treated as a "qualifying dividend" if it has been received from a
domestic corporation. Capital gains dividends are not eligible for dividends
received deduction for corporations.
Ordinary income of individuals is taxable at a maximum nominal rate of
39.6%, although because of limitations on itemized deductions otherwise
allowable and the phase-out of personal exemptions, the maximum effective
marginal rate of tax for some taxpayers may be higher. An individual's long-term
capital gains are taxable at a maximum rate of 28%. Capital gains and ordinary
income of corporate taxpayers are both taxed at a nominal maximum rate of 35%.
If for any taxable year a Fund does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to shareholders. In such
event, all distributions (whether or not derived from exempt-interest income)
would be taxable as ordinary income and would be eligible for the dividends
received deduction in the case of corporate shareholders to the extent of the
Fund's current and accumulated earnings and profits.
Shareholders will be advised annually as to the Federal income tax
consequences of distributions made by each Fund each year.
The Code imposes a non-deductible 4% excise tax on regulated investment
companies that fail to currently distribute an amount equal to specified
percentages of their ordinary taxable income and capital gain net income (excess
of capital gains over capital losses). Each Fund intends to make sufficient
distributions or deemed distributions of its ordinary taxable income and capital
gain net income each calendar year to avoid liability for this excise tax.
The Trust will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable dividends or 31% of gross proceeds
realized upon sale paid to any shareholder (i) who has provided either an
incorrect tax identification number or no number at all, (ii) who is subject to
backup withholding by the Internal Revenue Service for failure to report the
receipt of taxable interest or dividend income properly, or (iii) who has failed
to certify to the Trust that he is not subject to backup withholding or that he
is an "exempt recipient."
The foregoing general discussion of Federal income tax consequences is
based on the Code and the regulations issued thereunder as in effect on the date
of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.
Although each Fund expects to qualify as a "regulated investment
company" and to be relieved of all or substantially all Federal income taxes,
depending upon the extent of its activities in states and localities in which
its offices are maintained, in which its agents or independent contractors are
located or in which it is otherwise deemed to be conducting business, each Fund
may be subject to the tax laws of such states or localities.
Foreign Income. Income received by Funds from sources within foreign
countries may be subject to withholding and other foreign taxes. The payment of
such taxes will reduce the amount of dividends and distributions paid to the
Funds' shareholders. So long as the Funds qualify as regulated investment
companies, certain distributions requirements are satisfied, and more than 50%
of the value of the Funds' assets at the close of the taxable year consists of
securities of foreign corporations, the Funds may elect, for U.S. Federal income
tax purposes, to treat foreign income taxes paid by the Funds that can be
treated as income taxes under U.S. income tax principles as paid by its
shareholders. The Funds may qualify for and make this election in some, but not
necessarily all, of its taxable years. If the Funds were to make an election, an
amount equal to the foreign income taxes paid by the Funds would be included in
the income of its shareholders and the shareholders would be entitled to credit
their portions of this amount against their U.S. tax due, if any, or to deduct
such portions from their U.S. taxable income, if any. Shortly after any year for
which it makes such an election, the Funds will report to their shareholders, in
writing, the amount per share of such foreign tax that must be included in each
shareholder's gross income and the amount which will be available for deduction
or credit. No deduction for foreign taxes may be claimed by a shareholder who
does not itemize deductions. Certain limitations are imposed on the extent to
which the credit (but not the deduction) for foreign taxes may be claimed.
Shareholders who choose to utilize a credit (rather than a deduction)
for foreign taxes will be subject to the limitation that the credit may not
exceed the shareholder's United States tax (determined without regard to the
availability of the credit) attributable to his or her total foreign source
taxable income. For this purpose, the portion of dividends and distributions
paid by the Fund from its foreign source income will be treated as foreign
source income. The Fund's gains and losses from the sale of securities will
generally be treated as derived from United States sources and certain foreign
currency gains and losses likewise will be treated as derived from United States
sources. The limitation on the foreign tax credit is applied separately to
foreign source "passive income", such as the portion of dividends received from
the Fund which qualifies as foreign source income. In addition, only a portion
of the foreign tax credit will be allowed to offset any alternative minimum tax
imposed on corporations and individuals. Because of these limitations,
shareholders may be unable to claim a credit for the full amount of their
proportionate shares of the foreign income taxes paid by the Fund.
Taxation of Certain Financial Instruments. Special rules govern the
Federal income tax treatment of financial instruments that may be held by the
Funds. These rules may have a particular impact on the amount of income or gain
that a Fund must distribute to their respective shareholders to comply with the
Distribution Requirement, on the income or gain qualifying under the Income
Requirement and on their ability to comply with the Short-Gain Test, all
described above.
