As filed with the Securities and Exchange Commission
on August 29, 1997
Registration Nos. 333-15205
811-07897
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. 2 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 3 [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
Teresa M.R. Hamlin, Esq.
First Data Investor Services Group, Inc.
One Exchange Place, 8th Floor
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
Copies to:
Lisa Anne Rosen, Esq. Paul F. Roye, Esq.
Munder Capital Management Dechert Price & Rhoads
480 Pierce Street 1500 K Street, N.W., Suite 500
Birmingham, Michigan 48009 Washington, D.C. 20005
[X] It is proposed that this filing will become effective October 28,
1997 pursuant to Paragraph (a)(1) of Rule 485.
Registrant elects to register an indefinite number of shares of
beneficial interest under the Securities Act of 1933 pursuant to Rule 24f-2
under the Investment Company Act of 1940. Registrant has filed 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 MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Equity Funds Class A, B and C Shares)
Part A
--------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Item Heading
------ ----------
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial Information
3. Condensed Financial Information Financial Information
4. General Description of Registrant Cover Page; Fund Highlights; Fund Choices;
Structure and Management of the Funds
5. Management of the Fund Structure and Management of the Funds;
Fund Choices; Dividends, Distributions and
Taxes; Performance
6. Capital Stock and Other Securities Structure and Management of the Funds;
Purchases and Exchanges of Shares;
Redemptions of Shares; Dividends,
Distributions and Taxes
7. Purchase of Securities Being Offered Purchases and Exchanges of Shares
8. Redemption or Repurchase Redemptions of Shares
9. Pending Legal Proceedings Not Applicable
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Class K Shares)
Part A
--------
Item Heading
------ ----------
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial Information
3. Condensed Financial Information Financial Information
4. General Description of Registrant Cover Page; Fund Highlights; Fund Choices;
Structure and Management of the Funds
5. Management of the Fund Structure and Management of the Funds;
Fund Choices; Dividends, Distributions and
Taxes; Performance
6. Capital Stock and Other Securities Structure and Management of the Funds;
Purchases of Shares; Redemptions of
Shares; Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchases of Shares
8. Redemption or Repurchase Redemptions of Shares
9. Pending Legal Proceedings Not Applicable
<PAGE>
THE MUNDER FUNDS, INC.
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Class Y Shares)
Part A
--------
Item Heading
------ ----------
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial Information
3. Condensed Financial Information Financial Information
4. General Description of Registrant Cover Page; Fund Highlights; Fund Choices;
Structure and Management of the Funds
5. Management of the Fund Structure and Management of the Funds;
Fund Choices; Dividends, Distributions and
Taxes; Performance
6. Capital Stock and Other Securities Structure and Management of the Funds;
Purchases and Exchanges of Shares;
Redemptions of Shares; Dividends,
Distributions and Taxes
7. Purchase of Securities Being Offered Purchases and Exchanges of Shares
8. Redemption or Repurchase Redemptions of Shares
9. Pending Legal Proceedings Not Applicable
<PAGE>
Part B
--------
(The Munder Funds)
Item Heading
------ ----------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History See Prospectus --"Structure and Management
of the Funds;" General; Trustees,
Directors and Officers
13. Investment Objectives and Policies Fund Investments; Investment Limitations;
Portfolio Transactions
14. Management of the Fund See Prospectus --"Structure and Management
of the Funds;" Trustees, Directors and
Officers; Miscellaneous
15. Control Persons and Principal See Prospectus --
Holders of Securities "Structure and Management of the Funds;"
Miscellaneous
16. Investment Advisory and Other Services Investment Advisory and Other Service
Arrangements; See Prospectus -- "
Structure and Management of the Funds "
17. Brokerage Allocation and Other Practices Portfolio Transactions
18. Capital Stock and Other Securities See Prospectus --"Structure and Management
of the Funds;" Additional Information
Concerning Shares
19. Purchase, Redemption and Pricing Additional Purchase and
of Securities Being Offered Redemption Information; Net Asset Value;
Additional Information Concerning Shares
20. Tax Status Taxes
21. Underwriters Investment Advisory and Other Service
Agreements
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
The Munder Framlington Funds Trust
The purpose of this Post-Effective Amendment filing is to combine
prospectuses with respect to the investment portfolios of the Registrant, The
Munder Funds, Inc. and The Munder Funds Trust. Additionally, in accordance with
the Staff's recent suggestion to write prospectuses in plain english, the
prospectuses have been wholly rewritten and streamlined.
PROSPECTUS
Class A, Class B and Class C Shares
The Munder Funds Trust (the "Trust"), The Munder Funds, Inc. (the
"Company") and The Munder Framlington Funds Trust ("Framlington") are open-end
investment companies. This Prospectus describes five investment portfolios
offered by the Trust (the "Trust Funds"), seven investment portfolios offered by
the Company (the "Company Funds") and three investment portfolios offered by
Framlington ("Framlington Funds") described below (referred to as the "Funds"):
Munder Accelerating Growth Fund
Munder Balanced Fund
Munder Equity Selection Fund*
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
Munder Growth & Income Fund
Munder International Equity Fund
Munder Micro-Cap Equity Fund
Munder Mid-Cap Growth Fund
Munder Multi-Season Growth Fund
Munder Real Estate Equity Investment Fund
Munder Small-Cap Value Fund
Munder Small Company Growth Fund
Munder Value Fund
- ---------------
* As of the date of this Prospectus, the Munder Equity Selection
Fund is not currently available for
purchase.
Munder Capital Management (the "Advisor") serves as the investment
adviser of the Funds.
This Prospectus explains the objectives, policies, risks and fees of
each Fund. You should read this Prospectus carefully before investing and retain
it for future reference. A Statement of Additional Information ("SAI")
describing each of the Funds has been filed with the Securities and Exchange
Commission (the "SEC") and is incorporated by reference into this Prospectus.
You can obtain the SAI free of charge by calling the Funds at (800) 438-5789. In
addition, the SEC maintains a Web site (http://www.sec.gov) that contains the
SAI 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 federally insured or guaranteed. An
investment in the Funds involves investment risks, including the possible loss
of the principal amount invested.
Securities offered by this Prospectus have not been approved or
disapproved by the SEC or any state securities commission nor has the SEC or any
state securities commission passed upon the accuracy or adequacy of this
Prospectus. Any representation to the contrary is a criminal offense.
Call Toll-Free for Shareholder Services:
(800) 438-5789
The date of this Prospectus is _________________, 1997
<PAGE>
TABLE OF CONTENTS
Fund Highlights
What are the key facts regarding the Funds?........................
Financial Information.............................................
Fund Choices
What Funds are offered?...........................................
Who may want to invest in the Funds?..............................
What are the Funds' investments and investment practices?.........
What are the risks of investing in the Funds?.....................
Performance
How is the Funds' performance calculated?.........................
Where can I obtain performance data?..............................
Purchases and Exchanges of Shares
What share class should I choose for my investment?...............
What price do I pay for shares?...................................
When can I purchase shares?.......................................
What is the minimum required investment?..........................
How can I purchase shares?........................................
How can I exchange shares?........................................
Redemptions of Shares
What price do I receive for redeemed shares?......................
When can I redeem shares?.........................................
How can I redeem shares?..........................................
When will I receive redemption amounts?...........................
Structure and Management of the Funds
How are the Funds structured?.....................................
Who manages and services the Funds?...............................
What are my rights as a shareholder?..............................
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?.................
How will distributions be made?...................................
Are there tax implications of my investments in the Funds?........
Additional Information............................................
Appendix A........................................................
<PAGE>
- ----------------------------------------------------------------------------
FUND HIGHLIGHTS
- ----------------------------------------------------------------------------
What Are the Key Facts Regarding the Funds?
Q:.......What are the Funds' goals?
A: o The Accelerating Growth Fund, Equity Selection Fund, Framlington
Emerging Markets Fund, Framlington Healthcare Fund, Framlington
International Growth Fund, International Equity Fund, Micro-Cap Equity
Fund, Mid-Cap Growth Fund, Multi-Season Growth Fund, Small-Cap Value
Fund, Small Company Growth Fund and Value Fund primarily seek to
provide long-term capital appreciation.
o The Balanced Fund, Growth & Income Fund and Real Estate Equity
Investment Fund seek to provide capital appreciation and current
income.
