As filed with the Securities and Exchange Commission
on December 19, 1996
Registration Nos. 333-15205
811-7897
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 1 [X]
----
Post-Effective Amendment No. [ ]
----
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 1 [X]
----
(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
------
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 Statement of
Assets and
Liabilities
62796.85
<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 Class A, Class B and Class C shares of the
investment portfolios offered by the Trust (the "Funds"):
Framlington International Growth Fund
Framlington Emerging Markets Fund
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 ______, 1996, 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
Performance of Equity Portfolios Managed by the Sub-
Advisor..................................................... 44
Portfolio Managers.......................................... 46
Administrator, Custodian and Transfer Agent................. 46
TAXES............................................................. 49
Taxes - Foreign Investments................................. 50
DESCRIPTION OF SHARES............................................. 51
Reports to Shareholders..................................... 52
PERFORMANCE....................................................... 52
SHAREHOLDER ACCOUNT INFORMATION................................... 53
2
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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.
3
<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
Framlington 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. Framlington Emerging Markets Fund
seeks to achieve its objective through investing primarily in equity securities
of issuers in emerging market countries. Framlington 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."
4
<PAGE>
Purchase Plans
This Prospectus offers three classes, "Class A," "Class B," and "Class C,"
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
5
<PAGE>
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
6
<PAGE>
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 and Sub-Advisor." Distributor
Funds Distributor, Inc.
7
<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>
<S> <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 dividend None None None
Maximum contingent deferred sales charge None None None
Redemption fees.................... None None None
Exchange fees...................... None None None
Annual operating expenses:
(as a percentage of average net assets)
Advisory fees...................... 1.00% 1.25% 1.00%
12b-1 fees......................... .25% .25% .25%
Other expenses..................... .30% .30% .30%
Total fund operating expenses...... 1.55% 1.80% 1.55%
- ------------------
*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.
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 dividendNone None None
Maximum contingent deferred sales charge5.00% 5.00% 5.00%
Redemption fees.................... None None None
Exchange fees...................... None None None
Annual operating expenses:
(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..................... .30% .30% .30%
Total fund operating expenses...... 2.30% 2.55% 2.30%
- ------------------
*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."
8
<PAGE>
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 dividendNone None None
Maximum contingent deferred sales charge1.00% 1.25% 1.00%
Redemption fees.................... None None None
Exchange fees...................... None None None
Annual operating expenses:
(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..................... .30% .30% .30%
Total fund operating expenses...... 2.30% 2.55% 2.30%
- ------------------
*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
9
<PAGE>
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 $70 $101
Emerging Markets Fund $72 $109
Healthcare Fund $70 $101
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$73 $23 $102 $72
Emerging Markets Fund $76 $26 $109 $79
Healthcare Fund $73 $23 $102 $72
</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.
10
<PAGE>
Class C Shares
1 Year 3 Years
------ -------
International Growth Fund $33 $72
Emerging Markets Fund $36 $79
Healthcare Fund $33 $72
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
Framlington International Growth Fund ("International Growth Fund"), the
Framlington Emerging Markets Fund ("Emerging Markets Fund"), and the 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 in their respective countries.
The Fund may invest in the securities of issuers located
in various countries which include, but are not limited to,
11
<PAGE>
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 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), the International Finance Corporation,
the United Nations or the European Bank for Reconstruction and Development.
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
12
<PAGE>
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 for which at least 50% of sales, earnings or assets arise from or are
dedicated to health services or medical technology activities. It is anticipated
that under normal circumstances the Healthcare Fund will be invested primarily
in U.S. healthcare companies. At the present time, the predominant number of
Healthcare companies meeting the Fund's criteria are in the United States.
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
13
<PAGE>
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 issuer's 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
issuer, 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 degree of
protection of principal and interest 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
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<PAGE>
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.
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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 countries 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.
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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. The 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 industry concentration may increase the risk and volatility of an
investment company's portfolio, the Healthcare Fund will endeavor to reduce risk
by having a portfolio of investments that is diversified within its stated
objective and policies.
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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 foreign
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
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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.
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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.
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." 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
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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
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<PAGE>
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 AND REVERSE REPURCHASE AGREEMENTS. 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. The Funds may also 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. Additionally, 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
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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. 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). These
limitations are set forth in the Statement of Additional Information.
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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.
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ANNUAL 12B-1
FEES (AS A % OF
AVERAGE DAILY OTHER
SALES CHARGE NET ASSETS) INFORMATION
CLASS A Maximum initial Service fee of Initial sales
sales charge of 0.25% charge waived
5.50% of the or reduced for
public offering certain
price. purchases.
CLASS B Maximum CDSC of Service fee of CDSC waived for
5% of 0.25%; certain
redemption distribution redemptions;
proceeds; fee of 0.75% shares convert
declines to to Class A
zero after six shares
years. approximately
six years after
issuance,
subject to
receipt of
certain tax
rulings or
opinions.
CLASS C Maximum CDSC of Service fee of Shares do not
1% of 0.25%; convert to
redemption distribution another class.
proceeds for fee of 0.75%
redemptions
made within the
first year
after purchase.
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
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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
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<PAGE>
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
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<PAGE>
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.
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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:
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INITIAL SALES CHARGE SCHEDULE - CLASS A SHARES
<TABLE>
<S> <C> <C> <C>
Sales Charge as a Percentage of
Discount to
Net Amount Selected Dealers
Amount of Purchase Invested (Net as a Percentage of
Offering Price 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,
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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
31
<PAGE>
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.
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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.
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.
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<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 THE LESSER OF NET ASSET VALUE
PURCHASE OR ORIGINAL PURCHASE PRICE
First 5.00%
Second 4.00%
Third 3.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh 0.00%
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<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.
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<PAGE>
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.
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<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.
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<PAGE>
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
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<PAGE>
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.
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<PAGE>
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.
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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 September 30, 1996, the Advisor and its
affiliates had approximately $36 billion in assets under active management, of
which $18 billion were invested in equity securities, $8 billion were invested
in money market or other short-term instruments, and $10 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
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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 up 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 up 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 accounts 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 the Healthcare portfolio
performance, the data relates to a unit trust organized under the laws of the
United Kingdom managed by the same personnel of the Sub-Advisor with similar
investment objectives and policies to the Healthcare Fund. In the case of
Emerging Markets portfolio performance, the data relates to a Canadian-based
institutional emerging markets portfolio managed by the same personnel of the
Sub-Advisor with similar investment objectives and policies to the Emerging
Markets Fund.
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The trust account performance is 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, actual investment advisory fees and UK
taxes and initial sales charges. The data assume the reinvestment of net income
and capital gain distributions. The trust account returns are calculated using
beginning offer and ending bid prices for periods ended September 30, 1996.
Investors should not rely on the following performance data of the
Sub-Advisor's client 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.
S&P Healthcare
Period Ended Framlington Composite Index
September 30, 1996 Health Portfolio Capital Change
------------------ ---------------- --------------
1 Year......................... 33.68% 28.53%
3 Years........................ 112.54% 110.78%
5 Years........................ 134.42% 65.00%
Inception on April 30, 1987.... 404.63% 225.90%
Performance for the Health trust account is calculated on
an offer-bid basis; US Dollar adjusted total return net of all
management fees but not reflecting U.K. tax. Source:
Micropal.
S&P Healthcare Composite Index performance shows capital
change in US Dollars but does not reflect the deduction of
fees, expenses and taxes. Source: Datastream
Framlington MSCI Emerging
Emerging Markets
Period Ended Markets Total
September 30, 1996 Account Return
1 Year......................... 4.23% 4.84%
Inception on November 1, 1994.. 0.65% -12.15%
MSCI Emerging Markets Index performance shows total
return in U.S. dollars but does not reflect the deduction of
fees, expenses and taxes. Source: Datastream.
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The performance of the Canadian Institutional account is measured by the
World Markets Company on a total return basis and has been re-calculated net of
the management fee charged the Canadian Institutional account. The inception
date of the Canadian institutional account is November 1, 1994.
Indices
The S&P Healthcare Composite Index is the composite Healthcare section of
the S&P 500 Index as defined and managed by Standard & Poors. This index covers
securities listed in the USA only.
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.
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.
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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
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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.
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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.
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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
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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 30, 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
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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
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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.
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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.
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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.
62796.84
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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"):
Framlington International Growth Fund
Framlington Emerging Markets Fund
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 ______, 1996, 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..................................................... 4
THE TRUST......................................................... 5
INVESTMENT OBJECTIVES AND POLICIES................................ 5
International Growth Fund................................... 5
Emerging Markets Fund....................................... 6
Healthcare Fund............................................. 6
Information Regarding All Funds............................. 7
PORTFOLIO INSTRUMENTS AND PRACTICES AND ASSOCIATED RISK
FACTORS........................................................... 7
INVESTMENT LIMITATIONS............................................ 17
PURCHASE AND REDEMPTIONS OF SHARES................................ 18
Purchase of Shares.......................................... 18
Redemption of Shares........................................ 19
DIVIDENDS AND DISTRIBUTIONS....................................... 20
NET ASSET VALUE................................................... 21
MANAGEMENT........................................................ 22
Board of Trustees........................................... 22
Investment Advisor and Sub-Advisor.......................... 22
Performance of Equity Portfolios Managed by the Sub-
Advisor..................................................... 24
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
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
2
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offering by the Funds or by the Distributor in any
jurisdiction in which such offering may not lawfully be made.
3
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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 .55% .55% .55%
Shareholder Servicing .25% .25% .25%
All Other Expenses .30% .30% .30%
Total Fund Operating Expenses 1.55% 1.80% 1.55%
</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:
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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 $16 $49
Emerging Markets Fund $18 $57
Healthcare Fund $16 $49
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
Framlington International Growth Fund ("International Growth Fund"), the
Framlington Emerging Markets Fund ("Emerging Markets Fund"), and the 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 in their respective countries.
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<PAGE>
The Fund may invest in the securities of issuers located in various
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 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, the United Nations or the European Bank for Reconstruction and
Development. 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
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<PAGE>
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 for which at least 50% of sales, earnings or
assets arise from or are dedicated to health services or medical technology
activities. It is anticipated that under normal circumstances the Healthcare
Fund will be vested primarily in U.S. healthcare companies. At the present time,
the predominant number of healthcare companies meeting the Fund's criteria are
in the United States.
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
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<PAGE>
("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 issuer's 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
issuer, 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 degree of
protection of principal and interest payments, (c) the relatively low trading
market liquidity for the
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<PAGE>
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
9
<PAGE>
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 countries 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
10
<PAGE>
possible imposition of exchange control regulations or freezes
on convertibility of currency.
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. The 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 industry concentration may increase the risk and volatility of an
investment company's portfolio, the Healthcare Fund will
11
<PAGE>
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 foreign
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
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<PAGE>
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
13
<PAGE>
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.
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." 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
14
<PAGE>
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
15
<PAGE>
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 AND REVERSE REPURCHASE AGREEMENTS. 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. The Funds may also 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. Additionally, 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
16
<PAGE>
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. 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). These
limitations are set forth in the Statement of Additional Information.
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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
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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.
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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.
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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).
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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 September 30, 1996, the Advisor and its
affiliates had approximately $36 billion in assets under active management, of
which $18 billion were invested in equity securities, $8 billion were invested
in money market or other short-term instruments, and $10 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
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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 up 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 up 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.
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Performance of Equity Portfolios Managed by the Sub-Advisor
Set forth below are certain performance data provided by the Sub-Advisor
relating to accounts 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 the Healthcare portfolio
performance, the data relates to a unit trust organized under the laws of the
United Kingdom managed by the same personnel of the Sub-Advisor with similar
investment objectives and policies to the Healthcare Fund.
The trust account performance is 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, actual investment advisory fees, UK
taxes and initial sales charges. The data assume the reinvestment of net income
and capital gain distributions. The trust account returns are calculated using
beginning offer and ending bid prices for periods ended September 30, 1996.
Investors should not rely on the following performance data of the
Sub-Advisor's client 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.
S&P Healthcare
Period Ended Framlington Composite Index
September 30, 1996 Health Portfolio Capital Change
------------------ ---------------- --------------
1 Year......................... 33.68% 28.53%
3 Years........................ 112.54% 110.78%
5 Years........................ 134.42% 65.00%
Inception on April 30, 1987.... 404.63% 225.90%
Performance for the Health trust account is calculated on
an offer-bid basis; US Dollar adjusted total return net of all
management fees but not reflecting U.K. tax. Source:
Micropal.
S&P Healthcare Composite Index performance shows capital
change in US Dollars but does not reflect the deduction of
fees, expenses and taxes. Source: Datastream
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Framlington MSCI Emerging
Emerging Markets
Period Ended Markets Total
September 30, 1996 Account Return
1 Year......................... 4.23% 4.84%
Inception on November 1, 1994.. 0.65% -12.15%
MSCI Emerging Markets Index performance shows total
return in U.S. dollars but does not reflect the deduction of
fees, expenses and taxes. Source: Datastream.
The performance of the Canadian Institutional account is measured by the
World Markets Company on a total return basis and has been re-calculated net of
the management fee charged the Canadian Institutional fund. The inception date
of the Canadian institutional account is November 1, 1994.
Indices
The S&P Healthcare Composite Index is the composite Healthcare section of
the S&P 500 Index as defined and managed by Standard & Poors. This index covers
securities listed in the USA only.
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.
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.
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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.
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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
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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
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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.
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DESCRIPTION OF SHARES
Each Fund operates as one series of the Trust. The Trust was organized as
a Massachusetts business trust on October 30, 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 (which may affect
performance), 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.
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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.
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
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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.
62796.83
32
<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"):
Framlington International Growth Fund
Framlington Emerging Markets Fund
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 ______, 1996, 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..................................................... 4
THE TRUST......................................................... 5
INVESTMENT OBJECTIVES AND POLICIES................................ 5
International Growth Fund................................... 5
Emerging Markets Fund....................................... 6
Healthcare Fund............................................. 6
Information Regarding All Funds............................. 7
PORTFOLIO INSTRUMENTS AND PRACTICES AND
ASSOCIATED RISK FACTORS....................... 7
INVESTMENT LIMITATIONS............................................ 17
PURCHASE AND REDEMPTION OF SHARES................................. 18
Purchase of Shares.......................................... 18
Automatic Investment Plan ("AIP")........................... 19
Redemption of Shares........................................ 19
Exchanges................................................... 20
DIVIDENDS AND DISTRIBUTIONS....................................... 20
NET ASSET VALUE................................................... 21
MANAGEMENT........................................................ 22
Board of Trustees........................................... 22
Investment Advisor and Sub-Advisor ......................... 22
Performance of Equity Portfolios Managed by the Sub-
Advisor..................................................... 24
Indices..................................................... 25
Portfolio Managers.......................................... 26
Administrator, Custodian and Transfer Agent................. 26
TAXES............................................................. 27
Taxes - Foreign Investments................................. 28
DESCRIPTION OF SHARES............................................. 29
Reports to Shareholders..................................... 30
PERFORMANCE....................................................... 30
2
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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.
3
<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 .30% .30% .30%
Total Fund Operating Expenses 1.30% 1.55% 1.30%
</TABLE>
"Other expenses" in the above table include administration 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:
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<PAGE>
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 $13 $41
Emerging Markets Fund $16 $49
Healthcare Fund $13 $41
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
Framlington International Growth Fund ("International Growth Fund"), the
Framlington Emerging Markets Fund ("Emerging Markets Fund"), and the 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 in their respective countries.
5
<PAGE>
The Fund may invest in the securities of issuers located in various
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 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), the International Finance Corporation,
by the United Nations or the European Bank for Reconstruction and Development.
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
6
<PAGE>
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 for which at least 50% of sales, earnings or
assets arise from or are dedicated to health services or medical technology
activities. It is anticipated that under normal circumstances the Healthcare
Fund will be invested primarily in U.S. healthcare companies. At the present
time, the predominant number of healthcare companies meeting the Fund's criteria
are in the United States. 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
7
<PAGE>
("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 issuer's 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 issuer, 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 degree of
protection of principal and interest payments, (c) the relatively low trading
market liquidity for the
8
<PAGE>
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
9
<PAGE>
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 countries 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
10
<PAGE>
possible imposition of exchange control regulations or freezes
on convertibility of currency.
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. The 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 industry concentration may increase the risk and volatility of an
investment company's portfolio, the Healthcare Fund will
11
<PAGE>
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 foreign
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
12
<PAGE>
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
13
<PAGE>
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.
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." 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
14
<PAGE>
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
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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 AND REVERSE REPURCHASE AGREEMENTS. 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. The Funds may also 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. Additionally, 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
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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). These
limitations are set forth in the Statement of Additional Information.
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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 Advisor, the
Distributor and the 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
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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
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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
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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
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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,
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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 September 30,
1996, the Advisor and its affiliates had approximately $36
billion in assets under active management, of which $18
billion were invested in equity securities, $8 billion were
invested in money market or other short-term instruments, and
$10 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
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the Sub-Advisor a monthly fee equal on an annual basis to up 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 up 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 accounts 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 the Healthcare portfolio
performance, the data relates to a unit trust organized under the laws of the
United Kingdom managed by the same personnel of the Sub-Advisor with similar
investment objectives and policies to the Healthcare Fund. In the case of
Emerging Markets portfolio performance, the data relates to a Canadian-based
institutional emerging markets portfolio managed by the same personnel of the
Sub-Advisor with similar investment objectives and policies to the Emerging
Markets Fund.
The trust account performance is 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, actual investment advisory fees, UK
taxes and initial sales charges. The data assume the reinvestment of net income
and capital gain distributions. The trust account returns are calculated using
beginning offer and ending bid prices for periods ended September 30, 1996.
Investors should not rely on the following performance
data of the Sub-Advisor's client accounts as an indication of
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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.
S&P Healthcare
Composite Index
Period Ended Framlington Capital
September 30, 1996 Health Portfolio Change
1 Year......................... 33.68% 28.53%
3 Years........................ 112.54% 110.78%
5 Years........................ 134.42% 65.00%
Inception on April 30, 1987.... 404.63% 225.90%
Performance for the Health trust account is calculated on
an offer-bid basis; US Dollar adjusted total return net of all
management fees but not reflecting U.K. tax. Source:
Micropal.
S&P Healthcare Composite Index performance shows capital
change in US Dollars but does not reflect the deduction of
fees, expenses and taxes. Source: Datastream
Framlington MSCI Emerging
Emerging Markets
Period Ended Markets Total
September 30, 1996 Account Return
1 Year......................... 4.23% 4.84%
Inception on November 1, 1994.. 0.65% -12.15%
MSCI Emerging Markets Index performance shows total
return in U.S. dollars but does not reflect the deduction of
fees, expenses and taxes. Source: Datastream.
The performance of the Canadian Institutional account is measured by the
World Markets Company on a total return basis and has been recalculated net of
the management fee charged the Canadian Institutional account. The inception
date of the Canadian institutional account is November 1, 1994.
Indices
The S&P Healthcare Composite Index is the composite Healthcare section of
the S&P 500 Index as defined and managed by Standard & Poors. This index covers
securities listed in the USA only.
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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.
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
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$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
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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
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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 30, 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 (which may affect
performance), 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.
29
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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.
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[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.
62796.81
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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,
Framlington International Growth Fund, Framlington Emerging Markets Fund, and
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 December __,
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 December __, 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 December __, 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 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.
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.
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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.
Additionally, 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 portfolio securities of an amount at least
equal to the market value of the securities, plus accrued interest, subject to
the agreement.
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-
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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
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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
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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.
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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.
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
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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
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<PAGE>
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
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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.
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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
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<PAGE>
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
- 12 -
<PAGE>
("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.
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.
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<PAGE>
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
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<PAGE>
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.
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").
- 15 -
<PAGE>
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 healthcare industries);
3. borrow money or enter into reverse repurchase
agreements except that the Fund may (i) borrow money
or enter into reverse repurchase agreements for
temporary purposes in amounts not exceeding 5% of
its total assets and (ii) borrow money for the
purpose of meeting redemption requets, in amounts
(when aggregated with amounts borrowed under clause
(i)) not exceeding 33 1/3% of its total assets;
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
- 16 -
<PAGE>
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;
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; or
11. Issue senior securities, except as permitted by the
1940 Act.
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; or
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.
- 17 -
<PAGE>
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 TruSenior Advisor to the President
3338 Bronson Boulevard - Western Michigan University
Kalamazoo, MI 490008 since July 1995; prior to that
Age: 62 Executive 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 ofChairman, Walbridge Aldinger
1876 Rathmor Board of Trustees Company
Bloomfield Hills, MI 48304
Age: 47
Thomas B. Bender Trustee Investment Advisor, Financial &
7 Wood Ridge Road Investment Management Group
Glen Arbor, MI 49636 (since April, 1991); Vice
Age: 61 President Institutional Sales,
Kidder, Peabody & Co. (Retired
April, 1991).
David J. Brophy Trustee Professor, University of
1025 Martin Place Michigan; Director, River Place
Ann Arbor, MI 48104 Financial Corp.; Trustee,
Age: 58 Renaissance Assets Trust.
Dr. Joseph E. Champagne Trustee Corporate and Executive
319 Snell Road Consultant since September 1995;
Rochester, MI 48306 prior to that Chancellor, Lamar
Age: 56 University from 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
- 18 -
<PAGE>
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
Age: 51 Services, Inc. ("LPM").
Terry H. Gardner Vice President, Chief FinancVice President and Chief
480 Pierce Street Officer and Treasurer Financial Officer of the Advisor
Suite 300 and World Asset Management; Vice
Birmingham, MI 48009 President and Chief Financial
Age: 36 Officer of Old 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
480 Pierce Street Chief Operating Officer of the
Suite 300 Advisor (since April 1995) and
Birmingham, MI 48009 Executive Vice President of
Age: 45 Comerica, Inc.
Gerald Seizert Vice President Executive Vice President and
480 Pierce Street Chief Investment Officer/Equities
Suite 300 of the Advisor (since April
Birmingham, MI 48009 1995); Managing Director (1991-
Age: 44 1995), 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: 38 1988 to December 1994).
James C. Robinson Vice President Vice President and Chief
480 Pierce Street Investment Officer/Fixed Income
Suite 300 for the Advisor; Vice President
Birmingham, MI 48009 and Director of Fixed Income of
Age: 35 Old MCM, Inc. (1987-1994).
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<PAGE>
Leonard J. Barr, II Vice President Vice President and Director of
480 Pierce Street Core Equity Research of the
Suite 300 Advisor; Director and Senior Vice
Birmingham, MI 48009 President of Old MCM, Inc. (since
Age: 52 1988); 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: 51 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, Assistant TreasurGeneral Counsel of the Advisor
480 Pierce Street since May, 1996; Formerly
Suite 300 Counsel, First Data Investor
Birmingham, MI 48009 Services Group, Inc.; Assistant
Age: 29 Vice President and 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: 33
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 Munder Funds, Inc. and The Munder Funds Trust to their
respective directors/trustees for the fiscal year ended June
30, 1996. Neither the Trust nor St. Clair Funds, Inc. had
operations during the fiscal year ended June 30, 1996.
- 20 -
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Aggregate
Compensation Pension
from Munder Retirement Estimated
Funds Trust andBenefits Accrued Annual Total
Munder Funds, as Part of Benefits from the
Name of Person Position Inc. Fund Expenses upon Retirement Fund Complex
Charles W. Elliott $14,000 None None $14,000
Chairman
John Rakolta, Jr. $14,000 None None $14,000
Vice Chairman
Thomas B. Bender $14,000 None None $14,000
David J. Brophy $14,000 None None $14,000
Trustee
Dr. Joseph E. Champagne $14,000 None None $14,000
Trustee
Thomas D. Eckert $14,000 None None $14,000
Trustee
Jack L. Otto $14,000 None None $14,000
Trustee
Arthur DeRoy Rodecker $14,000 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
- 21 -
<PAGE>
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
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<PAGE>
.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 up to 0.50% of average
daily net assets up to $250 million, reduced to .375% of average daily net
assets in
- 23 -
<PAGE>
excess of $250 million for the International Growth Fund and the Healthcare
Fund, and up to .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
- 24 -
<PAGE>
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.
- 25 -
<PAGE>
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.
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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; provide accounting and bookkeeping services for
the Funds, including the computation of the Funds' net asset values, 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
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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
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<PAGE>
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 each 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 the 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
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<PAGE>
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
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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
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<PAGE>
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
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(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
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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
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<PAGE>
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
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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:
P (1 + T)n = ERV
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.
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<PAGE>
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) - 1
Aggregate Total Return = 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 load adjusted
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 load adjusted average annual total return and load
adjusted 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
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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
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<PAGE>
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
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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
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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
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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
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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
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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
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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. The 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
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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 Trustees 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
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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 Prospectuses 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 Prospectuses 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.
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APPENDIX
As stated in the Prospectuses, 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.
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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 Placed-
Buy Equity Securities with Sell 1 Index Futures at 130
Actual Cost = $65,000 Value of Futures
Increase in Purchase = $65,000/Contract
Price = $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 Lifted-
Anticipate Selling Sell 16 Index Futures at 125
$1,000,000 in Equity Value of Futures = $1,000,000
Securities
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-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 Gain on Futures = $40,000
= $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
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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.
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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
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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
- 53 -
<PAGE>
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
- 54 -
<PAGE>
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.
- 55 -
<PAGE>
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.
- 56 -
<PAGE>
The Munder Framlington Funds Trust
STATEMENTS OF ASSETS AND LIABILITIES
December 18, 1996
Framlington Framlington
International Emerging Framlington
Growth Markets Healthcare
Fund Fund Fund
ASSETS:
Cash $33,330 $33,330 $33,340
Deferred organizational 24,999 24,999 25,002
costs (Note 1)
Total Assets 58,329 58,329 58,342
LIABILITIES:
Accrued organizational 24,999 24,999 25,002
costs (Note 1)
NET ASSETS $33,330 $33,330 $33,340
------- ------- -------
SHARES OF BENEFICIAL
INTEREST OUTSTANDING 3,333 3,333 3,334
CLASS Y SHARES:
Net Asset Value,
offering and redemption
price per share of
beneficial interest
outstanding: $ 10.00 $ 10.00 $ 10.00
------- ------- -------
(See Notes to statements
of assets and liabilities)
<PAGE>
The Munder Framlington Funds Trust
NOTES TO STATEMENTS OF ASSETS AND LIABILITIES
December 18, 1996
1. The Munder Framlington Funds Trust (the "Trust") was organized as a
Massachusetts business trust on October 30, 1996, and is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Trust offers three funds: Framlington International Growth Fund,
Framlington Emerging Markets Fund and Framlington Healthcare Fund (individually,
a "Fund", collectively the "Funds"). The investment objective of the Funds is to
provide shareholders with long-term capital appreciation. The preparation of
financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The Trust has had no operations other than organizational
matters and the issuance and sale of initial shares of each of the Funds to
Funds Distributor, Inc. ("FDI").
Costs incurred by the Trust and the Funds in connection with their organization
will be deferred and amortized on a straight line basis over a period not to
exceed sixty months from the date upon which each Fund commences its investment
operations. If any of the initial shares are redeemed during the amortization
period by any holder thereof, the redemption proceeds will be reduced by a pro
rata portion of the then unamortized organization costs.
Expenses: General expenses of the Trust are allocated to the respective
Fund based upon relative net assets. Operating expenses directly attributable to
a Fund are charged to that Fund's operations.
2. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
The Trust has entered into an Investment Advisory Agreement with Munder Capital
Management, Inc. (the "Advisor"). For the investment advisory services provided
and expenses assumed with regard to the Framlington International Growth Fund
and Framlington 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 0.75% of each Fund's average daily net
assets in excess of $250 million. For the investment advisory services provided
and expenses assumed with regard to the Framlington 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.
Pursuant to a sub-advisory agreement with the Advisor, Framlington Overseas
Investment Management Limited (the "Sub- Advisor") provides sub-advisory
services to the Funds. For its services with regard to the International Growth
Fund and the Healthcare Fund, the Advisor pays the Sub-Advisor a monthly fee on
an annual basis up to 0.50% of each Fund's average daily net assets up to $250
million, reduced to 0.375% 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 up to 0.625%
of the Fund's average daily net assets. The Sub-Advisor is a subsidiary of
Framlington Group plc, which 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.
FDI serves as the distributor of each Fund. First Data Investor Services
Group, Inc. ("First Data"), a wholly-owned subsidiary of First Data Corporation,
serves as the administrator and transfer agent of each Fund.
Comerica Bank (the "Custodian"), provides custodial services to the Funds. 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 Munder, for which the custodian
provides services, computed daily and payable monthly at an annual rate of 0.03%
of the first $100 million of average daily net assets, 0.02% of the next $500
million of net assets and 0.01% of net assets in excess of $600 million. The
Custodian also receives certain transaction based fees.
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
To the Board of Trustees of
The Munder Framlington Funds Trust
We have audited the accompanying statements of assets and liabilities of
The Munder Framlington Funds Trust (the "Trust")(comprising, respectively, the
Framlington International Growth Fund, Framlington Emerging Markets Fund, and
Framlington Healthcare Fund (collectively, the "Funds"), as of December 18,
1996. These statements of assets and liabilities are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
statements of assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements of assets and liabilities is
free of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the statements of assets and
liabilities. An audit includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statements of assets and liabilities referred to above
present fairly, in all material respects, the financial position of each of the
respective Funds constituting the Munder Framlington Funds Trust at December 18,
1996 in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Boston, Massachusetts
December 18, 1996
<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 Distribution Agreement
(7) Not Applicable
(8) (a) Form of Custody Agreement
(b) Form of Subcustodian Agreement
(9) (a) Transfer Agency and Registrar 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) Purchase Agreement
(14) Not Applicable
(15) (a) Service and Distribution Plan for The
Munder Framlington Funds Trust Class A, B
and C Shares
<PAGE>
(b) Service Plan for The Munder Framlington
Funds Trust Class K Shares
(16) Schedule for Computation of Performance
Quotations
(17) Not Applicable
(18) Multi-Class Plan
Item 25. Persons Controlled by or Under Common Control with
Registrant.
--------------------------------------------------
Not Applicable.
Item 26. Number of Holders of Securities.
-------------------------------
As of December 19, 1996, the number of shareholders
of record of each Class of shares of each Series of the
Registrant was as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
Class A Class B Class C Class K Class Y
------------------------------------------------------
Framlington International Growth Fund 1 1 1 1 1
Framlington Emerging Markets Fund 1 1 1 1 1
Framlington Healthcare Fund 1 1 1 1 1
</TABLE>
Item 27. Indemnification.
---------------
Section 4.3 of the Fund's Declaration of Trust provides that
Trustees and Officers shall be indemnified by the Trust to the fullest extent
permitted by law against all liability and against all expenses reasonably
incurred with any claim, action, suit or proceeding in which they become
involved by virtue of being or having been a Trustee or Officer. However, no
indemnification may be provided: (i) against any liability to the Trust, a
Series thereof or the Shareholders by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office; (ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the reasonable belief
that his action
<PAGE>
was in the best interest of the Trust or a Series thereof; (iii) in the event of
a settlement or other disposition not involving a final adjudication as provided
above resulting in a payment by a Trustee or officer, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office: (A) by the court or other body approving
the settlement or other disposition; or (B) based upon a review of readily
available facts (as opposed to a full trial-type inquiry) by (x) vote of a
majority of the Non-interested Trustees acting on the matter (provided that a
majority of the Non-interested Trustees then in office act on the matter) or (y)
written opinion of independent legal counsel.
Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in paragraph (a) of this
Section 4.3 may be advanced by the Trust or a Series thereof prior to final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Section 4.3, provided that either: (i)
such undertaking is secured by surety bond or some other appropriate security
provided by the recipient, or the Trust or Series thereof shall be insured
against losses arising out of any such advances; or (ii) a majority of the
Non-interested Trustees acting on the matter (provided that a majority of the
Non-interested Trustees act on the matter) or an independent legal counsel in a
written opinion shall determine, based upon a review of readily available facts
(as opposed to a full trial-type inquiry) that there is reason to believe that
the recipient ultimately will be found entitled to 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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
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
(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:
(1) Munder Capital Management, 480 Pierce Street or 255
<PAGE>
East Brown Street, Birmingham, Michigan 48009
(records relating to its function as investment
adviser)
(2) First Data Investor Services Group, Inc., 53 State
Street, Exchange Place, Boston, Massachusetts or
4400 Computer Drive, Westborough, Massachusetts
01581 (records relating to its functions as
Administrator and Transfer Agent)
(3) Funds Distributor, Inc., 60 State Street, Boston, Massachusetts
02109 (records relating to its function as distributor)
(4) Comerica Bank, One Detroit Center, 500 Woodward Avenue, Detroit,
Michigan 48226 (records relating to its function as custodian)
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.
62796.87
<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 Pre-Effective Amendment No. 1 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Washington, D.C. on this 19th day of December, 1996.
The Munder Framlington Funds Trust
By: ________________________
*Lee P. Munder
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 Pre-Effective Amendment No. 1 to the 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 Chief December 19, 1996
* Lee P. Munder Executive Officer
_____________________ Trustee December 19, 1996
* Charles W. Elliott
_____________________ Trustee December 19, 1996
* Joseph E. Champagne
_______________________ Trustee December 19, 1996
* Arthur DeRoy Rodecker
_____________________ Trustee December 19, 1996
* Jack L. Otto
<PAGE>
_____________________ Trustee December 19, 1996
* Thomas B. Bender
_____________________ Trustee December 19, 1996
* Thomas D. Eckert
_____________________ Trustee December 19, 1996
* John Rakolta, Jr.
_____________________ Trustee December 19, 1996
* David J. Brophy
_____________________ Vice President December 19, 1996
* Terry H. Gardner Treasurer and Chief
Financial Officer
* By: /s/ Paul F. Roye
---------------------
Paul F. Roye
as Attorney-in-Fact
62796.88
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------ ---------
Exhibit 1 Declaration of Trust
Exhibit 2 By-Laws
Exhibit 5(a) Form of Investment Advisory Agreement
Exhibit 5(b) Form of Sub-Advisory Agreement
Exhibit 6(a) Form of Distribution Agreement
Exhibit 8(a) Form of Custody Agreement
Exhibit 8(b) Form of Subcustodian Agreement
Exhibit 9(a) Transfer Agency and Registrar
Agreement
Exhibit 9(b) Administration Agreement
Exhibit 10 Opinion and Consent of Counsel
Exhibit 11(a) Consent of Independent Public
Accountants
Exhibit 11(b) Powers of Attorney
Exhibit 13 Purchase Agreement
Exhibit 15(a) Service and Distribution Plan for The
Munder Framlington Funds Trust Class
A, B and C Shares
Exhibit 15(b) Service and Distribution Plan for The
Munder Framlington Funds Trust Class
K Shares
Exhibit 16 Schedule for Computation of
Performance Quotations
Exhibit 18 Multi-Class Plan
62796.8N
<PAGE>
EXHIBIT 1
DECLARATION OF TRUST
OF
THE MUNDER FRAMLINGTON FUNDS TRUST
DECLARATION OF TRUST made this 30th day of October, 1996 by Julie A.
Tedesco and Teresa M.R. Hamlin (together with all other persons from time to
time duly elected, qualified and serving as Trustees in accordance with the
provisions of Article II hereof, the "Trustees");
WHEREAS, the Trustees wish to establish a trust for the investment and
reinvestment of funds contributed thereto;
WHEREAS, the Trustees desire that the beneficial interest in the trust
assets be divided into transferable shares of beneficial interest as hereinafter
provided;
WHEREAS, the Trustees declare that all money and property contributed to
the trust established thereunder shall be held and managed in trust for the
benefit of the holders, from time to time, of the shares of beneficial interest
issued thereunder and subject to the provisions hereof and in consideration of
the foregoing premises and the agreements herein contained declare as follows:
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is The
Munder Framlington Funds Trust (the "Trust").
Section 1.2. Definitions. Wherever they are used herein, the
following terms have the following respective meanings:
(a) "Administrator" means the party, other than the Trust, to the contract
described in Section 3.3 hereof.
(b) "By-laws" means the By-laws referred to in Section 2.8 hereof, as from
time to time amended.
(c) The terms "Commission" and "Interested Person" have the meanings given
them in the 1940 Act. Except as otherwise defined by the Trustees in conjunction
with the establishment of any Series of Shares, the term "vote of a majority of
the Shares outstanding and entitled to vote" shall have the same meaning as the
term "vote of a majority of the outstanding voting security" given it in the
1940 Act.
(d) "Class" means any division of shares within a Series, which Class is
or has been established within such Series in accordance with the provision of
Article V.
(e) "Custodian" means any Person other than the Trust who has custody of
any Trust Property as required by ss.17(f) of the 1940 Act, but does not include
a system for the central handling of securities described in said ss.17(f).
(f) "Declaration" means this Declaration of Trust as amended from time to
time. Reference in this Declaration of Trust to "Declaration", "hereof",
"herein", and "hereunder" shall be deemed to refer to this Declaration rather
than exclusively to the article or section in which such words appear.
(g) "Distributor" means the party, other than the Trust, to the contract
described in Section 3.1 hereof.
(h) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.
(i) "Fund" or "Funds" individually or collectively means the separate
Series of Shares of the Trust, together with the assets and liabilities assigned
thereto.
(j) "His" shall include the feminine and neuter, as well as the
masculine, genders.
(k) "Investment Adviser" means the party, other than the Trust, to the
contract described in Section 3.2 hereof.
(l) "Person" means and includes individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
(m) "Prospectus" means and includes the currently effective Prospectus and
Statement of Additional Information of the Trust or any Series or Class of the
Trust under the Securities Act of 1933.
(n) "Series" individually or collectively means the separate Series of the
Trust (or if the Trust shall have only one such component, then that one) as may
be established and designated from time to time by the Trustees pursuant to
Section 5.11 hereof.
(o) "Shareholder" means the record owner of Outstanding Shares.
(p) "Shares" means the equal proportionate units of interest into which
the beneficial interest in the Trust shall be divided from time to time,
including the Shares of any and all Series or of any Class within any Series
which may be established by the Trustees, and includes fractions of Shares as
well as whole Shares. "Outstanding" Shares means those Shares shown from time to
time on the books of the Trust or its Transfer Agent as then issued and
outstanding, but shall not include Shares which have been redeemed or
repurchased by the Trust and which are at the time held in the treasury of the
Trust.