Generally, futures contracts, options on futures contracts and certain
foreign currency contracts held by a Fund (collectively, the "Instruments") at
the close of their taxable year are treated for Federal income tax purposes as
sold for their fair market value on the last business day of such year, a
process known as "marking-to-market." Forty percent of any gain or loss
resulting from such constructive sales will be treated as short-term capital
gain or loss and 60% of such gain or loss will be treated as long-term capital
gain or loss without regard to the period the Fund hold the Instruments ("the
40%-60% rule"). The amount of any capital gain or loss actually realized by a
Fund in a subsequent sale or other disposition of those Instruments is adjusted
to reflect any capital gain or loss taken into account by the Fund in a prior
year as a result of the constructive sale of the Instruments. Losses with
respect to futures contracts to sell, related options and certain foreign
currency contracts which are regarded as parts of a "mixed straddle" because
their values fluctuate inversely to the values of specific securities held by a
Fund are subject to certain loss deferral rules which limit the amount of loss
currently deductible on either part of the straddle to the amount thereof which
exceeds the unrecognized gain (if any) with respect to the other part of the
straddle, and to certain wash sales regulations. Under short sales rules, which
are also applicable, the holding period of the securities forming part of the
straddle will (if they have not been held for the long-term holding period) be
deemed not to begin prior to termination of the straddle. With respect to
certain Instruments, deductions for interest and carrying charges may not be
allowed. Notwithstanding the rules described above, with respect to futures
contracts which are part of a "mixed straddle" to sell related options, and
certain foreign currency contracts which are properly identified as such, a Fund
may make an election which will exempt (in whole or in part) those identified
futures contracts, options and foreign currency contracts from the Rules of
Section 1256(g) of the Code including "the 40%-60% rule" and the mark-to-market
on gains and losses being treated for Federal income tax purposes as sold on the
last business day of the Fund's taxable year, but gains and losses will be
subject to such short sales, wash sales and loss deferral rules and the
requirement to capitalize interest and carrying charges. Under Temporary
Regulations, the Fund would be allowed (in lieu of the foregoing) to elect to
either (1) offset gains or losses from portions which are part of a mixed
straddle by separately identifying each mixed straddle to which such treatment
applies, or (2) establish a mixed straddle account for which gains and losses
would be recognized and offset on a periodic basis during the taxable year.
Under either election, "the 40%-60% rule" will apply to the net gain or loss
attributable to the Instruments, but in the case of a mixed straddle account
election, not more than 50% of any net gain may be treated as long-term and no
more than 40% of any net loss may be treated as short-term.
A foreign currency contract must meet the following conditions in order
to be subject to the marking-to-market rules described above: (1) the contract
must require delivery of a foreign currency of a type in which regulated futures
contracts are traded or upon which the settlement value of the contract depends;
(2) the contract must be entered into at arm's length at a price determined by
reference to the price in the interbank market; and (3) the contract must be
traded in the interbank market. The Treasury Department has broad authority to
issue regulations under the provisions respecting foreign currency contracts. As
of the date of this Statement of Additional Information, the Treasury Department
has not issued any such regulations. Other foreign currency contracts entered
into by a Fund may result in the creation of one or more straddles for Federal
income tax purposes, in which case certain loss deferral, short sales, and wash
sales rules and the requirement to capitalize interest and carrying charges may
apply.
Some of the non-U.S. dollar denominated investments that a Fund may
make, such as foreign securities, European Deposit Receipts and foreign currency
contracts, may be subject to the provisions of Subpart J of the Code, which
govern the Federal income tax treatment of certain transactions denominated in
terms of a currency other than the U.S. dollar or determined by reference to the
value of one or more currencies other than the U.S dollar. The types of
transactions covered by these provisions include the following: (1) the
acquisition of, or becoming the obligor under, a bond or other debt instrument
(including, to the extent provided in Treasury regulations, preferred stock);
(2) the accruing of certain trade receivables and payables; and (3) the entering
into or acquisition of any forward contract, futures contract, option and
similar financial instrument, if such instrument is not marked to market. The
disposition of a currency other than the U.S. dollar by a U.S. taxpayer is also
treated as a transaction subject to the special currency rules. However, foreign
currency-related regulated futures contracts and non equity options are
generally not subject to the special currency rules if they are or would be
treated as sold for their fair market value at year-end under the
marking-to-market rules unless an election is made to have such currency rules
apply. With respect to transactions covered by the special rules, foreign
currency gain or loss is calculated separately from any gain or loss on the
underlying transaction and is normally taxable as ordinary gain or loss. A
taxpayer may elect to treat as capital gain or loss foreign currency gain or
loss arising from certain identified forward contracts, futures contracts and
options that are capital assets in the hands of the taxpayer and which are not
part of a straddle. In accordance with Treasury regulations, certain
transactions that are part of a "Section 988 hedging transaction" (as defined in
the Code and Treasury regulations) may be integrated and treated as a single
transaction or otherwise treated consistently for purposes of the Code. "Section
988 hedging transactions" are not subject to the marking-to-market or loss
deferral rules under the Code. Gain or loss attributable to the foreign currency
component of transactions engaged in by the Funds which are not subject to the
special currency rules (such as foreign equity investments other than certain
preferred stocks) is treated as capital gain or loss and is not segregated from
the gain or loss on the underlying transaction.
If a Fund invests in certain "passive foreign investment companies"
("PFICs"), it will be subject to Federal income tax (and possibly additional
interest charges) on a portion of any "excess distribution" or gain from the
disposition of such shares even if it distributes such income to its
shareholders. If a Fund elects to treat the PFIC as "qualified electing fund"
("QEF") and the PFIC furnishes certain financial information in the required
form to the Fund, the Fund will instead be required to include in income each
year its allocable share of the ordinary earnings and net capital gains on the
QEF, regardless of whether received, and such amounts will be subject to the
various distribution requirements described above.