Q: What are the Funds' strategies?
A: The Funds, other than the Balanced Fund, invest primarily in equity
securities. The Balanced Fund allocates its assets primarily among three types
of assets - Equity Securities, Fixed Income Securities and Cash Equivalents.
"Equity Securities" include common stocks, preferred stocks, warrants and other
securities convertible into common stock. "Fixed Income Securities" are
securities which either pay interest at set times at either fixed or variable
rates, or which realize a discount upon maturity. Fixed Income Securities
include corporate bonds, debentures, notes and other similar corporate debt
instruments, zero coupon bonds (discount debt obligations that do not make
interest payments) and variable amount master demand notes that permit the
amount of indebtedness to vary in addition to providing for periodic adjustments
in the interest rates. "Cash Equivalents" are instruments which are highly
liquid and virtually free of investment risk.
Q: What are the Funds' risks?
A: Each Fund's net asset value, which is determined on every business day, will
change daily. The net asset value changes due to changes in the price of
securities owned by each Fund as a result of rises and falls in the stock market
in general, perceptions about the stocks of particular companies, perceptions
about particular industries and, in the case of an international fund, changes
in exchange rates. You should note that you could lose a portion of the amount
you invest in a Fund.
The International Equity Fund, Framlington Emerging Markets Fund and
Framlington International Growth Fund invest mostly in Foreign Securities.
"Foreign Securities" are securities issued by non-U.S. companies. Foreign
Securities are generally considered to be riskier than securities issued by U.S.
companies due to factors such as freezes on convertibility of currency, the rise
and fall of foreign currency exchange rates, political instability and
differences in accounting and reporting standards. Certain of the other Funds
also may invest in Foreign Securities.
The Micro-Cap Equity Fund, Small-Cap Value Fund, Mid-Cap Growth Fund
and Small Company Growth Fund invest primarily in small-capitalization or
mid-capitalization companies and may invest in emerging growth companies.
Investments in such companies are riskier than investments in larger, more
established companies as a result of larger fluctuations in earnings, greater
reliance on a few key customers, and other factors.
The Real Estate Equity Investment Fund concentrates its investments in the
real estate industry and Framlington Healthcare Fund concentrates its
investments in the healthcare industry. Because the Funds
<PAGE>
- -------------------------------------------------------------------------------
concentrate their investments in one industry, they may pose greater risks and
experience larger fluctuations in value than portfolios invested in a broader
range of industries.
- -------------------------------------------------------------------------
Q: What are the options for investment in the Funds?
A: Each Fund offers five different investment options, or classes:
Class A, B, C, K and Y. Class K and Y shares, which are only offered to
institutional and other qualified investors, are offered in other prospectuses.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Maximum Front Maximum
Class Rule 12b-1 Fees * End Sales Load ** CDSC ***
Class A 0.25% 5.5% None****
Class B 1% None 5%
Class C 1% None 1%, if redeemed within 1
year of purchase
* An annual fee for distributing shares and servicing shareholder
accounts based on the Fund's average daily net assets.
** A one-time fee charged at the time of purchase of shares. The fee
declines based on the amount you
invest.
*** A contingent deferred sales charge ("CDSC") is a one-time fee charged
at the time of redemption. The fee declines based on the length of time
you hold the shares.
**** A CDSC of 1% is imposed on certain redemptions of Class A Shares
if redeemed within one year of
purchase.
</TABLE>
(i) If you invest over $250,000, you must buy Class A or Class C Shares.
Q: How do I buy and sell shares of the Funds?
A: Funds Distributor Inc. (the "Distributor") sells shares of the Funds.
You may purchase shares from the Distributor through broker-dealers or other
financial institutions or from the Funds' transfer agent, First Data Investor
Services Group, Inc. ("Investor Services Group" or the "Transfer Agent"), by
mailing the attached application with a check to Investor Services Group. You
must invest at least $500 ($50 through the Automatic Investment Plan) initially
and at least $50 for subsequent purchases.
Shares may be redeemed (sold back to the Fund) by mail or by telephone.
You may also acquire the Funds' shares by exchanging shares of the same
class of other funds of the Trust, the Company and Framlington, and exchange
Fund shares for shares of the same class of other funds of the Trust, the
Company and Framlington.
<TABLE>
<CAPTION>
Q: What shareholder privileges do the Funds offer?
<S> <C> <C> <C>
A: 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
</TABLE>
<PAGE>
- ----------------------------------------------------------------------------
Q: When and how are distributions made?
- ----------------------------------------------------------------------------
A: Dividends paid at least quarterly (if available): Accelerating Growth
Fund, Balanced Fund, Growth & Income Fund and Small Company Growth Fund.
Dividends paid at least annually: Equity Selection Fund, Framlington
Emerging Markets Fund, Framlington Healthcare Fund, Framlington International
Growth Fund, International Equity Fund, Micro-Cap Equity Fund, Mid-Cap Growth
Fund, Multi-Season Growth Fund, Small-Cap Value Fund and Value Fund.
Dividends paid monthly: Real Estate Equity Investment Fund.
The Funds distribute capital gains at least annually. Unless you elect
to receive distributions in cash, all dividends and capital gain distributions
of a Fund will be automatically used to purchase additional shares of that Fund.
Q: Who manages the Funds' assets?
A: Munder Capital Management is the Funds' investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Funds
other than the Framlington Funds. The Advisor provides overall investment
management of the Framlington Funds. Framlington Overseas Investment Management
Limited (the "Sub-Advisor") is responsible for all purchases and sales of
securities held by the Framlington Funds.
- -------------------------------------------------------------------------------
FINANCIAL INFORMATION
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES 1
- ----------------------------------------------------------------------------
The purpose of this table is to assist you in understanding the
expenses a shareholder in the Funds will bear directly.
Class A Class B Class C
Shares Shares Shares
Maximum Sales Charges 5.5% None None
on Purchase 2
(as a % of Offering Price)
Sales Charge Imposed None None None
on Reinvested Dividends
Maximum Deferred Sales Charge3 None 4 5% None5
Redemption Fees None6 None6 None6
Exchange Fees None None None
Notes:
1. Does not include fees which institutions may charge for services they
provide to you.
2. The sales charge declines as the amount invested increases.
3. The CDSC payable upon redemption of Class B Shares declines over time.
4. A 1% CDSC applies to redemptions of Class A Shares within one year
of investment that were purchased
with no initial sales charge as part of an investment of $1,000,000
or more.
5. A 1% CDSC applies to redemptions of Class C Shares within one year of
purchase.
6. The Transfer Agent may charge a fee of $7.50 for wire redemptions
under $5,000.