(q) "Transfer Agent" means any Person other than the Trust who maintains
the Shareholder records of the Trust, such as the list of Shareholders, the
number of Shares credited to each account, and the like.
(r) "Trust" means The Munder Framlington Funds Trust.
(s) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees.
(t) The "Trustees" means the person who has signed this Declaration, so
long as he shall continue in office in accordance with the terms hereof, and all
other persons who may from time to time be duly elected, qualified and serving
as Trustees in accordance with the provisions of Article II hereof, and
reference herein to a Trustee or the Trustees shall refer to such person or
persons in this capacity or their capacities as trustees hereunder.
ARTICLE II
TRUSTEES
Section 2.1. General Powers. The Trustees shall have exclusive and
absolute control over the Trust Property and over the business of the Trust to
the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without The Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 2.2. Investments. The Trustees shall have the power:
(a) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations.
(b) To invest in, hold for investment, or reinvest in, securities,
including common and preferred stocks; warrants; bonds, debentures, bills, time
deposits, notes and all other evidences of indebtedness; negotiable or
non-negotiable instruments; government securities, including securities of any
state, municipality or other political subdivision thereof, or any governmental
or quasi-governmental agency or instrumentality; and money market instruments
including bank certificates of deposit, finance paper, commercial paper, bankers
acceptances and all kinds of repurchase agreements, of any U.S. or non-U.S.
corporation, company, trust, association, firm, investment company or other
business organization however established, and of any country, state,
municipality or other political subdivision, or any governmental or
quasi-governmental agency or instrumentality.
(c) To acquire (by purchase, subscription or otherwise), to hold, to trade
in and deal in, to acquire any rights or options to purchase or sell, to sell or
otherwise dispose of, to lend and to pledge any such securities, to enter into
repurchase agreements, reverse repurchase agreements, firm commitment agreements
and forward foreign currency exchange contracts, to purchase and sell options on
securities, indices, currency or other financial assets, futures contracts and
options on futures contracts of all descriptions, swaps, caps, floors and
collars and other derivative securities, and to engage in all types of hedging
and risk management transactions.
(d) To exercise all rights, powers and privileges of ownership or interest
in all securities and repurchase agreements included in the Trust Property,
including the right to vote thereon and otherwise act with respect thereto and
to do all acts for the preservation, protection, improvement and enhancement in
value of all such securities and repurchase agreements.
(e) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property, real or
personal, including cash, and any interest therein.
(f) To borrow money and in this connection issue notes or other evidence
of indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; and to endorse, guarantee, or
undertake the performance of any obligation or engagement of any other Person
and to lend Trust Property.
(g) To aid by further investment any corporation, company, trust,
association or firm, any obligation of or interest in which is included in the
Trust Property or in the affairs of which the Trustees have any direct or
indirect interest; to do all acts and things designed to protect, preserve,
improve or enhance the value of such obligation or interest; and to guarantee or
become surety on any or all of the contracts, stocks, bonds, notes, debentures
and other obligations of any such corporation, company, trust, association or
firm.
(h) To enter into a plan of distribution and any related agreements
whereby the Trust may finance directly or indirectly any activity which is
primarily intended to result in sale of Shares.
(i) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power herein before set forth either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or arising out of or connected with the aforesaid business or
purposes, objects or powers.
(j) Notwithstanding any other provision of this Declaration to the
contrary, the Trustees shall have the power in their discretion without any
requirement of approval by Shareholders to either invest all or portion of the
Trust Property or the Property of a Series of the Trust, or sell all or a
portion of the Trust Property or the Property of a Series of the Trust and
invest the proceeds of such sales, in another investment company that is
registered under the 1940 Act.
The foregoing clauses shall be construed both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
Section 2.3. Legal Title. Legal title to all the Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust of any Series of the
Trust, or in the name of any other Person as nominee, on such terms as the
Trustees may determine, provided that the interest of the Trust therein is
deemed appropriately protected. The right, title and interest of the Trustees
shall vest automatically in each Person who may hereafter become a Trustee. Upon
the termination of the term of office, resignation, removal or death of a
Trustee he shall automatically cease to have any right, title or interest in any
of the Trust Property, and the right, title and interest of such Trustee in the
Trust Property shall vest automatically in the remaining Trustees. Such vesting
and cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered.
Section 2.4. Issuance and Repurchase of Shares. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in Shares and, subject
to the provisions set forth in Articles VI and VII and Section 5.11 hereof, to
apply to any such repurchase, redemption, retirement, cancellation, or
acquisition of Shares any funds or property of the Trust, whether capital or
surplus or otherwise, to the full extent now or hereafter permitted by the laws
of The Commonwealth of Massachusetts governing business corporations.
Section 2.5. Delegation; Committees. The Trustees shall have the power to
delegate from time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or any Series of the Trust or the
names of the Trustees or otherwise as the Trustees may deem expedient, to the
same extent as such delegation is permitted by the 1940 Act.
Section 2.6. Collection and Payment. Subject to Section 5.11 hereof, the
Trustees shall have power to collect all property due to the Trust; to pay all
claims, including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to foreclose
any security interest securing any obligations, by virtue of which any property
is owed to the Trust; and to enter into releases, agreements and other
instruments.
Section 2.7. Expenses. Subject to Section 5.11 hereof, the Trustees shall
have the power to incur and pay any expenses which in the opinion of the
Trustees are necessary or incidental to carry out any of the purposes of the
Trust, and to pay reasonable compensation from the funds of the Trust to
themselves as Trustees. The Trustees shall fix the compensation of all officers,
employees and Trustees.
Section 2.8. Manner of Acting; By-laws. Except as otherwise provided
herein or in the By-laws, any action to be taken by the Trustees may be taken by
a majority of the Trustees present at a meeting of Trustees (a quorum being
present), including any meeting held by means of a conference telephone circuit
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, or by written consents of a majority of
Trustees then in office. The Trustees may adopt By-laws not inconsistent with
this Declaration to provide for the conduct of the business of the Trust and may
amend or repeal such By-laws to the extent such power is not reserved to the
Shareholders.
Notwithstanding the foregoing provisions of this Section 2.8 and in
addition to such provisions or any other provision of this Declaration or of the
By-laws, the Trustees may by resolution appoint a committee consisting of less
than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body.
Section 2.9. Miscellaneous Powers. Subject to Section 5.11 hereof, the
Trustees shall have the power to: (a) employ or contract with such Persons as
the Trustees may deem desirable for the transaction of the business of the Trust
or any Series thereof; (b) enter into joint ventures, partnerships and any other
combinations or associations; (c) remove Trustees or fill vacancies in or add
their number, elect and remove such officers and appoint and terminate such
agents or employees as they consider appropriate, and appoint from their own
number, and terminate, any one or more committees which may exercise some or all
of the power and authority of the Trustees as the Trustees may determine; (d)
purchase, and pay for out of Trust Property or the Property of the appropriate
Series of the Trust, insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers, administrators, distributors,
selected dealers or independent contractors of the Trust against all claims
arising by reason of holding any such position or by reason of any action taken
or omitted by any such Person in such capacity, whether or not constituting
negligence, or whether or not the Trust would have the power to indemnify such
Person against such liability; (e) establish pension, profit-sharing, share
purchase and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Trust: (f) to the extent permitted by law,
indemnify any person with whom the Trust or any Series thereof has dealings,
including the Investment Adviser, Distributor, Administrator, Transfer Agent and
selected dealers, to such extent as the Trustees shall determine; (g) guarantee
indebtedness or contractual obligations of others; (h) determine and change the
fiscal year of the Trust or any Series thereof and the method by which its
accounts shall be kept; and (i) adopt a seal for the Trust, but the absence of
such seal shall not impair the validity of any instrument executed on behalf of
the Trust.
Section 2.10. Principal Transactions. Except in transactions not permitted
by the 1940 Act or rules and regulations adopted by the Commission, the Trustees
may, on behalf of the Trust, buy any securities from or sell any securities to,
or lend any assets of the Trust or any Series thereof to, any Trustee or officer
of the Trust or any firm of which any such Trustee or officer is a member acting
as principal, or have any such dealings with the Investment Adviser, Distributor
or transfer agent or with any Interested Person of such Person; and the Trust or
Series thereof may employ any such Person, or firm or company in which such
Person is an Interested Person, as broker, legal counsel, registrar, transfer
agent, dividend disbursing agent or custodian upon customary terms.
Section 2.11. Number of Trustees. The number of Trustees shall initially
be two (2), and thereafter shall be such number as shall be fixed from time to
time by written instrument signed by a majority of the Trustees or by an officer
of the Trust pursuant to the vote of a majority of the Trustees; provided,
however, that the number of Trustees shall in no event be less than one (1) nor
more than twenty.
Section 2.12. Election and Term. Except for the Trustees named herein or
appointed to fill vacancies pursuant to Section 2.14 hereof, the Trustees shall
be elected by the Shareholders owning of record a plurality of the Shares voting
at a meeting of Shareholders on a date fixed by the Trustees. Except in the
event of resignation or removals pursuant to Section 2.13 hereof, each Trustee
shall hold office until such time as less than a majority of the Trustees
holding office have been elected by Shareholders. In such event the Trustees
then in office will call a Shareholders' meeting for the election of Trustees.
Except for the foregoing circumstances, the Trustees shall continue to hold
office and may appoint successor Trustees.
Section 2.13. Resignation and Removal. Any Trustee may resign his trust
(without the need for any prior or subsequent accounting) by an instrument in
writing signed by him and delivered to the other Trustees and such resignation
shall be effective upon delivery, or at a later date according to the terms of
the instrument. Any of the Trustees may be removed (provided the aggregate
number of Trustees shall not be less than one) with cause, by the action of
two-thirds of the remaining Trustees or by the action of two-thirds of the
Outstanding Shares of the Trust at a meeting duly called pursuant to Section
5.10 hereof by the Shareholders for such purpose. Upon the resignation or
removal of a Trustee, or his otherwise ceasing to be a Trustee, he shall execute
and deliver such documents as the remaining Trustees shall require for the
purpose of conveying to the Trust or the remaining Trustees any Trust Property
held in the name of the resigning or removed Trustee. Upon the incapacity or
death of any Trustee, his legal representative shall execute and deliver on his
behalf such documents as the remaining Trustees shall require as provided in the
preceding sentence.
Section 2.14. Vacancies. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of his death, resignation, removal,
bankruptcy, adjudicated incompetence or other incapacity to perform the duties
of the office of a Trustee. No such vacancy shall operate to annul the
Declaration or to revoke any existing agency created pursuant to the terms of
the Declaration. In the case of an existing vacancy, including a vacancy
existing by reason of an increase in the number of Trustees, subject (but only
after the Trust's initial registration statement under the Securities Act of
1933 shall have become effective) to the provisions of Section 16(a) of the 1940
Act, the remaining Trustees shall fill such vacancy by the appointment of such
other person as they in their discretion shall see fit, made by a written
instrument signed by a majority of the Trustees then in office or by an officer
of the Trust pursuant to the vote of a majority of the Trustees then in office.
Any such appointment shall not become effective, however, until the person named
in the written instrument of appointment shall have accepted in writing such
appointment and agreed to be bound by the terms of the Declaration. An
appointment of a Trustee may be made in anticipation of a vacancy to occur at a
later date by reason of retirement, resignation or increase in the number of
Trustees, provided that such appointment shall not become effective prior to
such retirement, resignation or increase in the number of Trustees. Whenever a
vacancy in the number of Trustees shall occur, until such vacancy is filled as
provided in this Section 2.14, the Trustees in office, regardless of their
number, shall have all the powers granted to the Trustees and shall discharge
all the duties imposed upon the Trustees by the Declaration. A written
instrument certifying the existence of such vacancy signed by a majority of the
Trustees in office or by an officer of the Trust pursuant to the vote of a
majority of the Trustees in office shall be conclusive evidence of the existence
of such vacancy.
Section 2.15. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6) months
at any one time to any other Trustee or Trustees; provided that in no case shall
fewer than two (2) Trustees personally exercise the powers granted to the
Trustees under this Declaration except as herein otherwise expressly provided.
ARTICLE III
CONTRACTS
Section 3.1. Distribution Contract. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive distribution contract
or contracts providing for the sale of Shares to the Trust or the applicable
Series of the Trust not less than the amount provided for in Section 7.1 of
Article VII hereof, whereby the Trustees may either agree to sell the Shares to
the other party to the contract or appoint such other party their sales agent
for the Shares, and in either case on such terms and conditions, if any, as may
be prescribed in the By-laws, and such further terms and conditions as the
Trustees may in their discretion determine not inconsistent with the provisions
of this Article III or of the By-laws; and such contract may also provide for
the repurchase of the Shares by such other party as agent of the Trustees.
Section 3.2. Advisory or Management Contract. The Trustees may in their
discretion from time to time enter into an investment advisory contract, or, if
the Trustees establish multiple Series, separate investment advisory contracts
with respect to each Series, whereby the other party to such contract or
contracts shall undertake to manage the investment operations of one or more
Series of the Trust and the compositions of the portfolios of the Trust or such
Series, including the purchase, retention and disposition of securities and
other assets in accordance with the investment objectives, policies and
restrictions of the Trust or such Series and all upon such terms and conditions
as the Trustees may in their discretion determine, including the grant of
authority to such other party to determine what securities shall be purchased or
sold by the Trust or applicable Series of the Trust and what portion of its
assets shall be uninvested, which authority shall include the power to make
changes in the investments of the Trust or any Series.
Section 3.3. Administration Contract. The Trustees may in their discretion
from time to time enter into an administration contract or contracts whereby the
other party to such contract shall undertake to supervise all or any part of the
operations of the Trust or any Series thereof and to provide all or any part of
the administrative and clerical personnel, office space and office equipment and
services appropriate for the efficient administration and operations of the
Trust and any Series thereof.
Section 3.4. Transfer Agency and Registrar Contract. The Trustees may, on
such terms and conditions as they may in their discretion determine, enter into
one or more agreements with any Person or Persons providing for transfer agency
and other services to shareholders of any class.
Section 3.5. Custody Contract. The Trustees may, on such terms and
conditions as they may in their discretion determine, enter into one or more
agreements with any Person or Persons providing for the custody and safekeeping
of the property of the Trust or any class of shares.
Section 3.6. Service and Distribution Plans. The Trustees may, on such
terms and conditions as they may in their discretion determine, adopt one or
more plans pursuant to which Persons may be compensated directly or indirectly
by the Trust for shareholder servicing, administration or distribution with
respect to one or more classes of shares, including without limitation plans
subject to Rule 12b-1 under the 1940 Act, and the Trustees may enter into
agreements pursuant to such Plans.
Section 3.7. Parties to Contracts. The same Person may be employed in
multiple capacities under Sections 3.1 through 3.6 of this Article III and may
receive compensation in as many capacities as such Persons serves. The Trustees
may enter into any agreement of the character described in this Article III, or
any other agreement necessary or appropriate to the conduct of the business of
the Trust or any class of Shares, with any Person, including any Person in which
any Trustee, officer, representative, employee or shareholder of the Trust may
be interested, and no such agreement shall be invalidated or rendered voidable
by reason of the existence of any such relationship, nor shall any Person
holding such relationship be liable by reason of such relationship for any loss
or expense to the Trust under or by reason of said agreement or accountable for
any profit realized directly or indirectly therefrom.
Section 3.8. Service in Other Capacities. Any Trustee, officer,
representative, employee or agent of the Trust, including any investment
adviser, transfer agent, administrator, distributor, custodian or underwriter
for the Trust, may serve in any other capacity on his or its own behalf of
others, and may engage in other business activities in addition to his or its
services on behalf of the Trust, provided that such other activities do not
materially interfere with the performance of his or its duties for or on behalf
of the Trust.
Section 3.9. Affiliations of Trustees or Officers, Etc.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, member, trustee, employee, manager,
adviser or distributor of or for any partnership, corporation, company, trust,
association or other organization or of or for any parent of affiliate of any
organization, with which a contract of the character described in Sections 3.1
or 3.2 above or for services as Custodian, Administrator, Transfer Agent or
disbursing agent or for related services may have been or may hereafter be made,
or that any such organization, or any parent or affiliate thereof, is a
Shareholder of or has any interest in the Trust, or that
(ii) any partnership, corporation, company, trust, association or other
organization with which a contract of the character described in Sections 3.1 or
3.2 above or for services as Custodian, Administrator, Transfer Agent or
disbursing agent or for related services may have been or may hereafter may be
made also has any one or more of such contracts with one or more other
partnerships, corporations, companies, trusts, associations or other
organizations, or has other business or interests, shall not affect the validity
of any such contract or disqualify any Shareholder, Trustee or officer of the
Trust from voting upon or executing the same or create any liability or
accountability to the Trust or its Shareholders.
Section 3.10. Compliance with 1940 Act. Any contract entered into or
pursuant to Sections 3.1 or 3.2 shall be consistent with and subject to the
requirements of Sections 12(b) and 15 of the 1940 Act (including any other
applicable Act of Congress hereafter enacted) with respect to its continuance in
effect, its termination and the method of authorization and approval of such
contract or renewal thereof.
ARTICLE IV
LIMITATIONS OF LIABILITY OF SHAREHOLDERS, TRUSTEES AND OTHERS
Section 4.1. No Personal Liability of Shareholders, Trustees, Etc. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. No Trustee, officer, employee or agent of the Trust shall be subject to
any personal liability whatsoever to any Person, other than to the Trust or its
Shareholders, in connection with Trust Property or the affairs of the Trust,
save only that arising from bad faith, willful misfeasance, gross negligence or
reckless disregard of his duties with respect to such Person; and all such
Persons shall look solely to the Trust Property, or to the Property of one or
more specific Series of the Trust if the claim arises from the conduct of such
Trustee, officer, employee or agent with respect to only such Series, for
satisfaction of claims of any nature arising in connection with the affairs of
the Trust. If any Shareholder, Trustee, officer, employee, or agent, as such, of
the Trust, is made a party to any suit or proceeding to enforce any such
liability of the Trust, he shall not, on account thereof, be held to any
personal liability. The Trust shall indemnify and hold each Shareholder harmless
from and against all claims and liabilities, to which such Shareholder may
become subject by reason of his being or having been a Shareholder, and shall
reimburse such Shareholder out of the Trust Property for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability. The indemnification and reimbursement required by the preceding
sentence shall be made only out of assets of the one or more Series whose Shares
were held by said Shareholder at the time the act or event occurred which gave
rise to the claim against or liability of said Shareholder. The rights accruing
to a Shareholder under this Section 4.1 shall not impair any other right to
which such Shareholder may be lawfully entitled, nor shall anything herein
contained restrict the right of the Trust to indemnify or reimburse a
Shareholder in any appropriate situation even though not specifically provided
herein.
Section 4.2. Non-Liability of Trustees, Etc. No Trustee, officer, employee
or agent of the Trust shall be liable to the Trust, its Shareholders, or to any
Shareholder, Trustee, officer, employee or agent thereof for any action or
failure to act (including without limitation the failure to compel in any way
any former or acting Trustee to redress any breach of trust) except for his own
bad faith, willful misfeasance, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Section 4.3. Mandatory Indemnification. (a) Subject to the
exceptions and limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee or officer of the Trust
shall be indemnified by the Trust, or by one or more Series thereof if the claim
arises from his conduct with respect to only such Series, to the fullest extent
permitted by the law against all liability and against all expenses reasonably
incurred or paid by him in connection with any claim, action, suit or proceeding
in which he becomes involved as a party or otherwise by virtue of his being or
having been a Trustee or officer and against amounts paid or incurred by him in
the settlement thereof;
(ii) the words "claim", "action", "suit", or "proceeding" shall apply to
all claims, actions, suits or proceedings (civil, criminal, or other, including
appeals), actual or threatened; and the words "liability" and "expenses" shall
include, without limitation, reasonable attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust, a Series thereof or the
Shareholders by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved
in the conduct of his office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the
reasonable belief that his action was in the best interest of
the Trust or a Series thereof;
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraph (b)
(ii) resulting in a payment by a Trustee or officer, unless
there has been a determination that such Trustee or officer
did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office:
(A) by the court or other body approving the settlement
or other disposition; or
(B) based upon a review of readily available facts (as
opposed to a full trial-type inquiry) by (x) vote of a
majority of the Non-interested Trustees acting on the
matter (provided that a majority of the Non-interested
Trustees then in office act on the matter) or (y)
written opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
affect any other rights to which any other Trustee or officer may now or
hereafter be entitled, shall continue as to a person who has ceased to be such
Trustee or officer and shall inure to the benefit of the heirs, executors,
administrators and assigns of such a person. Nothing contained herein shall
affect any rights to indemnification to which personnel of the Trust other than
Trustees and officers may be entitled by contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any
claim, action, suit or proceeding of the character described in paragraph (a) of
this Section 4.3 may be advanced by the Trust or a Series thereof prior to final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Section 4.3, provided that either:
(i) such undertaking is secured by surety bond or some other
appropriate security provided by the recipient, or the
Trust or Series thereof shall be insured against losses
arising out of any such advances; or
(ii) a majority of the Non-interested Trustees acting on
the matter (provided that a majority of the
Non-interested Trustees act on the matter) or an
independent legal counsel in a written opinion shall
determine, based upon a review of readily available
facts (as opposed to a full trial-type inquiry) that
there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this section 4.3, a "Non-interested Trustee" is one who is not
(i) an "Interested Person" of the Trust (including anyone who has been exempted
from being an "Interested Person" by any rule, regulation, or order of the
Commission), or (ii) involved in the claim, action, suit or proceeding.
Section 4.4. No Bond Required of Trustees. No Trustee shall be
obligated to give any bond or other security for the performance of any of
his duties hereunder.
Section 4.5. No Duty of Investigation; Notice in Trust Instruments, Etc.
No purchaser, lender, transfer agent or other Person dealing with the Trustees
or any officer, employee or agent of the Trust or a Series thereof shall be
bound to make any inquiry concerning the validity of any transaction purporting
to be made by the Trustees or by said officer, employee or agent or be liable
for the application of money or property paid, loaned, or delivered to or on the
order of the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Trust or a
Series thereof or undertaking, and every other act or thing whatsoever executed
in connection with the Trust shall be conclusively presumed to have been
executed or done by the executors thereof only in their capacity as Trustees
under this Declaration or in their capacity as officers, employees or agents of
the Trust or a Series thereof. Every written obligation, contract, instrument,
certificate, Share, other security of the Trust or a Series thereof or
undertaking made or issued by the Trustees may recite that the same is executed
or made by them not individually, but as Trustees under the Declaration, and
that the obligations of the Trust or a Series thereof under any such instrument
are not binding upon any of the Trustees or Shareholders individually, but bind
only the Trust Property or the Trust Property of the applicable Series, and may
contain any further recital which they may deem appropriate, but the omission of
such recital shall not operate to bind the Trustees individually. The Trustees
shall at all times maintain insurance for the protection of the Trust Property
or the Trust Property of the applicable Series, its Shareholders, Trustees,
officers, employees and agents in such amount as the Trustees shall deem
adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
Section 4.6. Reliance on Experts, Etc. Each Trustee, officer or employee
of the Trust or a Series thereof shall, in the performance of his duties, be
fully and completely justified and protected with regard to any act or any
failure to act resulting from reliance in good faith upon the books of account
or other records of the Trust or a Series thereof, upon an opinion of counsel,
or upon reports made to the trust or a Series thereof by any of its officers or
employees or by the Investment Adviser, the Distributor, Administrator, Transfer
Agent, selected dealers, accountants, appraisers or other experts or consultants
selected with reasonable care by the Trustees, officers or employees of the
Trust, regardless of whether such counsel or expert may also be a Trustee.
<PAGE>
ARTICLE V
SHARES OF BENEFICIAL INTEREST
Section 5.1. Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable shares of beneficial interest, par
value $.001 per share. The Trustees shall have the authority to establish and
designate one or more Series of shares and one or more Classes thereof as
provided in Section 5.11 hereof. The number of shares of beneficial interest
authorized hereunder is unlimited. All shares issued hereunder including,
without limitation, Shares issued in connection with a dividend in Shares or a
split of Shares, shall be fully paid and non-assessable.
Section 5.2. Rights of Shareholders. The ownership of the Trust Property
of every description and the right to conduct any business herein before
described are vested exclusively in the Trustees, and the Shareholders shall
have no interest therein other than the beneficial interest conferred by their
Shares, and they shall have no right to call for any partition or division of
any property, profits, rights or interests of the Trust nor can they be called
upon to share or assume any losses of the Trust or suffer an assessment of any
kind by virtue of their ownership of Shares. The Shares shall be personal
property giving only the rights specifically set forth in this Declaration. The
Shares shall not entitle the holder to preference, preemptive, appraisal,
conversion or exchange rights, except as the Trustees may determine with respect
to any Series of Shares.
Section 5.3. Trust Only. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
Section 5.4. Issuance of Shares. The Trustees in their discretion may,
from time to time without vote of the shareholders, issue Shares, in addition to
the then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration including cash or
property, at such time or times and on such terms as the Trustees may deem best,
and may in such manner acquire other assets (including the acquisition of assets
subject to, and in connection with the assumption of, liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may issue
fractional Shares and Shares held in the treasury. The Trustees may from time to
time divide or combine the Shares of the Trust or, if the Shares be divided into
Series, of any Series of the Trust, into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Trust or in the
Trust Property allocated or belonging to such Series. Contributions to the Trust
or Series thereof may be accepted for, and Shares shall be redeemed as, whole
Shares and/or 1/1,000ths of a Share or integral multiples thereof.
Section 5.5. Register of Shares. A register shall be kept at the principal
office of the Trust or an office of the Transfer Agent which shall contain the
names and addresses of the Shareholders and the number of Shares held by them
respectively and a record of all transfers thereof. Such register shall be
conclusive as to who are the holders of the Shares and who shall be entitled to
receive dividends or distributions or otherwise to exercise or enjoy the rights
of Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or distribution, nor to have notice given to him herein or in the
By-laws provided, until he has given his address to the Transfer Agent or such
other officer or agent of the Trustees as shall keep the said register for entry
thereon. It is not contemplated that certificates will be issued for the Shares;
however, the Trustees, in their discretion, may authorize the issuance of share
certificates and promulgate appropriate rules and regulations as to their use.
Section 5.6. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees or the Transfer Agent
of a duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as may
reasonably be required. Upon such delivery the transfer shall be recorded on the
register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor any transfer agent or registrar nor any officer,
employee or agent of the Trust shall be affected by any notice of the proposed
transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law.
Section 5.7. Notices. Any and all notices to which any Shareholder may be
entitled and any and all communications shall be deemed duly served or given if
mailed, postage pre-paid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust.
Section 5.8. Treasury Shares. Shares held in the treasury shall, until
resold pursuant to Section 5.4, not confer any voting rights on the Trustees,
nor shall such Shares be entitled to any dividends or other distributions
declared with respect to the Shares.
Section 5.9. Voting Powers. The Shareholders shall have power to vote only
(i) for the election of Trustees as provided in Section 2.12; (ii) with respect
to any investment advisory contract entered into pursuant to Section 3.2; (iii)
with respect to termination of the Trust or a Series thereof to the extent and
as provided in Section 8.2; (iv) with respect to any amendment of this
Declaration to the extent and as provided in Section 8.3; (v) with respect to
any merger, consolidation or sale of assets to the extent and as provided in
Section 8.4; (vi) with respect to incorporation of the Trust to the extent and
as provided in Section 8.5; (vii) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or a Series thereof or the
Shareholders of either; (viii) with respect to any plan adopted pursuant to Rule
12b-1 (or any successor rule) under the 1940 Act, and related matters; and (ix)
with respect to such additional matters relating to the Trust as may be required
by this Declaration, the By-laws or any registration of the Trust as an
investment company under the 1940 Act with the Commission (or any successor
agency) or as the Trustees may consider necessary or desirable. Each whole Share
shall be entitled to one vote as to any matter on which it is entitled to vote
and each fractional Share shall be entitled to a proportionate fractional vote.
On any matter submitted to Shareholders all shares shall be voted in the
aggregate and not by individual Series or Class except (1) when required by the
1940 Act or any rule thereunder Shares shall be voted by individual Series or
Class and (2) when the Trustees shall have determined that the matter affects
only the interests of one or more Series or Classes thereof, then only the
Shareholders of such Series or Classes thereof shall be entitled to vote
thereon. The Trustees may, in conjunction with the establishment of any Series
or any Classes of Shares, establish conditions under which the several Series or
Classes of Shares shall have separate voting rights or no voting rights. There
shall be no cumulative voting in the election of Trustees. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take any
action required by law, this Declaration or the By-laws to be taken by
Shareholders. The By-laws may include further provisions for Shareholders' votes
and meetings and related matters.
Section 5.10. Meetings of Shareholders. Meetings of the Shareholders of
the Trust may be called at any time by the Chairman of the Board (if there be
one) or the President, and shall be called by the President or the Secretary at
the request, in writing or by resolution, of a majority of the Trustees, or at
the written request of the holder or holders of ten percent (10%) or more of the
total number of Shares then issued and outstanding of the Trust entitled to vote
at such meeting. Meetings of the Shareholders of any Series of the Trust shall
be called by the President or the Secretary at the written request of the holder
or holders of ten percent (10%) or more of the total number of Shares then
issued and outstanding of such Series of the Trust entitled to vote at such
meeting. Any such request shall state the purpose of the proposed meeting.
Section 5.11. Series and Class Designation. The Trustees, in their
discretion, may authorize the division of Shares into two or more Series or
Classes thereof, and the different Series and Classes shall be established and
designated, and the variations in the relative rights and preferences as between
the different Series and Classes shall be fixed and determined, by the Trustees;
provided that all Shares shall be identical except that there may be variations
so fixed and determined between different Series or Classes as to investment
objective, policies and restrictions, purchase price, payment obligations,
distribution expenses, right of redemption, special and relative rights as to
dividends and on liquidation, conversion rights, exchange rights and conditions
under which the several Series or Classes shall have separate voting rights, all
of which are subject to the limitations set forth below. All references to
Shares in this Declaration shall be deemed to be Shares of any or all Series or
Classes as the context may require.
If the Trustees divide the Shares of the Trust into two or more Series or
Classes, the following provisions shall be applicable:
(a) The number of authorized Shares and the number of Shares of each
Series or Class thereof that may be issued shall be unlimited. The Trustees may
classify or reclassify any unissued Shares or any Shares previously issued and
reacquired of any Series or Class into one or more Series or one or more Classes
that may be established and designated from time to time. The Trustees may hold
as treasury shares (of the same or some other Series or Class), reissue for such
consideration and on such terms as they may determine, or cancel any Shares of
any Series or Class reacquired by the Trust at their discretion from time to
time.
(b) All consideration received by the Trust for the issue or sale of
Shares of a particular Series or Class thereof, together with all assets in
which such consideration is invested or reinvested, all income, earnings,
profits and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation of such assets and any funds or payments derived from
any reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes, subject only to the rights
of creditors of such Series and except as may otherwise be required by
applicable tax laws, and shall be so recorded upon the books of account of the
Trust. In the event that there are any assets, income, earnings, profits, and
proceeds thereof, funds, or payments which are not readily identifiable as
belonging to any particular Series, the Trustees shall allocate them among any
one or more of the Series established and designated from time to time in such a
manner and on such basis as they, in their sole discretion, deem fair and
equitable. Each such allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all Series and Classes for all purposes. No holder of
Shares of any Series shall have any claim on or right to any assets allocated or
belonging to any other Series.
(c) The assets belonging to each particular Series shall be charged with
the liabilities of the Trust in respect of that Series or the appropriate Class
or Classes thereof and all expenses, costs, charges and reserves attributable to
that Series or Class or Classes thereof, and any general liabilities, expenses,
costs, charges or reserves of the Trust which are not readily identifiable as
belonging to any particular Series or Class shall be allocated and charged by
the Trustees to and among any one or more of the Series or Classes established
and designated from time to time in such manner and on such basis as the
Trustees in their sole discretion deem fair and equitable. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Series and Classes for all
purposes. The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items are capital; and each
such determination and allocation shall be conclusive and binding upon the
Shareholders. The assets of a particular Series of the Trust shall, under no
circumstances, be charged with liabilities attributable to any other Series or
Class or Classes thereof of the Trust. All persons extending credit to, or
contracting with or having any claim against a particular Series or Class
thereof of the Trust shall look only to the assets of that particular Series for
payment of such credit, contract or claim.
(d) The power of the Trustees to pay dividends and make distributions
shall be governed by Section 7.2 of this Declaration with respect to any Series
or Class which represents the interests in the assets of the Trust immediately
prior to the establishment of two or more Series or Classes. With respect to any
other Series or Class, dividends and distributions on Shares of a particular
Series or Class may be paid with such frequency as the Trustees may determine,
which may be daily or otherwise, pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine, to the holders of Shares of that Series or Class, from such of the
income and capital gains, accrued or realized, from the assets belonging to that
Series, as the Trustees may determine after providing for actual and accrued
liabilities belonging to that Series or Class. All dividends and distributions
on Shares of a particular Series or Class shall be distributed pro rata to the
Shareholders of that Series or Class in proportion to the number of Shares of
that Series or Class held by such Shareholders at the time of record established
for the payment of such dividends or distribution.
(e) Each Share of a Series of the Trust shall represent a beneficial
interest in the net assets of such Series. Each holder of Shares of a Series or
Class thereof shall be entitled to receive his pro rata share of distributions
of income and capital gains made with respect to such Series or Class thereof.
Upon redemption of his Shares or indemnification for liabilities incurred by
reason of his being or having been a Shareholder of a Series or Class thereof,
such Shareholder shall be paid solely out of the funds and property of such
Series of the Trust. Upon liquidation or termination of a Series or Class
thereof of the Trust, Shareholders of such Series or Class thereof shall be
entitled to receive a pro rata share of the net assets of such Series. A
Shareholder of a particular Series of the Trust shall not be entitled to
participate in a derivative or class action on behalf of any other Series or the
Shareholders of any other Series of the Trust.
(f) Subject to compliance with the requirements of the 1940 Act, the
Trustees shall have the authority to provide that the holders of Shares of any
Series or Class shall have the right to convert or exchange said Shares into
Shares of one or more Series or Classes of Shares in accordance with such
requirements and procedures as may be established by the Trustees.
The establishment and designation of any Series or Classes of Shares shall
be effective upon the execution by a majority of the then Trustees or by an
officer of the Trust pursuant to the vote of a majority of the then Trustees of
an instrument setting forth such establishment and designation and the relative
rights and preferences of such Series or Classes, or as otherwise provided in
such instrument. At any time that there are no Shares outstanding of any
particular Series or Class previously established and designated, the Trustees
may by an instrument executed by a majority of their number or by an officer of
the Trust pursuant to the vote of a majority of the then Trustees abolish that
Series or Class and the establishment and designation thereof. Each instrument
referred to in this section shall have the status of an amendment to this
Declaration.
ARTICLE VI
REDEMPTION AND REPURCHASE OF SHARES
Section 6.1. Redemption of Shares. All Shares of the Trust shall
be redeemable, at the redemption price determined in the manner set out in
this Declaration. Redeemed or repurchased Shares may be resold by the Trust.
The Trust shall redeem the Shares of the Trust or any Series or Class
thereof at the price determined hereinafter set forth, upon appropriately
verified written application of the record holder thereof (or upon such other
form of request as the Trustees may determine) at such office or agency as may
be designated from time to time for that purpose by the Trustees. The Trustees
may from time to time specify additional conditions, not inconsistent with the
1940 Act, regarding the redemption of Shares in the Trust's then effective
prospectus under the Securities Act of 1933.
Section 6.2. Price. Shares shall be redeemed at their net asset value
determined as set forth in Section 7.1 hereof as of such time as the Trustees
shall have theretofore prescribed by resolution. In absence of such resolution,
the redemption price of Shares deposited shall be the net asset value of such
Shares next determined as set forth in Section 7.1 hereof after receipt of such
application.
Section 6.3. Payment. Payment of the redemption price of Shares of the
Trust or any Series or Class thereof shall be made in cash or in property to the
Shareholder at such time and in the manner, not inconsistent with the 1940 Act
or other applicable laws, as may be specified from time to time in the Trust's
then effective prospectus under the Securities Act of 1933, subject to the
provisions of Section 6.4 hereof.
Section 6.4. Effect of Suspension of Determination of Net Asset Value. If,
pursuant to Section 6.9 hereof, the Trustees shall declare a suspension of the
determination of net asset value with respect to Shares of the Trust or any
Series or Class thereof, the rights of Shareholder (including those who shall
have applied for redemption pursuant to Section 6.1 hereof but who shall not yet
have received payment) to have Shares redeemed and paid for by the Trust or
Series or Class thereof shall be suspended until the termination of such
suspension is declared. Any record holder who shall have his redemption right so
suspended may, during the period of such suspension, by appropriate written
notice of revocation at the office or agency where application was made, revoke
any application for redemption not honored and withdraw any certificates on
deposit. The redemption price of Shares for which redemption applications have
not been revoked shall be the net asset value of such Shares next determined as
set forth in Section 7.1 after the termination of such suspension, and payment
shall be made within seven (7) days after the date upon which the application
was made plus the period after such application during which the determination
of net asset value was suspended.
Section 6.5. Repurchase by Agreement. The Trust may repurchase Shares
directly, or through the Distributor or another agent designated for the
purpose, by agreement with the owner thereof at a price not exceeding the net
asset value per share determined as of the time when the purchase or contract of
purchase is made or the net asset value as of any time which may be later
determined pursuant to Section 7.1 hereof, provided payment is not made for the
Shares prior to the time as of which such net asset value is determined.
Section 6.6. Redemption of Shareholder's Interest. The Trust shall have
the right at any time without prior notice to the Shareholder to redeem Shares
of any Shareholder for their then current net asset value per Share if at such
time the Shareholder owns Shares of any Series or Class having an aggregate net
asset value per Series or Class of less than $500 subject to such terms and
conditions as the Trustees may approve, and subject to the Trust's giving
general notice to all Shareholders of its intention to avail itself of such
right, either by publication in the Trust's prospectus, if any, or by such other
means as the Trustees may determine.