Each Fund may be subject to U.S. Federal income tax on a portion of any
"excess distribution" or a gain from the distribution of passive foreign
investment companies.
ADDITIONAL INFORMATION CONCERNING SHARES
The Trust is a Massachusetts business trust. Under the Trust's
Declaration of Trust, the beneficial interest in the Trust may be divided into
an unlimited number of full and fractional transferable shares. The Trust's
Declaration of Trust authorize the Boards of Trustees to classify or reclassify
any unissued shares of the Trust into one or more classes by setting or
changing, in any one or more respects, their respective designations,
preferences, conversion or other rights, voting powers, restrictions,
limitations, qualifications and terms and conditions of redemption. Pursuant to
such authority, the Trust's Board of Trustees has authorized the issuance of an
unlimited number of shares of beneficial interest in the Trust, representing
interests in Munder Framlington International Growth Fund, Munder Framlington
Emerging Markets Fund, and Munder Framlington Healthcare Fund. The shares of
each Fund are offered in five separate classes: Class A, Class B, Class C, Class
K and Class Y shares.
At a board meeting on November 7, 1996, the Trustees adopted a plan
pursuant to Rule 18f-3 under the 1940 Act ("Multi-Class Plan") on behalf of each
Fund. Each Multi-Class Plan provides that shares of each class of a Fund are
identical, except for one or more expense variables, certain related rights,
exchange privileges, class designation and sales loads assessed due to differing
distribution methods.
In the event of a liquidation or dissolution of the Trust, shareholders
of a particular Fund would be entitled to receive the assets available for
distribution belonging to such Fund, and a proportionate distribution, based
upon the relative net asset value of the Trust's respective Funds, of any
general assets not belonging to a Fund which are available for distribution.
Shareholders of a Fund are entitled to participate in the net distributable
assets of the particular Fund involved on liquidation, based on the number of
shares of the particular Fund that are held by each shareholder.
Holders of all outstanding shares of a particular Fund will vote
together in the aggregate and not by class on all matters, except that only
Class A shares of a Fund will be entitled to vote on matters submitted to a vote
of shareholders pertaining to the Fund's Class A Plan, only Class B shares will
be entitled to vote on matters submitted to a vote of shareholders pertaining to
the Fund's Class B Plan, only Class C shares of the Fund will be entitled to
vote on matters submitted to a vote of shareholders pertaining to the Fund's
Class C Plan, and only Class K shares of the Fund will be entitled to vote on
matters submitted to a vote of shareholders pertaining to the Class K Plan.
Further, shareholders of all of the Funds, as well as those of any other
investment portfolio now or hereafter offered by the Trust, will vote together
in the aggregate and not separately on a Fund-by-Fund basis, except as otherwise
required by law or when permitted by the Boards of Trustees. Rule 18f-2 under
the 1940 Act provides that any matter required to be submitted to the holders of
the outstanding voting securities of an investment company such as the Trust
shall not be deemed to have been effectively acted upon unless approved by the
holders of a majority of the outstanding shares of each Fund affected by the
matter. A Fund is affected by a matter unless it is clear that the interests of
each Fund in the matter are substantially identical or that the matter does not
affect any interest of the Fund. Under the Rule, the approval of an investment
advisory agreement, sub-advisory agreement, or any change in a fundamental
investment policy would be effectively acted upon with respect to a Fund only if
approved by a majority of the outstanding shares of such Fund. However, the Rule
also provides that the ratification of the appointment of independent auditors,
the approval of principal underwriting contracts and the election of trustees
may be effectively acted upon by shareholders of the Trust voting together in
the aggregate without regard to a particular Fund.
Shares of the Trust have noncumulative voting rights and, accordingly,
the holders of more than 50% of the Trust's outstanding shares may elect all of
the trustees. Shares have no preemptive rights and only such conversion and
exchange rights as the Board may grant in its discretion. When issued for
payment as described in the Prospectus, shares will be fully paid and
non-assessable by the Trust.
Shareholder meetings to elect trustees will not be held unless and until
such time as required by law. At that time, the trustees then in office will
call a shareholders' meeting to elect trustees. Except as set forth above, the
trustees will continue to hold office and may appoint successor trustees.
Meetings of the shareholders of the Trust shall be called by the directors upon
the written request of shareholders owning at least 10% of the outstanding
shares entitled to vote.