- ----------------------------------------------------------------------------
FUND OPERATING EXPENSES
- ---------------------------------------------------------------------------
The purpose of this table is to assist you in understanding the
expenses charged directly to each Fund, which investors in the Funds will bear
indirectly. Such expenses include payments to Trustees, Directors, auditors,
legal counsel and service providers (such as the Advisor), registration fees and
distribution fees. The fees shown are based on fees for the Funds' past fiscal
year, except for the Equity Selection Fund, Micro-Cap Equity Fund and Small-Cap
Value Fund and the Framlington Funds, in which expenses are estimated for the
current fiscal year. Because of the 12b-1 fee, you may over the long term pay
more than the amount of the maximum permitted front-end sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ANNUAL FUND Accelerating Balanced Equity Selection
OPERATING Growth Fund Fund Fund
----------------------------- ------------------------------ -----------------
EXPENSES Class Class Class Class Class Class Class Class Class
(as a % of A B C A B C A B C
average net assets) Shares Shares Shares Shares Shares Shares Shares Shares Shares
- ------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Advisory Fees .75% .75% .75% .65% .65% .65% .75% .75% .75%
12b-1 Fees .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses .20% .20% .20% .32% .32% .32% .25% .25% .25%
==== ==== ==== ==== ==== ==== ==== ==== ====
Total Fund 1.25%
Operating Expenses 1.20% 1.95% 1.95% 1.22% 1.97% 1.97% 2.00% 2.00%
Framlington Framlington Framlington
ANNUAL FUND Emerging Healthcare International
OPERATING Markets Fund Fund Growth Fund
------------ ---- -----------
EXPENSES Class Class Class Class Class Class Class Class Class
(as a % of A B C A B C A B C
average net assets) Shares Shares Shares Shares Shares Shares Shares Shares Shares
- ------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Advisory Fees 1.25% 1.25% 1.25% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
12b-1 Fees .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses (after
expense reimbursements) .29%+ .29%+ .29%+ .30%+ .30% .30% .30%+ .30%+ .30%+
==== ==== ==== ==== ==== ==== ==== ==== ====
Total Fund
Operating Expenses
(after expense
reimbursements) 1.79%+ 2.54%+ 2.54%+ 1.55%+ 2.30%+ 2.30%+ 1.55%+ 2.30%+ 2.30%+
ANNUAL FUND Growth & International Micro-Cap
OPERATING Income Fund Equity Fund Equity Fund
----------- ----------- -----------
EXPENSES Class Class Class Class Class Class Class Class Class
(as a % of A B C A B C A B C
average net assets) Shares Shares Shares Shares Shares Shares Shares Shares Shares
- ------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Advisory Fees .75% .75% .75% .75% .75% .75% 1.00% 1.00% 1.00%
12b-1 Fees .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses .20% .20% .20% .26% .26% .26% .25% .25% .25%
==== ==== ==== ==== ==== ==== ==== ==== ====
Total Fund
Operating Expenses 1.20% 1.95% 1.95% 1.26% 2.01% 2.01% 1.50% 2.25% 2.25%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL FUND Mid-Cap Multi-Season Real Estate Equity
OPERATING Growth Fund Growth Fund Investment Fund
----------- ----------- ---------------
EXPENSES Class Class Class Class Class Class Class Class Class
(as a % of A B C A B C A B C
average net assets) Shares Shares Shares Shares Shares Shares Shares Shares Shares
- ------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Advisory Fees .74% .74% .74% .75%* .75%* .75%* .74% .74% .74%
12b-1 Fees .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses (after expense
reimbursements) .25%+ .25%+ .25%+ .25% .25% .25% .36%+ .36%+ .36%+
==== ==== ==== ==== ==== ==== ==== ==== ====
Total Fund
Operating Expenses (after
expense reimbursements) 1.24%+ 1.99%+ 1.99%+ 1.25%* 2.00%* 2.00%* 1.35%+ 2.10%+ 2.10%+
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ANNUAL FUND Small-Cap Small Company OPERATING Value Fund Growth Fund Value
Fund ---------- ----------- ---------- EXPENSES Class Class Class Class Class
Class Class Class Class (as a % of A B C A B C A B C average net assets) Shares
Shares Shares Shares Shares Shares Shares Shares Shares -------------------
- ------ ------ ------ ------ ------ ------ ------ ------ ------ Advisory Fees
.75% .75% .75% .75% .75% .75% .74% .74% .74% 12b-1 Fees .25% 1.00% 1.00% .25%
1.00% 1.00% .25% 1.00% 1.00% Other Expenses (after expense reimbursements) .38%+
.38%+ .38%+ .22%+ .22%+ .22%+ .28%+ .28%+ .28%+ ==== ==== ==== ==== ==== ====
==== ==== ==== Total Fund Operating Expenses (after expense reimbursements)
1.38%+ 2.13%+ 2.13%+ 1.22%+ 1.97%+ 1.97%+ 1.27%+ 2.02%+ 2.02%+
- ------------------------ * Reflects advisory fee waiver. Without waivers, the
ratio of advisory fees to average net assets would be 1.00% and total fund
operating expenses would be 1.50%-Class A Shares; 2.25%-Class B Shares; and
2.25%-Class C Shares. + The Advisor voluntarily reimbursed the Funds for certain
operating expenses. In the absence of such expense reimbursements, total fund
operating expenses would have been: o Framlington Emerging Markets Fund:
5.43%-Class A, 6.18%-Class B and 6.18%-Class C o Framlington Healthcare Fund:
7.33%-Class A, 8.08%-Class B and 8.08%-Class C o Framlington International
Growth Fund: 2.56%-Class A, 3.31%-Class B and 3.31%-Class C o Micro-Cap Equity:
7.90%-Class A, 8.65%-Class B, and 8.65%-Class C o Mid-Cap Growth Fund:
1.46%-Class A, 2.21%-Class B and 2.21%-Class C o Real Estate Equity Investment
Fund: 1.38%-Class A, 2.13%-Class B and 2.13%-Class C o Small-Cap Value Fund:
1.51%-Class A, 2.26%-Class B and 2.26%-Class C o Small Company Growth Fund:
1.22%-Class A, 1.97%-Class B and 1.97%-Class C o Value Fund: 1.31%-Class A,
2.06%-Class B and 2.06%-Class C
</TABLE>
<PAGE>
- -----------------------------------------------------------------------------
EXAMPLE
- -----------------------------------------------------------------------------
This example shows the amount of expenses you would pay (directly or
indirectly) on a $1,000 investment in the Fund assuming (1) a 5% annual return,
(2) redemption at the end of the time period (including the deduction of the
deferred sales charge, if any) and (3) no redemption at the end of the time
period. This example is not a representation of past or future performance or
operating expenses; actual performance or operating expenses may be larger or
smaller than those shown.
<TABLE>
<CAPTION>
Accelerating Balanced Equity Selection
Growth Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class Class Class Class Class Class Class Class Class
A B C A B C A B C
Shares Shares Shares Shares Shares Shares Shares Shares Shares
1 Year
o Redemption $ 67 $ 70 $ 30 $ 67 $ 70 $ 30 $ 67 $ 70 $ 30
o No Redemption $ 67 $ 20 $ 20 $ 67 $ 20 $ 20 $ 67 $ 20 $ 20
3 Years
o Redemption $ 91 $ 91 $ 61 $ 92 $ 92 $ 62 $ 93 $ 93 $ 63
o No Redemption $ 91 $ 61 $ 61 $ 92 $ 62 $ 62 $ 93 $ 63 $ 63
5 Years
o Redemption $117 $125 $105 $118 $126 $106 $120 $128 $108
o No Redemption $117 $105 $105 $118 $106 $106 $120 $108 $108
10 Years
o Redemption $193 $237 $227 $195 $240 $230 $198 $243 $233
o No Redemption $193 $227 $227 $195 $230 $230 $198 $233 $233
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Framlington Framlington Framlington
Emerging Healthcare International
Markets Fund Fund Growth Fund
Class Class Class Class Class Class Class Class Class
A B C A B C A B C
Shares Shares Shares Shares Shares Shares Shares Shares Shares
1 Year
o Redemption $ 72 $ 76 $ 36 $ 70 $ 73 $ 33 $ 70 $ 73 $ 33
o No Redemption $ 72 $ 26 $ 26 $ 70 $ 23 $ 23 $ 70 $ 23 $ 23
3 Years
o Redemption $108 $109 $ 79 $101 $102 $ 72 $101 $102 $ 72
o No Redemption $108 $ 79 $ 79 $101 $ 72 $ 72 $101 $ 72 $ 72
5 Years
o Redemption $147 $155 $135 $135 $143 $123 $135 $143 $123
o No Redemption $147 $135 $135 $135 $123 $123 $135 $123 $123
10 Years
o Redemption $254 $298 $288 $230 $274 $264 $230 $274 $264
o No Redemption $254 $288 $288 $230 $264 $264 $230 $264 $264
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth & International Micro-Cap
Income Fund Equity Fund Equity Fund
Class Class Class Class Class Class Class Class Class
A B C A B C A B C
Shares Shares Shares Shares Shares Shares Shares Shares Shares
1 Year
o Redemption $ 67 $ 70 $ 30 $ 67 $ 70 $ 30 $ 69 $ 73 $ 33
o No Redemption $ 67 $ 20 $ 20 $ 67 $ 20 $ 20 $ 69 $ 23 $ 23
3 Years
o Redemption $ 91 $ 91 $ 61 $ 93 $ 93 $ 63 $100 $100 $ 70
o No Redemption $ 91 $ 61 $ 61 $ 93 $ 63 $ 63 $100 $ 70 $ 70
5 Years
o Redemption $117 $125 $105 $120 $128 $108 $132 $140 $120