Section 6.7. Redemption of Shares in Order to Qualify as Regulated
Investment Company; Disclosure of Holding. If the Trustees shall, at any time
and in good faith, be of the opinion that direct or indirect ownership of shares
or other Securities of the Trust has or may become concentrated in any Person to
an extent which would disqualify the Trust or any Series of the Trust as a
regulated investment company under the Internal Revenue Code, then the Trustees
shall have the power by lot or other means deemed equitable by them (i) to call
for the redemption by any such Person a number, or principal amount, of Shares
or other securities of the Trust or any Series of the Trust sufficient to
maintain or bring the direct or indirect ownership of Shares or other securities
of the Trust or any Series of the Trust into conformity with the requirements
for such qualification and (ii) to refuse to transfer or issue Shares or other
securities of the Trust or any Series of the Trust to any Person whose
acquisition of the Shares or other securities of the Trust or any Series of the
Trust in question would result in such disqualification. The redemption shall be
effected at the redemption price and in the manner provided in Section 6.1.
The holders of Shares or other securities of the Trust shall upon demand
disclose to the Trustees in writing such information with respect to direct and
indirect ownership of Shares or other securities of the Trust as the Trustees
deem necessary to comply with the provisions of the Internal Revenue Code, or to
comply with the requirements of any other taxing authority.
Section 6.8. Reductions in Number of Outstanding Shares pursuant to Net
Asset Value Formula. The Trust may also reduce the number of outstanding Shares
of the Trust or of any Series of the Trust pursuant to the provisions of Section
7.3.
Section 6.9. Suspension of Right of Redemption. The Trust may declare a
suspension of the right of redemption or postpone the date of payment or
redemption for the whole or any part of any period (i) during which the New York
Stock Exchange is closed other than customary weekend and holiday closings, (ii)
during which trading on the New York Stock Exchange is restricted, (iii) during
which an emergency exists as a result of which disposal by the Trust or a Series
thereof of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Trust or a Series thereof fairly to determine the
value of its net assets, or (iv) during any other period when the Commission may
for the protection of Shareholders of the Trust by order permit suspension of
the right of redemption or postponement of the date of payment or redemption;
provided that applicable rules and regulations of the Commission shall govern as
to whether the conditions prescribed in (ii), (iii), or (iv) exist. Such
suspension shall take effect at such time as the Trust shall specify but not
later than the close of business on the business day next following the
declaration of suspension, and thereafter there shall be no right of redemption
or payment on redemption until the Trust shall declare the suspension at an end,
except that the suspension shall terminate in any event on the first day on
which said stock exchange shall have reopened or the period specified in (ii) or
(iii) shall have expired (as to which in the absence of an official ruling by
the Commission, the determination of the Trust shall be conclusive). In the case
of a suspension of the right of redemption, a Shareholder may either withdraw
his request for redemption or receive payment based on the net asset value
extending after the termination of the suspension.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE, NET INCOME AND DISTRIBUTIONS
Section 7.1. Net Asset Value. The net asset value per Share of any class
of Shares shall be computed at such time or times as the Trustees may specify
pursuant to the 1940 Act. Assets shall be valued and net asset value per Share
shall be determined by such person or persons as the Trustees may appoint under
the supervision of the Trustees in such manner as the Trustees may determine not
inconsistent with the 1940 Act.
Section 7.2. Distributions to Shareholders. Shares of classes having the
same alphabetical designation shall be entitled to such dividends and
distributions, in Shares or in cash or both, as may be declared from time to
time by the Trustees, acting in their sole discretion, with respect to such
classes, provided that such dividends and distributions shall be paid only out
of the lawfully available "assets belonging to" such classes as such term is
defined in Section 7.3.
Section 7.3. Assets Belonging to Classes with Some Alphabetical
Designation. All consideration received by the Trust for the issue and sale of
Shares of any class shall be commingled, invested and reinvested together with
the consideration received by the Trust for the issue and sale of Shares of such
other class or classes, if any, that have the same alphabetical designation,
along with all income, earnings, profits and proceeds derived from the
investment thereof, including any proceeds derived from the sale, exchange or
liquidation of such investments, any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, and any general
assets of the Trust not belonging to a particular class which the Trustees may,
in their sole discretion, allocate to such classes having the same alphabetical
designation, and shall irrevocably belong to the classes with respect to which
such assets, payments or funds were received or allocated for all purposes,
subject only to the rights of creditors, and shall be so handled upon the books
of account of the Trust. For purposes of this Declaration of Trust, such assets
and the income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, and any assets derived
from any reinvestment of such proceeds in whatever form, are referred to as
"assets belonging to" such classes. Each Share of the classes having the same
alphabetical designation shall share equally with each other Share of such
classes in the assets belonging to such classes. Shareholders of any class of
Shares shall have no right, title or interest in or to the assets belonging to
any class of Shares with a different alphabetical designation.
Section 7.4. Determination of Net Income; Constant Net Asset Value;
Reduction of Outstanding Shares. The assets belonging to classes of Shares with
the same alphabetical designation shall be charged with the direct liabilities
in respect of such classes and shall also be charged with such classes'
proportionate share of the general liabilities of the Trust as determined by
comparing the assets belonging to such classes with the aggregate assets of the
Trust, provided, that the Board of Trustees may, in their discretion, direct
that any one or more general liabilities of the Trust be allocated to such
classes on a different basis. The liabilities so charged to such classes are
herein referred to as "liabilities belonging to" such classes, and each Share of
such classes shall be charged equally with each other Share of a class having
the same alphabetical designation with the liabilities belonging to such
classes, except that:
A class of Shares shall bear any expenses and liabilities directly
attributable to such class of Shares which the Trustees determine should be
borne solely by such class, which expenses and liabilities may include, without
limitation, expenses and liabilities incurred in connection with the
distribution of Shares of such class and expenses and liabilities incurred
pursuant to agreements under which institutions agree to provide services with
respect to beneficial owners of Shares of that class but not with respect to
beneficial owners of Shares of other classes with the same alphabetical
designation; and
A class of Shares shall not be required to bear any expenses and
liabilities directly attributable to one or more other classes of Shares which
the Trustees determine should be borne solely by such other class or classes.
Section 7.5. Power to Modify Foregoing Procedures. Notwithstanding any of
the foregoing provisions of this Article VII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value of the Shares of the Trust or a Series or Class thereof,
or the declaration and payment of dividends and distributions as they may deem
necessary or desirable. Without limiting the generality of the foregoing, the
Trustees may establish several Series or Classes of Shares in accordance with
Section 5.11, and declare dividends thereon in accordance with Section 5.11(d).
ARTICLE VIII
DURATION; TERMINATION OF TRUST OR A SERIES; AMENDMENT; MERGERS, ETC.
Section 8.1. Duration. The Trust shall continue without
limitation of time but subject to the provisions of this Article VIII.
Section 8.2. Termination of the Trust, a Series or a Class. (a) The Trust,
any Series or Class thereof may be terminated by (i) the affirmative vote of the
holders of not less than two-thirds of the Shares outstanding and entitled to
vote at any meeting of Shareholders of the Trust or the appropriate Series or
Class thereof or (ii) an instrument in writing signed by a majority of the
Trustees or by an officer of the Trust pursuant to the vote of a majority of the
Trustees, stating that a majority of the Trustees has determined that the
continuation of the Trust, the Series or Class thereof is not in the best
interest of such Series or Class, the Trust or their respective shareholders as
a result of such factors or events adversely affecting the ability of such
Series or Class or the Trust to conduct its business and operations in an
economically viable manner. Such factors and events may include, but are not
limited to, the inability of a Series or Class of the Trust to maintain its
assets at an appropriate size, changes in laws or regulations governing the
Series or Class or the Trust or affecting assets of the type in which such
Series or the Trust invests or economic developments or trends having a
significant adverse impact on the business or operations of such Series or Class
or the Trust. Upon the termination of the Trust or the Series or Class,
(i) The Trust or the Series or Class shall carry on no business
except for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the
Trust or the Series or Class and all of the powers of the
Trustees under this Declaration shall continue until the
affairs of the Trust shall have been wound up, including
the power to fulfill or discharge the contracts of the
Trust or the Series, collect its assets, sell, convey,
assign, exchange, transfer or otherwise dispose of all or
any part of the remaining Trust Property or Trust Property
allocated or belonging to such Series or Class to one or
more persons at public or private sale for consideration
which may consist in whole or in part of cash, securities
or other property of any kind, discharge or pay its
liabilities, and do all other acts appropriate to liquidate
its business; provided that any sale, conveyance,
assignment, exchange, transfer or other disposition of all
or substantially all the Trust Property or Trust Property
allocated or belonging to such Series or Class (other than
as provided in (iii) below) shall require Shareholder
approval in accordance with Section 8.4 hereof.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities
and refunding agreements as they deem necessary for their
protection, the Trustees may distribute the remaining Trust
Property or the remaining property of the terminated Series or
Class, in cash or in kind or partly each, among the
Shareholders of the Trust or the Series or Class according to
their respective rights.
(b) After termination of the Trust or the Series or Class and distribution
to the Shareholders as herein provided, a majority of the Trustees shall execute
and lodge among the records of the Trust and file with the Secretary of The
Commonwealth of Massachusetts an instrument in writing setting forth the fact of
such termination, and the Trustees shall thereupon be discharged from all
further liabilities and duties with respect to the Trust or the terminated
Series or Class, and the rights and interests of all Shareholders of the Trust
or the terminated Series or Class shall thereupon cease.
Section 8.3. Amendment Procedure. (a) This Declaration may be amended by a
vote of the holders of a majority of the Shares outstanding and entitled to vote
or by any instrument in writing, without a meeting, signed by a majority of the
Trustees and consented to by the holders of a majority of the Shares outstanding
and entitled to vote. The Trustees may amend this Declaration without the vote
or consent of Shareholders so long as such amendment does not materially
adversely affect the rights of Shareholders.
(b) No amendment may be made under this Section 8.3 which would change any
rights with respect to any Shares of the Trust or Series or Class thereof by
reducing the amount payable thereon upon liquidation of the Trust or Series or
Class thereof or by diminishing or eliminating any voting rights pertaining
thereto, except with the vote or consent of the holders of two-thirds of the
Shares of the Trust or such Series or Class outstanding and entitled to vote.
Nothing contained in this Declaration shall permit the amendment of this
Declaration to impair the exemption from personal liability of the Shareholder,
Trustees, officers, employees and agents of the Trust or to permit assessments
upon Shareholders.
(c) A certificate signed by a majority of the Trustees or by an officer of
the Trust pursuant to the vote of a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed by
a majority of the Trustees or by an officer of the Trust pursuant to the vote of
a majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
Section 8.4. Merger, Consolidation and Sale of Assets. The Trust or any
Series thereof may merge or consolidate with any other corporation, association,
trust or other organization or may sell, lease or exchange all or substantially
all of the Trust Property or Trust Property allocated or belonging to such
Series, including its good will, upon such terms and conditions and for such
consideration when and as authorized at any meeting of Shareholders called for
the purpose by the affirmative vote of the holders of two-thirds of the Shares
of the Trust or such Series outstanding and entitled to vote, or by an
instrument or instruments in writing without a meeting, consented to by the
holders of two-thirds of the Shares of the Trust or such Series; provided,
however, that, if such merger, consolidation, sale, lease or exchange is
recommended by the Trustees, the vote or written consent of the holders of a
majority of the Shares of the Trust or such Series outstanding and entitled to
vote shall be sufficient authorization; and any such merger, consolidation,
sale, lease or exchange shall be deemed for all purposed to have been
accomplished under and pursuant to Massachusetts law.
Section 8.5. Incorporation. With the approval of the holders of a majority
of the shares of the Trust or a Series thereof outstanding and entitled to vote,
the Trustees may cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction or any other trust, partnership,
association or other organization to take over all of the Trust Property or the
Trust Property allocated or belonging to such Series or to carry on any business
in which the Trust shall directly or indirectly have any interest, and to sell,
convey and transfer the Trust Property or the Trust Property allocated or
belonging to such Series to any such corporation, trust, association or
organization in exchange for the shares or securities thereof or otherwise, and
to lend money to, subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization, or any corporation, partnership, trust, association or
organization in which the Trust or such Series holds or is about to acquire
shares or any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law, as provided under the law then in effect. Nothing
contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and selling, conveying
or transferring a portion of the Trust Property to such organization or
entities.
<PAGE>
ARTICLE IX
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders of
each Series a written financial report of the transactions of the Trust,
including financial statements which shall at least annually be certified by
independent public accountants.
ARTICLE X
MISCELLANEOUS
Section 10.1. Execution and Filing. This Declaration and any amendment
hereto shall be filed in the office of the Secretary of The Commonwealth of
Massachusetts and in such other places as may be required under the laws of
Massachusetts and may also be filed or recorded in such other places as the
Trustees deem appropriate. Each amendment so filed shall be accompanied by a
certificate signed and acknowledged by a Trustee stating that such action was
duly taken in a manner provided herein, and unless such amendment or such
certificate sets forth some later time for the effectiveness of such amendment,
such amendment shall be effective upon its execution. A restated Declaration,
integrating into a single instrument all of the provisions of the Declaration
which are then in effect and operative, may be executed from time to time by a
majority of the Trustees and filed with the Secretary of The Commonwealth of
Massachusetts. A restated Declaration shall, upon execution, be conclusive
evidence of all amendments contained therein and may hereafter be referred to in
lieu of the original Declaration and the various amendments thereto.
Section 10.2. Governing Law. This Declaration is executed by the Trustees
and delivered in The Commonwealth of Massachusetts and with reference to the
laws thereof, and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed according to the laws
of said State.
Section 10.3. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 10.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust appears to be a Trustee
hereunder or an officer elected pursuant to the By-laws, certifying (a) the
number or identity of Trustees or Shareholders, (b) the due authorization of the
execution of any instrument or writing, (c) the form of any vote passed at a
meeting of Trustees or Shareholders, (d) the fact that the number of trustees or
Shareholders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration, (e) the form of any By-laws
adopted by or the identity of any officers elected by the Trustees, or (f) the
existence of any fact or facts which in any manner relate to the affairs of the
Trust, shall be conclusive evidence as to the matters so certified in favor of
any Person dealing with the Trustees and their successors.
Section 10.5. Provisions in Conflict with Law or Regulations. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of this
Declaration; provided, however, that such determination shall not affect any of
the remaining provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provisions in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
The address of the Trust is:
The Munder Framlington Funds Trust
480 Pierce Street
Birmingham, Michigan 48009
The address of the Trustees, Julie A. Tedesco and
Teresa M.R. Hamlin, is:
One Exchange Place
Boston MA 02109
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument this
30th day of October, 1996.
/s/ Julie A. Tedesco
Julie A. Tedesco, as Trustee and
not individually
/s/ Teresa M.R. Hamlin
Teresa M.R. Hamlin, as Trustee and
not individually
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK COUNTY MASSACHUSETTS
October 30, 1996
Then personally appeared the above-named persons who acknowledged the
foregoing instrument to be his free act and deed.
Before me,
/s/ Jolene Quinn
Notary Public
My commission expires: June 21, 2002
EXHIBIT 2
BY-LAWS
OF
THE MUNDER FRAMLINGTON FUNDS TRUST
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS 1
ARTICLE II - OFFICES 1
Section 1. Principal Office 1
Section 2. Other Offices 1
ARTICLE III - SHAREHOLDERS 1
Section 1. Meetings 1
Section 2. Notice of Meetings 1
Section 3. Record Date for Meetings and Other Purposes 2
Section 4. Proxies 2
Section 5. Inspection of Records 2
Section 6. Action without Meeting 2
ARTICLE IV - TRUSTEES 2
Section 1. Meetings of the Trustees 2
Section 2. Quorum and Manner of Acting 3
Section 3. Retirement of Trustees 3
ARTICLE V - COMMITTEES 3
Section 1. Executive and Other Committees 3
Section 2. Audit Committee 3
Section 3. Nominating Committee 3
Section 4. Meetings, Quorum and Manner of Acting 4
ARTICLE VI - OFFICERS 4
Section 1. General Provisions 4
Section 2. Term of Office and Qualifications 4
Section 3. Removal 4
Section 4. Powers and Duties of the Chairman 4
Section 5. Powers and Duties of the President 4
Section 6. Powers and Duties of Vice Presidents 5
Section 7. Powers and Duties of the Treasurer 5
Section 8. Powers and Duties of the Secretary 5
Section 9. Powers and Duties of Assistant Officers 5
Section 10. Powers and Duties of Assistant Secretaries 5
Section 11. Compensation of Officers and Trustees
and Members of the Advisory Board 5
Section 12 Bonding of Officers and Employees
ARTICLE VII - FISCAL YEAR 5
ARTICLE VIII - SEAL 6
ARTICLE IX - SUFFICIENCY AND WAIVERS OF NOTICE 6
TABLE OF CONTENTS (continued)
Page
ARTICLE X - AMENDMENTS 6
ARTICLE XI - MISCELLANEOUS 6
<PAGE>
7
shared/bankgrp/framling/bylaws.doc
BY-LAWS
OF
THE MUNDER FRAMLINGTON FUNDS TRUST
ARTICLE I
DEFINITIONS
The terms "Administrator," "By-Laws," "Class," "Commission," "Custodian,"
"Declaration," "Distributor," "Fund" or "Funds," "His," "Interested Person,"
"Investment Adviser," "1940 Act," "Person," "Prospectus," "Series,"
"Shareholder," "Shares," "Transfer Agent," "Trust," "Trust Property,"
"Trustees," and "vote of a majority of the Shares outstanding and entitled to
vote," have the respective meanings given them in the Declaration of Trust of
The Munder Framlington Funds Trust.
ARTICLE II
OFFICES
Section 1. Principal Office. Until changed by the Trustees, the
principal office of the Trust shall be 480 Pierce Street, Birmingham,
Michigan 48009.
Section 2. Other Offices. The Trust may have offices in such other
places without as well as within the Commonwealth of Massachusetts as the
Trustees may from time to time determine.
ARTICLE III
SHAREHOLDERS
Section 1. Meetings. Meetings of the Shareholders of the Trust or a Series
thereof shall be held as provided in the Declaration at such place within or
without the Commonwealth of Massachusetts as the Trustees shall designate. The
holders of a majority of outstanding Shares of the Trust or a Series thereof
present in person or by proxy shall constitute a quorum at any meeting of the
Shareholders of the Trust or a Series thereof.
Section 2. Notice of Meetings. Written notice of all meetings of the
Shareholders, stating the time, place and purposes of the meeting, shall be
given by the Trustees by mail to each Shareholder at his address as recorded on
the register of the Trust mailed at least ten (10) days before the meeting,
provided, however, that notice of a meeting need not be given to a shareholder
to whom such notice need not be given under the proxy rules of the Commission
under the 1940 Act and the Securities Exchange Act of 1934, as amended. Any
adjourned meeting may be held as adjourned without further notice. No notice
need be given to any Shareholder who shall have failed to inform the Trust of
his current address or if a written waiver of notice, executed before or after
the meeting by the Shareholder or his attorney thereunto authorized, is filed
with the records of the meeting.
Section 3. Record Date for Meetings and Other Purposes. For the purpose of
determining the Shareholders who are entitled to notice of and to vote at any
meeting, or to participate, the Trustees may from time to time close the
transfer books for such period, not exceeding thirty (30) days, as the Trustees
may determine; or without closing the transfer books the Trustees may fix a date
not more than ninety (90) days prior to the date of any meeting of Shareholders
or distribution or other action as a record date for the determination of the
persons to be treated as Shareholders of record for such purposes, except for
dividend payments, which shall be governed by the Declaration.
Section 4. Proxies. At any meeting of Shareholders, any holder of Shares
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken.
Proxies may be solicited in the name of one or more Trustees or one or more of
the officers of the Trust. Only Shareholders of record shall be entitled to
vote. Each whole share shall be entitled to one vote as to any matter on which
it is entitled by the Declaration to vote, and each fractional Share shall be
entitled to a proportionate fractional vote. When any Share is held jointly by
several persons, any one of them may vote at any meeting in person or by proxy
in respect of such Share, but if more than one of them shall be present at such
meeting in person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote shall not be received in respect
of such Share. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise,
and the burden of proving invalidity shall rest on the challenger. If the holder
of any such share is a minor or a person of unsound mind, and subject to
guardianship or the legal control of any other person as regards the charge or
management of such Share, he may vote by his guardian or such other person
appointed or having such control, and such vote may be given in person or by
proxy.
Section 5. Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.
Section 6. Action Without Meeting. Any action which may be taken by
Shareholders may be taken without a meeting if a majority of Shareholders
entitled to vote on the matter (or such larger proportion thereof as shall be
required by law, the Declaration or these By-Laws for approval of such matter)
consent to the action in writing and the written consents are filed with the
records of the meetings of Shareholders. Such consents shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
ARTICLE IV
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees may in their decision
provide for regular or stated meetings of the Trustees. Notice of regular or
stated meetings need not be given. Meetings of the Trustees other than regular
or stated meetings shall be held whenever called by the President, or by written
request of any three of the Trustees, at the time being in office. Notice of the
time and place of each meeting other than regular or stated meetings shall be
given at least one day before the meeting. Such notice may, however, be waived
by any Trustee. Notice of a meeting need not be given to any Trustee if a
written waiver of notice, executed by him before or after the meeting, is filed
with the records of the meeting, or to any Trustee who attends the meeting
without protesting prior thereto or at its commencement the lack of notice to
him. A notice or waiver of notice need not specify the purpose of any meeting.
The Trustees may meet by means of a telephone conference circuit or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by such means
shall be deemed to have been held at a place designated by the Trustees at the
meeting. Participation in a telephone conference meeting shall constitute
presence in person at such meeting. Any action required or permitted to be taken
at any meeting of the Trustees may be taken by the Trustees without a meeting if
all the Trustees consent to the action in writing and the written consents are
filed with the records of the Trustees' meetings. Such consents shall be treated
as a vote for all purposes.
Section 2. Quorum and Manner of Acting. A majority of the Trustees shall
be present in person at any regular or special meeting of the Trustees in order
to constitute a quorum for the transaction of business at such meeting and
(except as otherwise required by law, the Declaration or these By-Laws) the act
of a majority of the Trustees present at any such meeting, at which a quorum is
present, shall be the act of the Trustees. In the absence of a quorum, a
majority of the Trustees present may adjourn the meeting from time to time until
a quorum shall be present. Notice of an adjourned meeting need not be given.
Section 3. Retirement of Trustees. Any Trustee shall retire as
Trustee at the end of the calendar year in which the Trustee attains the age
of 70 years.
ARTICLE V
COMMITTEES
Section 1. Executive and Other Committees. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of two or more members to hold office at the pleasure of
the Trustees, which shall have the power to conduct the current and ordinary
business of the Trust while the Trustees are not in session, including the
purchase and sale of securities and the designation of securities to be
delivered upon redemption of Shares of the Trust or a Series thereof, and such
other powers of the Trustees as the Trustees may, from time to time, delegate to
them except those powers which by law, the Declaration or these By-Laws they are
prohibited from delegating. The Trustees may also elect from their own number
other Committees from time to time, the number composing such Committees, the
powers conferred upon the same (subject to the same limitations as with respect
to the Executive Committee) and the term of membership on such Committees to be
determined by the Trustees. The Trustees may designate a chairman of any such
Committee. In the absence of such designation the Committee may elect its own
Chairman.
Section 2. Audit Committee. The Trustees may by the affirmative vote of a
majority of the Trustees appoint from their members an Audit Committee composed
of two or more Trustees who are not "interested persons" (as defined in the 1940
Act) of the Trust, as the Trustees may from time to time determine.
Section 3. Nominating Committee. The Trustees may by the affirmative vote
of a majority of the Trustees appoint from their members a Nominating Committee
composed of two or more Trustees. The Nominating Committee shall recommend to
the Trustees a slate of persons to be nominated for election as Trustees by the
shareholders at a meeting of shareholders and a person to fill any vacancy
occurring for any reason in the Board of Trustees.
Section 4. Meetings, Quorum and Manner of Acting. The Trustees may (1)
provide for stated meetings of any Committee, (2) specify the manner of calling
and notice required for special meetings of any Committee, (3) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (4) authorize the making of decisions to exercise specified
powers by written consent of the requisite number of members of a Committee
without a meeting, and (5) authorize the members of a Committee to meet by means
of a telephone conference circuit.
The Executive Committee and any other committee of the Board of Trustees
shall keep regular minutes of their meetings and records of decisions taken
without a meeting and cause them to be recorded in a book designated for that
purpose and kept in the office of the Trust.
ARTICLE VI
OFFICERS
Section 1. General Provisions. The officers of the Trust shall be a
President, a Treasurer and a Secretary, who shall be elected by the Trustees.
The Trustees may elect or appoint such other officers or agents as the business
of the Trust may require, including one or more Vice Presidents, one or more
Assistant Secretaries, and one or more Assistant Treasurers. The Trustees may
delegate to any officer or Committee the power to appoint any subordinate
officers or agents.
Section 2. Term of Office and Qualifications. Except as otherwise provided
by law, the Declaration or these By-Laws, the President, the Treasurer and the
Secretary shall each hold office until his successor shall have been duly
elected and qualified, and all other officers shall hold office at the pleasure
of the Trustees. The Secretary and the Treasurer may be the same person. Any two
or more offices, except those of President and Vice President, may be held by
the same person, but no person shall execute, acknowledge or verify any
instrument in more than one capacity if such instrument is required by law, the
Declaration or these By-Laws to be executed, acknowledged or verified by two or
more officers. Any officer may be but need not be a Trustee or Shareholder.
Section 3. Removal. The Trustees, at any regular or special meeting of the
Trustees, may remove any officer without cause, by a vote of a majority of the
Trustees then in office. Any officer or agent appointed by an officer or
Committee may be removed with or without cause by such appointing officer or
Committee.
Section 4. Powers and Duties of the Chairman. The Trustees may, but need
not, appoint from among their number a Chairman. The Chairman shall serve at the
pleasure of the Trustees and shall perform and execute such duties as the
Trustees from time-to-time provide but who shall not by reason of performing or
executing these duties be deemed an officer or employee of the Trust.
Section 5. Powers and Duties of the President. In the absence of the
Chairman, the President may call meetings of the Trustees and of any Committee
thereof when he deems it necessary and shall preside at all meetings of the
Shareholders. The President shall be the Chief Executive Officer of the Trust
and shall exercise general supervision and direction over the affairs of the
Trust. Subject to the control of the Trustees and to the control of any
Committees of the Trustees, within their respective spheres, as provided by the
Trustees, the President shall have such powers and duties, as from time to time
may be conferred upon or assigned to him by the Trustees.
Section 6. Powers and Duties of Vice Presidents. In the absence or
disability of the President, a Vice President shall perform all the duties and
may exercise any of the powers of the President, subject to the control of the
Trustees. Each Vice President shall perform such other duties as may be assigned
to him from time to time by the Trustees and the President.
Section 7. Powers and Duties of the Treasurer. The Treasurer shall be the
principal financial and accounting officer of the Trust. He shall deliver all
funds of the Trust or any Series thereof which may come into his hands to such
Custodian as the Trustees may employ pursuant to Article X of these By-Laws. He
shall render a statement of condition of the finances of the Trust or any Series
thereof to the Trustees as often as they shall require the same and he shall in
general perform all the duties incident to the office of a Treasurer and such
other duties as from time to time may be assigned to him by the Trustees.
Section 8. Powers and Duties of the Secretary. The Secretary shall keep
the minutes of all meetings of the Trustees and of the Shareholders in proper
books provided for that purpose; he shall have custody of the seal of the Trust;
he shall have charge of the Share transfer books, lists and records unless the
same are in the charge of the Transfer Agent. He shall attend to the giving and
serving of all notices by the Trust in accordance with the provisions of these
By-Laws and as required by law; and subject to these By-Laws, he shall in
general perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him by the Trustees.
Section 9. Powers and Duties of the Assistant Treasurer. In the absence or
disability of the Treasurer, an Assistant Treasurer shall perform all the
duties, and may exercise any of the powers, of the Treasurer. Each Assistant
Treasurer shall perform such other duties as from time to time may be assigned
to him by the Trustees.
Section 10. Powers and Duties of Assistant Secretaries. In the absence or
disability of the Secretary, any Assistant Secretary designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Secretary. Each Assistant Secretary shall perform such other duties as from time
to time may be assigned to him by the Trustees.
Section 11. Compensation of Officers and Trustees. Any Trustee, whether or
not a salaried officer, employee, or agent of the Trust, may be compensated for
his services as a Trustee or as a member of a committee, or as Chairman of the
Board of Trustees or Chairman of a Committee, by fixed periodic payments or by
fees for attendance at meetings or by both, and in addition may be reimbursed
for transportation and other expenses, all in such manner and amounts as the
Trustees may from time to time determine.
Section 12. Bonding of Officers and Employees. All officers and
employees of the Trust shall be bonded to such extent, and in such manner, as
may be required by law.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Trust shall begin on the first day of July in each
year and shall end on the last day of June in each year, provided, however, that
the Trustees may from time to time change the fiscal year.
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form and shall have
such inscription thereon as the Trustees may from time to time prescribe.
ARTICLE IX
SUFFICIENCY AND WAIVERS OF NOTICE
Whenever any notice whatever is required to be given by law, the
Declaration or these By-Laws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. A notice shall be deemed to have
been telegraphed, cabled or wirelessed for the purposes of these By-Laws when it
has been delivered to a representative of any telegraph, cable or wireless
company with instructions that it be telegraphed, cabled or wirelessed.
ARTICLE X
AMENDMENTS
These By-Laws, or any of them, may be altered, amended or repealed, or new
By-Laws may be adopted by (a) vote of a majority of the Shares outstanding and
entitled to vote or (b) by the Trustees, provided, however, that no By-Law may
be amended, adopted or repealed by the Trustees if such amendment, adoption or
repeal requires, pursuant to law, the Declaration or these By-Laws, a vote of
the Shareholders.
ARTICLE XI
MISCELLANEOUS
(A) Except as hereinafter provided, no officer or Trustee of the Trust and
no partner, officer, director or shareholder of the Investment Adviser of the
Trust (as that term is defined in the 1940 Act) or of an underwriter of the
Trust, and no Investment Adviser or underwriter of the Trust, shall take long or
short positions in the securities issued by the Trust or any Series thereof.
(1) The foregoing provision shall not prevent an underwriter from
purchasing Shares from the Trust or any Series if such purchases are
limited (except for reasonable allowances for clerical errors, delays and
errors of transmission and cancellation of orders) to purchases for the
purpose of filling orders for such Shares received by the underwriter, and
provided that orders to purchase from the Trust or any Series thereof are
entered with the Trust or any Series thereof or the Custodian promptly
upon receipt by the underwriter of purchase orders for such Shares, unless
the underwriter is otherwise instructed by its customer.
(2) The foregoing provision shall not prevent an underwriter from
purchasing Shares of the Trust or any Series thereof as agent for the
account of the Trust or any Series thereof.
(3) The foregoing provision shall not prevent the purchase from the
Trust or any Series thereof or from the underwriter of Shares issued by
the Trust or any Series thereof, by any officer, or Trustee of the Trust
or any Series thereof or by any partner, officer, director or shareholder
of the Investment Adviser of the Trust or any Series thereof or of an
underwriter of the Trust at the price available to the public generally at
the moment of such purchase, or as described in the then Prospectus of the
Trust.
(4) The foregoing shall not prevent the Investment Adviser, or any
affiliate thereof, of the Trust or any Series or Class thereof from
purchasing Shares prior to the effectiveness of the first registration
statement relating to the Shares under the Securities Act of 1933.
(B) Neither the Trust nor any Series thereof shall lend assets of the
Trust or of such Series to any officer or Trustee of the Trust or Series, or to
any partner, officer, director or shareholder of, or person financially
interested in, the Investment Adviser of the Trust or Series or an underwriter
of the Trust.
(C) The Trust shall not impose any restrictions upon the transfer of the
Shares of the Trust or any Series thereof except as provided in the Declaration
or as may be required to comply with federal or state securities laws, but this
requirement shall not prevent the charging of customary transfer agent fees.
END OF BY-LAWS
EXHIBIT 5(a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made this day of , 1996, between The Munder Framlington Funds
Trust (the "Trust") and Munder Capital Management (the "Advisor"), a Delaware
partnership.
WHEREAS, the Trust is a Massachusetts business trust authorized to issue
shares in series and is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Advisor is registered as an investment advisor under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Trust wishes to retain the Advisor to render investment
advisory services to the portfolios of the Trust listed on Appendix A attached
hereto (the "Funds"), and the Advisor is willing to furnish such services to the
Funds;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Trust and the Advisor as follows:
1. Appointment
The Trust hereby appoints the Advisor to act as investment Advisor to the
Funds for the period and on the terms set forth herein. The Advisor accepts the
appointment and agrees to furnish the services set forth herein for the
compensation provided herein.
2. Services as Investment Advisor
Subject to the general supervision and direction of the Board of Trustees
of the Trust, the Advisor will (a) provide overall management to each Fund in
accordance with the Fund's investment objective and policies as stated in the
Fund's Prospectuses and the Statement of Additional Information filed with the
Securities and Exchange Commission, as they may be amended from time to time;
(b) make investment decisions for each Fund; (c) oversee the placement of
purchase and sale orders on behalf of each Fund; (d) employ professional
portfolio managers and securities analysts to provide research services to each
Fund; (e) maintain books and records with respect to the Funds' securities
transactions; and (f) provide periodic and special reports to the Board of
Trustees of the Trust, as requested. In providing those services, the Advisor
will provide the Funds with ongoing research, analysis, advice and judgments
regarding individual investments, general economic conditions and trends and
long-range investment policy. In addition, the Advisor will furnish the Funds
with whatever statistical information the Funds may reasonably request with
respect to the securities that the Funds may hold or contemplate purchasing.
<PAGE>
The Advisor further agrees that, in performing its duties hereunder, it
will:
(a) comply with the 1940 Act and all rules and regulations thereunder, the
Advisors Act, the Internal Revenue Code, of 1986, as amended (the "Code"), and
all other applicable federal and state laws and regulations, and with any
applicable procedures adopted by the Trust's Trustees;
(b) use reasonable efforts to manage each Fund so that it will qualify,
and continue to qualify, as a regulated investment company under Subchapter M of
the code and regulations issued thereunder;
(c) maintain books and records with respect to the Funds' securities
transactions, render to the Board of Trustees of the Trust such periodic and
special reports as the Board may reasonably request, and keep the Trustees
informed of developments materially affecting the Funds' portfolio;
(d) make available to the Funds' administrator, and the Trust, promptly
upon their request, such copies of the investment records and ledgers with
respect to the Funds as may be required to assist the administrator and the
Trust in their compliance with applicable laws and regulations; and
(e) immediately notify the Trust in the event that the Advisor or any of
its affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Advisor from serving as investment Advisor
pursuant to this Agreement; or (2) becomes aware that it is the subject of an
administrative proceeding or enforcement action by the Securities and Exchange
Commission or other regulatory authority. The Advisor further agrees to notify
the Trust immediately of any material fact known to the Advisor respecting or
relating to the Advisor that is not contained in the Trust's Registration
Statement regarding the Funds, or any amendment or supplement thereto, but that
is required to be disclosed therein, and of any statement contained therein that
becomes untrue in any material respect.
The Advisor may enter into an agreement with one or more sub-advisors
(each, a "Sub-Advisor") pursuant to which each Sub-Advisor shall furnish to the
Trust on behalf of one or more of the Funds the investment advisory services
specified therein in connection with the management of the Trust (the
"Sub-Advisory Agreements"). The Advisor will continue to have ultimate
responsibility for all investment advisory services furnished pursuant to any
Sub-Advisory Agreement.
3. Documents
The Trust has delivered properly certified or authenticated copies of each
of the following documents to the Advisor and will deliver to it all future
amendments and supplements thereto, if any:
(a) certified resolution of the Board of Trustees of the Trust
authorizing the appointment of the Advisor and approving the form of this
Agreement;
(b) the Registration Statement describing the Funds as filed with the
Securities and Exchange Commission and any amendments thereto; and
(c) exhibits, powers of attorneys, certificates and any and all other
documents relating to or filed in connection with the Registration Statement
described above.
<PAGE>
4. Brokerage
In selecting brokers-dealers to execute transactions on behalf of the
Funds, the Advisor will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any Fund
transaction, the Advisor will consider all factors it deems relevant, including,
but not limited to, 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, for the specific transaction
and on a continuing basis. In selecting brokers-dealers to execute a particular
transaction, and in evaluating the best overall terms available, the Advisor is
authorized to consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the
"1934 Act")) provided to the Funds and/or other accounts over which the
Sub-Advisor or its affiliates exercise investment discretion. The parties hereto
acknowledge that it is desirable for the Trust that the Advisor have access to
supplemental investment and market research and security and economic analysis
provided by brokers-dealers who may execute brokerage transactions at a higher
cost to the Trust than may result when allocating brokerage to other brokers on
the basis of seeking the most favorable price and efficient execution.
Therefore, the Advisor may 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 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 Advisor to the Funds. It is understood that the
services provided by such brokers may be useful to the Advisor in connection
with the Advisor's services to other clients. In accordance with Section 11(a)
of the 1934 Act and Rule 11a2-2(T) thereunder and subject to any other
applicable laws and regulations, the Advisor and its affiliates are authorized
to effect portfolio transactions for the Funds and to retain brokerage
commissions on such transactions.
5. Records
The Advisor agrees to maintain and to preserve for the periods prescribed
under the 1940 Act any such records as are required to be maintained by the
Advisor with respect to the Funds by the 1940 Act. The Advisor further agrees
that all records which it maintains for the Funds are the property of the Funds
and it will promptly surrender any of such records upon request.