The Trust's Declaration of Trust authorizes the Trust's Board of
Trustees, without shareholder approval (unless otherwise required by applicable
law), to: (i) sell and convey the assets belonging to a class of shares to
another management investment company for consideration which may include
securities issued by the purchaser and, in connection therewith, to cause all
outstanding shares of such class to be redeemed at a price which is equal to
their net asset value and which may be paid in cash or by distribution of the
securities or other consideration received from the sale and conveyance; (ii)
sell and convert the assets belonging to one or more classes of shares into
money and, in connection therewith, to cause all outstanding shares of such
class to be redeemed at their net asset value; or (iii) combine the assets
belonging to a class of shares with the assets belonging to one or more other
classes of shares if the Board of Trustees reasonably determines that such
combination will not have a material adverse effect on the shareholders of any
class participating in such combination and, in connection therewith, to cause
all outstanding shares of any such class to be redeemed or converted into shares
of another class of shares at their net asset value. However, the exercise of
such authority may be subject to certain restrictions under the 1940 Act. The
Trust's Board of Trustees may authorize the termination any class of shares
after the assets belonging to such class have been distributed to its
shareholders.
MISCELLANEOUS
Counsel. The law firm of Dechert Price & Rhoads, 1500 K Street, N.W.,
Washington, DC 20005, has passed upon certain legal matters in connection with
the shares offered by the Funds and serves as counsel to the Trust.
Independent Auditors. Ernst & Young LLP, serves as the Trust's independent
auditors.
Shareholder Approvals. As used in this Statement of Additional
Information and in the Prospectus, a "majority of the outstanding shares" of a
Fund means the lesser of (a) 67% of the shares of that Fund represented at a
meeting at which the holders of more than 50% of the outstanding shares of that
Fund are present in person or by proxy, or (b) more than 50% of the outstanding
shares of that Fund.
REGISTRATION STATEMENT
This Statement of Additional Information and the Trust's Prospectus do
not contain all the information included in the Trust's registration statement
filed with the SEC under the 1933 Act with respect to the securities offered
hereby, certain portions of which have been omitted pursuant to the rules and
regulations of the SEC. The registration statement, including the exhibits filed
therewith, may be examined at the offices of the SEC in Washington, D.C.
Statements contained herein and in the Prospectus as to the contents of
any contract of other documents referred to are not necessarily complete, and,
in such instance, reference is made to the copy of such contract or other
documents filed as an exhibit to the Trust's registration statement, each such
statement being qualified in all respect by such reference.
APPENDIX
As stated in the Prospectus, the Funds may enter into certain futures
transactions and options for hedging purposes. Such transactions are described
in this Appendix.
I. Index Futures Contracts
General. A bond index assigns relative values of the bonds included in
the index and the index fluctuates with changes in the market values of the
bonds included. The Chicago Board of Trade has designed a futures contract based
on the Bond Buyer Municipal Bond Index. This Index is composed of 40 term
revenue and general obligation bonds and its composition is updated regularly as
new bonds meeting the criteria of the Index are issued and existing bonds
mature. The Index is intended to provide an accurate indicator of trends and
changes in the municipal bond market. Each bond in the Index is independently
priced by six dealer-to-dealer municipal bond brokers daily. The 40 prices then
are averaged and multiplied by a coefficient. The coefficient is used to
maintain the continuity of the Index when its composition changes.
A stock index assigns relative values to the stocks included in the
index and the index fluctuates with changes in the market values of the stocks
included. Some stock index futures contracts are based on broad market indexes,
such as the Standard & Poor's 500 or the New York Stock Exchange Composite
Index. In contrast, certain exchanges offer futures contracts on narrower market
indexes, such as the Standard & Poor's 100 or indexes based on an industry or
market segment, such as oil and gas stocks.
Futures contracts are traded on organized exchanges regulated by the
Commodity Futures Trading Commission. Transactions on such exchanges are cleared
through a clearing corporation, which guarantees the performance of the parties
to each contract.
A Fund will sell index futures contracts in order to offset a decrease
in market value of its portfolio securities that might otherwise result from a
market decline. A Fund will purchase index futures contracts in anticipation of
purchases of securities. In a substantial majority of these transactions, a Fund
will purchase such securities upon termination of the long futures position, but
a long futures position may be terminated without a corresponding purchase of
securities.
In addition, a Fund may utilize index futures contracts in anticipation
of changes in the composition of its portfolio holdings. For example, in the
event that a Fund expects to narrow the range of industry groups represented in
its holdings it may, prior to making purchases of the actual securities,
establish a long futures position based on a more restricted index, such as an
index comprised of securities of a particular industry group. A Fund may also
sell futures contracts in connection with this strategy, in order to protect
against the possibility that the value of the securities to be sold as part of
the restructuring of the portfolio will decline prior to the time of sale.
Examples of Stock Index Futures Transactions. The following are examples
of transactions in stock index futures transactions (net of commissions and
premiums, if any).