o No Redemption $117 $105 $105 $120 $108 $108 $132 $120 $120
10 Years
o Redemption $193 $237 $227 $199 $244 $234 $225 $268 $258
o No Redemption $193 $227 $227 $199 $234 $234 $225 $258 $258
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Cap Multi-Season Real Estate Equity
Growth Fund Growth Fund Investment Fund
Class Class Class Class Class Class Class Class Class
A B C A B C A B C
Shares Shares Shares Shares Shares Shares Shares Shares Shares
1 Year
o Redemption $ 67 $ 70 $ 30 $ 67 $ 70 $ 30 $ 68 $ 71 $ 31
o No Redemption $ 67 $ 20 $ 20 $ 67 $ 20 $ 20 $ 68 $ 21 $ 21
3 Years
o Redemption $ 92 $ 92 $ 62 $ 93 $ 93 $ 63 $ 95 $ 96 $ 66
o No Redemption $ 92 $ 62 $ 62 $ 93 $ 63 $ 63 $ 95 $ 66 $ 66
5 Years
o Redemption $119 $127 $107 $120 $128 $108 $125 $133 $113
o No Redemption $119 $107 $107 $120 $108 $108 $125 $113 $113
10 Years
o Redemption $197 $242 $232 $198 $243 $233 $209 $253 $243
o No Redemption $197 $232 $232 $198 $233 $233 $209 $243 $243
</TABLE>
<PAGE>
- ----------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Small-Cap Small Company
Value Fund Growth Fund Value Fund
Class Class Class Class Class Class Class Class Class
A B C A B C A B C
Shares Shares Shares Shares Shares Shares Shares Shares Shares
1 Year
o Redemption $ 68 $ 72 $ 32 $ 67 $ 70 $ 30 $ 67 $ 71 $ 31
o No Redemption $ 68 $ 22 $ 22 $ 67 $ 20 $ 20 $ 67 $ 21 $ 21
3 Years
o Redemption $ 96 $ 97 $ 67 $ 92 $ 92 $ 62 $ 93 $ 93 $ 63
o No Redemption $ 96 $ 67 $ 67 $ 92 $ 62 $ 62 $ 93 $ 63 $ 63
5 Years
o Redemption $127 $134 $114 $118 $126 $106 $121 $129 $109
o No Redemption $127 $114 $114 $118 $106 $106 $121 $109 $109
10 Years
o Redemption $212 $256 $246 $195 $240 $230 $200 $245 $235
o No Redemption $212 $246 $246 $195 $230 $230 $200 $235 $235
</TABLE>
The Advisor expects to waive a portion of its fees with respect to the
Multi-Season Growth Fund and reimburse expenses with respect to the Framlington
Emerging Markets Fund, Framlington Healthcare Fund, Framlington International
Growth Fund, Micro-Cap Equity Fund, Mid-Cap Growth Fund, Real Estate Equity
Investment Fund, Small-Cap Value Fund and Value Fund during the current fiscal
year. The Advisor may discontinue such waivers and/or expense reimbursements at
any time in its sole discretion. Without waivers and/or expense reimbursements,
an investor of the Funds would pay the following expenses on a $1,000
investment, assuming redemption after one, three, five and ten years,
respectively, and assuming a hypothetical 5% annual return:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund
Class A Shares Class B Shares Class C Shares
Framlington Emerging Markets Fund
Framlington Healthcare Fund
Framlington International Growth Fund
Micro-Cap Equity Fund
Mid-Cap Growth Fund
Multi-Season Growth Fund
Real Estate Equity Investment Fund
Small-Cap Value Fund
Value Fund
</TABLE>
Without waivers and/or expense reimbursements, the total fund operating expenses
would be as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund
Class A Shares Class B Shares Class C Shares
Framlington Emerging Markets Fund
Framlington Healthcare Fund
Framlington International Growth Fund
Micro-Cap Equity Fund
Mid-Cap Growth Fund
Multi-Season Growth Fund
Real Estate Equity Investment Fund
Small-Cap Value Fund
Value Fund
</TABLE>
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------
The following financial highlights were audited by Ernst & Young LLP
except that Multi-Season Growth Fund's financial statements for periods ended
prior to June 30, 1995 were audited by another auditor. Class B Shares of the
Company's Funds were not offered prior to March 1, 1994 and Shares of Equity
Selection Fund were not offered during the periods shown. This information
should be read in conjunction with the Funds' most recent Annual Reports, which
are incorporated by reference into the SAI. You may obtain the Annual Reports
without charge by calling (800) 438-5789.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Accelerating Growth Fund (a)
--------------------------------------------------------------
Year Year Period
Ended Ended Ended
6/30/97(i) 6/30/96 6/30/95(d)
Class A Class A Class A
Net Asset Value, Beginning of Period..........................
Income from Investment Operations:
Net investment income/(loss).............................
Net realized and unrealized gain/(loss) on investments...
Total from investment operations.........................
Less Distributions:
Dividends from net investment income.....................
Distributions from net realized gains....................
Total distributions......................................
Net Asset Value, End of Period................................
Total Return (b).........................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands).................
Ratio of operating expenses to average net assets........
Ratio of net investment income/(loss) to average net
assets.................................................
Portfolio turnover rate..................................
Ratio of operating expenses to
average net assets without waivers...................
Average commission rate (g)..............................
(a) The Accelerating Growth Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on November 23, 1992, April 25, 1994 and
September 26, 1995, respectively.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by the Fund.
(h) Amount rounds to less than 0.01%.
(i) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
</TABLE>
<PAGE>
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Accelerating Growth Fund
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Period
Year Year Ended Year Year Period Period Year Period
Ended Ended 2/28/93 Ended Ended Ended Ended Ended Ended
2/28/95 (e) 2/28/94 (a,e) 6/30/97 (i) 6/30/96 6/30/95 (d) 2/28/95 (e) 6/30/97 (i) 6/30/96
Class A Class A Class A Class B Class B Class B Class B Class C Class C
------- ------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Balanced Fund
--------------------- --------------------- ---------------------
Year Year Period
Ended Ended Ended
6/30/97 (g) 6/30/96 (g) 6/30/95 (d)
Class A Class A Class A
Net Asset Value, Beginning of Period...................
Income from Investment Operations:
Net investment loss...............................
Net realized and unrealized gain on investments...
Total from investment operations..................
Less Distributions:
Dividends from net investment income..............
Distributions from net realized gains.............
Total distributions...............................
Net Asset Value, End of Period.........................
Total Return (b)..................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands)..........
Ratio of operating expenses to average net assets.
Ratio of net investment loss to average net assets
Portfolio turnover rate...........................
Ratio of operating expenses to
average net assets without waivers............
Net investment loss per share without waivers.....
Average commission rate (f).......................
(a) The Balanced Fund Class A Shares, Class B Shares and Class C Shares
commenced operations on April 30, 1993, June 21, 1994 and January 24,
1996, respectively.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(f) Average commission rate paid per share of securities purchased and sold by the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balanced Fund
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Period Period
Period Ended Year Year Period Ended Year Ended
Year Ended 2/28/94 (a) Ended Ended Ended 2/28/95 Ended 6/30/96
2/28/95 (e) Class A 6/30/97 (g) 6/30/96 (g) 6/30/95 (d) (a, e) 6/30/97(g) (a, g)
Class A Class B Class B Class B Class B Class C Class C
------- ------- ------- ------- ------- ------- -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Framlington Emerging Framlington Framlington International
Markets Fund Healthcare Fund Growth Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Period Ended Period Ended Period Ended Period Ended Period Ended Period
6/30/97 6/30/97 6/30/97 Period Period Ended Period Ended 6/30/97 6/30/97 Ended
(a, e) (a, e) (a, e) Ended 6/30/97 (a) 6/30/97(a) (a, e) (a, e) 6/30/97
Class A Class B Class C 6/30/97 (a) Class B Class C Class A Class B (a, e)
Class A Class C
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Growth & Income Fund
-------------------- -------------------- -------------------
Year Year Period
Ended Ended Ended
6/30/97 (h) 6/30/96 (h) 6/30/95 (d)
Class A Class A Class A
Net Asset Value, Beginning of Period........................