6. Standard of Care
The Advisor shall exercise its best judgment in rendering the services
under this Agreement. The Advisor shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Funds or the Funds'
shareholders in connection with the matters to which this Agreement relates,
provided that nothing herein shall be deemed to protect or purport to protect
the Advisor against any liability to the Fund or to its shareholders to which
the Advisor would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or by
reason of the Advisor's reckless disregard of its obligations and duties under
this Agreement. As used in this Section 5, the term "Advisor" shall include any
officers, directors, employees, or other affiliates of the Advisor performing
services with respect to the Funds.
<PAGE>
7. Compensation
In consideration of the services rendered pursuant to this Agreement, each
Fund will pay the Advisor a fee at an annual rate based on the Funds' average
daily net assets as set forth on Appendix A. This fee shall be computed and
accrued daily and payable monthly. For the purpose of determining fees payable
to the Advisor, the value of the Funds' average daily net assets shall be
computed at the times and in the manner specified in the Funds' Prospectuses or
Statement of Additional Information.
8. Expenses
The Advisor will bear all expenses in connection with the performance of
its services under this Agreement and will bear the costs and expenses payable
to the Sub-Advisors under the Sub-Advisory Agreements. The Fund will bear
certain other expenses to be incurred in its operation, including: taxes,
interest, brokerage fees and commissions, if any, fees of Trustees of the Trust
who are not officers, directors, or employees of the Advisor or any Sub-Advisor;
Securities and Exchange Commission fees and state blue sky qualification fees;
charges of custodians and transfer and dividend disbursing agents; the Funds'
proportionate share of insurance premiums; outside auditing and legal expenses;
costs of maintenance of the Funds' existence; costs attributable to investor
services, including, without limitation, telephone and personal expenses;
charges of an independent pricing service; costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders; costs of shareholders' reports
and meetings of the shareholders of the Funds and of the officers or Board of
Trustees of the Trust; and any extraordinary expenses.
9. Services to Other Companies or Accounts
The investment advisory services of the Advisor to the Funds under this
Agreement are not to be deemed exclusive, and the Advisor, or any affiliate
thereof, shall be free to render similar services to other investment companies
and other clients (whether or not their investment objectives and policies are
similar to those of the Funds) and to engage in the activities, so long as its
services hereunder are not impaired thereby.
10. Duration and Termination
This Agreement shall become effective on the date hereof and shall
continue in effect, unless sooner terminated as provided herein, for two years
from such date and shall continue from year to year thereafter, provided each
continuance is specifically approve at least annually by (i) the vote of a
majority of the Board of Trustees of the Trust or (ii) a vote of a "majority"
(as defined in the 1940 Act) of each Fund's outstanding voting securities,
provided that in either event the continuance is also approved by a majority of
the Board of Trustees who are not "interested persons" (as defined in the 1940
Act) of any party to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is terminable,
without penalty, on sixty (60) days' written notice by the Board of Trustees of
the Trust or by vote of holders of a "majority" (as defined in the 1940 Act) of
each Fund's shares or upon ninety (90) days' written notice by the Advisor. This
Agreement will be terminated automatically in the event of its "assignment" (as
defined in the 1940 Act).
<PAGE>
11. Amendment
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective with respect to a
Fund until approved by an affirmative vote of (i) a majority of the outstanding
voting securities of the Fund, and (ii) a majority of the Trustees of the Trust,
including a majority of Trustees who are not interested persons of any party to
this Agreement, cast in person at a meeting called for the purpose of voting on
such approval, if such approval is required by applicable law.
12. Names
It is understood that the name of Munder Capital Management or any
derivative thereof or logo associated with that name is the valuable property of
the Advisor and its affiliates, and that each Fund has the right to use such
name (or derivative thereof or associated logo) only so long as this Agreement
shall continue with respect to that Fund. Upon termination of this Agreement,
each Fund shall forthwith cease to use such name (or derivative thereof or
associated logo) and the Trust shall promptly amend its Declaration of Trust to
change its name and the name of each Fund to comply herewith.
The words "The Munder Framlington Funds Trust" and "Trustees" or "Board of
Trustees" used herein refer respectively to the Trust created and the Trustees,
as trustees of the Trust but not individually or personally acting from time to
time under a Declaration of Trust dated October 30, 1996 which is hereby
referred to and a copy of which is on file at the office of the Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of "The Munder Framlington Funds Trust" entered into in the name or
on behalf thereof by any of the Trustees, officers, representatives or agents of
the Trust are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders, officers, representatives or agents of
the Trust personally, but bind only the Trust Property, and all persons dealing
with any class of shares of the Trust must look solely to the Trust Property
belonging to such class for the enforcement of any claims against the Trust.
13. Miscellaneous
(a) This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
(b) Titles or captions of sections contained in this Agreement are
inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provisions thereof.
(c) This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all the
parties.
(d) This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in accordance with
the laws of the State of Michigan.
(e) If any provisions of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person or circumstance,
other than these as to which it is so determined to be invalid or unenforceable,
shall not be affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
(f) Notices of any kind to be given to the Advisor by the Trust shall be
in writing and shall be duly given if mailed or delivered to the Advisor at 480
Pierce Street, Birmingham, Michigan 48009, or at such other address or to such
individual as shall be specified by the Advisor to the Trust. Notices of any
kind to be given to the Trust by the Advisor shall be in writing and shall be
duly given if mailed or delivered to 480 Piece Street, Birmingham, Michigan
48009, or at such the address or to such individual as shall be specified by the
Trust to the Advisor.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
THE MUNDER FRAMLINGTON FUNDS TRUST
By:
MUNDER CAPITAL MANAGEMENT
By:
<PAGE>
APPENDIX A
Annual Fees (as a Percentage of
Funds Average Daily Net Assets
Framlington Emerging Markets Fund 1.25%
Framlington International Growth Fund 1.00% of net
assets up to $250 million; plus 0.75% of
net assets of $250 million or more
Framlington Healthcare Fund 1.00% of net assets up to $250
million; plus 0.75% of net assets of
$250 million or more
EXHIBIT 5(b)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT, made this day of , 1996, among Munder Capital Management (the
"Advisor"), a Delaware partnership, Framlington Overseas Investment Management
Limited (the "Sub-Advisor"), a subsidiary of Framlington Group plc, a public
holding company incorporated in England and in Wales and registered under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and The Munder
Framlington Funds Trust (the "Trust"), a Massachusetts business trust and a
diversified open-end management investment company under the Investment Company
Act of 1940, as amended (the "1940 Act").
WHEREAS, the Advisor has entered into an Investment Advisory Agreement,
dated ______, 1996 with the Trust (the "Investment Advisory Agreement"),
pursuant to which the Advisor will act as investment advisor to the Trust;
WHEREAS, the shares of beneficial interest of the Trust are divided
into more than one separate series; and
WHEREAS, the Advisor wishes to retain the Sub-Advisor to render investment
advisory services to the portfolios of the Trust listed on Appendix A attached
hereto (the "Funds"), and the Sub-Advisor is willing to furnish such services to
the Funds;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed among the Trust, the Advisor and the Sub-Advisor
as follows:
1. Appointment
The Advisor hereby appoints the Sub-Advisor to act as sub-investment
Advisor to the Funds for the periods and on the terms set forth herein. The
Sub-Advisor accepts the appointment and agrees to furnish the services set forth
herein for the compensation provided herein.
2. Services as Sub-Investment Advisor
Subject to the general supervision and direction of the Board of Trustees
of the Trust and the Advisor, the Sub-Advisor will (a) manage the investments of
each Fund in accordance with the Fund's investment objective and policies as
stated in the Fund's Prospectuses and the Statement of Additional Information
filed with the Securities and Exchange Commission, as they may be amended from
time to time; (b) make investment decisions for each Fund; (c) place purchase
and sale orders on behalf of each Fund; and (d) select brokers-dealers to
execute trades on behalf of the Funds.
The Sub-Advisor further agrees that, in performing its duties hereunder,
it will:
(a) comply with the 1940 Act and all rules and regulations thereunder, the
Advisors Act, the Internal Revenue Code, of 1986, as amended (the "Code"), and
all other applicable federal and state laws and regulations, and with any
applicable procedures adopted by the Trust's Trustees;
(b) use reasonable efforts to manage each Fund so that it will qualify,
and continue to qualify, as a regulated investment company under Subchapter M of
the code and regulations issued thereunder;
(c) maintain books and records with respect to the Funds' securities
transactions, render to the Advisor or Board such periodic and special reports
as the Board of Trustees of the Trust may reasonably request, and keep the
Advisor and the Trustees informed of developments materially affecting the
Funds' portfolio;
(d) make available to the Funds' administrator, and the Trust, promptly
upon their request, such copies of the investment records and ledgers with
respect to the Funds as may be required to assist the administrator and the
Trust in their compliance with applicable laws and regulations; and
(e) immediately notify the Trust in the event that the Sub-Advisor or any
of its affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Sub-Advisor from serving as investment
Advisor pursuant to this Agreement; or (2) becomes aware that it is the subject
of an administrative proceeding or enforcement action by the Securities and
Exchange Commission or other regulatory authority. The Sub-Advisor further
agrees to notify the Trust immediately of any material fact known to the
Sub-Advisor respecting or relating to the Sub-Advisor that is not contained in
the Trust's Registration Statement regarding the Funds, or any amendment or
supplement thereto, but that is required to be disclosed therein, and of any
statement contained therein that becomes untrue in any material respect.
3. Documents
The Advisor has delivered properly certified or authenticated copies of
each of the following documents to the Sub-Advisor and will deliver to it all
future amendments and supplements thereto, if any:
(a) certified resolution of the Board of Trustees of the Trust
authorizing the appointment of the Sub-Advisor and approving the form of this
Agreement;
(b) the Registration Statement describing the Funds as filed with the
Securities and Exchange Commission and any amendments thereto; and
(c) exhibits, powers of attorneys, certificates and any and all other
documents relating to or filed in connection with the Registration Statement
described above.
4. Brokerage
In selecting brokers-dealers to execute transactions on behalf of the
Funds, the Sub-Advisor will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any Fund
transaction, the Sub-Advisor will consider all factors it deems relevant,
including, but not limited to, 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, for the specific
transaction and on a continuing basis. In selecting brokers-dealers to execute a
particular transaction, and in evaluating the best overall terms available, the
Sub-Advisor is authorized to consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934,
as amended (the "1934 Act")) provided to the Funds and/or other accounts over
which the Sub-Advisor or its affiliates exercise investment discretion. The
parties hereto acknowledge that it is desirable for the Trust that the
Sub-Advisor have access to supplemental investment and market research and
security and economic analysis provided by brokers-dealers who may execute
brokerage transactions at a higher cost to the Trust than may result when
allocating brokerage to other brokers on the basis of seeking the most favorable
price and efficient execution. Therefore, the Sub-Advisor may 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 Funds. It is understood that the services provided by such
brokers may be useful to the Sub-Advisor in connection with the Sub-Advisor's
services to other clients. In accordance with Section 11(a) of the 1934 Act and
Rule 11a2-2(T) thereunder and subject to any other applicable laws and
regulations, the Sub-Advisor and its affiliates are authorized to effect
portfolio transactions for the Funds and to retain brokerage commissions on such
transactions.
5. Records
The Sub-Advisor agrees to maintain and to preserve for the periods
prescribed under the 1940 Act any such records as are required to be maintained
by the Sub-Advisor with respect to the Funds by the 1940 Act. The Sub-Advisor
further agrees that all records which it maintains for the Funds are the
property of the Funds and it will promptly surrender any of such records upon
request.
6. Standard of Care
The Sub-Advisor shall exercise its best judgment in rendering the services
under this Agreement. The Sub-Advisor shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Advisor, the Funds or
the Funds' shareholders in connection with the matters to which this Agreement
relates, provided that nothing herein shall be deemed to protect or purport to
protect the Sub-Advisor against any liability to the Advisor, the Funds or to
the Funds' shareholders to which the Sub-Advisor would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the Sub-Advisor's reckless disregard
of its obligations and duties under this Agreement. As used in this Section 6,
the term "Sub-Advisor" shall include any officers, directors, employees, or
other affiliates of the Sub-Advisor performing services with respect to the
Funds.
7. Compensation
In consideration of the services rendered pursuant to this Agreement, the
Advisor will pay the Sub-Advisor a fee at an annual rate based on the Funds'
average daily net assets as set forth on Appendix A. This fee shall be computed
and accrued daily and payable monthly. For the purpose of determining fees
payable to the Sub-Advisor, the value of the Funds' average daily net assets
shall be computed at the times and in the manner specified in the Funds'
Prospectuses or Statement of Additional Information. As to each Fund, if, in any
fiscal year, the Advisor determines to waive fees payable to it by the Fund or
reimburse expenses to the Fund, the Sub-Advisor will bear that portion of the
fee waiver or expense reimbursement which bears the same relation to such fee
waiver or expense reimbursement as the fee payable by the Fund to the
Sub-Advisor during such year bears to the total of (i) the annual fee payable by
the Fund to the Sub-Advisor plus (ii) the annual fee payable by the Fund to the
Advisor, in each case without giving effect to the fee waiver or expense
reimbursement.
8. Expenses
The Sub-Advisor will bear all expenses in connection with the performance
of its services under this Agreement. The Fund will bear certain other expenses
to be incurred in its operation, including: taxes, interest, brokerage fees and
commissions, if any, fees of Trustees of the Trust who are not officers,
directors, or employees of the Advisor or any Sub-Advisor; Securities and
Exchange Commission fees and state blue sky qualification fees; charges of
custodians and transfer and dividend disbursing agents; the Funds' proportionate
share of insurance premiums; outside auditing and legal expenses; costs of
maintenance of the Funds' existence; costs attributable to investor services,
including, without limitation, telephone and personal expenses; charges of an
independent pricing service; costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders; costs of shareholders' reports and
meetings of the shareholders of the Funds and of the officers or Board of
Trustees of the Trust; and any extraordinary expenses.
9. Services to Other Companies or Accounts
The investment advisory services of the Sub-Advisor to the Funds under
this Agreement are not to be deemed exclusive, and the Sub-Advisor, or any
affiliate thereof, shall be free to render similar services to other investment
companies and other clients (whether or not their investment objectives and
policies are similar to those of the Funds) and to engage in the activities, so
long as its services hereunder are not impaired thereby.
10. Duration and Termination
This Agreement shall become effective on the date hereof and shall
continue in effect, unless sooner terminated as provided herein, for two years
from such date and shall continue from year to year thereafter, provided each
continuance is specifically approve at least annually by (i) the vote of a
majority of the Board of Trustees of the Trust or (ii) a vote of a "majority"
(as defined in the 1940 Act) of each Fund's outstanding voting securities,
provided that in either event the continuance is also approved by a majority of
the Board of Trustees who are not "interested persons" (as defined in the 1940
Act) of any party to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is terminable,
without penalty, (a) on sixty (60) days' written notice by the Board of Trustees
of the Trust or by vote of holders of a "majority" (as defined in the 1940 Act)
of each Fund's shares, (b) on 90 days' written notice by the Advisor or (c) on
ninety (90) days' written notice by the Sub-Advisor. This Agreement will be
terminated automatically in the event of its "assignment" (as defined in the
1940 Act).
11. Amendment
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective with respect to a
Fund until approved by an affirmative vote of (i) a majority of the outstanding
voting securities of the Fund, and (ii) a majority of the Trustees of the Trust,
including a majority of Trustees who are not interested persons of any party to
this Agreement, cast in person at a meeting called for the purpose of voting on
such approval, if such approval is required by applicable law.
12. Names
It is understood that the name "Framlington Overseas Investment Management
Limited" or any derivative thereof or logo associated with that name is the
valuable property of the Sub-Advisor and its affiliates, and that each Fund has
the right to use such name (or derivative thereof or associated logo) only so
long as this Agreement shall continue with respect to that Fund. Upon
termination of this Agreement, each Fund shall forthwith cease to use such name
(or derivative thereof or associated logo) and the Trust shall promptly amend
its Declaration of Trust to change its name and the name of each Fund to comply
herewith.
The words "The Munder Framlington Funds Trust" and "Trustees" or "Board of
Trustees" used herein refer respectively to the Trust created and the Trustees,
as trustees of the Trust but not individually or personally acting from time to
time under a Declaration of Trust dated October 30, 1996 which is hereby
referred to and a copy of which is on file at the office of the Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of "The Munder Framlington Funds Trust" entered into in the name or
on behalf thereof by any of the Trustees, officers, representatives or agents of
the Trust are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders, officers, representatives or agents of
the Trust personally, but bind only the Trust Property, and all persons dealing
with any class of shares of the Trust must look solely to the Trust Property
belonging to such class for the enforcement of any claims against the Trust.
13. Miscellaneous
(a) This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
(b) Titles or captions of sections contained in this Agreement are
inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provisions thereof.
(c) This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all the
parties.
(d) This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in accordance with
the laws of the State of Michigan.
(e) If any provisions of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person or circumstance,
other than these as to which it is so determined to be invalid or unenforceable,
shall not be affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
(f) Notices of any kind to be given to the Sub-Advisor by the Advisor
shall be in writing and shall be duly given if mailed or delivered to the
Sub-Advisor at 155 Bishopsgate, London EC2M 3XJ, England, or at such other
address or to such individual as shall be specified by the Sub-Advisor to the
Advisor. Notices of any kind to be given to the Advisor by the Sub-Advisor shall
be in writing and shall be duly given if mailed or delivered to 480 Pierce
Street, Birmingham, Michigan 48009, or at such the address or to such individual
as shall be specified by the Trust to the Sub-Advisor.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
THE MUNDER FRAMLINGTON FUNDS TRUST
By:
MUNDER CAPITAL MANAGEMENT
By:
FRAMLINGTON OVERSEAS INVESTMENT
MANAGEMENT LIMITED
By:
<PAGE>
APPENDIX A
Annual Fees (as a Percentage of
Funds Average Daily Net Assets
Framlington Emerging Markets Fund 0.75%
Framlington International Growth Fund 0.50% of net
assets up to $250 million; plus 0.375%
of net assets of $250 million or more
Framlington Healthcare Fund 0.50% of net assets up to $250
million; plus 0.375% of net assets of
$250 million or more
EXHIBIT 6(a)
DISTRIBUTION AGREEMENT
This Distribution Agreement is made as of this _____ day of November, 1996
by and between THE MUNDER FRAMLINGTON FUNDS TRUST, a Massachusetts business
trust (the "Fund"), and FUNDS DISTRIBUTOR, INC., a Massachusetts corporation
("Funds Distributor").
WHEREAS, the Fund is an open-end management investment company and is so
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Fund desires to retain Funds Distributor as Distributor for
the Fund's shares of beneficial interest in Class A, Class B, Class C, Class K
and Class Y Shares representing interests in the Fund's three separate
portfolios, Munder Framlington Emerging Markets Fund, Munder Framlington
Healthcare Fund, and Munder Framlington International Growth Fund (individually,
a "Portfolio" and collectively, the "Portfolios"), to provide for the sale and
distribution of shares of the Portfolios (the "Shares"), and Funds Distributor
is willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein and intending to be legally bound hereby, the parties hereto agree
as follows:
I. DELIVERY OF DOCUMENTS
The Fund has delivered to Funds Distributor copies of each of the
following documents and will deliver to it all future amendments and supplements
thereto, if any:
(a) Resolutions of the Fund's Board of Trustees authorizing the
execution and delivery of this Agreement;
(b) The Fund's Declaration of Trust as filed with the State Secretary of
the Commonwealth of Massachusetts on October 30, 1996, and the Boston
City Clerk on October 30, 1996;
(c) The Fund's By-Laws;
(d) The Fund's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission ("SEC");
(e) The Fund's Registration Statement on Form N-1A (the "Registration
Statement") under the Securities Act of 1933 (the "1933 Act") and the
1940 Act, as filed with the SEC on October 30, 1996, and all
amendments thereto; and
(f) The Fund's most recent Prospectuses and Statements of Additional
Information and all amendments and supplements thereto (collectively,
the "Prospectuses").
<PAGE>
II. DISTRIBUTION
1. Appointment of Distributor. The Fund hereby appoints Funds
Distributor as Distributor of the Portfolios' Shares and Funds Distributor
hereby accepts such appointment and agrees to render the services and duties set
forth in this Section II. In the event that the Fund establishes one or more
additional portfolios or classes of shares other than the Portfolios and the
Shares with respect to which it decides to retain Funds Distributor to act as
distributor hereunder, the Fund shall notify Funds Distributor in writing. If
Funds Distributor is willing to render such services, it shall so notify the
Fund in writing whereupon such portfolio and such shares shall become a
Portfolio and Shares hereunder and shall be subject to the provisions of this
Agreement, except to the extent that said provision is modified with respect to
such portfolio or shares in writing by the Fund and Funds Distributor at the
time.
2. Services and Duties.
(a) The Fund agrees to sell through Funds Distributor, as agent, from
time to time during the term of this Agreement, Shares (whether authorized but
unissued or treasury shares, in the Fund's sole discretion) upon the terms and
at the current offering price as described in the applicable Prospectus. Funds
Distributor will act only in its own behalf as principal in making agreements
with selected dealers or others for the sale and redemption of Shares, and shall
sell Shares only at the offering price thereof as set forth in the applicable
Prospectus. Funds Distributor shall devote appropriate efforts to effect sales
of Shares of each of the Portfolios, but shall not be obligated to sell any
certain number of Shares.
(b) In all matters relating to the sale and redemption of Shares, Funds
Distributor will act in conformity with the Fund's Declaration of Trust, By-Laws
and applicable Prospectuses and with the instructions and directions of the
Board of Trustees of the Fund and will conform to and comply with the
requirements of the 1933 Act, the 1940 Act, the regulations of the National
Association of Securities Dealers, Inc. and all other applicable Federal or
state laws and regulations.
(c) Funds Distributor will bear the cost of printing and distributing
any Prospectus (including any supplement or amendment thereto), provided,
however, that Funds Distributor shall not be obligated to bear the expenses
incurred by the Fund in connection with (i) the preparation and printing of any
supplement or amendment to a Registration Statement or Prospectus necessary for
the continued effective registration of the Shares under the 1933 Act or state
securities laws; and (ii) the printing and distribution of any Prospectus,
supplement or amendment thereto for existing shareholders of the class ("Class")
of Shares described therein.
(d) All Shares of the Portfolios offered for sale by Funds Distributor
shall be offered for sale to the public at a price per share (the "offering
price") equal to (i) their net asset value (determined in the manner set forth
in the applicable Prospectuses) plus, except to those classes of persons set
forth in the applicable Prospectuses, (ii) a sales charge which shall be the
percentage of the offering price of such Shares as set forth in the applicable
Prospectuses. The offering price, if not an exact multiple of one cent, shall be
adjusted to the nearest cent. Concessions paid by Funds Distributor to
broker-dealers and other persons shall be set forth in either the selling
agreements between Funds Distributor and such broker-dealers and persons or, if
such concessions are described in the applicable Prospectuses, shall be as so
set forth. No broker-dealer or other person who enters into a selling or
distribution and servicing agreement with Funds Distributor shall be authorized
to act as agent for the Fund in connection with the offering or sale of Shares
to the public or otherwise.
(e) If any Shares sold by Funds Distributor under the terms of this
Agreement are redeemed or repurchased by the Fund or by Funds Distributor as
agent or are tendered for redemption within seven business days after the date
of confirmation of the original purchase of said Shares, Funds Distributor shall
forfeit the amount above the net asset value received by it with respect to such
Shares, provided that the portion, if any, of such amount re-allowed by Funds
Distributor to broker-dealers or other persons shall be repayable to the Fund
only to the extent recovered by Funds Distributor from the broker-dealer or
other persons concerned. Funds Distributor shall include in the form of
agreement with such broker-dealers and other persons a corresponding provision
for the forfeiture by them of their concession with respect to Shares sold by
them or their principals and redeemed or repurchased by the Fund or by Funds
Distributor as agent (or tendered for redemption) within seven business days
after the date of confirmation of such initial purchases.
(f) Funds Distributor may be reimbursed for all or a portion of the
expenses described above to the extent permitted by one or more distribution
plans adopted by the Fund on behalf of a Portfolio pursuant to Rule 12b-1 under
the 1940 Act. No provision of this Agreement may be deemed to prohibit any
payments by a Portfolio to Funds Distributor or by a Portfolio or Funds
Distributor to investment dealers, banks or other financial institutions through
whom shares of the Fund are sold where such payments are made under a
distribution plan adopted by the Fund on behalf of such Portfolio pursuant to
Rule 12b-1 under the Act (the "Plan"). The Fund agrees that it shall provide
notice to Funds Distributor at least 30 days prior to the effective date of the
elimination of or the decrease in the amount of expenses reimbursable under such
a distribution plan.
(g) With respect to such classes of shares, if any, that are sold with
a contingent deferred sales charge ("CDSC"), Funds Distributor shall impose a
CDSC in connection with the redemption of the Shares of such classes, not to
exceed a specified percentage of the original purchase price of the Shares, as
from time to time set forth in the applicable Prospectuses. Funds Distributor
may retain (or receive from the Fund, as the case may be) all of any CDSC. Funds
Distributor may pay to broker-dealers or other persons through whom such Shares
are sold a commission or other payment to the extent consistent with the current
Prospectuses and applicable rules and regulations.
3. Sales and Redemptions.
(a) The Fund shall pay all costs and expenses in connection with the
registration of the Shares under the 1933 Act, and all expenses in connection
with maintaining facilities for the issue and transfer of the Shares and for
supplying information, prices and other data to be furnished by the Fund
hereunder, and all expenses in connection with preparing, printing and
distributing the Prospectuses except as set forth in subsection 2(c) of Section
II hereof.
(b) The Fund shall execute all documents, furnish all information and
otherwise take all actions which may be reasonably necessary in the discretion
of the Fund's officers in connection with the qualification of the Shares for
sale in such states as Funds Distributor may designate to the Fund and the Fund
may approve, and the Fund shall pay all filing fees which may be incurred in
connection with such qualification. Funds Distributor shall pay all other
expenses incurred by Funds Distributor in connection with the sale of the
Shares, except as otherwise specifically provided in this Agreement.
(c) The Fund shall have the right to suspend the sale of Shares at any
time in response to conditions in the securities markets or otherwise, and to
suspend the redemption of Shares of any Portfolio at any time permitted by the
1940 Act or the rules of the SEC ("Rules").
(d) The Fund reserves the right to reject any order for Shares, but
will not do so arbitrarily or without reasonable cause.
III. LIMITATIONS OF LIABILITY
Funds Distributor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund or any Portfolio in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
IV. CONFIDENTIALITY
Funds Distributor will treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund,
to the Fund's prior or current shareholders and to those persons or entities who
respond to Funds Distributor's inquiries concerning investment in the Fund, and,
except as provided below, will not use such records and information for any
purpose other than the performance of its responsibilities and duties hereunder.
Any other use by Funds Distributor of the information and records referred to
above may be made only after prior notification to and approval in writing by
the Fund. Such approval shall not be unreasonably withheld and may not be
withheld where: (i) Funds Distributor may be exposed to civil or criminal
contempt proceedings for failure to divulge such information; (ii) Funds
Distributor is requested to divulge such information by duly constituted
authorities; or (iii) Funds Distributor is so requested by the Fund.
V. INDEMNIFICATION
1. Fund Representation. The Fund represents and warrants to Funds
Distributor that at all times the Registration Statement and Prospectuses will
in all material respects conform to the applicable requirements of the 1933 Act
and the Rules thereunder and will not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, except that no representation or warranty
in this subsection shall apply to statements or omissions made in reliance upon
and in conformity with written information furnished to the Fund by or on behalf
of and with respect to Funds Distributor expressly for use in the Registration
Statement or Prospectuses.
2. Funds Distributor Representation. Funds Distributor represents and
warrants to the Fund that it is duly organized as a Massachusetts corporation
and is and at all times will remain duly authorized and licensed to carry out
its services as contemplated herein.
3. Fund Indemnification. The Fund, on behalf of each Portfolio, agrees
that each Portfolio will indemnify, defend and hold harmless Funds Distributor,
its several officers and directors, and any person who controls Funds
Distributor within the meaning of Section 15 of the 1933 Act, from and against
any losses, claims, damages or liabilities, joint or several, to which any of
them may become subject under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Prospectuses or in any application or other document executed by or on behalf of
a Portfolio, or arise out of or based upon, information furnished by or on
behalf of a Portfolio, filed in any state in order to qualify the Shares under
the securities or blue sky laws thereof ("Blue Sky Application"), or arise out
of, or are based upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse Funds Distributor, its several
officers and directors, and any person who controls Funds Distributor within the
meaning of Section 15 of the 1933 Act, for any legal or other expenses
reasonably incurred by any of them in investigating, defending or preparing to
defend any such action, proceeding or claim; provided, however, that neither the
Fund nor any Portfolio shall be liable in any case to the extent that such loss,
claim, damage or liability arises out of, or is based upon, any untrue
statement, alleged untrue statement, or omission or alleged omission made in the
Registration Statement, the Prospectuses, any Blue Sky Application or any
application or other document executed by or on behalf of the Fund in reliance
upon and in conformity with written information furnished to the Fund by or on
behalf of Funds Distributor specifically for inclusion therein.
A Portfolio shall not indemnify any person pursuant to this subsection
3 unless the court or other body before which the proceeding was brought has
rendered a final decision on the merits that such person was not liable by
reason of his willful misfeasance, bad faith or gross negligence in the
performance of his duties, or his reckless disregard of his obligations and
duties, under this Agreement ("disabling conduct") or, in the absence of such a
decision, a reasonable determination (based upon a review of the facts) that
such person was not liable by reason of disabling conduct has been made by the
vote of a majority of a quorum of trustees of the Fund who are neither
"interested parties" of the Fund (as defined in the 1940 Act) nor parties to the
proceeding, or by an independent legal counsel in a written opinion.
Each Portfolio shall advance attorneys' fees and other expenses
incurred by any person in defending any claim, demand, action or suit which is
the subject of a claim for indemnification pursuant to this subsection 3, so
long as: (i) such person shall undertake to repay all such advances unless it is
ultimately determined that he or she is entitled to indemnification hereunder;
and (ii) such person shall provide security for such undertaking, or the
Portfolio shall be insured against losses arising by reason of any lawful
advances, or a majority of a quorum of the disinterested, non-party trustees of
the Fund (or an independent legal counsel in a written opinion) shall determine
based on a review of readily available facts (as opposed to a full trial-type
inquiry) that there is reason to believe that such person ultimately will be
found entitled to indemnification hereunder.
The obligations of each Portfolio under this subsection 3 shall be the
several (and not joint or joint and several) obligation of each Portfolio.
4. Funds Distributor Indemnification. Funds Distributor will indemnify,
defend and hold harmless the Fund, each Portfolio, the Fund's several officers
and trustees and any person who controls the Fund or any Portfolio within the
meaning of Section 15 of the 1933 Act, from and against any losses, claims,
damages or liabilities, joint or several, to which any of them may become
subject under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect hereof) arise out of, or
are based upon, any breach of its representations, warranties and agreements
herein, or which arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, the Prospectuses, any Blue Sky Application or any application or
other documents executed by or on behalf of the Fund or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, which statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Fund or any of its several officers and trustees by or on
behalf of Funds Distributor specifically for inclusion therein, and will
reimburse the Fund, each Portfolio, the Fund's several officers and trustees,
and any person who controls the Fund or any Portfolio within the meaning of
Section 15 of the 1933 Act, for any legal or other expenses reasonably incurred
by any of them in investigating, defending or preparing to defend any such
action, proceeding or claim.
5. General Indemnity Provision. No indemnifying party shall be liable
under its indemnity agreement contained in subsection 3 or 4 hereof with respect
to any claim made against such indemnifying party unless the indemnified party
shall have notified the indemnifying party in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon the indemnified party (or after the
indemnified party shall have received notice of such service on any designated
agent), but failure to notify the indemnifying party of any such claim shall not
relieve it from any liability which it may otherwise have to the indemnified
party. The indemnifying party will be entitled to participate at its own expense
in the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, and if the indemnifying party elects to assume the
defense, such defense shall be conducted by counsel chosen by it and reasonably
satisfactory to the indemnified party. In the event the indemnifying party
elects to assume the defense of any such suit and retain such counsel, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by the indemnified party.
VI. DURATION AND TERMINATION
This Agreement shall become effective as of the date first above
written, and, unless sooner terminated as provided herein, shall continue until
November 7, 1995. Thereafter, if not terminated, this Agreement shall continue
automatically for successive terms of one year, provided that such continuance
is specifically approved at least annually by a vote of the majority of the
Board of Trustees of the Fund, including a majority of the trustees who are not
"interested persons" of the Fund and have no direct or indirect financial
interest in the operation of the Plan, this Agreement, or in any agreement
relating to the Plan (the "Plan Trustees"), by vote cast in person at a meeting
called for the purpose of voting on such approval; provided, however, that this
Agreement may be terminated with respect to any Portfolio by the Fund at any
time, without the payment of any penalty, by vote of a majority of the Plan
Trustees or by a vote of a "majority of the outstanding voting securities" of
such Portfolio on 60 days' written notice to Funds Distributor, or by Funds
Distributor at any time, without the payment of any penalty, on 60 days' written
notice to the Fund. This Agreement will automatically and immediately terminate
in the event of its "assignment." (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meanings as such terms have in the 1940 Act.)
VII. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party against which
an enforcement of the change, waiver, discharge or termination is sought.
VIII. NOTICES
Notices of any kind to be given to the Fund hereunder by Funds
Distributor shall be in writing and shall be duly given if mailed or delivered
to the Fund at 480 Pierce Street, Suite 300, Birmingham, Michigan 48009,
Attention: Lee Munder, with a copy to Paul F. Roye, Esq., Dechert Price &
Rhoads, 1500 K Street N.W., Washington, D.C. 20005-1208, or at such other
address or to such individual as shall be so specified by the Fund to Funds
Distributor. Notices of any kind to be given to Funds Distributor hereunder by
the Fund shall be in writing and shall be duly given if mailed or delivered to
Funds Distributor at 60 State Street, Suite 1300, Boston, Massachusetts 02109,
Attention: Betsy Connolly or at such other address or to such individual as
shall be so specified by Funds Distributor to the Fund.
IX. MISCELLANEOUS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby.
Subject to the provisions of Section VI hereof, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by Massachusetts law; provided, however, that
nothing herein shall be construed in a manner inconsistent with the 1940 Act or
any rule or regulation of the SEC thereunder.
The names "The Munder Framlington Funds Trust" and "Trustees of The
Munder Framlington Funds Trust" refer respectively to the trust created and the
Trustees, as trustees but not individually or personally, acting from time to
time under a Declaration of Trust dated October __, 1996 which is hereby
referred to and a copy of which is on file at the office of the State Secretary
of the Commonwealth of Massachusetts and at the principal office of the Fund.
The obligations of "The Munder Framlington Funds Trust" entered into in the name
or on behalf thereof by any of the Trustees, officers, representatives or agents
are made not individually, but in such capacities, and are not binding upon any
of the Trustees, shareholders, officers, representatives or agents of the Fund
personally, but bind only the Trust Property (as defined in the Declaration of
Trust), and all persons dealing with any class of shares of the Fund must look
solely to the Trust Property belonging to such class for the enforcement of any
claims against the Fund.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE MUNDER FRAMLINGTON FUNDS TRUST
By:
Name: Lee P. Munder
Title: President
Attest:
FUNDS DISTRIBUTOR, INC.
By:
Name: Betsy Connolly
Title: President
Attest:
EXHIBIT 8(a)
CUSTODY AGREEMENT
AGREEMENT dated as of November ____, 1996 between The Munder Framlington
Funds Trust (the "Trust"), a Massachusetts business trust with its principal
place of business at 480 Pierce Street, Birmingham, MI 48009, on behalf of the
investment portfolios of the Trust identified on Schedule A attached hereto,
(which may be amended from time to time by attaching to Schedule A a revised
list of portfolios, dated and signed by an authorized representative of each
party hereto) (individually, a "Fund" and collectively, the "Funds"), and
Comerica Bank (the "Custodian"), a Michigan banking corporation and a
wholly-owned subsidiary of Comerica Incorporated, with its principal place of
business at One Detroit Center, 500 Woodward Avenue, Detroit, Michigan.
W I T N E S S E T H:
That for and in consideration of the mutual promises hereinafter set forth,
the Trust and the Custodian agree as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
(a) "Authorized Person" shall be deemed to include the Chairman of the
Board of Trustees, the President, and any Vice President, the Secretary,
the Treasurer or any other person, whether or not any such person is an
officer or employee of the Trust, duly authorized by the Board of Trustees
of the Trust to give Oral Instructions and Written Instructions on behalf
of a Fund and listed in the certification annexed hereto as Appendix A or
such other certification as may be received by the Custodian from time to
time.
(b) "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successor or
successors and its nominee or nominees.
(c) "Certificate" shall mean any notice, instruction or other instrument in
writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on behalf
of the Trust by any two Authorized Persons or any two officers thereof.
(d) "Declaration of Trust" shall mean the Declaration of Trust of the Trust
filed with the Secretary of State of the Commonwealth of Massachusetts on
October 30, 1996, as now in effect and as the same may be amended from time
to time.
(e) "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission
under Section 17(a) of the Securities Exchange Act of 1934, as amended, its
successor or successors and its nominee or nominees, in which the Custodian
is hereby specifically authorized to make deposits. The term "Depository"
shall further mean and include any other person to be named in a
Certificate authorized to act as a depository under the 1940 Act, its
successor or successors and its nominee or nominees.
(f) "Money Market Security" shall be deemed to include, without limitation,
debt obligations issued or guaranteed as to interest and principal by the
Government of the United States or agencies or instrumentalities thereof,
commercial paper, bank certificates of deposit, bankers' acceptances and
short-term corporate obligations, where the purchase or sale of such
securities normally requires settlement in federal funds on the same day as
such purchase or sale, and repurchase and reverse repurchase agreements
with respect to any of the foregoing types of securities.
(g) "Oral Instructions" shall mean verbal instructions actually received by
the Custodian from a person reasonably believed by the Custodian to be an
Authorized Person.
(h) "Prospectus" shall mean a Fund's current prospectus and statement of
additional information relating to the registration of the Fund's Shares
under the Securities Act of 1933, as amended.