ANTICIPATORY PURCHASE HEDGE: Buy the Future
Hedge Objective: Protect Against Increasing Price
Portfolio Futures
-Day Hedge is Placed-
Anticipate buying $62,500 in Buying 1 Index Futures at 125
Equity Securities Value of Futures =
$62,500/Contract
-Day Hedge is Lifted-
Buy Equity Securities with Actual Sell 1 Index Futures at 130
Cost = $65,000 Value of Futures =
Increase in Purchase Price = $65,000/Contract
$2,500
Gain on Futures = $2,500
HEDGING A STOCK PORTFOLIO: Sell the Future
Hedge Objective: Protect Against Declining
Value of the Portfolio
Factors:
Value of Stock Portfolio = $1,000,000
Value of Futures Contract - 125 x $500 = $62,500
Portfolio Beta Relative to the Index = 1.0
Portfolio Futures
-Day Hedge is Placed-
Anticipate Selling $1,000,000 in Sell 16 Index Futures at 125
Equity Securities Value of Futures = $1,000,000
-Day Hedge is Lifted-
Equity Securities - Own Stock Buy 16 Index Futures at 120
with Value = $960,000 Value of Futures = $960,000
Loss in Portfolio Value = $40,000 Gain on Futures = $40,000
II. Margin Payments
Unlike purchase or sales of portfolio securities, no price is paid or
received by a Fund upon the purchase or sale of a futures contract. Initially,
the Fund will be required to deposit with the broker or in a segregated account
with the Custodian an amount of cash or cash equivalents, known as initial
margin, based on the value of the contract. The nature of initial margin in
futures transactions is different from that of margin in security transactions
in that futures contract margin does not involve the borrowing of funds by the
customer to finance the transactions. Rather, the initial margin is in the
nature of a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract assuming all
contractual obligations have been satisfied. Subsequent payments, called
variation margin, to and from the broker, will be made on a daily basis as the
price of the underlying instruments fluctuates making the long and short
positions in the futures contract more or less valuable, a process known as
marking-to-the-market. For example, when a Fund has purchased a futures contract
and the price of the contract has risen in response to a rise in the underlying
instruments, that position will have increased in value and the Fund will be
entitled to receive from the broker a variation margin payment equal to that
increase in value. Conversely, where a Fund has purchased a futures contract and
the price of the futures contract has declined in response to a decrease in the
underlying instruments, the position would be less valuable and the Fund would
be required to make a variation margin payment to the broker. At any time prior
to expiration of the futures contract, the Sub-Advisor may elect to close the
position by taking an opposite position, subject to the availability of a
secondary market, which will operate to terminate the Fund's position in the
futures contract. A final determination of variation margin is then made,
additional cash is required to be paid by or released to the Fund, and the Fund
realizes a loss or gain.
III. Risks of Transactions in Futures Contracts
There are several risks in connection with the use of futures by a Fund
as hedging devices. One risk arises because of the imperfect correlation between
movements in the price of the futures and movements in the price of the
instruments which are the subject of the hedge. The price of the future may move
more than or less than the price of the instruments being hedged. If the price
of the futures moves less than the price of the instruments which are the
subject of the hedge, the hedge will not be fully effective but, if the price of
the instruments being hedged has moved in an unfavorable direction, the Fund
would be in a better position than if it had not hedged at all. If the price of
the instruments being hedged has moved in a favorable direction, this advantage
will be partially offset by the loss on the futures. If the price of the futures
moves more than the price of the hedged instruments, the Fund will experience
either a loss or gain on the futures which will not be completely offset by
movements in the price of the instruments which are the subject of the hedge. To
compensate for the imperfect correlation of movements in the price of
instruments being hedged and movements in the price of futures contracts, a Fund
may buy or sell futures contracts in a greater dollar amount than the dollar
amount of instruments being hedged if the volatility over a particular time
period of the prices of such instruments has been greater than the volatility
over such time period of the futures, or if otherwise deemed to be appropriate
by the Sub-Advisor. Conversely, a Fund may buy or sell fewer futures contracts
if the volatility over a particular time period of the prices of the instruments
being hedged is less than the volatility over such time period of the futures
contract being used, or if otherwise deemed to be appropriate by the
Sub-Advisor. It is also possible that, when a Fund had sold futures to hedge its
portfolio against a decline in the market, the market may advance and the value
of instruments held in the Fund may decline. If this occurred, the Fund would
lose money on the futures and also experience a decline in value in its
portfolio securities.
Where futures are purchased to hedge against a possible increase in the
price of securities before a Fund is able to invest its cash (or cash
equivalents) in an orderly fashion, it is possible that the market may decline
instead; if the Fund then concludes not to invest its cash at that time because
of concern as to possible further market decline or for other reasons, the Fund
will realize a loss on the futures contract that is not offset by a reduction in
the price of the instruments that were to be purchased.
In instances involving the purchase of futures contracts by a Fund, an
amount of cash and cash equivalents, equal to the market value of the futures
contracts, will be deposited in a segregated account with the Custodian and/or
in a margin account with a broker to collateralize the position and thereby
insure that the use of such futures is unleveraged.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the futures and the
instruments being hedged, the price of futures may not correlate perfectly with
movement in the cash market due to certain market distortions. Rather than
meeting additional margin deposit requirements, investors may close futures
contracts through off-setting transactions which could distort the normal
relationship between the cash and futures markets. Second, with respect to
financial futures contracts, the liquidity of the futures market depends on
participants entering into off-setting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced thus producing distortions. Third, from
the point of view of speculators, the deposit requirements in the futures market
are less onerous than margin requirements in the securities market. Therefore,
increased participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price distortion in the
futures market, and because of the imperfect correlation between the movements
in the cash market and movements in the price of futures, a correct forecast of
general market trends or interest rate movements by the Sub-Advisor may still
not result in a successful hedging transaction over a short time frame.