Income from Investment Operations:
Net investment income..................................
Net realized and unrealized gain on investments........
Total from investment operations.......................
Less Distributions:
Dividends from net investment income...................
Distributions from net realized gains..................
Total distributions....................................
Net Asset Value, End of Period..............................
Total Return (b).......................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands)...............
Ratio of operating expenses to average net assets......
Ratio of net investment income to average net assets...
Portfolio turnover rate................................
Ratio of operating expenses to
average net assets without waivers.................
Average commission rate (g)............................
(a) The Growth & Income Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on August 8, 1994, August 9, 1994 and
December 5, 1995, respectively.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Growth & Income Fund
- -------------------------------------------------------------------------------------------------------------------------------
Period Year Year Period Period Year Period
Ended Ended Ended Ended Ended Ended Ended
2/28/95 (a, e) 6/30/97 (h) 6/30/96 (h) 6/30/95 (d) 2/28/95 (a, e) 6/30/97 (h) 6/30/96 (a, h)
Class A Class B Class B Class B Class B Class C Class C
------- ------- ------- ------- ------- ------- -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Micro-Cap Equity Fund
-------------------- --------------------- --------------------
Period Period Period
Ended Ended Ended
6/30/97 (a, e) 6/30/97 (a, e) 6/30/97 (a, e)
Class A Class B Class C
Net Asset Value, Beginning of Period......................
Income from Investment Operations:
Net investment loss..................................
Net realized and unrealized gain on investments......
Total from investment operations.....................
Less Distributions:
Dividends from net investment income.................
Total distributions..................................
Net Asset Value, End of Period............................
Total Return (b).....................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands).............
Ratio of operating expenses to average net assets....
Ratio of net investment loss to average net assets...
Portfolio turnover rate..............................
Ratio of operating expenses to
average net assets without waivers...............
Average commission rate (d)..........................
(a) The Micro-Cap Equity Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on December 26, 1996, February 24, 1997 and
March 31, 1997, respectively. The Mid-Cap Growth Fund Class A Shares,
Class B Shares and Class C Shares commenced operations on December 22,
1995, January 26, 1996 and November 9, 1995 respectively.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Mid-Cap Growth Fund
- -------------------------------------------------------------------------------------------------------------------------------
Year Period Year Period Year Period
Ended Ended Ended Ended Ended Ended
6/30/97 (e) 6/30/96 (a, e) 6/30/97 (e) 6/30/96 (a, e) 6/30/97 (e) 6/30/96 (a, e)
Class A Class A Class B Class B Class C Class C
------- ------- ------- ------- ------- -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
International Equity Fund
------------------- ------------------- -------------------
Year Year Period
Ended Ended Ended
6/30/97 (f) 6/30/96 (f) 6/30/95 (d)
Class A Class A Class A
Net Asset Value, Beginning of Period..........................
Income from Investment Operations:
Net investment income....................................
Net realized and unrealized gain/(loss) on investments...
Total from investment operations.........................
Less Distributions:
Dividends from net investment income....................
Distributions from net realized gains....................
Distributions from capital...............................
Total distributions......................................
Net Asset Value, End of Period................................
Total Return (b).........................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands).................
Ratio of operating expenses to average net assets........
Ratio of net investment income to average net assets.....
Portfolio turnover rate..................................
Ratio of operating expenses to
average net assets without waivers...................
Average commission rate (h)..............................
(a) The International Equity Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on November 30, 1992, March 9, 1994 and
September 29, 1995, respectively.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) Amount represents less than $0.01 per share.
(h) Average commission rate paid per share of securities purchased and sold by the Fund.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
International Equity Fund
- -------------- ------------- -------------- ------------- ------------- ------------- ------------- -------------- -------------
Year Period Period Period
Ended Year Ended Year Year Period Ended Year Ended
2/28/95 Ended 2/28/93 Ended Ended Ended 2/28/95 Ended 6/30/96
(e, f) 2/28/94 (a, f) 6/30/97 (f) 6/30/96 (f) 6/30/95 (d) (a, e, f) 6/30/97 (f) (a, f)
Class A Class A Class A Class B Class B Class B Class B Class C Class C
------- ------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Multi-Season Growth Fund
----------- ----------- ------------ -------------- ------------- --------------
Year Year Period Period Year
Ended Ended Ended Year Ended Ended
6/30/97 6/30/96 6/30/95 Ended 12/31/93 6/30/97
(h) (h) (d, e, f) 12/31/94 (a) (h)
Class A Class A Class A Class A Class A Class B
Net Asset Value, Beginning of Period.............
Income from Investment Operations:
Net investment income/(loss)................
Net realized and unrealized gain/(loss)
on investments..........................
Total from investment operations............
Less Distributions:
Dividends from net investment income........ Distributions from net
realized gains.......
Total distributions.........................
Net Asset Value, End of Period...................
Total Return (b)............................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands)....
Ratio of operating expenses to
average net assets......................
Ratio of net investment income/(loss) to
average net assets......................
Portfolio turnover rate.....................
Ratio of operating expenses to
average net assets without waivers......
Average commission rate (g).................
(a) The Multi-Season Growth Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on August 4, 1993, April 29, 1993 and
September 20, 1993.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On June 23, 1995, the Multi-Season Growth Fund acquired the assets and certain liabilities of the
Ambassador Established Company Growth Fund.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(g) Average commission rate paid per share of securities purchased and sold by the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Multi-Season Growth Fund
- --------------- -------------- --------------- ------------ ------------- ------------- ------------- ------------ --------------
Period Year Period Year Year Period Period
Year Ended Ended Ended Ended Ended Ended Year Ended
Ended 6/30/95 12/31/94 12/31/93 6/30/97 6/30/96 6/30/95 Ended 12/31/93
6/30/96(h) (d, e, f) (a) (a) (h) (h) (d, e, f) 12/31/94 (a)
Class B Class B Class C Class A Class C Class C Class C Class C Class C
------- ------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Real Estate Investment Equity Fund
-------------------- -------------------- --------------------
Year Year Period
Ended Ended Ended
6/30/97 6/30/96 (f) 6/30/95 (a, d)
Class A Class A Class A
Net Asset Value, Beginning of Period......................
Income from Investment Operations:
Net investment income................................
Net realized and unrealized gain on investments......
Total from investment operations.....................
Less Distributions:
Dividends from net investment income.................
Distributions in excess of net investment income.....
Distributions from paid-in-capital...................
Total distributions..................................
Net Asset Value, End of Period............................
Total Return (b).....................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands).............
Ratio of operating expenses to average net assets....
Ratio of net investment income to average net assets.
Portfolio turnover rate..............................
Ratio of operating expenses to
average net assets without waivers...............
Net investment loss per share without waivers and/or
expenses reimbursed..............................
Average commission rate (e)..........................
(a) The Real Estate Equity Investment Fund Class A Shares, Class B Shares and
Class C Shares commenced operations on September 30, 1994, October 3,
1994 and January 5, 1996, respectively. The Small Cap Value Fund Class A
Shares, Class B Shares and Class C Shares commenced operations on January
6, 1997, February 11, 1997 and January 13, 1997, respectively.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(e) Average commission rate paid per share of securities purchased and sold by the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Real Estate Equity Investment Fund Small-Cap Value Fund
- -------------- ------------ ------------ -------------- --------------- ------------- ------------- --------------
Year Period Period Period Period Period
Year Ended Ended Year Ended Ended Ended Ended
Ended 6/30/96 6/30/95 Ended 6/30/96 6/30/97 6/30/97 6/30/97
6/30/97 (f) (a, d) 6/30/97 (a, f) (a, f) (a, f) (a, f)
Class B Class B Class B Class C Class C Class A Class B Class C
------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Small Company Growth Fund
-------------------- -------------------- --------------------
Year Year Period
Ended Ended Ended
6/30/97 6/30/96 (f) 6/30/95 (e)
Class A Class A Class A
Net Asset Value, Beginning of Period......................