(i) "Shares" refers to the shares of beneficial interest $.001 par value
per share of a Fund, as may be issued by the Fund from time to time.
(j) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, options and
other securities, commodity interests and investments, including currency,
from time to time of a Fund, including futures contracts, forward contracts
and options on futures contracts and forward contracts.
(k) "Transfer Agent" shall mean the person which performs as the transfer
agent, dividend disbursing agent and shareholder servicing agent functions
for the Trust.
(l) "Written Instructions" shall mean a written communication actually
received by the Custodian signed by two Authorized Persons or from two
persons reasonably believed by the Custodian to be Authorized Persons by
telex or facsimile machine or any other such system whereby the receiver of
such communication is able to verify through codes or otherwise with a
reasonable degree of certainty the authenticity of the sender of such
communication; however, "Written Instructions" from the Trust's
Administrator, First Data Investor Services Group, Inc., to the Custodian
shall mean an electronic communication transmitted by fund accountants and
their managers (who have been provided an access code by the Administrator)
and actually received by the Custodian.
(m) The "1940 Act" refers to the Investment Company Act of 1940, and the
Rules and Regulations thereunder, all as amended from time to time.
2. Appointment of Custodian.
(a) The Trust hereby constitutes and appoints the Custodian as custodian of
all the Securities and monies at the time owned by or in the possession of
the Funds during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and agrees
to perform the duties thereof as hereinafter set forth.
(c) The Custodian understands and acknowledges that the Trust intends to
issue Shares of separate series and classes, and may classify and
reclassify Shares of such series and classes. The Custodian shall identify
to each such series or class the property belonging to such series or class
and in such reports, confirmations and notices to the Trust called for
under this Agreement shall identify the series or class to which such
report, confirmation or notice pertains. In the event the Trust establishes
one or more portfolios other than the Funds with respect to which the Trust
wishes to retain the Custodian to act as custodian, the Trust shall so
notify the Custodian in writing. If the Custodian is willing to render such
services, the Custodian shall notify the Trust in writing whereupon each
such portfolio shall be deemed to be a Fund hereunder.
3. Compensation.
(a) The Trust will compensate the Custodian for its services rendered under
this Agreement in accordance with the fees set forth in the Fee Schedule
annexed hereto as Schedule B and incorporated herein.
(b) Any compensation agreed to hereunder may be adjusted from time to time
by attaching to Schedule B of this Agreement a revised Fee Schedule, dated
and signed by an Authorized Officer or authorized representative of each
party hereto.
(c) The Custodian will bill the Trust as soon as practicable after the end
of each calendar month, and said billings will be detailed in accordance
with the Fee Schedule for the Trust. The Trust will promptly pay to the
Custodian the amount of such billing. The Custodian may charge against any
monies held on behalf of a Fund pursuant to this Agreement such
compensation and any expenses incurred by the Custodian (and reimbursable
by the Fund) in the performance of its duties pursuant to this Agreement.
The Custodian shall also be entitled to charge against any money held on
behalf of a Fund pursuant to this Agreement the amount of any loss, damage,
liability or expense incurred with respect to the Fund, including
reasonable counsel fees, for which it shall be entitled to reimbursement
under the provisions of this Agreement.
The expenses which the Custodian may charge against such account
include, but are not limited to, the expenses of Sub-Custodians and foreign
branches of the Custodian incurred in settling transactions outside of
Detroit, Michigan or New York City, New York involving the purchase and
sale of Securities.
(d) Each Fund will use reasonable efforts to avoid cash overdrafts in its
account and will provide offsetting balances with respect to any cash
overdrafts that may occur from time to time.
<PAGE>
4. Custody of Cash and Securities.
(a) Receipt and Holding of Assets.
The Trust will deliver or cause to be delivered to the Custodian all
Securities and monies owned by the Funds, including cash received from the
issuance of Shares, at any time during the period of this Agreement. The
Custodian will not be responsible for such Securities and monies until
actually received by it. The Trust shall instruct the Custodian from time
to time in its sole discretion, by means of Written Instructions, or, in
connection with the purchase or sale of Money Market Securities, by means
of Oral Instructions or Written Instructions, as to the manner in which and
in what amounts Securities and monies are to be deposited on behalf of the
Funds in the Book-Entry System or a Depository and specifically allocated
on the books of the Custodian to the Funds; provided, however, that prior
to the initial deposit of Securities of the Funds in the Book-Entry System
or a Depository, including a deposit in connection with the settlement of a
purchase or sale, the Custodian shall have received a Certificate or
Written Instructions specifically approving such deposits by the Custodian
in the Book-Entry System or a Depository. Securities and monies of the
Funds deposited in the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including but not limited to accounts which the Custodian acts
in a fiduciary or representative capacity.
(b) Accounts and Disbursements. The Custodian shall establish and maintain
a separate account for each Fund and shall credit to the separate account
all monies received by it for the account of the Fund and shall disburse
the same only:
1. In payment for Securities purchased for the Fund, as
provided in Section 5 hereof;
2. Pursuant to Written Instructions, for the payment of any expense
or liability incurred by the Fund, including but not limited to the
following payments for the account of the Fund: interest, taxes,
management, accounting, transfer agent and legal fees and operating
expenses of the Fund whether or not such expenses are, in whole or in
part, to be capitalized or treated as deferred expenses;
3. In payment of dividends or distributions with respect to the
Shares of the Fund, as provided in Section 7 hereof;
4. In payment of original issue or other taxes with respect to
the Shares of the Fund, as provided in Section 8 hereof;
5. In payment for Shares which have been redeemed by the Fund,
as provided in Section 8 hereof;
6. Pursuant to Written Instructions, setting forth the name and
address of the Fund and the person to whom the payment is to be
made, the amount to be paid and the purpose for which payment is
to be made;
7. In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Fund, as provided
in Section 3(a) and Section 11(h) hereof; or
8. To a sub-custodian pursuant to Section 11(f) hereof.
(c) Confirmation and Statements. Promptly after the close of business on
each day, the Custodian shall furnish each Fund with confirmations and a
summary of all transfers to or from the account of the Fund during said
day. Where securities purchased by the Funds are in a tangible bulk of
securities registered in the name of the Custodian (or its nominee) or
shown on the Custodian's account on the books of a Depository or the
Book-Entry System, the Custodian shall by book entry or otherwise identify
the quantity of those securities belonging to the Funds. At least monthly,
the Custodian shall furnish each Fund with a detailed statement of the
Securities and monies held for the Fund under this Agreement. The Custodian
shall also furnish the Trust with such periodic and special reports as the
Trust may reasonably request, and such other information as may be agreed
upon from time to time.
(d) Registration of Securities and Physical Separation. All Securities held
for the Funds which are issued or issuable only in bearer form, except such
Securities as are held in the Book-Entry System, shall be held by the
Custodian in that form; all other Securities held for the Fund may be
registered in the name of the Fund, in the name of any duly appointed
registered nominee of the Custodian as the Custodian may from time to time
determine, or in the name of the Book-Entry System or a Depository or their
successor or successors, or their nominee or nominees. The Trust reserves
the right to instruct the Custodian as to the method of registration and
safekeeping of the Securities of the Funds. The Trust agrees to furnish to
the Custodian appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or a Depository,
any Securities which it may hold for the account of the Funds and which may
from time to time be registered in the name of the Funds. The Custodian
shall hold all such Securities specifically allocated to a Fund which are
not held in the Book-Entry System or a Depository in a separate account for
the Fund in the name of the Fund physically segregated at all times from
those of any other person or persons.
(e) Segregated Accounts. Upon receipt of a Written Instruction the
Custodian will establish segregated accounts on behalf of the Funds to hold
liquid or other assets as it shall be directed by a Written Instruction and
shall increase or decrease the assets in such segregated accounts only as
it shall be directed by subsequent Written Instruction.
(f) Collection of Income and Other Matters Affecting Securities. Unless
otherwise instructed to the contrary by a Written Instruction, the
Custodian by itself, or through the use of the Book-Entry System or a
Depository with respect to Securities therein deposited, shall with respect
to all Securities held for the Funds in accordance with this Agreement:
<PAGE>
1. Collect all income due or payable;
2. Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed or retired, or
otherwise become payable. Notwithstanding the foregoing, the
Custodian shall have no responsibility to a Fund for monitoring or
ascertaining any call, redemption or retirement dates with respect to
put bonds which are owned by a Fund and held by the Custodian or its
nominees. Nor shall the Custodian have any responsibility or
liability to a Fund for any loss by a Fund for any missed payment or
other defaults resulting therefrom; unless the Custodian received
timely notification from the Fund specifying the time, place and
manner for the presentment of any such put bond owned by a Fund and
held by the Custodian or its nominee. The Custodian shall not be
responsible and assumes no liability to a Fund for the accuracy or
completeness of any notification the Custodian may furnish to a Fund
with respect to put bonds;
3. Surrender Securities in temporary form for definitive
Securities;
4. Execute any necessary declarations or certificates of
ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect;
5. Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of the
Funds all rights and similar Securities issued with respect to any
Securities held by the Custodian hereunder for the Funds;
6. Transmit promptly to the Trust any proxy statement, proxy
materials, notice of a call or conversion or similar communication
received by it as Custodian; and
7. Receive and hold for the account of each Fund all securities
received as a distribution on the Fund's portfolio of securities as a
result of a stock dividend, share split-up or reorganization,
recapitalization, readjustment or other rearrangement or distribution
of rights or similar securities issued with respect to any portfolio
securities belonging to the Fund.
(g) Delivery of Securities and Evidence of Authority. Upon receipt of
Written Instructions and not otherwise, except for subparagraphs 5, 6, and
7 of this section 4(g) which may be effected by Oral or Written
Instructions, the Custodian, directly or through the use of the Book-Entry
System or a Depository, shall:
1. Execute and deliver or cause to be executed and delivered to such
persons as may be designated in such Written Instructions, proxies,
consents, authorizations, and any other instruments whereby the
authority of a Fund as owner of any Securities may be exercised;
<PAGE>
2. Deliver or cause to be delivered any Securities held for a Fund in
exchange for other Securities or cash issued or paid in connection
with the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the exercise
of any conversion privilege;
3. Deliver or cause to be delivered any Securities held for a Fund to
any protective committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger,
consolidation or recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this Agreement
in the separate account for the Fund certificates of deposit, interim
receipts or other instruments or documents as may be issued to it to
evidence such delivery;
4. Make or cause to be made such transfers or exchanges of the assets
specifically allocated to the separate account of a Fund and take
such other steps as shall be stated in Written Instructions to be for
the purpose of effecting any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the
Fund;
5. Deliver Securities owned by a Fund upon sale of such
Securities for the account of the Fund pursuant to Section 5;
6. Deliver Securities owned by a Fund upon the receipt of
payment in connection with any repurchase agreement related to
such Securities entered into by the Fund;
7. Deliver Securities owned by a Fund to the issuer thereof, or its
agent, for transfer into the name of the Fund or into the name of any
nominee or nominees of the Custodian or into the name or nominee name
of any agent appointed pursuant to Section 10(f) or into the name or
nominee name of any sub-custodian appointed pursuant to Section
10(e); or for exchange for a different number of bonds, certificates
or other evidence representing the same aggregate face amount or
number of units; provided, however, that in any such case, the new
Securities are to be delivered to the Custodian;
8. Deliver Securities owned by a Fund to the broker for
examination in accordance with "street delivery" custom;
9. Deliver Securities owned by a Fund in accordance with the
provisions of any agreement among the Fund, the Custodian and any
broker-dealer or any similar organization or organizations relating
to compliance with the rules of any options clearing entity or
securities or commodities exchange, regarding escrow or other
arrangements in connection with transactions by the Fund;
10. Deliver Securities owned by a Fund in accordance with the
provisions of any agreement among the Fund, the Custodian, and a
futures commission merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Fund;
11. Deliver Securities owned by a Fund for delivery in connection
with any loans of securities made by the Fund but only against
receipt of adequate collateral as agreed upon from time to time by
the Custodian and the Fund which may be in the form of cash or
obligations issued by the United States government, its agencies or
instrumentalities;
12. Deliver Securities owned by a Fund for delivery as security
in connection with any borrowings by the Fund requiring a pledge
of Fund assets, but only against receipt of amounts borrowed;
13. Deliver Securities owned by a Fund upon receipt of Written
Instructions from the Fund for delivery to the Transfer Agent or to
the holders of Shares in connection with distributions in kind, as
may be described from time to time in the Fund's Prospectus, in
satisfaction of requests by holders of Shares for repurchase or
redemption;
14. Deliver Securities as collateral in connection with short
sales of securities by a Fund;
15. Deliver Securities for any purpose expressly permitted by and in
accordance with procedures described in a Fund's Prospectus or
resolution adopted by its Board of Trustees signed by an Authorized
Person and certified by the Secretary of the Trust; and
16. Deliver Securities owned by a Fund for any other proper business
purpose, but only upon receipt of, in addition to Written
Instructions, a certified copy of a resolution of the Board of
Trustees signed by an Authorized Person and certified by the
Secretary of the Trust, specifying the Securities to be delivered,
setting forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper business purpose, and naming
the person or persons to whom delivery of such Securities shall be
made.
(h) Endorsement and Collection of Checks, Etc. The Custodian is hereby
authorized to endorse and collect all checks, drafts or other orders for
the payment of money received by the Custodian for the account of a Fund;
provided, however, that the Custodian shall not be liable pursuant to this
Agreement for any money, whether or not represented by check, draft, or
other instrument for the payment of money, received by it on behalf of the
Fund until the Custodian actually receives and collects such money directly
or by the final crediting of the account representing the Fund's interest
in the Book-Entry System or the Depository.
<PAGE>
5. Purchase and Sale of Investments of a Fund.
(a) Promptly after each purchase of Securities for a Fund, the Fund shall
deliver to the Custodian (i) with respect to each purchase of Securities
which are not Money Market Securities, Written Instructions and (ii) with
respect to each purchase of Money Market Securities, either Written
Instructions or Oral Instructions, in either case specifying with respect
to each purchase: (1) the name of the issuer and the title of the
Securities; (2) the number of shares or the principal amount purchased and
accrued interest, if any; (3) the date of purchase and settlement; (4) the
purchase price per unit; (5) the total amount payable upon such purchase;
(6) the name of the person from whom or the broker through whom the
purchase was made, if any; (7) whether or not such purchase is to be
settled through the Book-Entry System or a Depository; and (8) whether the
Securities purchased are to be deposited in the Book-Entry System or a
Depository. The Custodian shall receive the Securities purchased by or for
the Fund and upon receipt of Securities or, as appropriate, a copy of the
broker's or dealer's confirmation or payee's invoice, shall pay out of the
monies held for the account of the Fund the total amount payable upon such
purchase, provided that the same conforms to the total amount payable as
set forth in such Written or Oral Instructions.
(b) Promptly after each sale of Securities of a Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities which
are not Money Market Securities, Written Instructions, and (ii) with
respect to each sale of Money Market Securities, either Written
Instructions or Oral Instructions, in either case specifying with respect
to such sale: (1) the name of the issuer and the title of the Securities;
(2) the number of shares or principal amount sold, and accrued interest, if
any; (3) the date of sale; (4) the sale price per unit; (5) the total
amount payable to the Fund upon such sale; (6) the name of the broker
through whom or the person to whom the sale was made; and (7) whether or
not such sale is to be settled through the Book-Entry System or a
Depository. The Custodian shall deliver or cause to be delivered the
Securities to the broker or other person designated by the Fund upon
receipt of the total amount payable to the Fund upon such sale, provided
that the same conforms to the total amount payable to the Fund as set forth
in such Written or Oral Instructions. Subject to the foregoing, the
Custodian may accept payment in such form as shall be satisfactory to it,
and is customary among dealers in Securities, and may deliver Securities
and arrange for payment in accordance with the customs prevailing among
dealers in Securities.
6. Lending of Securities.
(a) If the Trust is permitted by the terms of its Declaration of Trust and,
as disclosed in its Prospectus to lend Securities, within 24 hours after
each loan of Securities, a Fund, shall deliver to the Custodian Written
Instructions specifying with respect to each such loan: (i) the name of the
issuer and the title of the Securities; (ii) the number of shares or the
principal amount loaned; (iii) the date of loan and delivery; (iv) the
total amount to be delivered to the Custodian and specifically allocated
against the loan of the Securities, including the amount of cash collateral
and the premium, if any, separately identified; (v) the name of the broker,
dealer or financial institution to which the loan was made; and (vi)
whether the Securities loaned are to be delivered through the Book-Entry
System or a Depository.
(b) Promptly after each termination of a loan of Securities, a Fund shall
deliver to the Custodian Written Instructions specifying with respect to
each such loan termination and return of Securities: (i) the name of the
issuer and the title of the Securities to be returned; (ii) the number of
shares or the principal amount to be returned; (iii) the date of
termination; (iv) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting
credits as described in said Written Instructions); (v) the name of the
broker, dealer or financial institution from which the Securities will be
returned; and (vi) whether such return is to be effected through the
Book-Entry System or a Depository. The Custodian shall receive all
Securities returned from the broker, dealer or financial institution to
which such Securities were loaned and upon receipt thereof shall pay the
total amount payable upon such return of Securities as set forth in the
Written Instructions. Securities returned to the Custodian shall be held as
they were prior to such loan.
7. Payment of Dividends or Distributions.
(a) The Trust shall furnish to the Custodian Written Instructions (i)
authorizing the declaration of dividends or distributions with respect to a
Fund on a specified periodic basis and specifying the date of the
declaration of such dividend or distribution, the date of payment thereof,
the record date as of which shareholders entitled to payment shall be
determined, and the total amount payable to the Transfer Agent on the
payment date, or (ii) setting forth the date of declaration of any
distribution by the Fund, the date of payment thereof, the record date as
of which shareholders entitled to payment shall be determined, and the
total amount payable to the Transfer Agent on the payment date.
(b) Upon the payment date specified in such Written Instructions, the
Custodian shall pay to the Transfer Agent out of monies specifically
allocated to and held for the account of a Fund the total amount payable to
the Transfer Agent. In lieu of paying the Transfer Agent cash dividends and
distributions, the Custodian may arrange for the direct payment of cash
dividends and distributions to Shareholders by the Custodian in accordance
with such procedures and controls as are mutually agreed upon from time to
time by and among the Trust, the Custodian and the Transfer Agent.
8. Sale and Redemption of Shares of the Trust.
(a) Whenever a Fund shall sell any Shares, the Fund shall deliver or cause
to be delivered to the Custodian Written Instructions duly specifying:
1. The number of Shares sold, trade date, and price; and
2. The amount of money to be received by the Custodian for the
sale of such Shares.
The Custodian understands and agrees that Written Instructions may be
furnished subsequent to the purchase of Shares of the Fund and that the
information contained therein will be derived from the sales of Shares as
reported to the Fund by the Transfer Agent.
(b) Upon receipt of such money from the Transfer Agent, the Custodian shall
credit such money to the separate account of the Fund.
(c) Upon issuance of any Shares in accordance with the foregoing provisions
of this Section 8, the Custodian shall pay all original issue or other
taxes required to be paid in connection with such issuance upon the receipt
of Written Instructions specifying the amount to be paid.
(d) Except as provided hereafter, whenever any Shares are redeemed, the
Fund shall cause the Transfer Agent to promptly furnish to the Custodian
Written Instructions, specifying:
1. The number of Shares redeemed; and
2. The amount to be paid for the Shares redeemed.
The Custodian further understands that the information contained in
such Written Instructions will be derived from the redemption of Shares as
reported to the Fund by the Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting forth the number
of Shares received by the Transfer Agent for redemption and that such
Shares are valid and in good form for redemption, the Custodian shall make
payment to the Transfer Agent of the total amount specified in Written
Instructions issued pursuant to paragraph (d) of this Section 8. In lieu of
paying the Transfer Agent said redemption proceeds as stated, the Custodian
may arrange for the direct payment of said proceeds to Shareholders by the
Custodian in accordance with such procedures and controls as are mutually
agreed upon from time to time by and among the Trust, the Custodian and the
Transfer Agent.
(f) Notwithstanding the above provisions regarding the redemption of
Shares, whenever such Shares are redeemed pursuant to any check redemption
privilege which may from time to time be offered by the Fund, the
Custodian, unless otherwise instructed by Written Instructions, shall honor
the check presented as part of such check redemption privilege out of the
monies specifically allocated to the Fund in such advice for such purpose.
9. Indebtedness.
(a) The Trust will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which a Fund borrows money, a notice or
undertaking in the form currently employed by any such bank setting forth
the amount which such bank will loan to the Fund and the amount of
collateral, if any, required for such loan. The Trust shall promptly
deliver to the Custodian Written Instructions stating with respect to each
such borrowing: (i) the name of the bank; (ii) the amount and terms of the
borrowing, which may be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Fund, or other loan agreement or
evidence of indebtedness; (iii) the time and date, if known, on which the
loan is to be entered into (the "Borrowing Date"); (iv) the date on which
the loan becomes due and payable; (v) the total amount payable to the Fund
on the Borrowing Date; (vi) the market value of Securities, if any, to be
delivered as collateral for such loan, including the name of the issuer,
the title and the number of shares or the principal or other amount of any
particular Securities; (vii) whether the Custodian is to deliver such
collateral through the Book-Entry System or a Depository; and (viii) a
statement that such loan is in conformance with the 1940 Act and the Fund's
Prospectus.
(b) Upon receipt of the Written Instructions referred to in subparagraph
(a) above, the Custodian shall deliver on the Borrowing Date the specified
collateral (if any) against delivery by the lending bank of the total
amount of the loan payable, provided that the same conforms to the total
amount payable as set forth in the Written Instructions. The Custodian may,
at the option of the lending bank (unless the lending bank has not been
appointed a custodian or sub-custodian of the Fund's assets, in which case
the Custodian must), keep any such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending bank by
virtue of any promissory note or loan agreement. The Custodian shall
deliver as additional collateral in the same manner as directed by the Fund
from time to time such Securities specifically allocated to such Fund as
may be specified in Written Instructions to collateralize further any
transaction described in this Section 9. The Fund shall cause all
Securities released from collateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Trust fails to
specify in Written Instructions all of the information required by this
Section 9, the Custodian shall not be under any obligation to deliver any
Securities. Collateral returned to the Custodian shall be held hereunder as
it was prior to being used as collateral.
10. Persons Having Access to Assets of the Fund.
(a) No Trustee, officer, employee or agent of the Trust, and no officer,
director, employee or agent of a Fund's investment advisers, or any
sub-investment adviser of a Fund, or of a Fund's administrator, shall have
physical access to the assets of the Fund held by the Custodian or be
authorized or permitted to withdraw any investments of the Fund, nor shall
the Custodian deliver any assets of the Fund to any such person. No
officer, director, employee or agent of the Custodian who holds any similar
position with a Fund's investment advisers, with any sub-investment adviser
of a Fund or with a Fund's administrator shall have access to the assets of
the Fund.
(b) The individual employees of the Custodian duly authorized by the Board
of Directors of the Custodian to have access to the assets of the Funds are
listed in the certification annexed hereto as Appendix C. The Custodian
shall advise the Funds of any change in the individuals authorized to have
access to the assets of the Fund by written notice to the Fund accompanied
by a certified copy of the authorizing resolution of the Custodian's Board
of Directors approving such change.
(c) Nothing in this Section 10 shall prohibit any officer, employee or
agent of the Company, or any officer, director, employee or agent of the
investment advisers, of any sub-investment adviser of the Funds or of the
Funds' administrator, from giving Oral Instructions or Written Instructions
to the Custodian or executing a Certificate so long as it does not result
in delivery of or access to assets of a Fund prohibited by paragraph (a) of
this Section 10.
11. Concerning the Custodian.
(a) Standard of Conduct. In the performance of its duties hereunder, the
Custodian shall be obligated to exercise care and diligence and to act in
good faith and to use its best efforts within reasonable limits to insure
the accuracy and completeness of all services under this Agreement. Except
as otherwise provided herein, neither the Custodian nor its nominee shall
be liable for any loss or damage, including counsel fees, resulting from
its action or omission to act or otherwise, except for any such loss or
damage arising out of its negligence, misfeasance or willful misconduct or
that of its employees or agents. The Custodian may, with respect to
questions of law, apply for and obtain the advice and opinion of counsel to
the Trust or of its own counsel, at the expense of the Trust, and shall be
fully protected with respect to anything done or omitted by it in good
faith in conformity with such advice or opinion. The Custodian shall be
liable to the Funds for any loss or damage resulting from the use of the
Book-Entry System or a Depository arising by reason of any negligence,
misfeasance or willful misconduct on the part of the Custodian or any of
its employees or agents.
(b) Limit of Duties. Without limiting the generality of the foregoing, the
Custodian shall be under no duty or obligation to inquire into, and shall
not be liable for:
1. The validity of the issue of any Securities purchased by the
Funds, the legality of the purchase thereof, or the propriety of
the amount paid therefor;
2. The legality of the sale of any Securities by the Funds or
the propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
5. The legality of the declaration or payment of any
distribution of any Fund; or
6. The legality of any borrowing.
(c) No Liability Until Receipt. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether or not represented by
any check, draft, or other instrument for the payment of money, received by
it on behalf of a Fund until the Custodian actually receives and collects
such money directly or by the final crediting of the account representing
the Fund's interest in the Book-Entry System or a Depository.
(d) Amounts Due from Transfer Agent. The Custodian shall not be under any
duty or obligation to take action to effect collection of any amount due to
the Funds from the Transfer Agent nor to take any action to effect payment
or distribution by the Transfer Agent of any amount paid by the Custodian
to the Transfer Agent in accordance with this Agreement.
(e) Collection Where Payment Refused. The Custodian shall not be under any
duty or obligation to take action to effect collection of any amount, if
the Securities upon which such amount is payable are in default, or if
payment is refused after due demand or presentation, unless and until (i)
it shall be directed to take such action by a Certificate and (ii) it shall
be assured to its satisfaction of reimbursement of its costs and expenses
in connection with any such action. The Custodian shall give the Funds
prompt notice of each such event.
(f) Appointment of Sub-Custodians. In connection with its duties under this
Agreement, the Custodian may, at its own expense, enter into sub-custodian
agreements with other domestic banks or trust companies for the receipt of
certain securities and cash to be held by the Custodian for the accounts of
the Funds pursuant to this Agreement; provided that each such bank or trust
company complies with all relevant provisions of the 1940 Act, applicable
state securities laws and the rules and regulations thereunder. The
Custodian shall remain responsible for the performance of all of its duties
under this Agreement and shall hold the Trust harmless from the acts and
omissions, under the standards of care provided for herein, of any domestic
bank or trust company that it might choose pursuant to this Section. The
parties hereto acknowledge that they intend to enter into a Sub-Custodian
Agreement with Morgan Stanley Trust Company or another institution
agreeable to them providing for the custody of certain Securities outside
the United States in accordance with Rule 17f-5 under the 1940 Act.
(g) No Duty to Ascertain Authority. The Custodian shall not be under any
duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the Fund are such as may properly be held by
the Fund under the provisions of the Declaration of Trust and the
Prospectus.
(h) Reliance on Certificates and Instructions. The Custodian shall be
entitled to rely upon any Certificate, notice or other instrument in
writing received by the Custodian and reasonably believed by the Custodian
to be genuine and to be signed by two officers of the Trust or Authorized
Persons. The Custodian shall be entitled to rely upon any Written or Oral
Instructions actually received by the Custodian pursuant to the applicable
Sections of this Agreement and reasonably believed by the Custodian to be
genuine and to be given by an Authorized Person in the case of Oral
Instructions or two Authorized Persons in the case of Written Instructions.
The Trust agrees to forward to the Custodian Written Instructions from two
Authorized Persons confirming such Oral Instructions in such manner so that
such Written Instructions are received by the Custodian, whether by hand
delivery, telex or otherwise, by the close of business on the same day that
such Oral Instructions are given to the Custodian. The Trust agrees that
the fact that such confirming instructions are not received by the
Custodian shall in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the Trust. The
Trust agrees that the Custodian shall incur no liability to the Trust in
acting upon Oral Instructions given to the Custodian hereunder concerning
such transactions provided such instructions reasonably appear to have been
received from a duly Authorized Person.
(i) Books and Records. The books and records pertaining to the Trust which
are now or hereafter in the possession of the Custodian shall be the
property of the Trust. Such books and records shall be prepared and
maintained as required by the 1940 Act and other applicable securities laws
and regulations and shall, to the extent practicable, be maintained
separately for each Fund of the Trust. The Trust, the Trust's authorized
representatives and auditors shall have access to such books and records at
all times during the Custodian's normal business hours. Upon the reasonable
request of the Trust, copies of any such books and records shall be
provided by the Custodian to the Trust or the Trust's authorized
representatives at the Trust's expense.
The Custodian shall provide the Trust with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry
System or a Depository and with such reports on its own systems of internal
accounting control in accordance with the requirements of the 1940 Act and
as the Trust may reasonably request from time to time.
(j) Cooperation with Accountants. The Custodian shall cooperate with the
Trust's independent public accountants and shall take all reasonable action
in the performance of its obligations under this Agreement to assure that
the necessary information is made available to such accountants for the
expression of their opinions, as such may be required from time to time by
the Trust.
(k) Compliance with Governmental Rules and Regulations. The Custodian shall
comply with all applicable requirements of the federal securities and
commodities laws, and any other laws, rules and regulations of governmental
authorities having jurisdiction with respect to the duties to be performed
by the Custodian hereunder. Except as specifically set forth herein, the
Custodian assumes no responsibility for such compliance by the Trust.
12. Term and Termination.
(a) This Agreement shall become effective on the date first set forth above
(the "Effective Date") and shall continue in effect thereafter until
terminated pursuant to paragraph (b) of this Section 12.
(b) Either of the parties hereto may terminate this Agreement at any time
by giving to the other party a notice in writing specifying the date of
such termination, which shall be not less than 60 days after the date of
receipt of such notice. In the event such notice is given by the Trust, it
shall be accompanied by a certified resolution of the Board of Trustees of
the Trust, electing to terminate this Agreement and designating a successor
custodian or custodians, which shall be a person qualified to so act under
the 1940 Act.
In the event such notice is given by the Custodian, the Trust shall,
on or before the termination date, deliver to the Custodian a certified
resolution of the Board of Trustees of the Trust, designating a successor
custodian or custodians. In the absence of such designation by the Trust,
the Custodian may designate a successor custodian, which shall be a person
qualified to so act under the 1940 Act. If the Trust fails to designate a
successor custodian, the Trust shall upon the date specified in the notice
of termination of this Agreement and upon the delivery by the Custodian of
all Securities (other than Securities held in the Book-Entry System and
other securities held in uncertificated form which cannot be delivered to
the Trust) and monies then owned by the Trust, be deemed to be its own
custodian and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty with
respect to Securities held in the Book-Entry System and other
uncertificated securities which cannot be delivered to the Trust.
(c) Upon the date set forth in such notice under paragraph (b) of this
Section 12, this Agreement shall terminate to the extent specified in such
notice, and the Custodian shall upon receipt of a notice of acceptance by
the successor custodian deliver directly to the successor custodian on that
date all Securities and monies then held by the Custodian on behalf of the
Trust, after deducting all fees, expenses and other amounts the payment or
reimbursement of which it shall then be entitled.
13. Miscellaneous.
(a) Annexed hereto as Appendix A is a certification signed by two of the
present officers of the Trust setting forth the names and the signatures of
the present Authorized Persons. The Trust agrees to furnish to the
Custodian a new certification in similar form in the event that any such
present Authorized Person ceases to be such an Authorized Person or in the
event that other or additional Authorized Persons are elected or appointed.
Until such new certification shall be received, the Custodian shall be
fully protected in acting under the provisions of this Agreement upon Oral
Instructions or signatures of the present Authorized Persons as set forth
in the last delivered certification.
(b) Annexed hereto as Appendix B is a certification signed by the present
officers of the Trust setting forth the names and the signatures of the
three present officers of the Trust. The Trust agrees to furnish to the
Custodian a new certification in similar form in the event any such present
officer ceases to be an officer of the Trust or in the event that other or
additional officers are elected or appointed. Until such new certification
shall be received, the Custodian shall be fully protected in acting under
the provisions of this Agreement upon the signature of the officers as set
forth in the last delivered certification.
(c) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at
411 West Lafayette, 2nd Floor MasterTrust Mail Code 3438, Detroit, Michigan
48226, Attn: Julie Elya or at such other place as the Custodian may from
time to time designate in writing.
(d) Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Trust, shall be sufficiently given if
addressed to the Company and mailed or delivered to Lee P. Munder,
President, The Munder Framlington Funds Trust, 480 Pierce Street, Suite
300, Birmingham, Michigan 48009, or to such other place as the Trust
may from time to time designate in writing.
(e) This Agreement may not be amended or modified in any manner except by a
written agreement executed by both parties with the same formality as this
Agreement, (i) authorized and approved by a resolution of the Board of
Trustees of the Trust, including a majority of the members of the Board of
Directors of the Company who are not "interested persons" of the Trust (as
defined in the 1940 Act), or (ii) authorized and approved by such other
procedures as may be permitted or required by the 1940 Act.
(f) This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Trust without the
written consent of the Custodian, or by the Custodian without the written
consent of the Trust authorized or approved by a resolution of the Board of
Trustees of the Trust, and any attempted assignment without such written
consent shall be null and void.
(g) This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts.
(h) The captions of the Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(i) This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective representatives duly authorized as of the day
and year first above written.
THE MUNDER FRAMLINGTON FUNDS TRUST
By:
Name:
Title:
COMERICA BANK
By:
Name:
Title:
<PAGE>
SCHEDULE A
List of Funds
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
COMERICA BANK
By:
Title:
THE MUNDER FRAMLINGTON FUNDS TRUST
By:
Title:
<PAGE>
SCHEDULE B
Fee Schedule
Annual fee
Computed daily and payable monthly based on the aggregate average daily net
assets of The Munder Framlington Funds Trust.
First $100 million of net assets .03%
Next $500 million of net assets .02%
Over $600 million of net assets .01%
Transaction Charges
DTC Trades $2.00 per trade
Fed Book Entry Trade $12.00 per trade
U.S. Physical Trade $25.00 per trade
<PAGE>
APPENDIX A
I, Lisa A. Rosen, Secretary of The Munder Framlington Funds Trust, a
Massachusetts Business Trust (the "Trust") do hereby certify that:
The individuals shown on Exhibit A attached hereto have been duly
authorized as Authorized Persons to give Oral Instructions and Written
Instructions on behalf of the Trust and the signatures set forth opposite their
respective names are their true and correct signatures.
The Munder Framlington Funds Trust
Lisa A. Rosen, Secretary
<PAGE>
APPENDIX B
I, Lisa A. Rosen, Secretary of The Munder Framlington Funds Trust, a
Massachusetts Business Trust (the "Trust"), do hereby certify that:
The following individuals serve in the following positions with the Trust
and each individual has been duly elected or appointed to each such position and
qualified therefor in conformity with the Trust's Declaration of Trust and the
signatures set forth opposite their respective names are their true and correct
signatures:
Name Position Signature
Charles W. Elliott Chairman of the Board
of Trustees
John D. Rakolta, Jr. Vice Chairman
Lee P. Munder President ________________________
Terry H. Gardner Vice President
Chief Financial Officer
and Treasurer
Leonard J. Barr II Vice President
Ann F. Putallaz Vice President
James C. Robinson Vice President
Gerald L. Seizert Vice President
Paul D. Tobais Vice President
Elyse G. Essick Vice President
Richard H. Rose Assistant Treasurer
Lisa A. Rosen Secretary and
Assistant Treasurer
Teresa M.R. Hamlin Assistant Secretary
<PAGE>
APPENDIX C - INDIVIDUALS WITH ACCESS
I, _________________________, Secretary of Comerica Bank, a Michigan
banking corporation (the "Custodian"), do hereby certify that:
The individuals named on Exhibit A attached hereto have been duly
authorized by the Executive Committee of the Board of Directors of the Custodian
to have access to the assets of The Munder Framlington Funds Trust, a
Massachusetts Business Trust, held by the Custodian in its capacity as such.
COMERICA BANK
-------------------------
Secretary
<PAGE>
Exhibit A
Name Signature
Steven Albrecht
Joseph Aceto
Leonard J. Barr II
Kristopher Belken
Stephanie Benson
Chelia Cicione
Ann Conrad
Phil Dano
Patti DePace
John E. Dicker
Arnold Douville
Edward Eberle
Sharon Fayolle
Terry H. Gardner
Cheryl Z. Germeroth
Michael Georgio
Wendy Harries
Allan Harris
Otto G. Hinzmann, Jr.
Peter Hoglund
Brian T. Jeffries
Todd Johnson
Anne Kennedy
Richard Merry
Theodore Miller
Lee P. Munder
Greg Prost
Ronald Reed
David Rever
D. Gary Richardson
James Robinson
Lisa A. Rosen
Peter Root
Robert Samrah
Kenneth Schluchter
Gerald Seizert
Kurt Stalzer
Nicola Thompson
Susan Verdum
Joseph A. Viselli
Jeffrey A. Wrona
EXHIBIT 8(b)
SUB-CUSTODY AGREEMENT
This Custody Agreement is dated __________, 199_ among MORGAN STANLEY
TRUST COMPANY, a New York State chartered trust company (the "Bank"), the
__________, a Massachusetts business trust, on behalf of its Investment
Portfolios (the "Fund"), and Comerica Bank, a Michigan banking corporation (the
"Custodian").
WHEREAS, the Custodian has entered into a Custodian Agreement with the
Fund, an open-end investment company, to provide custody services; and
WHEREAS, the Custodian and the Fund wish to retain the Bank to provide
certain sub-custodian services to the Custodian and the Fund for the benefit of
the Fund and the Bank is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties thereto as follows:
1. Appointment and Acceptance; Accounts. (a) The Fund and the
Custodian hereby appoint the Bank as a custodian of Property (as defined
below) owned or under the control of the Fund that is delivered to the Bank,
or any Subcustodian as appointed below, from time to time to be held in
custody for the benefit of the Fund.