Positions in futures may be closed out only on an exchange or board of
trade which provides a secondary market for such futures. Although the Funds
intend to purchase or sell futures only on exchanges or boards of trade where
there appear to be active secondary markets, there is no assurance that a liquid
secondary market on any exchange or board of trade will exist for any particular
contract or at any particular time. In such event, it may not be possible to
close a futures investment position, and in the event of adverse price
movements, a Fund would continue to be required to make daily cash payments of
variation margin. However, in the event futures contracts have been used to
hedge portfolio securities, such securities will not be sold until the futures
contract can be terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee that the price of
the securities will in fact correlate with the price movements in the futures
contract and thus provide an offset on a futures contract.
Further, it should be noted that the liquidity of a secondary market in
a futures contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation in a
futures contract price during a single trading day. Once the daily limit has
been reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions. The
trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal activity, which could at times make it difficult or
impossible to liquidate existing positions or to recover excess variation margin
payments.
Successful use of futures by a Fund is also subject to the Sub-Advisor's
ability to predict correctly movements in the direction of the market. For
example, if a Fund has hedged against the possibility of a decline in the market
adversely affecting securities held by it and securities prices increase
instead, the Fund will lose part or all of the benefit to the increased value of
its securities which it has hedged because it will have offsetting losses in its
futures positions. In addition, in such situations, if the Fund has insufficient
cash, it may have to sell securities to meet daily variation margin
requirements. Such sales of securities may be, but will not necessarily be, at
increased prices which reflect the rising market. The Fund may have to sell
securities at a time when they may be disadvantageous to do so.
IV. Options on Futures Contracts
Each Funds may purchase and write options on the futures contracts
described above. A futures option gives the holder, in return for the premium
paid, the right to buy (call) from or sell (put) to the writer of the option a
futures contract at a specified price at any time during the period of the
option. Upon exercise, the writer of, the option is obligated to pay the
difference between the cash value of the futures contract and the exercise
price. Like the buyer or seller of a futures contract, the holder, or writer, of
an option has the right to terminate its position prior to the scheduled
expiration of the option by selling, or purchasing an option of the same series,
at which time the person entering into the closing transaction will realize a
gain or loss. A Fund will be required to deposit initial margin and variation
margin with respect to put and call options on futures contracts written by it
pursuant to brokers' requirements similar to those described above. Net option
premiums received will be included as initial margin deposits.
Investments in futures options involve some of the same considerations
that are involved in connection with investments in future contracts (for
example, the existence of a liquid secondary market). In addition, the purchase
or sale of an option also entails the risk that changes in the value of the
underlying futures contract will not correspond to changes in the value of the
option purchased. Depending on the pricing of the option compared to either the
futures contract upon which it is based, or upon the price of the securities
being hedged, an option may or may not be less risky than ownership of the
futures contract or such securities. In general, the market prices of options
can be expected to be more volatile than the market prices on underlying futures
contract. Compared to the purchase or sale of futures contracts, however, the
purchase of call or put options on futures contracts may frequently involve less
potential risk to a Fund because the maximum amount at risk is the premium paid
for the options (plus transaction costs). The writing of an option on a futures
contract involves risks similar to those risks relating to the sale of futures
contracts.
V. Currency Transactions
The Funds may engage in currency transactions in order to hedge the
value of portfolio holdings denominated in particular currencies against
fluctuations in relative value. Currency transactions include forward currency
contracts, currency futures, options on currencies, and currency swaps. A
forward currency contract involves a privately negotiated obligation to purchase
or sell (with delivery generally required) a specific currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. A currency swap is
an agreement to exchange cash flows based on the notional difference among two
or more currencies and operates similarly to an interest rate swap as described
in the Statement of Additional Information. A Fund may enter into currency
transactions with counterparties which have received (or the guarantors of the
obligations which have received) a credit rating of A-1 or P-1 by S&P or
Moody's, respectively, or that have an equivalent rating form a NRSRO or are
determined to be of equivalent credit quality by the Sub-Advisor.
A Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps will be
limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is entering into a currency transaction with
respect to specific assets or liabilities of a Fund, which will generally arise
in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.
A Fund will not enter into a transaction to hedge currency exposure to
an extent greater after netting all transactions intended wholly or partially to
offset other transactions, than the aggregate market value (at the time of
entering into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency,
other than with respect to proxy hedging as described below.
A Fund may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.
To reduce the effect of currency fluctuations on the value of existing
or anticipated holdings of portfolio securities, a Fund may also engage proxy
hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging entails entering into a commitment or option to sell a currency whose
changes in value are generally considered to be correlated to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, in exchange for U.S. dollars. The amount of the
commitment or option would not exceed the value of the Fund's securities
denominated in correlated currencies. For example, if the Sub-Advisor considers
that the Austrian schilling is correlated to the German deutschemark (the
"D-mark"), the Fund holds securities denominated in schillings and the
Sub-Advisor believes that the value of the schillings will decline against the
U.S. dollar, the Sub-Advisor may enter into a commitment or option to sell
D-marks and buy dollars. Currency hedging involves some of the same risks and
considerations as other transactions with similar instruments. Currency
transactions can result in losses to a Fund if the currency being hedged
fluctuates in value to a degree or in a direction that is not anticipated.