Income from Investment Operations:
Net investment loss..................................
Net realized and unrealized gain/(loss) on
investments......................................
Total from investment operations.....................
Less Distributions:
Dividends from net investment income.................
Distributions from net realized gains................
Total distributions..................................
Net Asset Value, End of Period............................
Total Return (b).....................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands).............
Ratio of operating expenses to average net assets....
Ratio of net investment loss to average net assets...
Portfolio turnover rate..............................
Ratio of operating expenses to
average net assets without waivers...............
Average commission rate (g)..........................
(a) The Small Company Growth Fund Class A Shares, Class B Shares and Class C
Shares commenced operations on November 23, 1992, April 28, 1994 and
September 26, 1995, respectively.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(e) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) Average commission rate paid per share of securities purchased and sold by the Fund.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Small Company Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Period Period Period
Year Year Ended Year Year Period Ended Year Ended
Ended Ended 2/28/93 Ended Ended Ended 2/28/95 Ended 6/30/96
2/28/95 (d) 2/28/94 (a, e) 6/30/97 6/30/96(f) 6/30/95 (e) (a, d) 6/30/97 (a, f)
Class A Class A Class A Class B Class B Class B Class B Class C Class C
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Value Fund
-----------------------------------------------------------------------------
----------- ----------- ----------- ---------------- ------------- ----------
Year Period Year Year Period
Ended Ended Ended Period Ended Ended
6/30/97 6/30/96 6/30/97 Ended 6/30/97 6/30/96
(e) (a, e) (e) 6/30/96 (a, e) (e) (a, e)
Class A Class A Class B Class B Class C Class C
Net Asset Value, Beginning of Period ............
Income from Investment Operations:
Net investment income/(loss)
Net realized and unrealized gain on
investments..............................
Total from investment operations ...........
Less Distributions:
Dividends from net investment income ...... Distributions from net
realized gains.......
Total distributions.........................
Net Asset Value, End of Period
Total Return (b)............................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands)...
Ratio of operating expenses to average
net assets...............................
Ratio of net investment income/(loss) to
average net assets.......................
Portfolio turnover rate.................
Ratio of operating expenses to average net
assets without waivers and expenses
reimbursed...............................
Average commission rate (d).................
(a) The Value Fund Class A Shares, Class B Shares and Class C Shares
commenced operations on September 14, 1995, September 19, 1995 and
February 9, 1996, respectively.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
</TABLE>
<PAGE>
- ---------------------------------------------------------------------------
FUND CHOICES
- ---------------------------------------------------------------------------
What Funds are Offered?
This Prospectus offers Class A, Class B and Class C Shares of the funds
described below. This section summarizes each Fund's goal and investments. The
sections entitled "What are the Funds' Investments and Investment Practices?"
and "What are the Risks of Investing in the Funds?" and the SAI give more
information about the Funds' investment techniques and risks. Capitalized terms
not yet defined are explained in the section entitled "What are the Fund's
Investments and Investment Practices."
- ----------------------------------------------------------------------------
ACCELERATING GROWTH FUND
- ---------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide long-term
capital appreciation; its secondary goal is to provide income. Under normal
conditions, the Fund will invest at least 65% of its assets in Equity
Securities.
In choosing Equity Securities the Advisor considers, among other
factors:
the potential for accelerated earnings growth the maintenance of a
substantial competitive advantage a focused management team a stable
balance sheet
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment
decisions for the Fund.
- -----------------------------------------------------------------------------
BALANCED FUND
- -----------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide an attractive
investment return through a combination of growth of capital and current income.
The Fund will allocate its assets among three asset groups: Equity Securities,
Fixed Income Securities and Cash Equivalents.
The Fund normally will invest at least 25% of its assets in Fixed-Income
Securities and no more than 75% of its assets in Equity Securities. The
Fund will notify shareholders at least 30 days before changing this policy.
The Advisor will allocate the Fund's assets to the three
asset groups based on its view of the following factors, among others:
general market and economic conditions and trends interest rates and
inflation rates fiscal and monetary developments long-term corporate
earnings growth
The Advisor will try to take advantage of changing economic conditions
by adjusting the ratio of Equity Securities to Fixed Income Securities or Cash
Equivalents. For example, if the Advisor believes that rapid economic growth
will lead to better corporate earnings in the future, then it might increase the
Fund's Equity Securities holdings and reduce its Fixed Income Securities and
Cash Equivalents holdings.
PORTFOLIO MANAGEMENT. Leonard J. Barr II, James Robinson and Ann J. Conrad
jointly manage the Fund's assets. Mr. Barr, Mr. Robinson and Ms. Conrad have
managed the Fund since February 1995, June 1995 and its inception in March 1993,
respectively. Mr. Barr is a Senior Vice President and Director of Research of
the Advisor. From April 1988 to February 1995, he was Vice President and
Director of Research for Old MCM, Inc. ("MCM"), the predecessor to the Advisor.
Mr. Robinson is, and has been, a Vice President and Chief Investment
Officer-Fixed Income of the Advisor or MCM since 1987. Ms. Conrad is a Vice
President and Director of Specialty Products of the Advisor, and held similar
titles with Woodbridge Capital Management, Inc. ("Woodbridge"), the Fund's
previous investment advisor, since June 1992.
- ----------------------------------------------------------------------------
EQUITY SELECTION FUND
- ----------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide shareholders
with long-term capital appreciation.
Under normal market conditions, the Fund will invest at least 65% of its
assets in Equity Securities.
The Advisor's dedicated research team invests the Fund's assets in Equity
Securities which it believes are of high quality and undervalued compared
to stocks of other companies in the same industry.
The Fund generally invests in issuers with market capitalizations of at
least $3 billion.
The Fund diversifies its assets by industry in approximately the same
weightings as those of the Standard & Poor's 500 Composite Stock Price
Index ("S&P 500").
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment
decisions for the Fund.
- ------------------------------------------------------------------------------
FRAMLINGTON EMERGING MARKETS FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation. The Fund invests at least 65% of its assets in companies in
emerging market countries, as defined by the World Bank, the International
Finance Corporation, the United Nations or the European Bank for Reconstruction
and Development.
A company will be considered to be in an emerging market country if:
the company is organized under the laws of, or has a principal office in,
an emerging market country the company's stock is traded primarily in an
emerging market country, most of the company's assets are in an emerging
market country, or most of the company's revenues or profits come from
goods produced or sold, investments made or services
performed in an emerging market country.
PORTFOLIO MANAGEMENT. William Calvert is the Fund's primary portfolio
manager. Prior to joining the Sub-Advisor, Mr. Calvert was an Economic
Strategist for LCF Edmond de Rothschild Securities (1993-1997), Vice President
Emerging Markets for Citibank Global Asset Management (1993) and Far East Fund
Manager for Municipal Mutual Insurance (1989-1992).
- ------------------------------------------------------------------------------
<PAGE>
FRAMLINGTON HEALTHCARE FUND
- -----------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation by investing in companies providing healthcare and medical services
and products worldwide. Currently, most of such companies are located in the
United States.
The Fund will invest in:
pharmaceutical producers
biotechnology firms
medical device and instrument manufacturers distributors of healthcare
products healthcare providers and managers other healthcare service
companies
Under normal conditions, the Fund will invest at least 65% of its
assets in healthcare companies, which are companies for which at least 50% of
sales, earnings or assets arise from or are dedicated to health services or
medical technology activities.