(b) Prior to the delivery of any property by the Custodian to the Bank,
the Custodian shall deliver to the Bank each document and other item listed in
Appendix 1. In addition, the Custodian and/or the Fund shall deliver to the Bank
any additional documents or items as the Bank may deem necessary for the
performance of its duties under this Agreement.
(c) The Fund instructs the Bank to establish on the books and records of
the Bank the accounts listed in Appendix 2 (the "Accounts") in the name of the
Investment Portfolios of the Fund. Upon receipt of Authorized Instructions (as
defined below) and appropriate documentation, the Bank shall open additional
Accounts for the investment Portfolios of the Fund. Upon the Bank's confirmation
to the Custodian and the Fund of the opening of such additional Accounts, or of
the closing of Accounts, Appendix 2 shall be deemed automatically amended or
supplemented accordingly. The Bank shall record in the Accounts and shall have
general responsibility for the safekeeping of all securities ("Securities"),
cash, cash equivalents and other property (all such Securities, cash, cash
equivalents and other property being collectively the "Property") of the Fund
that are delivered to the Bank for custody.
(d) The procedures the Bank, the Custodian and the Fund will use in
performing activities in connection with this Agreement act are set forth in a
client services guide provided to the Custodian and the Fund by the Bank, as
such guide may be amended from time to time by the Bank by written notice to the
Custodian and the Fund (the "Client Services Guide").
2. Subcustodians. The Board of Trustees of the Fund authorizes the Bank to
hold the Property of the Fund in omnibus accounts which have been established by
the Bank with (i) one of its branches, a branch of a qualified U.S. bank or an
eligible foreign custodian as listed on Exhibit A (the "Subcustodians") which
exhibit may be amended by the Bank from time to time upon sixty (60) days prior
written notice from the Bank or (ii) an eligible foreign securities depository
as listed on Exhibit B. Unless notified in writing to the contrary by the Fund
during the sixty (60) days notice period, the Banks shall assume that the Fund
has obtained all necessary approvals of any new Subcustodian and the proposed
amendment to Exhibit A shall become effective as of the proposed effective date;
provided however, that in the event that the Fund notifies the Bank that any
necessary approval will not be obtained prior to the proposed effective date of
such amendment, the Fund shall, as soon as practicable but in any event within
120 days from the date of the Bank's initial notice of the proposed amendment,
obtain the requisite approvals or, in the alternative, issue Authorized
Instructions to the bank to deliver any Property effected by the proposed
amendment in accordance with such Authorized Instructions and absent any such
Authorized Instructions, the Bank shall assume that the Fund obtained such
requisite approvals with the 120-day period. For purposes of this Agreement (a)
"qualified U.S. bank" shall mean a qualified U.S. bank as defined in Rule 17f-5
under the Investment Company Act of 1940, as amended ("Rule 17f-5"); (b)
"eligible foreign custodian" shall mean (i) a banking institution or trust
company incorporated or organized under the laws of a country other than the
United States that is regulated as such by that country's government or an
agency thereof and that has shareholders' equity in excess of $200 million in
U.S. currency (or a foreign currency equivalent thereto) or (ii) a
majority-owned direct or indirect subsidiary of a qualified U.S. bank or bank
holding company that is incorporated or organized under the laws of a country
other than the United States and that has shareholders' equity in excess of $100
million in U.S. currency (or a foreign currently equivalent thereto); and (c)
"eligible foreign securities depository" shall mean a securities depository or
clearing agency incorporated organized under the laws of a country other than
the United States, which operates (i) the central system for handling of
securities or equivalent book-entries in that country or (ii) a transactional
system for the central handling of securities or equivalent book-entries;
provided, however that although the Bank is of the opinion that each of the
securities depositories used by it and its Subcustodians do operate a central
system for handling securities in their respective countries, the determination
that a securities depository operates a central system absent any official
proclamation by the Securities and Exchange Commission ("SEC") is a factual one
and the Bank shall not be liable for any future determination by the SEC that
any such securities depository does not in fact operate such a central system.
If the Bank appoints other Subcustodians to hold the Fund's Property, it
will so notify the Custodian and the Fund in accordance with this Section 2 and
will provide them with information reasonably necessary to determine any such
new Subcustodian's eligibility under Rule 17f-5, including a copy of the
proposed agreement with such Subcustodian.
If the Bank removes any subcustodian it shall so notify the Fund and the
Custodian in accordance with this Section 2 and shall move the Property
deposited with such Subcustodian to another Subcustodian or a new Subcustodian,
provided that the appointment of any new Subcustodian will be subject to the
requirements set forth in this Section 2. The Bank shall take steps as may be
required to remove any Subcustodian which has ceased to meet the requirements of
this Section 2.
The Bank shall hold Property through a Subcustodian, securities depository
or clearing agency only if (a) such Subcustodian any securities depository or
clearing agency in which such Subcustodian or the Bank holds Property, or any of
their creditors, may not assert any right, charge, security interest, lien,
encumbrance or other claim of any kind to such property except a claim of
payment for its safe custody or administration and (b) beneficial ownership of
such Property may be freely transferred without the payment of money or value
other than for safe custody or administration.
3. Records. With respect to Property held by a Subcustodian:
(a) The Bank may hold Property for all of its customers with a
Subcustodian in a single account identified as belonging to the Bank for the
benefit of its customers;
(b) The Bank shall identify on its books as belonging to the Fund any
Property held by a Sucustodian for the Bank's account;
(c) The Bank shall require that Property held by the Subcustodian of the
Bank's account be identified on the Subcustodian's books as separate from any
other property held by the Subcustodian other than property of the Bank's
customers held solely for the benefit of customers of the Bank; and
(d) In the event the subcustodian holds Property in a securities
depository or clearing agency, such Subcustodian shall be required by its
agreement with the Bank to identify on its books such Property as being held of
the account of the Bank as custodian for its customers or in such other manner
as is required by local law or market practice.
(e) Any Property in an account held by a Subcustodian of the Bank will be
subject only to the instructions of the Bank, or its agent; and any property
held in an eligible foreign securities depository of the account of a
Subcustodian will be subject only to the instructions of such subcustodian.
(f) The Bank hereby warrants to the Fund and the Custodian that each of
its branches, each branch of a qualified U.S. bank, each eligible foreign
custodian and each eligible foreign securities depository holding Property of
the Fund pursuant to this Agreement meets the standards established for
inclusion in its sub-custody network set forth in Section 2 of this Agreement.
(g) The Bank hereby warrants to the Fund and the Custodian that as of the
date of this Agreement it is maintaining the insurance coverage set forth n
Exhibit C hereto and hereby agrees to maintain comparable coverage in a
commercially reasonable manner during the term of this Agreement.
4. Access to Records. The Banks shall allow the Fund's accountants
reasonable access tot he bank's records relating to the Property held by the
Bank as such accountants may reasonably require in connection with their
examination of the Fund's affairs. The Bank shall also obtain from any
subcustodian (and shall require each Subcustodian to use reasonable efforts to
obtain from any securities depository or clearing agency in which it deposits
Property) an undertaking, to the extent consistent with local practice and the
laws of the jurisdiction or jurisdictions to which such Subcustodian, securities
depository or clearing agency is subject to permit independent public
accountants such reasonable access to the records of such subcustodian,
securities depository or clearing agency as may be reasonably required in
connection with the examination of the Fund's affairs or to take such other
action as the Bank in its judgment may deem sufficient to ensure such reasonable
access.
5. Reports. The Bank will supply to the Fund, in care of its investment
adviser, and the Custodian at least monthly a statement with respect to any
Property in an Account held by each Subcustodian, including an identification of
the entity having possession of such Property, and the Bank will send to the
Fund and the custodian an advice or notification of any transfers of Property to
or from the Account, indicating, as to Property acquired for an Investment
Portfolio of the Fund, the identity of the entity having physical possession of
such Property. The Bank shall also provide to the Fund, on an annual basis, a
report confirming that the arrangements hereunder remain in compliance with the
items of this Agreement.
6. Payment of Monies. The Bank shall make, or cause any subcustodian to
make, payments from monies being held in the Accounts only in accordance with
Authorized Instructions or as provided in Section 9, 13 and 17.
The Bank may act as the Fund's agent or act as a principal in foreign
exchange transactions at such rates as are agreed from time to time between the
Fund and the Bank.
7. Transfer of Securities. The Bank shall make, or cause any
Subcustodian to make, transfers, exchange or deliveries of Securities only in
accordance with Authorized Instructions or as provided in Section 9, 13 and
17.
8. Corporate Action. (a) The Bank shall notify the Fund of details
of all corporate actions affecting the Fund's Securities promptly upon its
receipt of such information.
(b) The Bank shall take, or cause any subcustodian to take, such corporate
action only in accordance with Authorized Instructions or as proved in this
Section 8 or Section 9.
(c) In the event the Fund does not provide timely Authorized Instructions
to the Bank, the Bank shall act in accordance with the default option provided
by local market practice and/or the issuer of the Securities.
(d) Fractional shares resulting from corporate action activity shall be
treated in accordance with local market practices.
9. General Authority. In the absence of Authorized Insructions to
the contrary, the Bank may, and may authorize any Subcustodian to:
(a) make payments to itself or others for expenses of handling Property or
other similar items relating to its duties under this Agreement, provided such
all such payments shall be accounted for to the Fund;
(b) receive and collect all income and principal with respect to
Securities and to credit cash receipts to the Accounts;
(c) exchange Securities when the exchange is purely ministerial
(including, without limitation, the exchange of interim receipts of temporary
securities of securities in definitive form and the exchange of warrants, or
other documents of entitlement to securities, of the securities themselves);
(d) surrender securities at maturity or when called for redempion
upon receiving payment therefor;
(e) execute in the Fund's name such ownership and other certificates
as may be required to obtain the payment of income from securities;
(f) pay or cause to be paid, from the Accounts, any and all taxes and
levies in the nature of taxes imposed on Property by any government and
authority in connection with custody of and transactions in such Property;
(g) endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments;
(h) take non-discretionary action on mandatory corporate actions; and
(i) in general, attend to all nondiscretionary details in connection with
the custody, sale, purchase, transfer and other dealings with the Property.
10. Authorized Instructions; Authorized Persons. (a) Except as otherwise
provided in Sections 6 through 9, 13 and 17, all payments of monies, all
transfers exchanges or deliveries of Property and all responses to corporate
actions shall be made or taken only upon receipt by the Bank of Authorized
Instructions; provided that such authorized Instructions are timely received by
the Bank. "Authorized Instructions" of the Fund means instructions from an
authorized person received by telecopy, tested telex, electronic link or other
electronic means or by such other means as may be agreed in writing between the
Fund and the Bank.
(b) "Authorized Person" means each of the persons or entities identified
on Appendix 3 as amended from item to time by written notice from the Fund to
the Bank. The Fund represents and warrants to the Bank that each Authorized
Person listed in Appendix 3, as amended from time to time, is authorized to
issue Authorized Instructions on behalf of the Fund. Prior to the delivery of
the Property to the Bank, the Bank shall provide a list of designated system
user ID numbers and passwords that the Fund shall be responsible for assigning
to Authorized Persons. The Bank shall assume that an electronic transmission
received and identified by a system user ID number and password was sent by an
Authorized Person. The Bank agrees to provide additional designated system user
ID numbers and passwords as needed by the Fund. The Fund authorizes the Bank to
issue new system user ID numbers upon the request of a previously existing
Authorized Person. Upon the issuance of additional system user ID numbers by the
Bank to the Fund, Appendix 3 shall be deemed automatically amended accordingly.
The fund authorizes the Bank to receive, act and rely upon any Authorized
Instructions received by the Bank which have been issued, or purport to have
been issued, by an Authorized Person.
(c) Any Authorized Person may cancel/correct or otherwise amend any
Authorized Instruction received by the Bank, but the Fund agrees to indemnify
the Bank for any liability, loss or expense incurred by the Bank and its
Subcustodians as a result of their having relied upon or acted on any prior
Authorized Instruction. An amendment or cancellation of an Authorized
Instruction to deliver or receive any security or funds in connection with a
trade will not be processed once the trade has settled.
11. Registration of Securities. (a) In the absence of Authorized
Instructions to the contrary, Securities which must be held in registered form
shall be registered in the name of the Bank or the Bank's nominee or, in the
case of securities in the custody of an entity other than the Bank, in the name
of the Bank, its Subcustodian or any such entity's nominee. The Bank may,
without notice to the Fund, cause any Securities to be registered or
re-registered in the name of the Fund.
(b) Where the Bank has been instructed by the Fund to hold any Securities
in the name of any person or entity other than the Bank, its Subcustodian or any
such entity's nominee, the Bank shall not be responsible for any failure to
collect such dividends or other income or participate in any such corporate
action with respect to such Securities.
12. Deposit Accounts. All cash received by the bank for the Accounts shall
be held by the Bank as a short-term credit balance in favor of the Fund and, if
the Bank and the Fund have agreed in writing in advance that such credit
balances shall bear interest, the Fund shall earn interest at the rates and
times as agreed between the Bank and the Fund. The Fund acknowledges that any
such credit balances shall not be accompanied by the benefit of any governmental
insurance.
<PAGE>
13. Short-term Credit Extensions. (a) Fro time to time, the Bank may
extent or arrange short-term credit for Investment Portfolios of the Fund which
is (i) necessary in connection with payment and clearance of securities and
foreign exchange transactions or (ii) pursuant to an agreed schedule, as and if
set forth in the Client Services Guide, of credits for dividends and interest
payments on Securities. All such extensions of credit shall be payable by such
Investment Portfolios on demand.
(b) The Bank shall be entitled to charge such Investment Portfolio of the
Fund interest for any such credit extension at rates to be agreed upon from time
to time or, if such credit is arranged by the Bank with a third party on behalf
of such Investment Portfolios such Investment Portfolio shall reimburse the Bank
for any interest charge. In addition to any other remedies available, the Bank
shall be entitled to a right of set-off against the Property to satisfy the
repayment of such credit extensions and the payment of, or reimbursement for,
accrued interest thereon.
14. Representations and Warranties. (a) The fund represents an warrants
that (i) the execution, delivery and performance of this Agreement (including,
without limitation, the ability to obtain the short-term extensions of credit in
accordance with Section 13) are within the Fund's power and authority and have
been duly authorized by all requisite action (corporate or otherwise) of the
Fund and of the beneficial owner of the Property, of other than the Fund, and
(ii) this Agreement (including, without each extension of short-term credit
extended to or arranged fro the benefit of the Fund in accordance with Section
13) shall at all items constitute a legal, valid and binding obligation of the
Fund enforceable against the Fund in accordance with its terms, except as may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights in general and subject to the effect of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
(b) The Custodian represents and warrants that (i) the execution, delivery
and performance of this Agreement are within the Custodian's power and authority
and have been duly authorized by all requisite action (corporate or otherwise)
of the Custodian and (ii) this Agreement constitutes the legal, valid and
binding obligation of the Custodian enforceable against the custodian in
accordance with its terms, except as may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights in general and
subject to the effect of general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
(c) The Bank represents and warrants that (i) the execution, delivery and
performance of this Agreement are within he Bank's power and authority and have
been duly authorized by all requisite action (corporate or otherwise) of the
Bank and (ii) this Agreement constitutes the legal, valid and binding obligation
of the Bank enforceable against the Bank in accordance with its terms, except as
may be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights in general and subject to the effect of general
principles of equity (regardless of whether considering a proceeding in equity
or at law).
15. Standard of Care Indemnification. (a) The Bank shall be responsible
for the performance of only such duties as are set forth in his Agreement or
contained in Authorized Instructions given to the bank which are not contrary
tot he provisions of any relevant law or regulation. The bank shall be liable to
the Fund for any loss, liability or expense incurred by the Fund in connection
with this Agreement to the extent that any such loss, liability or expense
results from the negligence or willful misconduct of the Bank or any
Subcustodian; provided, however that neither the Bank nor any subcustodian shall
be liable to the Fund for any indirect, special or consequential damages.
(b) The Fund acknowledges that the Property may be physically held outside
the United States. The Bank shall not be liable for any loss, liability or
expense resulting from vents beyond the reasonable control of the Bank,
indulging, but not limited to, force majeure.
(c) In addition, the Fund and the Custodian, jointly and severally, shall
indemnify the Bank and Subcustodians and any nominee for, and hold each of them
harmless from, any liability, loss or expense (including attorneys' fees and
disbursements) incurred in connection with this Agreement, including without
limitation, (i) as a result of the Bank having acted or relied upon any
Authorized Instructions or (ii) arising out of any such person acting as a
nominee or holder of record of Securities.
16. Fees: Liens. The Fund shall pay to the Bank from time to time such
compensation for its services pursuant to this Agreement as may be mutually
agreed upon as well as the Bank's out-of-pocket and incidental expenses. the
Fund shall hold the Bank harmless from any liability or loss resulting from any
taxes or other governmental charges, and any expenses related thereto, which may
be imposed or assessed with respect tot he Accounts or any Property held
therein. The bank is, and any Subcustodians are, authorized to charge the
Accounts for such items. The Fund shall grant the Bank a lien on the Property of
an Investment Portfolio to the extent necessary: (1) to cover any temporary
short-term credit extensions with respect to that Investment Portfolio o under
Section 13 of this Agreement, and (2) to cover any temporary borrowing in
connection with fees payable hereunder or safe custody or administration with
respect to that Investment Portfolio.
17. Termination. This Agreement may be terminated by the Fund, the
Custodian or the Bank by 60 days written notice to the others, sent by
registered mail. If notice of termination is given, the Fund shall, within 30
days following the giving of such notice, deliver to the Bank a statement in
writing specifying the successor custodian or other person to whom the Bank
shall transfer the Property. In either event, the Bank subject to the
satisfaction of any lien it may have, shall transfer the Property to the person
so specified. If the Bank does not receive such statement the Bank, at its
election, may transfer the Property to a bank or trust company established under
the laws of the United States or any state thereof to be held and disposed of
pursuant to the provisions of this Agreement or may continue to hold the
Property until such a statement is delivered to the Bank. In such event the Bank
shall be entitled to fair compensation for its services during such period as
the Bank remains in possession of any Property and the provisions of this
Agreement relating to the duties and obligations of the Bank shall remain in
full force and effect; provided, however that the Bank shall have no obligation
to settle any transactions in Securities for the Accounts. the provisions of
Section 15 and 16 shall survive termination of this Agreement.
18. Investment Advice. The Bank shall not supervise, recommend or
advise the Fund relative to the investment, purchase, sale, retention or
other disposition of any Property held under this Agreement.
19. Confidentiality. (a) The bank, its agents and employees shall maintain
the confidentiality of information concerning the Property held in the Accounts
of the Fund's Investment Portfolios, including in dealings with affiliates of
the Bank. In the event the Bank or any Subcustodian is requested or required to
disclose any confidential information concerning the Property, the Bank shall,
the extent practicable and legally permissible, promptly notify the Fund of such
request or requirement so that the Fund may seek a protective order or waive any
objection to the Bank's or such Subcustodian's compliance with this Section 19.
In the absence of such a waiver, if the bank or such subcustodian is compelled,
in the opinion of its counsel, to disclose any confidential information, the
Bank or such Subcustodian may disclose such information to such person as, in
the opinion of counsel, is so required.
<PAGE>
(b) The Fund and the Custodian shall maintain the confidentiality of, and
not provide to any third parties absent the written permission of the Bank, any
computer software, hardware or communications facilities made available to the
Fund or the Custodian or their respective agents by the Bank.
20. Notices. Any notice or other communication to the Bank, unless
otherwise provided by his Agreement or the Client Services Guide, shall be sent
by certified or registered mail to Morgan Stanley Trust Company, One Pierepont
Plaza, Brooklyn,, New York, 11201, Attention: President, and any notice tot he
Fund or the Custodian is to be mailed postage paid, addressed tot the Fund or
the Custodian, as the case may be, at the address appearing below, or as it may
hereafter be changed on the Bank's records in accordance with written notice
from the Fund or the Custodian, as the case may be.
21. Assignment. This contract may not be assigned by any party
without the prior written approval of the others.
22. Miscellaneous. (a) This Agreement shall bind the successors and
assigns of the Fund, the Custodian and the Bank.
(b) This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York without regard to its conflicts of
law rules and to the extent not preempted by federal law. The Fund, the
Custodian and the Bank hereby irrevocable submit to the exclusive jurisdiction
of any New York State court or any United States District Court located in the
State of New York in action or proceeding arising out of this Agreement and
hereby irrevocable waive any objection to the venue of any such action or
proceeding brought in any such court or any defense of an inconvenient forum.
(c) It is understood and expressly stipulated that neither the holders of
shares of the Fund nor any trustee, officer, agent or employee of the Fund shall
be personally liable hereunder, nor shall any resort be had to other private
property for the satisfaction of any claim or obligation hereunder, but the fund
only shall be liable.
<PAGE>
In witness whereof, the parties hereto have set their hands as of the date
first above written.
[Insert Name of Fund]
By
Name:
Title:
Address for record:
[Insert Name of Custodian]
By
Name:
Title:
Address for record:
Accepted:
MORGAN STANLEY TRUST COMPANY
By
Authorized Signature
<PAGE>
APPENDIX 1
Account Documentation
REQUIRED DOCUMENTATION FOR CORE CUSTODIAL SERVICES (INCLUDING TAX RECLAIMS):
CUSTODY AGREEMENT
CLIENT SERVICES GUIDE (INCLUDING APPENDICES)
FEE SCHEDULE/BILLING GUIDE
GENERAL ACCOUNT INFORMATION
US TAX AUTHORITY DOCUMENTATION
LOCAL TAX OFFICE LETTER/APPLICATION LETTER
(NON-UNITED STATES-RESIDENT BENEFICIAL OWNERS, ONLY)
FORM 6166/REQUEST FOR FOREIGN CERTIFICATION FORM
(UNITED STATES-RESIDENT BENEFICIAL OWNERS, ONLY)
CERTIFICATION OF BENEFICIAL OWNERSHIP, LEGAL NAME, LEGAL RESIDENCY, TAX
STATUS AND TAX IDS
TAX RECLAIM POWER OF ATTORNEY
PREVIOUS TAX RECLAIM FILING INFORMATION
(PERVIOUS FILERS, ONLY)
UK TAX AUTHORITY DOCUMENTATION
SOPHISTICATED INVESTOR (ACCREDITED INVESTOR) LETTER
(UNITED STATES-RESIDENT BENEFICIAL OWNERS, ONLY)
<PAGE>
DOCUMENTATION THAT IS REQUIRED FROM AN ENTITY CLASSIFIED AS TAX-EXEMPT BY ITS
LOCAL TAX AUTHORITY:
UK FORM 4338
(EXEMPT NON-UNITED KINGDOM-RESIDENT BENEFICIAL OWNERS, ONLY)
FOREIGN EXEMPTION LETTERS/APPLICATION FOR AUSTRALIAN EXEMPTION LETTER
(EXEMPT BENEFICIAL OWNERS, ONLY)
DOCUMENTATION THAT IS REQUIRED ONLY IF YOU WILL USE THE PROXY VOTING SERVICE:
VOTING POWER OF ATTORNEY
DOCUMENTATION THAT IS REQUIRED ONLY IF YOU WILL DEAL IN CERTAIN SECURITIES:
JGB INDEMNIFICATION LETTER
KOREAN SECURITIES POWER OF ATTORNEY
NEW ZEALAND "APPROVED ISSUER LEVY" LETTER
SPANISH POWER OF ATTORNEY WITH APOSTILE
<PAGE>
APPENDIX 2
Client Accounts
Account Name Account Number Account Mnemonic
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
<PAGE>
APPENDIX 3
Part I - Authorized Signatures
The Bank is directed to accept and act upon Authorized Instructions received
from any of the following persons or entities:
Telephone/ Authorized
Name Organization Title Fax Signature
Authorized by:
<PAGE>
Part II - System User ID numbers
The Bank is directed to accept and act upon Authorized Instructions transmitted
electronically and identified with the following mnemonics and system user ID
numbers for the following activities:
Workstation Sessions
Work Station Account
User ID Mnemonic Number TE TCC SL FE CM MA TD
Workstation Session Codes
TE Trade Entry
TCC Trade Cancel/correct
SL Securities Lending
FE Foreign Exchange
CM Cash Movement
MA Mass Authorization
TD Time Deposit
<PAGE>
EXHIBIT A
Subcustodians
EXHIBIT 9(a)
TRANSFER AGENCY AND REGISTRAR AGREEMENT
AGREEMENT, dated as of November __, 1996 between THE MUNDER FRAMLINGTON
FUNDS TRUST (the "Trust"), a Massachusetts business trust having its offices at
480 Pierce Street, Suite 300, Birmingham, Michigan 48009, and FIRST DATA
INVESTOR SERVICES GROUP, INC. (the "Transfer Agent"), a Massachusetts
corporation with principal offices at One Exchange Place, 53 State Street,
Boston, Massachusetts 02109.
WITNESSETH
WHEREAS, the Trust is authorized to issue Shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets;
WHEREAS, the Trust initially intends to offer shares in those Portfolios
identified in the attached Exhibit 1, and each such Portfolio, together with all
other Portfolios subsequently established by the Trust, shall be subject to this
Agreement in accordance with Section 17; and
WHEREAS, the Trust on behalf of the Portfolios, desires to appoint the
Transfer Agent as its transfer agent, dividend disbursing agent and agent in
connection with certain other activities and the Transfer Agent desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the Trust and the Transfer Agent agree as follows:
1. Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, Partnership Agreement, or similar
organizational document as the case may be, of the Trust as the same may be
amended from time to time.
(b) "Authorized Person" shall be deemed to include any person,
whether or not such person is an officer or employee of the Trust, duly
authorized to give Oral Instructions or Written Instructions on behalf of the
Trust as indicated in a certificate furnished to the Transfer Agent pursuant to
Section 4(c) hereof as may be received by the Transfer Agent from time to time.
(c) "Board of Trustees" shall mean the Board of Trustees, Board of
Trustees or, if the Trust is a limited partnership, the General Partner(s) of
the Trust, as the case may be.
(d) "Commission" shall mean the Securities and Exchange
Commission.
(e) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Trust may from time to time deposit, or
cause to be deposited or held under the name or account of such a custodian
pursuant to a Custodian Agreement.
(f) "Trust" shall mean the entity executing this Agreement, and each
Portfolio listed on Exhibit 1 or hereafter created and made subject to this
Agreement in accordance with Section 17.
(g) "1940 Act" shall mean the Investment Company Act of 1940.
(h) "Oral Instructions" shall mean instructions, other than Written
Instructions, actually received by the Transfer Agent from a person reasonably
believed by the Transfer Agent to be an Authorized Person.
(i) "Prospectus" shall mean the most recently dated Trust
Prospectuses and Statements of Additional Information, including any supplements
thereto if any, which have become effective under the Securities Act of 1933 and
the 1940 Act.
(j) "Shares" refers collectively to such shares of capital stock,
beneficial interest or limited partnership interests, as the case may be, of the
Trust as may be issued from time to time and, if the Trust is a closed-end or a
series Trust, as such terms are used in the 1940 Act any other classes or series
of stock, shares of beneficial interest or limited partnership interests that
may be issued from time to time.
(k) "Shareholder" shall mean a holder of shares of capital stock,
beneficial interest or any other class or series, and also refers to partners of
limited partnerships.
(l) "Written Instructions" shall mean a written communication signed
by a person reasonably believed by the Transfer Agent to be an Authorized Person
and actually received by the Transfer Agent. Written Instructions shall include
manually executed originals and authorized electronic transmissions, including
telefacsimile of a manually executed original or other process.
2. Appointment of the Transfer Agent. The Trust hereby appoints and
constitutes the Transfer Agent as transfer agent, registrar and dividend
disbursing agent for Shares of the Trust and as shareholder servicing agent for
the Trust. The Transfer Agent accepts such appointments and agrees to perform
the duties hereinafter set forth.
3. Compensation.
(a) The Trust will compensate or cause the Transfer Agent to be
compensated for the performance of its obligations hereunder in accordance with
the fees set forth in the written schedule of fees annexed hereto as Schedule A
and incorporated herein. The Transfer Agent will transmit an invoice to the
Trust as soon as practicable after the end of each calendar month which will be
detailed in accordance with Schedule A, and the Trust will pay to the Transfer
Agent the amount of such invoice within fifteen (15) days after the Trust's
receipt of the Invoice.
In addition, the Trust agrees to pay, and will be billed separately
for, out-of-pocket expenses incurred by the Transfer Agent in the performance of
its duties hereunder. Out-of-pocket expenses shall include, but shall not be
limited to, the items specified in the written schedule of out-of-pocket charges
annexed hereto as Schedule B and incorporated herein. Schedule B may be modified
by the Transfer Agent upon mutual consent of the parties hereto. Unspecified
out-of-pocket expenses shall be limited to those out-of-pocket expenses
reasonably incurred by the Transfer Agent in the performance of its obligations
hereunder. Reimbursement by the Trust for expenses incurred by the Transfer
Agent in any month shall be made as soon as practicable but no later than 15
days after the receipt of an itemized bill from the Transfer Agent.
(b) Any compensation agreed to hereunder may be adjusted from time
to time by attaching to Schedule A, a revised fee schedule executed and dated by
the parties hereto.
4. Documents. In connection with the appointment of the Transfer Agent the
Trust shall deliver or caused to be delivered to the Transfer Agent the
following documents on or before the date this Agreement goes into effect, but
in any case within a reasonable period of time for the Transfer Agent to prepare
to perform its duties hereunder:
(a) If applicable, specimens of the certificates for Shares of
the Trust;
(b) All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service offered by the Trust;
(c) A signature card bearing the signatures of any officer of the
Trust or other Authorized Person who will sign Written Instructions or is
authorized to give Oral Instructions;
(d) A certified copy of the Articles of Incorporation, as
amended;
(e) A certified copy of the By-laws of the Trust, as amended;
(f) A copy of the resolution of the Board of Trustees
authorizing the execution and delivery of this Agreement;
(g) A certified list of Shareholders of the Trust with the name,
address and taxpayer identification number of each Shareholder, and the number
of Shares of the Trust held by each, certificate numbers and denominations (if
any certificates have been issued), lists of any accounts against which stop
transfer orders have been placed, together with the reasons therefor, and the
number of Shares redeemed by the Trust; and
(h) An opinion of counsel for the Trust with respect to the validity
of the Shares and the status of such Shares under the Securities Act of 1933, as
amended.
5. Further Documentation. The Trust will also furnish the Transfer
Agent with copies of the following documents promptly after the same shall
become available:
(a) each resolution of the Board of Trustees authorizing the
issuance of Shares;
(b) any registration statements filed on behalf of the Trust
and all pre-effective and post-effective amendments thereto filed with the
Commission;
(c) a certified copy of each amendment to the Articles of
Incorporation or the By-laws of the Trust;
(d) certified copies of each resolution of the Board of
Trustees or other authorization designating Authorized Persons; and
(e) such other certificates, documents or opinions as the Transfer
Agent may reasonably request in connection with the performance of its duties
hereunder.
6. Representations of the Trust. The Trust represents to the Transfer
Agent that all outstanding Shares are validly issued, fully paid and
non-assessable. When Shares are hereafter issued in accordance with the terms of
the Trust's Articles of Incorporation and its Prospectus, such Shares shall be
validly issued, fully paid and non-assessable.
7. Distributions Payable in Shares. In the event that the Board of
Trustees of the Trust shall declare a distribution payable in Shares, the Trust
shall deliver or cause to be delivered to the Transfer Agent written notice of
such declaration signed on behalf of the Trust by an officer thereof, upon which
the Transfer Agent shall be entitled to rely for all purposes, certifying (i)
the identity of the Shares involved, (ii) the number of Shares involved, and
(iii) that all appropriate action has been taken.
8. Duties of the Transfer Agent. The Transfer Agent shall be responsible
for administering and/or performing those functions typically performed by a
transfer agent; for acting as service agent in connection with dividend and
distribution functions; and for performing shareholder account and
administrative agent functions in connection with the issuance, transfer and
redemption or repurchase (including coordination with the Custodian) of Shares
in accordance with the terms of the Prospectus, applicable law and this
Agreement including without limitation, those duties specified in Schedule C
attached hereto. In addition, the Trust shall deliver to the Transfer Agent all
notices issued by the Trust with respect to the Shares in accordance with and
pursuant to the Articles of Incorporation or By-laws of the Trust or as required
by law and shall perform such other specific duties as are set forth in the
Articles of Incorporation including the giving of notice of any special or
annual meetings of shareholders and any other notices required thereby.
9. Record Keeping and Other Information. The Transfer Agent shall create
and maintain all records required of it pursuant to its duties hereunder and as
set forth in Schedule C in accordance with all applicable laws, rules and
regulations, including records required by Section 31(a) of the 1940 Act. All
such records shall be the property of the Trust and shall be available during
regular business hours for inspection, copying and use by the Trust. Where
applicable, such records shall be maintained by the Transfer Agent for the
periods and in the places required by Rule 31a-2 under the 1940 Act. Upon
termination of this Agreement, the Transfer Agent shall deliver all such records
to the Trust or such person as the Trust may designate.
Upon reasonable notice by the Trust, the Transfer Agent shall make
available during regular business hours such of its facilities and premises
employed in connection with the performance of its duties under this Agreement
for reasonable visitation by the Trust, or any person retained by the Trust as
may be necessary for the Trust to evaluate the quality of the services performed
by the Transfer Agent pursuant hereto.
10. Other Duties. In addition to the duties set forth in Schedule C, the
Transfer Agent shall perform such other duties and functions, and shall be paid
such amounts therefor, as may from time to time be agreed upon in writing
between the Trust and the Transfer Agent. The compensation for such other duties
and functions shall be reflected in a written amendment to Schedule A or B and
the duties and functions shall be reflected in an amendment to Schedule C, both
dated and signed by authorized persons of the parties hereto.
11. Reliance by Transfer Agent; Instructions.
(a) Provided the standard of care in Section 13 has been met, the
Transfer Agent will have no liability when acting upon Written or Oral
Instructions believed to have been executed or orally communicated by an
Authorized Person and will not be held to have any notice of any change of
authority of any person until receipt of a Written Instruction thereof from the
Trust pursuant to Section 4(c). Provided the standard of care in Section 13 has
been met, the Transfer Agent will also have no liability when processing Share
certificates which it reasonably believes to bear the proper manual or facsimile
signatures of the officers of the Trust and the proper countersignature of the
Transfer Agent.
(b) At any time, the Transfer Agent may apply to any Authorized
Person of the Trust for Written Instructions and may seek advice from legal
counsel for the Trust, or its own legal counsel, with respect to any matter
arising in connection with this Agreement, and provided the standard of care in
Section 13 has been met, it shall not be liable for any action taken or not
taken or suffered by it in good faith in accordance with such Written
Instructions or in accordance with the opinion of counsel for the Trust or for
the Transfer Agent. Written Instructions requested by the Transfer Agent will be
provided by the Trust within a reasonable period of time. In addition, the
Transfer Agent, its officers, agents or employees, shall accept Oral
Instructions or Written Instructions given to them by any person representing or
acting on behalf of the Trust only if said representative is an Authorized
Person. The Trust agrees that all Oral Instructions shall be followed within one
business day by confirming Written Instructions, and that the Trust's failure to
so confirm shall not impair in any respect the Transfer Agent's right to rely on
Oral Instructions. The Transfer Agent shall have no duty or obligation to
inquire into, nor shall the Transfer Agent be responsible for, the legality of
any act done by it upon the request or direction of a person reasonably believed
by the Transfer Agent to be an Authorized Person.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, the Transfer Agent shall be under no duty or obligation to inquire
into, and shall not be liable for: (i) the legality of the issuance or sale of
any Shares or the sufficiency of the amount to be received therefor; (ii) the
legality of the redemption of any Shares, or the propriety of the amount to be
paid therefor; (iii) the legality of the declaration of any dividend by the
Board of Trustees, or the legality of the issuance of any Shares in payment of
any dividend; or (iv) the legality of any recapitalization or readjustment of
the Shares.
12. Acts of God, etc. The Transfer Agent will not be liable or responsible
for delays or errors by acts of God or by reason of circumstances beyond its
control, including acts of civil or military authority, national emergencies,
labor difficulties, mechanical breakdown, insurrection, war, riots, or failure
or unavailability of transportation, communication or power supply, fire, flood
or other catastrophe.
In the event of equipment failures beyond the Transfer Agent's control,
the Transfer Agent shall, at no additional expense to the Trust, take reasonable
steps to minimize service interruptions but shall have no liability with respect
thereto. The foregoing obligation shall not extend to computer terminals located
outside of premises maintained by the Transfer Agent. The Transfer Agent shall
enter into and shall maintain in effect with appropriate parties one or more
agreements making reasonable provision for emergency use of electronic data
processing equipment to the extent appropriate equipment is available.
13. Duty of Care and Indemnification. The Transfer Agent shall be
obligated to exercise care and diligence and to act in good faith and to use its
best efforts within commercially reasonable limits to insure the accuracy and
completeness of all services performed under this Agreement. The Trust will
indemnify the Transfer Agent against and hold it harmless from any and all
losses, claims, damages, liabilities or expenses of any sort or kind (including
reasonable counsel fees and expenses) resulting from any claim, demand, action
or suit or other proceeding (a "Claim") arising directly or indirectly from any
action or thing which the Transfer Agent takes or does or omits to take or do
(i) at the request or on the direction of or in reliance on the advice of the
Trust; (ii) upon Oral or Written Instructions; (iii) in reliance on any records
or documents received from the Trust or any Agent of the Trust, including the
prior transfer agent; (iv) under the terms of this Agreement; and (v) the offer
or sale of Shares in violation of any requirement under Federal or State
Securities Laws, provided that neither the Transfer Agent nor any of its
nominees or sub-contractors shall be indemnified against any liability to the
Trust or to its Shareholders (or any expenses incident to such liability)
arising out of the Transfer Agent's or such nominee's or such sub-contractor's
own willful misfeasance, bad faith or negligence or reckless disregard of its
duties in connection with the performance of its duties and obligations
specifically described in this Agreement.