Further, there is the risk that the perceived correlation between various
currencies may not be present or may not be present during the particular time
that the Fund is engaging in proxy hedging. If a Fund enters into a currency
hedging transaction, the Fund will comply with the asset segregation
requirements. Under such requirements, the Fund will segregate liquid, high
grade assets with the custodian to the extent the Fund's obligations are not
otherwise "covered" through ownership of the underlying currency.
Currency transactions are subject to risks different from those of other
portfolio transactions. Because currency control is of great importance to the
issuing governments and influences economic planning and policy, purchases and
sales of currency and related instruments can be negatively affected by
government exchange controls, blockages, and manipulations or exchange
restrictions imposed by governments. These can result in losses to the Fund if
it is unable to deliver or receive currency or funds in settlement of
obligations and could also cause hedges it has entered into to be rendered
useless, resulting in full currency exposure as well as incurring transaction
costs. Buyers and sellers of currency futures are subject to the same risks that
apply to the use of futures generally. Further, settlement of a currency futures
contract for the purchase of most currencies must occur at a bank based in the
issuing nation. Trading options on currency futures is relatively new, and the
ability to establish and close positions on such options is subject to the
maintenance of a liquid market which may not always be available. Currency
exchange rates may fluctuate based on factors extrinsic to that country's
economy.
VI. Other Matters
Accounting for futures contracts will be in accordance with generally
accepted accounting principles.
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements
Report of Independent Certified Public Accountants*
Statements of Assets and Liabilities*
(b) Exhibits:
(1) Declaration of Trust*
(2) By-Laws*
(3) Not Applicable
(4) Not Applicable
(5) (a) Form of Investment Advisory Agreement*
(b) Form of Sub-Advisory Agreement*
(6) (a) Form of Underwriting Agreement*
(7) Not Applicable
(8) (a) Form of Custodian Contract*
(b) Form of Subcustodian Agreement*
(9) (a) Transfer Agency and Service Agreement*
(b) Administration Agreement*
(10) Opinion and Consent of Counsel*
(11) (a) Consent of Independent Public Accountants*
(b) Powers of Attorney
(12) Not Applicable
(13) Initial Capital Agreement*
(14) Not Applicable
(15) (a) Service and Distribution Plan for The Munder
Framlington Funds Trust Class A, B and C
Shares*
(b) Service Plan for The Munder Framlington
Funds Trust Class K Shares*
<PAGE>
(16) Schedule for Computation of Performance
Quotations*
(17) Not Applicable
(18) Multi-Class Plan*
- --------------------------------
* To be filed by Amendment
- --------------------------------
Item 25. Persons Controlled by or Under Common Control with Registrant.
--------------------------------------------------
Not Applicable.
Item 26. Number of Holders of Securities.
-------------------------------
As of , 1996, the number of shareholders of record of each
Class of shares of each Series of the Registrant that was offered as of that
date was as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
Class A Class B Class C Class K Class Y
------------------------------------------------------
Framlington International Growth Fund
Framlington Emerging Markets Fund
Framlington Healthcare Fund
</TABLE>
Item 27. Indemnification.
---------------
Reference is made to the Registrant's Declaration of Trust,
which provides for indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to Trustees, officers and
controlling persons of the Registrant by the Registrant pursuant to the Trust's
Declaration of Trust, its By-Laws or otherwise, the Registrant is aware that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and, therefore, is unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by Trustees,
officers or controlling persons of the Registrant in connection with the
successful defense of any act, suit or proceeding) is asserted by such Trustees,
officers or controlling persons in connection with shares being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.]
Item 28. Business and Other Connections of Investment Advisor and
Sub-Advisor.
----------------------------------------------------
Munder Capital Management
-------------------------
Position
Name with Advisor
- ---- ------------
Old MCM, Inc. Partner
Munder Group LLC Partner
WAM Holdings, Inc. Partner
Woodbridge Capital Management, Inc. Partner
Lee P. Munder President and Chief
Executive Officer
Leonard J. Barr, II Senior Vice
President and Director
of Research
Ann J. Conrad Vice President and
Director of Special
Equity Products
Terry H. Gardner Vice President and
Chief Financial Officer
Elyse G. Essick Vice President and
Director of Client
Services
Otto G. Hinzmann Vice President and
Director of Equity
Portfolio Management
Sharon E. Fayolle Vice President and
Director of Money Market
Trading
Anne K. Kennedy Vice President and
Director of Corporate
Bond Trading
Peter G. Root Vice President and
Director of Government
Securities Trading
Lisa A. Rosen General Counsel and
Director of Mutual Fund
Operations
Ann F. Putallaz Vice President and
Director of Fiduciary
Services
James C. Robinson Vice President and
Chief Investment
Officer/Fixed Income
Gerald L. Seizert Executive Vice
President and Chief
Investment Officer/Equity
Paul D. Tobias Executive Vice President
and Chief Operating
Officer
For further information relating to the Investment Advisor's officers, reference
is made to Form ADV filed under the Investment Advisers Act of 1940 by Munder
Capital Management, SEC File No. 801-32415.