PORTFOLIO MANAGEMENT. Antony Milford is the Head of the Specialist Desk for
the Sub-Advisor. He is the Fund's primary portfolio manager, a position he has
held since the Fund's inception. Mr. Milford has managed funds for the
Sub-Advisor since 1971.
- ------------------------------------------------------------------------------
FRAMLINGTON INTERNATIONAL GROWTH FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation. Under normal market conditions, at least 65% of the Fund's assets
will be invested in Equity Securities in at least three foreign countries.
The Sub-Advisor will choose companies that demonstrate:
above-average profitability
high quality management
the ability to grow significantly in their countries
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Sub-Advisor makes investment decisions for the Fund. Simon Key,
Chief Investment Officer of the Sub-Advisor, heads the committee.
- ------------------------------------------------------------------------------
GROWTH & INCOME FUND
- -----------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide capital
appreciation and current income. It primarily invests in a broadly diversified
portfolio of dividend-paying Equity Securities and is designed for investors
seeking current income and capital appreciation from the equity markets.
Under normal circumstances, the Fund will invest at least 65% of its
assets in income-producing common stocks and convertible preferred stocks.
The Fund may also purchase Fixed Income Securities which are convertible
into or exchangeable for common stock.
The Fund may invest up to 35% of its assets in Fixed Income Securities,
including 20% of its assets in Fixed Income Securities that are rated below
investment grade.
The Advisor generally selects large, well-known companies that it
believes have favorable prospects for dividend growth and capital appreciation.
The Fund will seek to produce a current yield greater than the S&P 500.
The Fund focuses on dividend-paying Equity Securities because, over
time, dividend income has accounted for a significant portion of the total
return of the S&P 500. In addition, dividends are usually a more stable and
predictable source of return than capital appreciation. The Advisor believes
that stocks which distribute a high level of current income generally have more
stable prices than those which pay below average dividends.
PORTFOLIO MANAGEMENT. Otto Hinzmann, Jr. is the Fund's portfolio manager, a
position he has held since February 1995. Mr. Hinzmann has been a Vice President
and Director of Equity Management of the Advisor or MCM since January 1987.
- -------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation. The Fund invests primarily in Foreign Securities and ADRs and
EDRs. At least once a quarter, the Advisor creates a list of Foreign Securities
and ADRs and EDRs (the "Securities List") which the Fund may purchase based on
the country where the company is located, its competitive advantages, its past
financial record, its future prospects for growth and the market for its
securities. The Advisor updates the Securities List frequently (but at least
quarterly), adds new securities to the Securities List if they are eligible and
sells securities not on the updated Securities List as soon as practicable.
After the Advisor creates the Securities List, it divides the list into
two sections. The first section is designed to provide broad coverage of
international markets. The second section increases exposure to securities that
the Advisor expects will perform better than other stocks in their industry
sectors and their markets as a whole. When the Advisor believes broader market
exposure will benefit the Fund, it will allocate up to 80% of the Fund's assets
in first section securities. When the Advisor identifies strong potential for
specific securities to perform well, the Fund may invest up to 50% of its assets
in second section securities.
Under normal market conditions, at least 65% of the Fund's assets are
invested in Equity Securities in at least three foreign countries.
The Fund emphasizes companies with a market capitalization of at least
$100 million.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Theodore Miller jointly manage
the Fund. Mr. Johnson, a Chief Investment Officer of the Advisor, and Mr.
Miller, senior portfolio manager of the Fund, have managed the Fund since July
1992 and October 1996, respectively. Mr. Miller previously worked as the primary
analyst for the Fund (1996) and for Interacciones Global Inc. (1993-1995) and
McDonald & Co. Securities Inc. (1991-1993).
- ------------------------------------------------------------------------------
MICRO-CAP EQUITY FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation. It invests primarily in Equity Securities of smaller
capitalization companies. The Fund attempts to provide investors with
potentially higher returns than a fund that invests primarily in larger more
established companies. Since smaller capitalization companies are generally not
as well known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
Under normal market conditions, the Fund will invest at least 65% of its
assets in Equity Securities of companies having a market capitalization of
$200 million or less, which is considerably less than the market
capitalization of S&P 500 companies.
The Advisor will choose companies that:
present the ability to grow significantly over the next several years may
benefit from changes in technology, regulations and industry sector trends
are still in the developmental stage and may have limited product lines
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment
decisions for the Fund.
- ------------------------------------------------------------------------------
MID-CAP GROWTH FUND
- ------------------------------------------------------------------------------
GOAL AND OBJECTIVES. The Fund's goal is to provide long-term capital
appreciation. The Fund invests at least 65% of its assets in the Equity
Securities of companies with market capitalizations between $100 million and $5
billion. Its style, which focuses on both growth prospects and valuation, is
known as GARP (Growth at a Reasonable Price) and seeks to produce attractive
returns during various market environments.
The Advisor chooses the Fund's investments as follows: The Advisor
reviews the earnings growth of approximately 10,000 companies over the past
three years. It invests in approximately 50 to 100 companies based on:
superior earnings growth
financial stability
relative market value
price changes compared to the Standard & Poor's Mid-Cap 400 Index
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment
decisions for the Fund.
- -------------------------------------------------------------------------------
MULTI-SEASON GROWTH FUND
- ----------------------------------------------------------------------------
GOAL AND OBJECTIVES. The Fund's goal is to provide long-term capital
appreciation. This goal is "fundamental" and cannot be changed without
shareholder approval. Its style, which focuses on both growth prospects and
valuation, is known as GARP (Growth at a Reasonable Price) and seeks to produce
attractive returns during various market environments. The Fund invests at least
65% of its assets in Equity Securities. The Fund generally invests in Equity
Securities with market capitalizations over $1 billion.
The Advisor chooses the Fund's investments as follows: The Advisor
reviews the earnings growth of approximately 5,500 companies over the past five
years. It invests in approximately 50 to 100 companies based on:
superior earnings growth
financial stability
relative market value
price changes compared to the S&P 500
PORTFOLIO MANAGEMENT. The portfolio managers of the Fund, Leonard J. Barr
II and Lee P. Munder, have managed the Fund since its inception in February
1995. Mr. Barr is the Senior Vice President and Director of Research of the
Advisor. From April 1988 to February 1995 he held similar positions with MCM.
Mr. Munder is the President and Chief Executive Officer of the Advisor,
positions he has held with the Advisor or MCM since 1985.
- -------------------------------------------------------------------------------
REAL ESTATE EQUITY INVESTMENT FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide both capital
appreciation and current income. This goal is "fundamental" and cannot be
changed without shareholder approval. The Fund invests primarily in U.S.
companies which are principally engaged in the real estate industry or which own
significant real estate. A company is "principally engaged" in the real estate
industry if at least 50% of its assets, gross income or net profits are
attributable to ownership, construction, management or sale of residential,
commercial or industrial real estate. The Fund will not own real estate
directly.
Under normal conditions, the Fund invests at least 65% of its total
assets in Equity Securities of U.S. companies in the real estate industry
including:
equity real estate investment trusts ("REITS")
brokers, home builders and real estate developers
companies with substantial real estate holdings (for example, paper and
lumber producers, hotels and entertainment companies)
manufacturers and distributors of building supplies
mortgage REITS
financial institutions which issue or service mortgages
In addition, the Fund may invest:
up to 35% of its assets in companies other than real estate industry
companies in Fixed Income Securities including up to 5% of its assets in debt
securities rated below investment grade or unrated if secured by real estate
assets if the Advisor believes that the underlying collateral is sufficient in
REITS only if they are traded on a securities exchange or NASDAQ
PORTFOLIO MANAGEMENT. Peter K. Hoglund is the portfolio manager of the
Fund, a position he has held since October 1996. Mr. Hoglund formerly was the
primary analyst of the Fund (October 1994 to October 1996).
- -------------------------------------------------------------------------------
SMALL-CAP VALUE FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation, with income as a secondary objective. It invests primarily in
Equity Securities of smaller capitalization companies. The Fund attempts to
provide investors with potentially higher returns than a fund that invests
primarily in larger more established companies. Since small companies are
generally not as well known to investors and have less of an investor following
than larger companies, they may provide higher returns due to inefficiencies in
the marketplace.