In any case in which the Trust may be asked to indemnify or hold the
Transfer Agent harmless, the Trust shall be advised of all pertinent facts
concerning the situation in question. The Transfer Agent will notify the Trust
promptly after identifying any situation which it believes presents or appears
likely to present a claim for indemnification against the Trust although the
failure to do so shall not prevent recovery by the Transfer Agent except and to
the extent the Trust has been prejudiced thereby. The Trust shall have the
option to defend the Transfer Agent against any Claim which may be the subject
of this indemnification, and, in the event that the Trust so elects, such
defense shall be conducted by counsel chosen by the Trust and reasonably
satisfactory to the Transfer Agent, and thereupon the Trust shall take over
complete defense of the Claim and the Transfer Agent shall sustain no further
legal or other expenses in respect of such Claim. The Transfer Agent will not
confess any Claim or make any compromise in any case in which the Trust will be
asked to provide indemnification, except with the Trust's prior written consent.
The obligations of the parties hereto under this Section shall survive the
termination of this Agreement.
14. Consequential Damages. In no event and under no circumstances shall
either party under this Agreement be liable to the other party for consequential
or indirect loss of profits, reputation or business or any other special damages
under any provision of this Agreement or for any act or failure to act
hereunder.
15. Term and Termination.
(a) This Agreement shall be effective as of the dates first written
above with respect to the Trust's respective series and shall continue until [ ,
1997] except as provided in subparagraph (b) of this Section and except that the
Trust may terminate this Agreement if the Transfer Agent breaches its duty of
care set forth in Section 13 and such breach is not cured within ninety (90)
days after written notice of the breach has been received by the Transfer Agent
from the Trust. After [ , 1997], this Agreement shall continue indefinitely
until terminated by either party, with or without cause, upon written notice to
the other party given at least ninety (90) days prior to such date, except that
the Agreement may be terminated at any time as provided in subparagraph (b) of
this Section.
(b) The Transfer Agent represents that it is currently registered
with the appropriate Federal agency for the registration of Transfer Agents, and
that it will remain so registered for the duration of this Agreement. The
Transfer Agent agrees that it will promptly notify the Trust in the event of any
material change in its status as a registered Transfer Agent. Should the
Transfer Agent fail to be registered with the appropriate Federal agency as a
Transfer Agent at any time during this Agreement, the Trust may, on written
notice to the Transfer Agent, immediately terminate this Agreement.
(c) Upon termination of this Agreement and (unless this Agreement is
terminated pursuant to subparagraph (b) of this Section 15, or unless the
Transfer Agent has breached the standard of care in Section 13 and such breach
is incurred on the date notice of termination is given) at the expense of the
Trust, the Transfer Agent will deliver to such successor a certified list of
shareholders of the Trust (with names and addresses), and all other relevant
books, records, correspondence and other Trust records or data in the possession
of the Transfer Agent, and the Transfer Agent will cooperate with the Trust and
any successor transfer agent or agents in the substitution process.
16. Confidentiality. Both parties hereto agree that any non public
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other party,
except as may be required by applicable law or at the request of the Commission
or other governmental agency. The Transfer Agent agrees that it shall not use
any non-public information for any purpose other than performance of its duties
or obligations hereunder. The obligations of the parties under this Section
shall survive the termination of this Agreement. The parties further agree that
a breach of this Section would irreparably damage the other party and
accordingly agree that each of them is entitled, without bond or other security,
to an injunction or injunctions to prevent breaches of this provision. Without
limiting the foregoing, the Transfer Agent agrees on behalf of itself and its
nominees, sub-contractors and employees to treat confidentially all records and
other information relative to the Trust and its prior, present or potential
Shareholders.
17. Additional Portfolios. In the event that the Trust establishes one or
more Portfolios in addition to those identified in Exhibit 1, with respect to
which the Trust desires to have the Transfer Agent render services as transfer
agent under the terms hereof, the Trust shall so notify the Transfer Agent in
writing, and if the Transfer Agent agrees in writing to provide such services,
Exhibit 1 shall be amended to include such additional Portfolios.
18. Amendment. This Agreement may only be amended or modified by a
written instrument executed by both parties.
19. Subcontracting. On thirty (30) days prior written notice to the Trust,
the Transfer Agent may assign its rights and delegate its duties hereunder to
any wholly-owned direct or indirect subsidiary of First Data Corporation
provided that (i) the delegate agrees with the Transfer Agent to comply with all
relevant provisions of the 1940 Act; (ii) the Transfer Agent and such delegate
shall promptly provide such information as the Trust may request, and respond to
such question as the Trust may ask, relative to the delegation, including
(without limitation) the capabilities of the delegate; (iii) the delegation of
such duties shall not relieve the Transfer Agent of any of its duties hereunder;
20. Miscellaneous.
(a) Notices. Any notice or other instrument authorized or required
by this Agreement to be given in writing to the Trust or the Transfer Agent,
shall be sufficiently given if addressed to that party and received by it at its
office set forth below or at such other place as it may from time to time
designate in writing.
To the Trust:
Lee P. Munder
President, The Munder Framlington Funds Trust
480 Pierce Street - Suite 300
Birmingham, Michigan 48009
To the Transfer Agent:
First Data Investor Services Group, Inc..
4400 Computer Drive
Westborough, Massachusetts 01581
Attention: President
with a copy to: the Transfer Agent's General Counsel (same address)
(b) Successors. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors.
(c) Governing Law. This Agreement shall be governed
exclusively by the laws of the Commonwealth of Massachusetts without
reference to the choice of law provisions thereof.
(d) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original; but such
counterparts shall, together, constitute only one instrument.
(e) Captions. The captions of this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(f) Use of Transfer Agent's Name. The Trust shall not use the name
of the Transfer Agent in any Prospectus, Statement of Additional Information,
shareholders' report, sales literature or other material relating to the Trust
in a manner not approved prior thereto in writing; provided, that the Transfer
Agent need only receive notice of all reasonable uses of its name which merely
refer in accurate terms to its appointment and services hereunder or which are
required by any Government agency or applicable law or rule.
(g) Use of Trust's Name. The Transfer Agent shall not use the name
of the Trust or material relating to the Trust on any documents or forms for
other than internal use in a manner not approved prior thereto in writing;
provided, that the Trust need only receive notice of all reasonable uses of its
name which merely refer in accurate terms to the appointment of the Transfer
Agent or which are required by any government agency or applicable law or rule.
(h) Independent Contractors. The parties agree that they are
independent contractors and not partners or co-venturers.
(i) Entire Agreement; Severability. This Agreement and the Schedules
attached hereto constitute the entire agreement of the parties hereto relating
to the matters covered hereby and supersede any previous agreements. If any
provision is held to be illegal, unenforceable or invalid for any reason, the
remaining provisions shall not be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, as of the day and year first above
written.
THE MUNDER FRAMLINGTON FUNDS TRUST
By: _______________________________
Title: Vice President & Chief
Financial Officer
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: ______________________________
Title: Executive Vice President
<PAGE>
Exhibit 1
LIST OF PORTFOLIOS
dated as of November __, 1996
Framlington Emerging Markets Fund
Framlington Healthcare Fund
Framlington International Growth Fund
<PAGE>
Schedule A
TRANSFER AGENT FEES
1) Asset Based Charge: Based on the total net assets of the companies (as
defined below*)
First $2.8 billion of net assets @ 2.0 basis points
Next $2.2 billion of aggregate net assets @ 1.5
basis points Over $5 billion of aggregate net
assets @ 1.0 basis points
Other Fees: IRA accounts will be charged $10.00 per annum
NSCC Transaction Charge is $.15 per financial
transaction
2) One-Time Conversion The conversion expenses are estimated at $150,000
Fee: of which Transfer Agent will absorb 50%
3) System Development: Client defined system enhancements will be agreed
upon by Transfer Agent and Munder Capital
Management and billed at a rate of $100.00 per hour
* Companies shall include Munder Funds, Inc., Munder Fund Trust, St. Clair
Funds Inc. and The Munder Framlington Funds Trust (and any other investment
companies advised by Munder Capital Management).
Fees will be re-evaluated on or after the first anniversary date.
<PAGE>
Schedule B
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Printing costs, including certificates, envelopes, checks and
stationery
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct pass
through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including all lease,
maintenance and line costs
- Ad hoc reports
- Proxy solicitations, mailings and tabulations - Daily & Distribution
advice mailings - Shipping, Certified and Overnight mail and insurance -
Year-end form production and mailings
- Terminals, communication lines, printers and other equipment
specifically required by the Fund
- Duplicating services
- Courier services
- Incoming and outgoing wire charges - Overtime, as approved by the Fund -
Temporary staff, as approved by the Fund
- Travel and entertainment, as approved by the Fund - Federal Reserve
charges for check clearance - Record retention, retrieval and destruction
costs - Third party audit reviews
- Customized systems development after the conversion at the rate of
$100.00 per hour
- Insurance
- Such other miscellaneous expenses reasonably incurred by the Transfer
Agent in performing its duties and responsibilities under this
Agreement as approved by the Fund
The Trust agrees that postage and mailing expenses will be paid on the day
of or prior to mailing as agreed with the Transfer Agent. In addition, the Trust
will promptly reimburse the Transfer Agent for any other unscheduled expenses
incurred by the Transfer Agent whenever the Trust and the Transfer Agent
mutually agree that such expenses are not otherwise properly borne by the
Transfer Agent as part of its duties and obligations under the Agreement.
<PAGE>
Schedule C
DUTIES OF THE TRANSFER AGENT
1. Shareholder Information. The Transfer Agent or its agent shall maintain
a record of the number of Shares held by each holder of record which shall
include name, address, taxpayer identification and which shall indicate whether
such Shares are held in certificates or uncertificated form, and if in
certificated form shall include certificate numbers and denominations;
historical information regarding the account of each Shareholder, including
dividends and distributions paid and the date and price for all transactions on
a Shareholder's account; any stop or restraining order placed against
Shareholder's account; any correspondence relating to the current maintenance of
a Shareholder's account; information with respect to withholdings; and, any
information required in order for the Transfer Agent to perform any calculations
contemplated or required by its Agreement with the Trust. The Transfer Agent
shall keep a record of all redemption checks and dividend checks returned by
postal authorities, and shall maintain such records as are required for the
Trust to comply with the escheat laws of any State or other authority; shall
keep a record of all redemption checks and dividend checks returned by the
postal authorities for the period of time they are the Transfer Agent of record
and for any records provided by and receipt acknowledged by both parties from
any prior Transfer Agent by means of a records certification letter; otherwise
the Transfer Agent is not responsible for the said records. The Transfer Agent
shall maintain such records as are required for The Trust to comply with the
escheat laws of any state or other authority for the period they are Transfer
Agent. The Trust will be responsible for notifying and instructing the Transfer
Agent to commence the escheatment process on their behalf, for any or all
states.
2. Shareholder Services. The Transfer Agent or its agent will investigate
all inquiries from Shareholders of the Trust relating to Shareholder accounts
and will respond to all communications from Shareholders and others relating to
its duties hereunder and such other correspondence as may from time to time be
mutually agreed upon between the Transfer Agent and the Trust.
3. Share Certificates.
(a) At the expense of the Trust, it shall supply the Transfer Agent
or its agent with an adequate supply of blank share certificates to meet the
Transfer Agent or its agent's requirements therefor. Such Share certificates
shall be properly signed by facsimile. The Trust agrees that, notwithstanding
the death, resignation, or removal of any officer of the Trust whose signature
appears on such certificates, the Transfer Agent or its agent may continue to
countersign certificates which bear such signatures until otherwise directed by
Written Instructions.
(b) The Transfer Agent or its agent shall issue replacement Share
certificates in lieu of certificates which have been lost, stolen or destroyed,
upon receipt by the Transfer Agent or its agent of properly executed affidavits
and lost certificate bonds, in form satisfactory to the Transfer Agent or its
agent, with the Trust and the Transfer Agent or its agent as obligees under the
bond.
(c) The Transfer Agent or its agent shall also maintain a record of
each certificate issued and/or canceled the number of Shares represented thereby
and the holder of record. With respect to Shares held in open accounts or
uncertificated form, i.e., no certificate being issued with respect thereto, the
Transfer Agent or its agent shall maintain comparable records of the record
holders thereof, including their names, addresses and taxpayer identification.
The Transfer Agent or its agent shall further maintain a stop transfer record on
lost and/or replaced certificates.
4. Mailing Communications to Shareholders; Proxy Materials. The Transfer
Agent or its agent will address and mail to Shareholders of the Trust, all
communicators by the Trust to such Shareholders, including without limitation,
confirmations of purchases and sales of Trust shares, monthly statements, all
reports to Shareholders, dividend and distribution notices and proxy material
for the Trust's meetings of Shareholders. In connection with meetings of
Shareholders, the Transfer Agent or its Agent will prepare Shareholder lists,
mail and certify as to the mailing of proxy materials, process and tabulate
returned proxy cards, report on proxies voted prior to meetings, act as
inspector of election at meetings and certify Shares voted at meetings.
5. Sales of Shares.
(a) Issuance of Shares. Upon receipt of a purchase order from or on
behalf of an investor for the purchase of Shares and sufficient information to
enable the Transfer Agent to establish a Shareholder account (if it is a new
account) and to determine which class of Shares the investor wishes to purchase,
and after confirmation of receipt of payment in the form described in the
Prospectus for the class of Shares involved, the Transfer Agent shall issue and
credit the account of the investor or other record holder with Shares in the
manner described in the Prospectus relating to such Shares and shall prepare and
mail the appropriate confirmation in accordance with legal requirements.
(b) Suspension of Sale of Shares. The Transfer Agent or its agent
shall not be required to issue any Shares of the Trust where it has received a
Written Instruction from the Trust or official notice from any appropriate
authority that the sale of the Shares of the Trust has been suspended or
discontinued. The existence of such Written Instructions or such official notice
shall be conclusive evidence of the right of the Transfer Agent or its agent to
rely on such Written Instructions or official notice.
(c) Returned Checks. In the event that any check or other order for
the payment of money is returned unpaid for any reason, the Transfer Agent or
its agent will: (i) give prompt notice of such return to the Trust or its
designee; (ii) place a stop transfer order against all Shares issued as a result
of such check or order; and (iii) take such actions as the Transfer Agent may
from time to time deem appropriate.
6. Transfer and Redemption.
(a) Requirements for Transfer or Redemption of Shares. The Transfer
Agent or its agent shall process all requests to transfer or repurchase Shares
in accordance with the transfer or redemption procedures set forth in the
Trust's Prospectus.
The Transfer Agent or its agent will transfer or redeem Shares upon
receipt of Oral or Written Instructions or otherwise pursuant to the Prospectus
and Share certificates, if any, properly endorsed for transfer or redemption,
accompanied by such documents as the Transfer Agent or its agent reasonably may
deem necessary.
The Transfer Agent or its agent reserves the right to refuse to
transfer or redeem Shares until it is satisfied that the endorsement on the
instructions is valid and genuine. The Transfer Agent or its agent also reserves
the right to refuse to transfer or redeem Shares until it is satisfied that the
requested transfer or redemption is legally authorized, and it shall incur no
liability for the refusal, in good faith, to make transfers or redemptions which
the Transfer Agent or its agent, in its good judgment, deems improper or
unauthorized, or until it is reasonably satisfied that there is no basis to any
claims adverse to such transfer or redemption.
(b) Notice to Custodian and Trust. When Shares are redeemed, the
Transfer Agent shall, upon receipt of the instructions and documents in proper
form, deliver to the Trust's Custodian and to the Trust or its designee a
notification setting forth the number of Shares to be redeemed. Such redeemed
Shares shall be reflected on appropriate accounts maintained by the Transfer
Agent reflecting outstanding Shares of the Trust involved and Shares attributed
to individual accounts.
(c) Payment of Redemption Proceeds. The Transfer Agent shall, upon
receipt of the moneys paid to it by the Custodian for the redemption of Shares,
pay such moneys as are received from the Custodian, all in accordance with the
procedures described in the Written Instruction received by the Transfer Agent
from the Trust. It is understood that the Transfer Agent may arrange for the
direct payment of redemption proceeds to Shareholders by the Trust's Custodian
in accordance with such procedures and controls as are mutually agreed upon from
time to time by the Trust, the Transfer Agent and the Trust's Custodian.
The Transfer Agent shall not process or effect any redemption with
respect to Shares of the Trust after receipt by the Transfer Agent of
notification of the suspension of the determination of the net asset value of
the Trust, provided the Transfer Agent has had a reasonable time to act on such
notification.
7. Dividends.
(a) Notice to Agent and Custodian. Upon the declaration of each
dividend and each capital gains distribution by the Board of Trustees of the
Trust with respect to Shares of the Trust, the Trust shall furnish or cause to
be furnished to the Transfer Agent or its agent a copy of a resolution of the
Trust's Board of Trustees certified by the Secretary of the Trust setting forth
the date of the declaration of such dividend or distribution, the ex-dividend
date, the date of payment thereof, the record date as of which shareholders
entitled to payment shall be determined, the amount payable per Share to the
shareholders of record as of that date, the total amount payable to the Transfer
Agent or its agent on the payment date and whether such dividend or distribution
is to be paid in Shares of such class at net asset value.
On or before the payment date specified in such resolution of
the Board of Trustees, the Custodian of the Trust will pay to the Transfer Agent
sufficient cash to make payment to the shareholders of record as of such payment
date.
After deducting any amount required to be withheld by any applicable
tax laws, rules and/or regulations and/or other applicable laws, the Transfer
Agent shall in accordance with the instructions in proper form from a
Shareholder and the provisions of the applicable dividend resolutions and
Prospectus issue and credit the Account of the Shareholder with Shares, or, if
the Shareholder so elects, pay such dividends or distributions in cash.
In lieu of receiving from the Trust's Custodian and paying to
Shareholders cash dividends or distributions, the Transfer Agent may arrange for
the direct payment of cash dividends and distributions to Shareholders by the
Trust's Custodian, in accordance with such procedures and controls as are
mutually agreed upon from time to time by and among the Trust, the Transfer
Agent and the Trust's Custodian.
The Transfer Agent shall prepare, file with the Internal Revenue
Services and other appropriate taxing authorities, and address and mail to
Shareholders such returns, forms and information relating to dividends and
distributions paid by the Trust as are required to be so prepared, filed and
mailed by applicable laws, rules and/or resolutions. On behalf of the Trust, the
Transfer Agent shall mail certain requests for Shareholders' certifications
under penalties of perjury and pay on a timely basis to the appropriate Federal
authorities any taxes to be withheld on dividends and distributions paid by the
Trust, all as required by applicable Federal tax laws and regulations.
(b) Insufficient Funds for Payments. If the Transfer Agent or its
agent does not receive sufficient cash from the Custodian to make total dividend
and/or distribution payments to all shareholders of the Trust as of the record
date, the Transfer Agent or its agent will, upon notifying the Trust, withhold
payment to all Shareholders of record as of the record date until sufficient
cash is provided to the Transfer Agent or its agent.
8. Cooperation with Accountants. The Transfer Agent shall cooperate
with the Trust's independent public accountants and shall take all reasonable
action in the performance of its obligations under its agreement with the Trust
to assure that the necessary information is made available to such accountants
for the expression of their opinions as such as may be required by the Trust
from time to time.
9. Other Services. In accordance with the Prospectus and such
procedures and controls as are mutually agreed upon from time to time by and
among the Trust, the Transfer Agent and the Trust's Custodian, the Transfer
Agent shall (a) arrange for issuance of Shares obtained through (i) transfers of
Trusts from Shareholders' accounts at financial institutions, (ii) a
pre-authorized check plan, if any and (iii) a right of accumulation, if any; (b)
arrange for the exchange of Shares for shares of such other funds designated by
the Trust from time to time; and (c) arrange for systematic withdrawals from the
account of a Shareholder participating in a systematic withdrawal plan, if any.
<PAGE>
Exhibit 1 to Schedule C
SUMMARY OF SERVICES
The services to be performed by the Transfer Agent or its agent shall
include the following:
A. DAILY RECORDS
Maintain daily the following information with respect to each
Shareholder account as received:
o Name and Address (Zip Code)
o Class of Shares
o Taxpayer Identification Number
o Balance of Shares held by Agent
o Beneficial owner code: i.e., male, female, joint tenant, etc.
o Dividend code (reinvestment)
o Number of Shares held in certificate form
B. OTHER DAILY ACTIVITY
o Answer written inquiries relating to Shareholder accounts
(matters relating to portfolio management, distribution of Shares
and other management policy questions will be referred to the
Trust).
o Process additional payments into established Shareholder accounts
in accordance with Written Instruction.
o Upon receipt of proper instructions and all required
documentation, process requests for repurchase of Shares.
o Identify redemption requests made with respect to accounts in
which Shares have been purchased within an agreed-upon period of
time for determining whether good funds have been collected with
respect to such purchase and process as agreed by the Transfer
Agent in accordance with Written Instructions set forth by the
Trust.
o Examine and process all transfers of Shares, ensuring that all
transfer requirements and legal documents have been supplied.
o Issue and mail replacement checks.
o Open new accounts and maintain records of exchanges between
accounts.
o Furnish daily requests of transactions in Shares.
o Calculate sales load or compensation payment (front-end and
deferred) and provide such information to the Trust, if any.
o Calculate dealer commissions for the Trust, if any.
o Provide toll-free lines for direct Shareholder use, plus customer
liaison staff with on-line inquiry capacity.
o Mail duplicate confirmations to dealers of their client's
activity, whether executed through the dealer or directly with
the Transfer Agent, if any.
o Identify to each series or class of Shares property belonging to
such series or class, and in such reports, confirmations and
notices to the Trust called for under this Agreement identify the
series or class to which such report, confirmation or notice
pertains.
C. DIVIDEND ACTIVITY
o Calculate and process Share dividends and distributions as
instructed by the Trust.
o Compute, prepare and mail all necessary reports to Shareholders
or various authorities as requested by the Trust. Report to the
Trust reinvestment plan share purchases and determination of the
reinvestment price.
D. MEETINGS OF SHAREHOLDERS
o Cause to be mailed proxy and related material for all meetings of
Shareholders. Tabulate returned proxies (proxies must be
adaptable to mechanical equipment of the Transfer Agent or its
agents) and supply daily reports when sufficient proxies have
been received.
o Prepare and submit to the Trust an Affidavit of Mailing.
o At the time of the meeting, furnish a certified list of
Shareholders, hard copy, microfilm or microfiche and, if
requested by the Trust, Inspection of Election.
E. PERIODIC ACTIVITIES
o Cause to be mailed reports, Prospectuses, and any other
enclosures requested by the Trust (material must be adaptable to
mechanical equipment of Transfer Agent or its agents).
o Receive all notices issued by the Trust with respect to the
Shares in accordance with and pursuant to the Articles of
Incorporation and By-Laws and perform such other specific
duties as are set forth in the Articles of Incorporation and
By-Laws including a giving of notice of a special meeting and
notice of redemption in the circumstances and otherwise in
accordance with all relevant provisions of the Articles of
Incorporation and By-Laws.
o Furnish monthly reports of transactions in shares by type
(custodial, trust, Keogh, IRA, other) including numbers of
accounts.
o Furnish state-by-state registration and sales reports to the
Administrator.
o Provide detail for underwriter or broker confirmations and other
participating dealer Shareholder accounting, in accordance with
such procedures as may be agreed upon between the Trust and the
Transfer Agent, if any.
o Provide Shareholder lists and statistical information
concerning accounts to the Trust.
o Provide timely notification of Trust activity and such other
information as may be agreed upon from time to time between the
Transfer Agent and the Custodian, to the Trust or the Custodian.
EXHIBIT 9(b)
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT is made as of November _, 1996 by and
between FIRST DATA INVESTOR SERVICES GROUP, INC., a Massachusetts corporation
("FDISG"), and THE MUNDER FRAMLINGTON FUNDS TRUST, a Massachusetts business
trust (the "Trust").
WHEREAS, the Trust is registered as an open-end management investment trust
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain FDISG to render certain administrative
services to the portfolios of the Trust listed on Schedule A attached hereto
(which may be amended from time to time by attaching to Schedule A a revised
list of portfolios, signed and dated by an authorized representative of each
party hereto) (each, a "Fund" and collectively, the "Funds") and FDISG is
willing to render such services,
WITNESSETH:
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints FDISG to act as Administrator
of the Trust on the terms set forth in this Agreement. FDISG accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided for in the Fee Schedule.
In the event that the Trust establishes one or more portfolios other than
the Funds with respect to which the Trust decides to retain FDISG to act as
administrator and accounting services provider, the Trust shall so notify FDISG
in writing. If FDISG is willing to render such services, FDISG shall notify the
Trust in writing whereupon such portfolio shall be deemed to be a Fund
hereunder. Without limiting the foregoing, it is understood that the Trust will
from time to time issue separate series or classes of shares and may classify
and reclassify shares of any such series or class. FDISG shall identify to each
such series or class property belonging to such series or class and in such
reports, confirmations and notices to the Trust called for under this Agreement
shall identify the series or class to which such report, confirmation or notice
pertains.
2. Delivery of Documents. The Trust has furnished FDISG with copies
properly certified or authenticated of each of the following:
(a) Votes of the Trust's Board of Trustees authorizing the appointment of
FDISG to provide administrative services to the Trust and approving this
Agreement;
(b) The Trust's Declaration of Trust filed with the Secretary of State of
the state of the Commonwealth of Massachusetts on October 30, 1996 (the
"Charter"),
(c) The Trust's By-Laws and all amendments thereto (the "By-Laws");
(d) The Investment Advisory Agreement between Munder Capital Management
(the "Adviser") and the Trust dated November 7, 1996 and the Sub-Investment
Advisory Agreement among the Adviser, the Trust and Framlington Overseas
Investment Management Limited (the "Sub-Adviser");
(e) The Custody Agreement between Comerica Bank (the "Custodian") and
the Trust dated November 7, 1996 (the "Custody Agreement");
(f) The Transfer Agency and Registrar Agreement between FDISG (the
"Transfer Agent") and the Trust dated November 7, 1996;
(g) The Trust's Registration Statement on Form N-1A (the "Registration
Statement") under the Securities Act of 1933 and under the 1940 Act as filed
with the Securities and Exchange Commission ("SEC") on October 30, 1996 relating
to the Trust's shares of beneficial interest, $.001 par value per share, and all
amendments thereto; and
(h) The Trust's most recent prospectuses and statement of additional
information (together, the "Prospectus").
The Trust will furnish FDISG from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing. Furthermore, the Trust will provide FDISG with any other documents
that FDISG may reasonably request and will notify FDISG as soon as possible of
any matter materially affecting the performance by FDISG of its services under
this Agreement.
3. Duties as Administrator. Subject to the supervision and direction of
the Board of Trustees of the Trust, FDISG, as Administrator, will use its best
judgment in supervising various aspects of the Trust's administrative operations
and undertakes to perform the following specific services:
(a) Maintaining office facilities (which may be in the offices of FDISG
or a corporate affiliate);
(b) Furnishing statistical and research data, data processing services,
clerical services, internal legal, executive and administrative services and
stationery and office supplies in connection with the foregoing;
(c) Furnishing corporate secretarial services including preparation and
distribution of materials for Board of Trustees meetings;
(d) Assisting in the preparation of the Trust's Registration Statement
and any Pre-Effective and Post-Effective Amendments to the Trust's
Registration Statement, Notices of Annual or Special Meetings of Shareholders
and Proxy materials relating to such Meetings;
(e) Assisting in the determination of the jurisdictions in which the
Trust's shares will be registered or qualified for sale and, in connection
therewith, shall be responsible for the initial registration or qualification
and the maintenance of such registration or qualification of such shares for
sale under the securities laws of any state. Payment of share registration fees
and any fees for qualifying or continuing the qualification of any Fund as a
dealer or broker shall be made by that Fund;
(f) Providing the services of certain persons who may be appointed as
officers of the Trust by the Trust's Board of Trustees;
(g) Providing legal advice and counsel to the Trust with respect to
regulatory matters, including monitoring regulatory and legislative developments
which may affect the Trust and assisting in the strategic response to such
developments, counseling and assisting the Trust in routine regulatory
examinations or investigations of the Trust, and working closely with outside
counsel to the Trust in response to any litigation or non-routine regulatory
matters;
(h) Accounting and bookkeeping services (including the maintenance of such
accounts, books and records of the Trust as may be required by Section 31(a) of
the 1940 Act and the rules thereunder and agrees that all records that it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such records at the Trust's request);
(i) Internal auditing and treasury services;
(j) Valuing the Trust's assets and calculating the net asset value of
the shares of each Fund on each business day;
(k) Accumulating information for and, subject to approval by the Trust's
Treasurer, preparing reports to the Trust's shareholders of record and the SEC
including, but not necessarily limited to, Annual and Semi-Annual Reports,
Semi-Annual Reports on Form N-SAR and Notices pursuant to Rule 24f-2;
(l) Reviewing and providing advice and counsel on all sales and
advertising materials prepared on behalf of the Trust;
(m) Preparing, signing and filing the Trust's tax returns;
(n) Assisting the Adviser and the Sub-Adviser, at their request, in
monitoring and developing compliance procedures for the Trust which will
include, among other matters, procedures to assist them in monitoring compliance
with each Fund's investment objective, policies, restrictions, tax matters and
applicable laws and regulations and performing certain monthly compliance tests;
and
(o) Preparing and furnishing the Trust (at the Trust's request) with
performance information (including yield and total return information)
calculated in accordance with applicable U.S. securities laws and reporting to
external databases such information as may reasonably be requested.
Without limiting the foregoing services, it is agreed that FDISG will
perform the following accounting functions on an ongoing basis:
(a) Journalize each Fund's investment, capital share and income and
expense activities;
(b) Maintain individual ledgers for investment securities;
(c) Maintain historical tax lots for each security;
(d) Maintain financial records in accordance with the 1940 Act and the
Rules and Regulations thereunder;
(e) Reconcile on a daily basis cash and on a weekly basis investment
balances c)f the Trust with the custodian:
(f) Post to and prepare each Fund's Statement of Assets and Liabilities
and Statement of Operations;
(g) Calculate various contractual expenses (e.g., advisory and
administration, transfer agency and custody fees):
(h) Monitor the expense accruals and notify Trust management of any
proposed adjustments;
(i) Control all disbursements from the Trust and authorize such
disbursements upon proper instructions;
(j) Calculate capital gains and losses;
(k) Determine each Fund's net income;
(l) Obtain security market quotes from independent pricing services
approved by the Sub-Adviser and the Trust's Board of Trustees, or if such quotes
are unavailable, then obtain such prices from the Sub-Adviser, and in either
case calculate the market value of each Fund's investments;
(m) Transmit or mail a copy of the daily portfolio valuation to the
Adviser and Sub-Adviser, if requested;
(n) Compute the net asset value of each Fund;
(o) Compute the Fund's yields, total return, expense ratios, portfolio
turnover rate, and portfolio average dollar-weighted maturity;
(p) Mark securities to market based upon quotes furnished by the
Sub-Adviser, an independent pricing agent approved by the Trust's Board of
Trustees or based upon values derived from yield data relating to classes of
instruments obtained from reputable sources, provided that any pricing system
based on yield data for selected instruments must be based upon market
quotations for sufficient numbers and types of instruments to be a
representative sample of each class of instrument held by each Fund, as
applicable, both in terms of the types of instruments as well as the differing
quality of instruments;
(q) Assist in monitoring compliance and assist in the development of
compliance procedures for each Fund which will include, among other matters,
monitoring compliance with each Fund's investment objectives, policies,
restrictions, tax matters and applicable laws and regulations;
(r) As appropriate, transmit to the Custodian instructions received
from the Adviser;
(s) Prepare semi-annual financial statements for each Fund, which will
include but not be limited to, the following items (the form and content of such
statements shall be in accordance with generally accepted accounting
principles):
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Cash Statement, if applicable;
(t) Prepare monthly broker security transactions summaries;
(u) Prepare monthly security transaction listings;
(v) Supply various Trust statistical date as reasonably requested on an
ongoing basis;
(w) Keep all books and records with respect to the Trust's books of
account;
(x) Keep records of the Trust's securities transactions, portfolio
valuations and securities positions; and
(y) Act as liaison with the Trust's independent public accountants and
provide account analyses, fiscal year summaries, and other audit related
schedules. FDISG will take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their opinions, as such
may be required by the Trust from time to time.
In performing its duties as Administrator of the Trust, FDISG (a) will act
in accordance with the Articles of Incorporation, By-Laws, Prospectus and with
the instructions and directions of the Board of Trustees of the Trust and will
conform to and comply with the requirements of the 1940 Act and all other
applicable federal or state laws and regulations and (b) will consult with legal
counsel to the Trust, as necessary and appropriate.
4. Allocation of Expenses. FDISG shall bear all expenses in connection
with the performance of its services under this Agreement.
(a) FDISG will from time to time employ or associate with itself such
person or persons as FDISG may believe to be particularly suited to assist it in
performing services under this Agreement. Such person or persons may be officers
and employees who are employed by both FDISG and the Trust. The compensation of
such person or persons shall be paid by FDISG and no obligation shall be
incurred on behalf of the Trust in such respect.
(b) FDISG shall not be required to pay any of the following expenses
incurred by the Trust: membership dues in the Investment Company Institute or
any similar organization; investment advisory expenses; costs of printing and
mailing stock certificates, prospectuses, reports and notices; interest on
borrowed money; brokerage commissions; taxes and fees payable to Federal, state
and other governmental agencies; fees of Trustees of the Trust who are not
affiliated with FDISG; outside auditing expenses; outside legal expenses; or
other expenses not specified in this Section 4 which may be properly payable by
the Trust.
(c) For the services to be rendered, the facilities to be furnished and
the payments to be made to FDISG, as provided for in this Agreement, the Trust
shall compensate FDISG for its services rendered pursuant to this Agreement in
accordance with the fees set forth in the Fee Schedule, annexed hereto and
incorporated herein. Such fees do not include out-of-pocket disbursements of
FDISG for which FDISG will be entitled to bill separately. Out-of-pocket
disbursements shall include, but shall not be limited to, the items specified in
Schedule B annexed hereto and incorporated herein, which schedule may be
modified by mutual consent of the parties hereto.
(d) FDISG will bill the Trust as soon as practicable after the end of each
calendar month, and said billings will be detailed in accordance with the
out-of-pocket schedule. The Trust will promptly pay to FDISG the amount of such
billing.
5. Limitation of Liability. FDISG shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with the performance of its obligations and duties under this Agreement, except
a loss resulting from FDISG's willful misfeasance, bad faith or gross negligence
in the performance of such obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement. The Trust will
indemnify FDISG against and hold it harmless from any and all losses, claims,
damages, liabilities or expenses (including reasonable counsel fees and
expenses) resulting from any claim, demand, action or suit not resulting from
the willful misfeasance, bad faith or gross negligence in the performance of
such obligations and duties or by reason of its reckless disregard thereof FDISG
will indemnify the Trust against and hold it harmless from any and all losses,
claims, damages, liabilities or expenses (including reasonable counsel fees and
expenses) resulting from any claim, demand, action or suit, based on FDISG's
willful misfeasance, bad faith or gross negligence in the performance of such
obligations and duties or by reason its reckless disregard thereof
6. Consequential Damages. In no event and under no circumstances shall
either party under this Agreement be liable to the other party for consequential
or indirect loss of profits, reputation or business or any special damages under
any provision of this Agreement or for any act or failure to act hereunder.
7. Termination of Agreement.
(a) This Agreement shall become effective on the date hereof and shall
remain in force from year to year unless terminated pursuant to the provision of
sub-section (b) of this Section 7.
(b) This Agreement may be terminated with respect to any Fund at any time
without payment of any penalty, upon 60 days' written notice, by vote of the
holders of a majority of the outstanding voting securities of such Fund, or by
vote of a majority of the Board of Trustees of the Trust, or by FDISG.
(c) Section 10 shall survive the termination of this Agreement.
(d) In the event of equipment failures beyond FDISG's control, FDISG
shall, at no additional expense to the Trust, take reasonable steps to minimize
service interruptions but shall have no liability with respect thereto. The
foregoing obligation shall not extend to computer terminals located outside of
premises maintained by FDISG. FDISG shall enter into and shall maintain in
effect with appropriate parties one or more agreements making reasonable
provision for emergency use of electronic data processing equipment to the
extent appropriate equipment is available.
8. Amendment to this Agreement. No provision of this Agreement may be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought.
9. Miscellaneous.
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Trust or FDISG shall be sufficiently
given if addressed to the party and received by it at its office set forth below
or at such other place as it may from time to time designate in writing.
To the Trust:
The Munder Framlington Funds Trust
480 Pierce Street, Suite 300
Birmingham, MI 48009
Attention: President
To FDISG:
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, Massachusetts 01585
Attention: President
with a copy to FDISG's General Counsel
(b) This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns, provided that this Agreement
shall not be assignable without the written consent of the other party.
(c) This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts.
(d) This Agreement may be executed in any number of counterparts each of
which shall be deemed to be an original and which collectively shall be deemed
to constitute only one instrument.
(e) The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(f) This Agreement and the fee schedule hereto constitute the entire
agreement between the parties hereto with respect to the matters described
herein.
10. Confidentiality. All books, records, information and data pertaining
to the business of the Trust that are exchanged or received pursuant to the
performance of FDISG's duties under this Agreement shall remain confidential and
shall not be voluntarily disclosed to any other person, except as specifically
authorized by the Trust or as may be required by law, and shall not be used by
FDISG for any purpose other than the performance of its responsibilities and
duties hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed and delivered by their duly authorized officers as of the date,
first written above.
FIRST DATA INVESTOR SERVICES GROUP, INC.
By:
Name:
Title
THE MUNDER FRAMLINGTON FUNDS TRUST
By:
Name:
Title:
<PAGE>
FEE SCHEDULE FOR
ADMINISTRATION AND
FUND ACCOUNTING SERVICES
I. FEES FOR ADMINISTRATION SERVICES -- (Fund Administration and Fund
Accounting)
A. The following annual Fund Administration fees apply:
.10% of the average daily net assets of each Fund.