Item 29. Principal Underwriters.
----------------------
(a) Funds Distributor, Inc. ("FDI") serves as Distributor
of shares of the Registrant. FDI also serves as
principal underwriter of the following investment
companies other than the Registrant:
HT Insight Funds, d/b/a Harris Insight Funds
Harris Insight Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
St. Clair Funds, Inc.
Panagora Funds
BJB Investment Funds
Waterhouse Investors Cash Management Fund, Inc.
Skyline Funds
Foreign Fund, Inc.
PanAgora Funds
BEA Investment Funds, Inc.
Fremont Mutual Funds
RCM Capital Funds, Inc.
RCM Equity Funds, Inc.
LKCM Funds
Pierpont Funds
JPM Advisor Funds
JPM Institutional Funds
(b) The directors and officers of FDI are set forth below.
Unless otherwise indicated, their address is One Exchange
Place, Boston, Massachusetts 02109.
<TABLE>
<S> <C> <C>
Positions and Positions and
Offices with Offices with
Name FDI Registrant
- ---- ------------- -------------
William J. Nutt Chairman None
Marie E. Connolly President, Chief None
Executive Officer
John E. Pelletier Senior Vice None
President General Counsel
Rui M. Moura First Vice None
President
Joseph F. Tower, III Senior Vice None
President, Treasurer,
Chief Financial Officer
Richard W. Ingram Senior Vice President None
Donald R. Robertson Senior Vice President None
Bernard A. Whalen Senior Vice President None
John W. Gomez Director None
</TABLE>
(c) Not Applicable
The information required by this Item 29 with respect to each
director and officer of FDI is incorporated by reference to Schedule A of Form
BD filed by FDI pursuant to the Securities Exchange Act of 1934 (SEC File No.
20518).
Item 30. Location of Accounts and Records.
--------------------------------
The account books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the Investment Company Act
of 1940 and the Rules thereunder will be maintained at the offices of Munder
Capital Management at 480 Pierce Street, Birmingham, MI 48009, at State Street
Bank and Trust Company, c/o National Financial Data Services, 1004 Baltimore,
Kansas City, Missouri 64105-1807 or at First Data Investor Services Group, Inc.
(f/k/a The Shareholder Services Group, Inc.), One Exchange Place, Boston,
Massachusetts 02109.
Item 31. Management Services.
-------------------
Not Applicable
Item 32. Undertakings.
------------
(a) Not applicable
(b) Registrant undertakes to file a post-effective amendment,
using reasonably current financial statements which need not
be certified, within four to six months from the effective
date of this Registration Statement.
(c) Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, Registrant has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Washington, D.C. on this 30th day of
October, 1996.
The Munder Framlington Funds Trust
By: Julie A. Tedesco
President
* By: /s/ Paul F. Roye
------------------------
Paul F. Roye
as Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form N-1A has been signed below by the following
persons on behalf of The Munder Framlington Funds Trust in the capacities and on
the date indicated:
Signatures Title Date
*_______________________ President and October 30, 1996
Julie A. Tedesco Trustee
*_______________________ Treasurer and October 30, 1996
Teresa M.R. Hamlin Trustee
* By: /s/ Paul F. Roye
------------------------
Paul F. Roye
as Attorney-in-Fact
Exhibit 11b
THE MUNDER FRAMLINGTON FUNDS TRUST
POWER OF ATTORNEY
The undersigned, Julie A. Tedesco, whose signature appears below, does
hereby constitute and appoint Paul F. Roye her true and lawful attorney and
agent to execute in her name, place and stead, in her capacity as trustee or
officer, or both, of The Munder Framlington Funds Trust (the "Trust"), the
Registration Statement of the Trust on Form N-1A, any amendments thereto, and
all instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission; and said attorney shall have
full power of substitution and re-substitution; and said attorney shall have
full power and authority to do and perform in the name and on the behalf of the
undersigned trustee and/or officer of the Trust, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises, as fully
and to all intents and purposes as the undersigned trustee and/or officer of the
Trust might or could do in person, said acts of said attorney being hereby
ratified and approved.
/s/ Julie A. Tedesco
Dated: October 29, 1996
<PAGE>
THE MUNDER FRAMLINGTON FUNDS TRUST
POWER OF ATTORNEY
The undersigned, Teresa M.R. Hamlin, whose signature appears below,
does hereby constitute and appoint Paul F. Roye her true and lawful attorney and
agent to execute in her name, place and stead, in her capacity as trustee or
officer, or both, of The Munder Framlington Funds Trust (the "Trust"), the
Registration Statement of the Trust on Form N-1A, any amendments thereto, and
all instruments necessary or incidental in connection therewith, and to file the
same with the Securities and Exchange Commission; and said attorney shall have
full power of substitution and re-substitution; and said attorney shall have
full power and authority to do and perform in the name and on the behalf of the
undersigned trustee and/or officer of the Trust, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises, as fully
and to all intents and purposes as the undersigned trustee and/or officer of the
Trust might or could do in person, said acts of said attorney being hereby
ratified and approved.
/s/ Teresa M.R. Hamlin
Dated: October 29, 1996
<PAGE>