B. MINIMUM FEES
For Fund Administration Services, a minimum fee of $60,000 per annum will
apply in the aggregate for the three Funds of The Munder Framlington Fund Trust.
The fees payable under this Agreement will be re-evaluated on or after the
first anniversary date of this Agreement.
<PAGE>
SCHEDULE A
FUNDS
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
FIRST DATA INVESTOR SERVICES GROUP, INC.
By:
THE MUNDER FRAMLINGTON FUNDS
TRUST
By:
SCHEDULE B
OUT-OF- POCKET EXPENSES
Out-of-pocket expenses include, but are not limited to, the following:
- Postage (including overnight courier services) - Telephone -
Telecommunications charges (including FAX) - Duplicating - Pricing
services - Forms and supplies
EXHIBIT 10
DECHERT PRICE & RHOADS
1500 K STREET, N.W.
WASHINGTON, D.C. 20005
December 17, 1996
The Munder Framlington Funds Trust
480 Pierce Street
Birmingham, MI 48009
Dear Sirs:
In connection with the registration under the Securities Act
of 1933 of an indefinite number of shares of beneficial interest (the "Shares")
of Framlington International Growth Fund, Framlington Emerging Markets Fund, and
Framlington Healthcare Fund (the "Funds"), each of which is a series of The
Munder Framlington Funds Trust (the "Company"), we have examined such matters as
we have deemed necessary, and we are of the opinion that, as permitted by its
Declaration of Trust, and assuming that the Company or its agent receives
consideration for the Shares in accordance with the provisions of its
Declaration of Trust, the Shares will be legally and validly issued, will be
fully paid, and will be non-assessable by the Company.
We hereby consent to the use of this opinion as an exhibit to
Pre-Effective Amendment No. 1 to the Company's Registration Statement on Form
N-1A filed with the Securities and Exchange Commission (File No. 33-15205), and
to the use of our name in the prospectuses and statement of additional
information contained therein or incorporated therein by reference, and any
amendments thereto.
Very truly yours,
62796.8M
<PAGE>
Exhibit 11(a)
Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the caption "Independent Auditors"
in the Statement of Additional Information, and to the use of our report, dated
December 18, 1996, on the statement of assets and liabilities of the Munder
Framlington Funds Trust, included in this Pre-Effective Amendment No. 1 to the
Registration Statement (Form N-1A, No.
33-15205).
ERNST & YOUNG LLP
Boston, Massachusetts
December 18, 1996
62796.8Q
<PAGE>
EXHIBIT 11(b)
THE MUNDER FRAMLINGTON FUNDS TRUST
POWER OF ATTORNEY
The undersigned, Lee P. Munder, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Teresa M.R. Hamlin and Paul F.
Roye his true and lawful attorneys and agents to execute in his name, place and
stead, in his 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/ Lee P. Munder
Dated: December 17, 1996
<PAGE>
EXHIBIT 11(b)
THE MUNDER FRAMLINGTON FUNDS TRUST
POWER OF ATTORNEY
The undersigned, Charles W. Elliott, whose signature appears below,
does hereby constitute and appoint Lisa Anne Rosen, Teresa M.R. Hamlin and Paul
F. Roye his true and lawful attorneys and agents to execute in his name, place
and stead, in his 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/ Charles W. Elliott
Dated: December 17, 1996
<PAGE>
EXHIBIT 11(b)
THE MUNDER FRAMLINGTON FUNDS TRUST
POWER OF ATTORNEY
The undersigned, Joseph E. Champagne, whose signature appears below,
does hereby constitute and appoint Lisa Anne Rosen, Teresa M.R. Hamlin and Paul
F. Roye his true and lawful attorneys and agents to execute in his name, place
and stead, in his 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/ Joseph E. Champagne
Dated: December 17, 1996
<PAGE>
EXHIBIT 11(b)
THE MUNDER FRAMLINGTON FUNDS TRUST
POWER OF ATTORNEY
The undersigned, Arthur DeRoy Rodecker, whose signature appears below,
does hereby constitute and appoint Lisa Anne Rosen, Teresa M.R. Hamlin and Paul
F. Roye his true and lawful attorneys and agents to execute in his name, place
and stead, in his 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/ Arthur DeRoy Rodecker
Dated: December 17, 1996
<PAGE>
EXHIBIT 11(b)
THE MUNDER FRAMLINGTON FUNDS TRUST
POWER OF ATTORNEY
The undersigned, Jack L. Otto, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Teresa M.R. Hamlin and Paul F.
Roye his true and lawful attorneys and agents to execute in his name, place and
stead, in his 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/ Jack L. Otto
Dated: December 17, 1996
<PAGE>
EXHIBIT 11(b)
THE MUNDER FRAMLINGTON FUNDS TRUST
POWER OF ATTORNEY
The undersigned, Thomas B. Bender, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Teresa M.R. Hamlin and Paul F.
Roye his true and lawful attorneys and agents to execute in his name, place and
stead, in his 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/ Thomas B. Bender
Dated: December 17, 1996
<PAGE>
EXHIBIT 11(b)
THE MUNDER FRAMLINGTON FUNDS TRUST
POWER OF ATTORNEY
The undersigned, Thomas D. Eckert, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Teresa M.R. Hamlin and Paul F.
Roye his true and lawful attorneys and agents to execute in his name, place and
stead, in his 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/ Thomas D. Eckert
Dated: December 17, 1996
<PAGE>
EXHIBIT 11(b)
THE MUNDER FRAMLINGTON FUNDS TRUST
POWER OF ATTORNEY
The undersigned, John Rakolta, Jr., whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Teresa M.R. Hamlin and Paul F.
Roye his true and lawful attorneys and agents to execute in his name, place and
stead, in his 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/ John Rakolta, Jr.
Dated: December 17, 1996
<PAGE>
EXHIBIT 11(b)
THE MUNDER FRAMLINGTON FUNDS TRUST
POWER OF ATTORNEY
The undersigned, David J. Brophy, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Teresa M.R. Hamlin and Paul F.
Roye his true and lawful attorneys and agents to execute in his name, place and
stead, in his 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/ David J. Brophy
Dated: December 17, 1996
<PAGE>
EXHIBIT 11(b)
THE MUNDER FRAMLINGTON FUNDS TRUST
POWER OF ATTORNEY
The undersigned, Terry H. Gardner, whose signature appears below, does
hereby constitute and appoint Lisa Anne Rosen, Teresa M.R. Hamlin and Paul F.
Roye his true and lawful attorneys and agents to execute in his name, place and
stead, in his 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/ Terry H. Gardner
Dated: December 17, 1996
62796.8K
<PAGE>
EXHIBIT 13
PURCHASE AGREEMENT
The Munder Framlington Funds Trust ("Framlington"), a Massachusetts
Business Trust, on behalf of the Munder Framlington Emerging Markets Fund, the
Munder Framlington Healthcare Fund and the Munder Framlington International
Growth Fund (together, the "New Portfolios"), and Funds Distributor, Inc.
("Funds Distributor"), a Massachusetts Corporation, hereby agree as follows:
1. Framlington hereby offers Funds Distributor and Funds Distributor
hereby purchases at least one share of each of the Class A, Class
B, Class C, Class Y and Class K shares of each of the New
Portfolios of the Trust at $10.00 per share (hereafter
"Shares"). Funds Distributor hereby acknowledges receipt of a
purchase confirmation reflecting the purchase of the Shares of
the Class A, Class B, Class C, Class K and Class Y Shares, and
the Trust hereby acknowledges receipt from Funds Distributor of
funds in the amount of $100,000 in full payment for the Shares.
2. Funds Distributor represents and warrants to Framlington that the
Shares are being acquired for investment purposes and not with a
view to the distribution thereof.
3. Funds Distributor agrees that if it or any direct or indirect
transferee of the Shares redeems the Shares prior to the fifth
anniversary of the date that Framlington begins its investment
activities, Funds Distributor will pay, or cause such transferee
to pay, to Framlington an amount equal to the number resulting
from multiplying the Company's total unamortized costs by a
fraction, the numerator of which is equal to the number of Shares
redeemed by Funds Distributor or such transferee and the
denominator of which is equal to the number of Shares outstanding
as of the date of such redemption, as long as the administrative
position of the staff of the Securities and Exchange Commission
requires such reimbursement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
___ day of ________, 199_.
Attest: THE MUNDER FRAMLINGTON FUNDS TRUST
By:
(SEAL)
Attest: FUNDS DISTRIBUTOR, INC.
By:
(SEAL)
EXHIBIT 15(a)
Service Plan for
Class A Shares of
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund and
Munder Framlington International Growth Fund
<PAGE>
SERVICE PLAN
WHEREAS, The Munder Framlington Funds Trust (the "Trust") engages in
business as an open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Trust are currently divided into
series of shares, three of which are designated as Munder Framlington Emerging
Markets Fund, Munder Framlington Healthcare Fund and Munder
Framlington International Growth Fund (the "Funds");
WHEREAS, shares of common stock of each Fund are divided into classes of
shares, one of which is designated Class A;
WHEREAS, the Trust employs Funds Distributor, Inc. (the "Distributor")
as distributor of the securities of which it is the issuer;
WHEREAS, the Trust and the Distributor have entered into a Distribution
Agreement pursuant to which the Trust has employed the Distributor in such
capacity during the continuous offering of shares of the Trust; and
WHEREAS, this Service Plan (the "Plan") was adopted and approved by the
Trust on _______________;
NOW, THEREFORE, the Trust hereby adopts on behalf of the Funds with
respect to their Class A shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-l under the Act on the following terms
and conditions:
1. Each Fund shall pay to the Distributor, as the distributor of the Class
A shares of the Fund, a service fee at the rate of .25% on an annualized basis
of the average daily net assets of the Fund's Class A shares, provided that, at
any time such payment is made, whether or not this Plan continues in effect, the
making thereof will not cause the limitation upon such payments established by
this Plan to be exceeded. Such fee shall be calculated and accrued daily and
paid at such intervals as the Board of Trustees shall determine, subject to any
applicable restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares. Payments under this Plan are not tied exclusively to actual service
expenses, and the payments may exceed service expenses actually incurred.
3. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Trustees of
the Trust and (b) those Trustees of the Trust who are not "interested persons"
of the Trust (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-l Trustees"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
4. After approval as set forth in paragraph 3, this Plan shall take
effect. The Plan shall continue in full force and effect as to the Class A
shares of the Funds for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan in paragraph 3.
5. The Distributor shall provide to the Trustees of the Trust, and the
Trustees shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
6. This Plan may be terminated as to a Fund at any time, without payment
of any penalty, by vote of the Trustees of the Trust, by vote of a majority of
the Rule 12b-l Trustees, or by a vote of a majority of the outstanding voting
securities of Class A shares of that Fund on not more than 30 days' written
notice to any other party to the Plan.
7. This Plan may not be amended to increase materially the amount of
service fee provided for in paragraph 1 hereof unless such amendment is approved
by the shareholders of the relevant Fund or Funds in the manner provided for in
the Act, and no material amendment to the Plan shall be made unless approved in
the manner provided for approval and annual renewal in paragraph 3 hereof.
8. While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Trust shall be
committed to the discretion of the Trustees who are not such interested persons.
9. The Trust shall preserve copies of this Plan and any related agreements
and all reports made to paragraph 5 hereof, for a period of not less than six
years from the date of this plan, any such agreement of any such report, as the
case may be, the first two years in any easily accessible place.
IN WITNESS WHEREOF, the Trust, on behalf of the Funds, and the Distributor
have executed this Service Plan as of the _____ day of _____.
THE MUNDER FRAMLINGTON FUNDS TRUST
By:
FUNDS DISTRIBUTOR, INC.
By:
EXHIBIT 15(a)
Service and Distribution Plan for
Class B Shares of
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund and
Munder Framlington International Growth Fund
<PAGE>
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Framlington Funds Trust (the "Trust") engages in
business as an open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Trust are currently divided into
series of shares, three of which are designated as Munder Framlington Emerging
Markets Fund, Munder Framlington Healthcare Fund and Munder
Framlington International Growth Fund (the "Funds");
WHEREAS, shares of common stock of each Fund are divided into classes of
shares, one of which is designated Class B;
WHEREAS, the Trust employs Funds Distributor, Inc. (the "Distributor")
as distributor of the securities of which it is the issuer;
WHEREAS, the Trust and the Distributor have entered into a Distribution
Agreement pursuant to which the Trust has employed the Distributor in such
capacity during the continuous offering of shares of the Trust; and
WHEREAS, this Service and Distribution Plan (the "Plan") was adopted
and approved by the Trust on __________;
NOW, THEREFORE, the Trust hereby adopts on behalf of the Funds with
respect to their Class B shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-l under the Act on the following terms
and conditions:
1. A. Each Fund shall pay to the Distributor, as the distributor of the
Class B shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
B shares, provided that, at any time such payment is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of Trustees
shall determine, subject to any applicable restriction imposed by rules of the
National Association of Securities Dealers, Inc.
B. In addition to the distribution fee distributed above, each Fund
shall pay to the Distributor, as the distributor of the Class B shares of the
Fund, a service fee at the rate of .25% on an annualized basis of the average
daily net assets of the Fund's Class B shares, provided that, at any time such
payment is made, whether or not this Plan continues in effect, the making
thereof will not cause the limitation upon such payments established by this
Plan to be exceeded. Such fee shall be calculated and accrued daily and paid at
such intervals as the Board of Trustees shall determine, subject to any
applicable restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class B shares of the Funds, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations (collectively, the "Service Organizations") to obtain various
distribution related and/or administrative 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 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, this Plan
hereby authorizes payment by the Funds of the cost of preparing, printing and
distributing the Funds' Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. 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 contingent deferred sales charges received by the Distributor. Payments
under the Plan are not tied exclusively to actual distribution and service
expenses, and the payments may exceed distribution and service expenses actually
incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Trustees of
the Trust and (b) those Trustees of the Trust who are not "interested persons"
of the Trust (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-l Trustees"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
4. After approval as set forth in paragraph 3, this Plan shall take
effect. The Plan of Distribution shall continue in full force and effect as to
the Class B shares of the Funds for so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan in
paragraph 3.
5. The Distributor shall provide to the Trustees of the Trust, and the
Trustees shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
6. This Plan may be terminated as to a Fund at any time, without payment
of any penalty, by vote of the Trustees of the Trust, by vote of a majority of
the Rule 12b-l Trustees, or by a vote of a majority of the outstanding voting
securities of Class B shares of the Fund on not more than 30 days' written
notice to any other party to the Plan.
7. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless such amendment is approved by the shareholders of the relevant Fund or
Funds in the manner provided for in the Act, and no material amendment to the
Plan shall be made unless approved in the manner provided for approval and
annual renewal in paragraph 3 hereof.
8. While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Trust shall be
committed to the discretion of the Trustees who are not such interested persons.
9. The Trust shall preserve copies of this Plan and any related and
related agreements and all reports made pursuant to paragraph 5 hereof, for a
period of not less than six years from the date of this plan, any such agreement
or any such report, as the case may be, the first two years in an easily
accessible place.
IN WITNESS WHEREOF, the Trust, on behalf of the Funds, and the Distributor
have executed this Service and Distribution Plan as of the _____ day of _____,
1996.
THE MUNDER FRAMLINGTON FUNDS TRUST
By:
FUNDS DISTRIBUTOR, INC.
By:
EXHIBIT 15(a)
Service and Distribution Plan for
Class C Shares of
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund and
Munder Framlington International Growth Fund
<PAGE>
3
SHARED\BANKGRP\FRAMLING\AGREEMEN\SERVPLAN\CLASSC.DOC
SHARED\BANKGRP\FRAMLING\AGREEMEN\SERVPLAN\CLASSC.DOC
SERVICE AND DISTRIBUTION PLAN
WHEREAS, The Munder Framlington Funds Trust (the "Trust") engages in
business as an open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Trust are currently divided into
series of shares, three of which are designated as Munder Framlington Emerging
Markets Fund, Munder Framlington Healthcare Fund and Munder
Framlington International Growth Fund (the "Funds");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated as Class C;
WHEREAS, the Trust employs Funds Distributor, Inc. (the "Distributor")
as distributor of the securities of which it is the issuer;
WHEREAS, the Trust and the Distributor have entered into a Distribution
Agreement pursuant to which the Trust has employed the Distributor in such
capacity during the continuous offering of shares of the Trust; and
WHEREAS, this Service and Distribution Plan (the "Plan") was adopted
and approved by the Trust on __________;
NOW, THEREFORE, the Trust hereby adopts on behalf of the Funds with
respect to their Class C shares, and the Distributor hereby agrees to the terms
of, the Plan, in accordance with Rule 12b-l under the Act on the following terms
and conditions:
1. A. Each Fund shall pay to the Distributor, as the distributor of the
Class C shares of the Fund, a fee for distribution of the shares at the rate of
0.75% on an annualized basis of the average daily net assets of the Fund's Class
C shares, provided that, at any time such payment is made, whether or not this
Plan continues in effect, the making thereof will not cause the limitation upon
such payments established by this Plan to be exceeded. Such fee shall be
calculated and accrued daily and paid at such intervals as the Board of Trustees
shall determine, subject to any applicable restriction imposed by rules of the
National Association of Securities Dealers, Inc.
B. In addition to the distribution fee described above, each Fund
shall pay to the Distributor, as the distributor of the Class C shares of the
Fund, a service fee at the rate of .25% on an annualized basis of the average
daily net assets of the Fund's Class C shares, provided that, at any time such
payment is made, whether or not this Plan continues in effect, the making
thereof will not cause the limitation upon such payments established by this
Plan to be exceeded. Such fee shall be calculated and accrued daily and paid at
such intervals as the Board of Trustees shall determine, subject to any
applicable restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Funds in
connection with any activities or expenses primarily intended to result in the
sale of the Class C shares of the Funds, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations (collectively, the "Service Organizations") to obtain various
distribution related and/or administrative 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 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, this Plan
hereby authorizes payment by the Funds of the cost of preparing, printing and
distributing the Funds' Prospectuses and Statements of Additional Information to
prospective investors and of implementing and operating the Plan. 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 contingent deferred sales charges received by the Distributor. Payments
under the Plan are not tied exclusively to actual distribution and service
expenses, and the payments may exceed distribution and service expenses actually
incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Trustees of
the Trust and (b) those Trustees of the Trust who are not "interested persons"
of the Trust (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-l Trustees"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
4. After approval as set forth in paragraph 3, this Plan shall take
effect. The Plan of Distribution shall continue in full force and effect as to
the Class C shares of the Funds for so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan in
paragraph 3.
5. The Distributor shall provide to the Trustees of the Trust, and the
Trustees shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
6. This Plan may be terminated as to a Fund at any time, without payment
of any penalty, by vote of the Trustees of the Trust, by vote of a majority of
the Rule 12b-l Trustees, or by a vote of a majority of the outstanding voting
securities of Class C shares of the Fund on not more than 30 days' written
notice to any other party to the Plan.
7. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless such amendment is approved by the shareholders of the relevant Fund or
Funds in the manner provided for in the Act, and no material amendment to the
Plan shall be made unless approved in the manner provided for approval and
annual renewal in paragraph 3 hereof.
8. While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Trust shall be
committed to the discretion of the Trustees who are not such interested persons.
9. The Trust shall preserve copies of this Plan and any related agreements
and all reports made pursuant to paragraph 5 hereof, for a period of not less
than six years from the date of this Plan, any such agreement or any such
report, as the case may be, the first two years in an easily accessible place.
<PAGE>
IN WITNESS WHEREOF, the Trust, on behalf of the Funds, and the Distributor
have executed this Service and Distribution Plan as of the ____ day of
___________, 199_.
THE MUNDER FRAMLINGTOIN FUNDS TRUST
By:
FUNDS DISTRIBUTOR, INC.
By:
EXHIBIT 15(b)
THE MUNDER FRAMLINGTON FUNDS TRUST
SERVICE PLAN
Section 1. Upon the recommendation of First Data Investor Services Group,
Inc. ("FDISG"), the administrator of The Munder Framlington Funds Trust (the
"Trust"), any officer of the Trust is authorized to execute and deliver, in the
name and on behalf of the Trust, written agreements based on the form attached
hereto as Appendix A or any other form duly approved by the Trust's Board of
Trustees ("Agreements") with institutional investors ("Shareholder
Organizations") which are shareholders or dealers of record or which have a
servicing relationship with the beneficial owners of shares of the Class K
shares of any Fund of the Trust. Pursuant to such Agreements, Shareholder
Organizations shall provide support services as set forth therein to their
clients who beneficially own Class K Shares in consideration of a fee, computed
monthly in the manner set forth in the Agreements, at an annual rate of up to
.25% of the average daily net asset value of the Class K Shares beneficially
owned by such clients. Comerica Bank and its affiliates are eligible to become
Shareholder Organizations and to receive fees under this Plan.
Section 2. FDISG shall monitor the arrangements pertaining to the Trust's
Agreements with Shareholder Organizations in accordance with the terms of
FDISG's agreement with the Trust. FDISG shall not, however, be obligated by this
Plan to recommend, and the Trust shall not be obligated to execute, any
Agreement with any qualifying Shareholder Organization.
Section 3. So long as this Plan is in effect, FDISG shall provide to the
Trust's Board of Trustees, and the Trustees shall review, at least quarterly, a
written report of the amounts expended pursuant to this Plan and the purposes
for which such expenditures were made.
Section 4. This Plan shall become effective immediately with respect to
each class of Class K Shares upon the approval of the Plan (and the form of
Agreement attached hereto) by a majority of the Trust's Board of Trustees,
including a majority of the Trustees who are not "interested persons," as
defined in the Investment Trust Act of 1940, as amended (the "Act"), of the
Trust and have no direct or indirect financial interest in the operation of this
Plan or in any Agreement related to this Plan (the "Disinterested Trustees"),
pursuant to a vote cast in person at a meeting called for the purpose of voting
on the approval of this Plan (and form of Agreement).
Section 5. Unless sooner terminated, this Plan shall continue in effect
for so long as its continuance is approved at least annually in the manner set
forth in Section 4.
Section 6. This Plan may be amended at any time with respect to any class
of Class K Shares by the Trust's Board of Trustees, provided that any material
amendment of the terms of this Plan shall become effective only upon the
approvals set forth in Section 4.
Section 7. This Plan is terminable at any time with respect to any class
of Class K Shares by vote of a majority of the Disinterested Trustees.
Section 8. While this Plan is in effect, the selection and nomination of
those trustees who are not "interested persons" (as defined in the Act) of the
Trust shall be committed to the discretion of such non-interested Trustees.
<PAGE>
3
SHARED/BANKGRP/FRAMLING/AGREEMENTS/SERVPLN/CLASSK.DOC
SHARED/BANKGRP/FRAMLING/AGREEMENTS/SERVPLN/CLASSK.DOC
APPENDIX A
THE MUNDER FRAMLINGTON FUNDS TRUST
SERVICING AGREEMENT
To: [_______________________________]
We wish to enter into this Servicing Agreement with you concerning the
provision of support services to your clients ("Clients") who may from time to
time beneficially own shares of Class K ("Shares") of the portfolio series of
The Munder Framlington Funds Trust (the "Funds") offered by us.
The terms and conditions of this Servicing Agreement are as follows:
1. You agree to provide the following support services to Clients who may
from time to time beneficially own Shares:1 (i) establishing and maintaining
accounts and records relating to Clients that invest in Shares; (ii) processing
dividend and distribution payments from us on behalf of Clients; (iii) providing
information periodically to Clients showing their positions in Shares and
integrating such statements with those of other transactions and balances in
Client's other accounts serviced by you; (iv) arranging for bank wires; (v)
responding to Client inquiries relating to the services performed by you; (vi)
responding to routine inquiries from Clients concerning their investments in
Shares; (vii) providing subaccounting with respect to Shares beneficially owned
by Clients or the information to us necessary for subaccounting; (viii) if
required by law, forwarding shareholder communications from us (such proxies,
shareholder reports, annual and semi-annual financial statements and dividend,
distribution and tax notices) to clients; (ix) assisting in processing purchase,
exchange and redemption requests from Clients and in placing such orders with
our service contractors; (x) assisting Clients in changing dividend options,
account designations and addresses; (xi) providing Clients with a service that
invests the assets of their accounts in Shares pursuant to specific or
pre-authorized instructions; and (xii) providing such other similar services as
we may reasonably request to the extent you are permitted to do so under
applicable statutes, rules and regulations.
Section 2. You will provide such office space and equipment, telephone
facilities and personnel (which may be any part of the space, equipment and
facilities currently used in your business, or any personnel employed by you) as
may be reasonably necessary or beneficial in order to provide the aforementioned
services and assistance to Clients.
Section 3. Neither you nor any of your officers, employees or agents are
authorized to make any representations concerning us or the Shares except those
contained in our then current prospectuses and statement of additional
information for Shares, copies of which will be supplied by us to you, or in
such supplemental literature or advertising as may be authorized by us in
writing.
Section 4. For all purposes of this Agreement you will be deemed to be an
independent contractor, and will have no authority to act as agent for us in any
matter or in any respect. By your written acceptance of this Agreement, you
agree to and do release, indemnify and hold us harmless from and against any and
all direct or indirect liabilities or losses resulting from requests,
directions, actions or inactions of or by you or your officers, employees or
agents regarding your responsibilities hereunder or the purchase, redemption,
transfer or registration of Shares (or orders relating to the same) by or on
behalf of Clients. You and your employees will, upon request, be available
during normal business hours to consult with us or our designees concerning the
performance of your responsibilities under this Agreement.
Section 5. In consideration of the services and facilities provided by you
hereunder, we will pay to you, and you will accept as full payment therefor, a
fee at the annual rate of .25 of 1% of the average daily net asset value of the
Shares beneficially owned by your Clients for whom you are the dealer of record
or holder of record or with whom you have a servicing relationship (the
"Clients' Shares"), which fee will be computed daily and payable monthly. For
purposes of determining the fees payable under this Section 5, the average daily
net asset value of the Clients' Shares will be computed in the manner specified
in our Registration Statement (as the same is in effect from time to time) in
connection with the computation of the net asset value of Shares for purposes of
purchases and redemptions. By your written acceptance of this Agreement, you
agree to and do waive such portion of any fee payable to you hereunder to the
extent necessary to assure that such fee and other expenses required to be
accrued by us on any day with respect to the Client's Shares in any Fund that
declares its net investment income as a dividend to shareholders on a daily
basis does not exceed the income to be accrued by us to such Shares on that day.
The fee rate stated above may be prospectively increased or decreased by us, in
our sole discretion, at any time upon notice to you. Further, we may, in our
discretion and without notice, suspend or withdraw the sale of Shares, including
the sale of Shares to you for the account of any Client or Clients.
Section 6. Any person authorized to direct the disposition of monies paid
or payable by us pursuant to this Agreement will provide to our Board of
Trustees, and our Trustees will review, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
In addition, you will furnish us or our designees with such information as we or
they may reasonably request (including, without limitation, periodic
certifications confirming the provision to Clients of the services described
herein), and will otherwise cooperate with us and our designees (including,
without limitation, any auditors designated by us), in connection with the
preparation of reports to our Board of Trustees concerning this Agreement and
the monies paid or payable by us pursuant hereto, as well as any other reports
or filings that may be required by law.
Section 7. We may enter into other similar Servicing Agreements with any
other persons without your consent.
Section 8. By your written acceptance of this Agreement, you represent,
warrant and agree that: (i) the compensation payable to you in connection with
the investment of your Clients' assets in Shares will be disclosed by you to
your Clients, will be authorized by your Clients and will not be excessive; (ii)
the services provided by you under this Agreement will in no event be primarily
intended to result in the sale of Shares; and (iii) in the event an issue
pertaining to our Service Plan is submitted for shareholder approval, you will
vote any shares held for your own account in the same proportion as the vote of
those shares held for your Client's accounts.
Section 9. This agreement will become effective on the date a fully
executed copy of this Agreement is received by us or our designee. Unless sooner
terminated, this Agreement will continue until __________, 1997, and thereafter
will continue automatically for successive annual periods provided such
continuance is specifically approved at least annually by us in the manner
described in Section 12. This Agreement is terminable with respect to the
Shares, without penalty, at any time by us (which termination may be by vote or
a majority of the Disinterested Trustees as defined in Section 12) or by you
upon written notice to the other party hereto.
Section 10. All notices and other communications to either you or us will
be duly given if mailed, telegraphed, telexed or transmitted by similar
telecommunications device to the appropriate address stated herein, or to such
other address as either party shall so provide the other.
Section 11. This Agreement will be construed in accordance with the laws
of the State of Massachusetts and is non-assignable by the parties hereto.
Section 12. This Agreement has been approved by vote of a majority of (i)
our Board of Trustees and (ii) those Trustees who are not "interested persons"
(as defined in the Investment Trust Act of 1940) of us and have no direct or
indirect financial interest in the operation of the Service Plan adopted by us
regarding the provision of support services to the beneficial owners of Shares
or in any agreement related thereto cast in person at a meeting called for the
purpose of voting on such approval ("Disinterested Trustees").
If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return it
to us, c/o First Data Investor Services Group, Inc. One Exchange Place, 8th
Floor, Boston, Massachusetts 02109-2873.
Very truly yours,
THE MUNDER FRAMLINGTON
FUNDS TRUST
Date: By:
(Authorized Officer)
Accepted and Agreed to:
[-------------------------------]
By:
Date: _____________________ (Authorized Officer)
Address of Shareholder Organization:
- ---------------------------
---------------------------
---------------------------
- --------
1. Services may be modified or omitted in the particular case and items
renumbered.
EXHIBIT 16
THE MUNDER FRAMLINGTON FUNDS TRUST
Schedule of Computation
1. Average Annual Total Return:
Formula: P(1 + T)n = ERV
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 and portion of a year
2. Aggregate Total Return:
Formula: (ERV/P)-1
62796.8L
<PAGE>
EXHIBIT 18
The Munder Framlington Funds Trust
Multi-Class Plan
Introduction
The purpose of this Plan is to specify the attributes of the five classes
of shares offered by The Munder Framlington Funds Trust (the "Trust"), including
the sales loads, expense allocations, conversion features and exchange features
of each class, as required by Rule 18f-3 under the Investment Company Act of
1940, as amended (the "1940 Act"). In general, shares of each class will have
the same rights and obligations except for one or more expense variables (which
will result in different yields, dividends and net asset values for the
different classes), certain related voting and other rights, exchange
privileges, conversion rights, class designation and sales loads assessed due to
differing distribution methods.
Allocation of Expenses
Pursuant to Rule 18f-3 under the 1940 Act, the Trust shall allocate to
each class of shares in a fund of the Trust (i) any fees and expenses incurred
by the Trust in connection with the distribution of such class of shares under a
distribution plan adopted for such class of shares pursuant to Rule 12b-1, and
(ii) any fees and expenses incurred by the Trust under a shareholder servicing
plan in connection with the provision of shareholder services to the holders of
such class of shares. In addition, the President and Chief Financial Officer of
the Trust shall determine, subject to Board approval or ratification, which of
the following fees and expenses may be allocated to a particular class of shares
in a fund of the Trust:
(i) transfer agent fees identified by the transfer agent as being
attributable to such class of shares;
(ii) printing and postage expense related to preparing and distributing
materials such as shareholder reports, prospectuses, reports, and proxies to
current shareholders of such class of shares or to regulatory agencies with
respect to such class of shares;
(iii) blue sky fees incurred by such class of shares;
(iv) Securities and Exchange Commission registration fees incurred by
such class of shares;
(v) the expense of administrative personnel and services (including, but
not limited to, those of a portfolio accountant, custodian or dividend paying
agent charged with calculating net asset values or determining or paying
dividends) as required to support the shareholders of such class of shares;
(vi) litigation or other legal expenses relating solely to such class
of shares;
(vii) fees of the Trust's Trustees incurred as a result of issues
relating to such class of shares; and
(viii) independent accountants' fees relating solely to such class
of shares.
Any changes to the determination of class expenses allocated to a
particular class of shares will be approved by a vote of the Trustees of the
Trust, including a majority of the Trustees who are not "interested persons" of
the Trust as defined under the 1940 Act.
Income, realized and unrealized capital gains and losses, and any expenses
of a fund of the Trust not allocated to a particular class of the fund pursuant
to this Plan shall be allocated to each class of the fund on the basis of the
net asset value of that class in relation to the net asset value of the fund.
Income, realized and unrealized capital gains and losses, and any expenses of a
fund of the Trust not allocated to a particular class of the fund pursuant to
this Plan shall be allocated to each class of the fund on the basis of the
relative net assets (settled shares), as defined in Rule 18f-3, of that class in
relation to the net assets of the fund.
Class A Shares
Class A Shares of a fund are offered at net asset value plus an initial
sales charge as set forth in the then-current prospectus of a fund. The initial
sales charge may be waived or reduced on certain types of purchases as set forth
in a fund's then-current prospectus. A contingent deferred sales charge may
apply to certain redemptions made within a specified period as set forth in the
fund's then-current prospectus. Class A Shares of a fund may be exchanged for
Class A Shares of another fund of the Trust, The Munder Funds Trust or The
Munder Funds, Inc. without the imposition of any sales charge.
Class A Shares of funds pay a Rule 12b-service fee of up to 0.25%
(annualized) of the average daily net assets of a fund's Class A Shares.
Distribution and support services provided by brokers, dealers and other
institutions may include forwarding sales literature and advertising materials
provided by the Trust's distributor; processing purchase, exchange and
redemption requests from customers placing orders with the Trust's transfer
agent; processing dividend and distribution payments from the funds of the Trust
on behalf of customers; providing information periodically to customers showing
their positions in Class A Shares; providing sub-accounting with respect to
Class A Shares beneficially owned by customers or the information necessary for
sub-accounting; responding to inquiries from customers concerning their
investment in Class A Shares; arranging for bank wires; and providing such other
similar services as may reasonably be requested.
Class B Shares
Class B Shares of a fund are offered without an initial sales charge but
are subject to a contingent deferred sales charge payable upon certain
redemptions as set forth in a fund's then-current prospectus. Class B Shares of
a fund may be exchanged for Class B Shares of another fund of the Trust, The
Munder Funds Trust or The Munder Funds, Inc. without the imposition of a sales
charge.
Class B Shares of a fund will automatically convert to Class A Shares of
the fund on the first business day of the month in which the sixth anniversary
of the issuance of the Class B Shares occurs. The conversion will be effected at
the relative net asset values per share of the two classes.
Class B Shares pay a Rule 12b-1 service fee of up to 0.25% (annualized)
and a distribution fee of up to 0.75% (annualized) of the average daily net
assets of a fund's Class B Shares. Brokers, dealers and other institutions may
maintain Class B shareholder accounts and provide personal services to Class B
shareholders. Services relating to the sale of Class B Shares may include, but
not be limited to, preparation, printing and distribution of prospectuses, sales
literature and advertising materials by the Trust's distributor, or, as
applicable, brokers, dealers or other institutions; commissions, incentive
compensation or other compensation to, and expenses of, account executives or
other employees of the Trust's distributor or brokers, dealers and other
institutions; overhead and other office expenses of the Trust's distributor
attributable to distribution or sales support activities; and opportunity costs
related to the foregoing (which may be calculated as a carrying charge on the
Trust's distributor unreimbursed expenses) incurred in connection with
distribution or sales support activities. The overhead and other office expenses
referenced above may include, without limitation, (a) the expenses of operating
the Trust's distributor's offices in connection with the sale of the Class B
Shares of the funds, including lease costs, the salaries and employee benefit
costs of administrative, operations and support personnel, utility costs,
communication costs and the costs of stationery and supplies, (b) the costs of
client sales seminars and travel related to distribution and sales support
activities, and (c) other expenses relating to distribution and sales support
activities.
Class C Shares
Class C Shares of a fund are offered at net asset value. A contingent
deferred sales charge may apply to certain redemptions made within the first
year of investing as set forth in the fund's then-current prospectus. Class C
Shares of a fund may be exchanged for Class C Shares of another fund of the
Trust, The Munder Funds Trust or The Munder Funds, Inc. without the imposition
of a sales charge.
Class C Shares pay a Rule 12b-1 service fee of up to 0.25% (annualized)
and a distribution fee of up to 0.75% (annualized) of the average daily net
assets of a fund's Class C Shares. Brokers, dealers and other institutions may
maintain Class C shareholder accounts and provide personal services to Class C
shareholders. Services relating to the sale of Class C Shares may include, but
not be limited to, preparation, printing and distribution of prospectuses, sales
literature and advertising materials by the Trust's distributor, or, as
applicable, brokers, dealers or other institutions; commissions, incentive
compensation or other compensation to, and expenses of, account executives or
other employees of the Trust's distributor or brokers, dealers and other
institutions; overhead and other office expenses of the Trust's distributor
attributable to distribution or sales support activities; and opportunity costs
related to the foregoing (which may be calculated as a carrying charge on the
Trust's distributor unreimbursed expenses) incurred in connection with
distribution or sales support activities. The overhead and other office expenses
referenced above may include, without limitation, (a) the expenses of operating
the Trust's distributor's offices in connection with the sale of the Class B
Shares of the funds, including lease costs, the salaries and employee benefit
costs of administrative, operations and support personnel, utility costs,
communication costs and the costs of stationery and supplies, (b) the costs of
client sales seminars and travel related to distribution and sales support
activities, and (c) other expenses relating to distribution and sales support
activities.
Class Y Shares
Class Y Shares of a fund are offered at net asset value. Class Y Shares of
a fund may be exchanged for Class Y Shares of another fund of the Trust, The
Munder Funds Trust or The Munder Funds, Inc. without the imposition of a sales
charge.
Class K Shares
Class K Shares of a fund are offered at net asset value. Class K Shares of
a fund may be exchanged for Class K Shares of another fund of the Trust, The
Munder Funds Trust or The Munder Funds, Inc., without the imposition of a sales
charge. Class K Shares pay a service fee of up to 0.25% (annualized) of the
average daily net assets of a fund's Investor Shares. Services provided by
brokers, dealers and other institutions for such service fees include:
processing purchase, exchange and redemption requests from customers and placing
orders with the Trust's transfer agent; processing dividend and distribution
payments from the funds of the Trust 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
reasonably be requested.