Under normal market conditions, the Fund will invest at least 65% of its
assets in Equity Securities of companies with market capitalizations below
$750 million, which is less than the market capitalization of S&P 500
companies.
The Advisor will concentrate on companies that it believes
are undervalued. A company's Equity Securities may be undervalued because it is
temporarily overlooked or out of favor due to general economic conditions, a
market decline, industry conditions or developments affecting the particular
company. The Fund will usually invest in Equity Securities of companies with low
price/earnings ratios, low price/cash flow ratios and low price/book values
compared to the general market.
In addition to valuation, the Advisor considers these factors, among
others, in choosing companies:
a stable or improving earnings record sound finances above-average growth
prospects participation in a fast growing industry strategic niche
position in a specialized market adequate capitalization
PORTFOLIO MANAGEMENT. Gerald Seizert and Edward Eberle jointly manage the
Fund. Mr. Seizert has managed the Fund since it commenced operations. Prior to
joining the Advisor in 1995, Mr. Seizert was a Director and Managing Partner of
Loomis, Sayles & Company, L.P. Mr. Eberle, who has managed the Fund since March
1997, was formerly the primary analyst for the Fund. Prior to joining the
Advisor in 1995, he was an Executive Vice President and Portfolio Manager for
Westpointe Financial Corporation.
- -------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation. The Fund invests primarily in Equity Securities of smaller
capitalization companies. The Fund attempts to provide investors with
potentially higher returns than a fund that invests primarily in larger more
established companies. Since smaller capitalization companies are generally not
as well-known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
Under normal market conditions, the Fund will invest at least 65% of the
Fund's assets in Equity Securities of companies with market capitalizations
below $750 million, which is less than the market capitalization of S&P 500
companies.
The Advisor considers these factors, among others, in choosing companies:
above-average growth prospects
participation in a fast-growing industry
strategic niche position in a specialized market
adequate capitalization
PORTFOLIO MANAGEMENT. Carl Wilk and Michael P. Gura jointly manage the
Fund. Mr. Wilk, a Senior Portfolio Manager of the Advisor, has managed the Fund
since October 1996 and was the Fund's primary analyst (1995 to 1996). Prior to
joining the Advisor in 1995, Mr. Wilk was a Senior Equity Research Analyst at
Woodbridge. Mr. Gura has managed the Fund since March 1997. Prior to joining the
Advisor in 1995, Mr. Gura was a Vice President, Senior Equity Analyst for
Woodbridge (1994 - 1995) and an investment officer for Manufacturers National
Bank Trust (1989 - 1994).
<PAGE>
- ------------------------------------------------------------------------------
VALUE FUND
- ----------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation, with income as a secondary objective. The Fund invests primarily
in the Equity Securities of well-established companies with intermediate to
large capitalizations, which typically exceed $750 million.
The Fund will invest at least 65% of its assets in Equity Securities.
The Advisor will concentrate on companies that it believes are
undervalued. A company's Equity Securities may be undervalued because it is
temporarily overlooked or out of favor due to general economic conditions, a
market decline, industry conditions or developments affecting the particular
company. The Fund will usually invest in Equity Securities of companies with low
price/earnings ratios, low price/cash flow ratios and low price/book values
compared to the general market.
In addition to valuation, the Advisor considers these factors, among
others, in choosing companies:
a stable or improving earnings record sound finances above-average growth
prospects participation in a fast growing industry strategic niche
position in a specialized market adequate capitalization
PORTFOLIO MANAGEMENT. Gerald Seizert and Edward Eberle jointly manage the
Fund. Mr. Seizert, an Executive Vice President and Chief Investment Officer of
the Advisor, has managed the Fund since it commenced operations. Prior to
joining the Advisor in 1995, Mr. Seizert was a Director and Managing Partner of
Loomis, Sayles & Company, L.P. Mr. Eberle, who has managed the Fund since
October 1996, was formerly the primary analyst for the Fund. Prior to joining
the Advisor in 1995, he was an Executive Vice President and Portfolio Manager
for Westpointe Financial Corporation.
Who May Want To Invest in the Funds?
The Funds are designed for investors who desire potentially high
capital appreciation and who can accept short-term variations in return for
potentially greater returns over the long term. In general, the greater the
risk, the greater the potential reward. Investors who have a short time horizon,
who desire a high level of income or who are conservative in their investment
approach may wish to invest in other portfolios offered by the Trust and the
Company.
What are the Funds' Investments and Investment Practices?
Each Fund will invest in Equity Securities, which includes common
stocks, preferred stocks, warrants and other securities convertible into common
stocks. Many of the common stocks the Funds (other than Growth & Income Fund)
will buy will not pay dividends; instead, stocks will be bought for the
potential that their prices will increase, providing capital appreciation for
the Fund. The value of Equity Securities will fluctuate due to many factors,
including the past and predicted earnings of the issuer, the quality of the
issuer's management, general market conditions, the forecasts for the issuer's
industry and the value of the issuer's assets. Holders of Equity Securities only
have rights to value in the company after all debts have been paid, and they
could lose their entire investment in a company that encounters financial
difficulty. Warrants are rights to purchase securities at a specified time at a
specified price.
Each Fund may invest in Cash Equivalents, which are high-quality,
short-term money market instruments including, among other things, commercial
paper, bankers' acceptances and negotiable certificates of deposit of banks or
savings and loan associations, short-term corporate obligations and short-term
securities issued by, or guaranteed by, the U.S. Government and its agencies or
instrumentalities. These instruments will be used primarily pending investment,
to meet anticipated redemptions or as a temporary defensive measure.
The Funds may enter into Repurchase Agreements. Under a repurchase
agreement, a Fund agrees to purchase securities from a seller and the seller
agrees to repurchase the securities at a later time, typically within seven
days, at a set price. The seller agrees to set aside collateral at least equal
to the repurchase price. This ensures that the Fund will receive the purchase
price at the time it is due, unless the seller defaults or declares bankruptcy,
in which event the Fund will bear the risk of possible loss due to adverse
market action or delays in liquidating the underlying obligation.
The Funds may purchase American Depository Receipts ("ADRs"), European
Depository Receipts ("EDRs") and Global Depository Receipts ("GDRs"). ADRs are
issued by U.S. financial institutions and EDRs and GDRs are issued by European
financial institutions. They are receipts evidencing ownership of underlying
Foreign Securities.
The Funds may buy shares of registered Money Market Funds. The Funds
will bear a portion of the expenses of any investment company whose shares they
purchase, including operating costs and investment advisory, distribution and
administration fees. These expenses would be in addition to a Fund's own
expenses. Each Fund may invest up to 10% of its assets in other investment
companies and no more than 5% of its assets in any one investment company.
The Funds may purchase Fixed Income Securities. Fixed Income Securities
are securities which either pay interest at set times at either fixed or
variable rates, or which realize a discount upon maturity. Fixed Income
Securities include corporate bonds, debentures, notes and other similar
corporate debt instruments, zero coupon bonds (discount debt obligations that do
not make interest payments) and variable amount master demand notes that permit
the amount of indebtedness to vary in addition to providing for periodic
adjustments in the interest rate. Each Fund may purchase U.S. Government
Securities, which are securities issued by, or guaranteed by, the U.S.
Government or its agencies or instrumentalities. Such securities include U.S.
Treasury bills, which have initial maturities of less than one year, U.S.
Treasury notes, which have initial maturities of one to ten years, U.S. Treasury
bonds, which generally have initial maturities of greater than ten years, and
obligations of the Federal Home Loan Mortgage Corporation, Federal National
Mortgage Association and Government National Mortgage Association. The Funds
probably will not invest to a significant extent, or on a routine basis, in U.S.
Government Securities. Under normal market conditions, the Funds will not invest
to a significant extent, or on a routine basis, in U.S. Government Securities.
Each Fund may Borrow Money in an amount up to 5% of its assets for
temporary purposes and in an amount up to 33 1/3% of its assets to meet
redemptions. This is a "fundamental" policy which only can be changed by
shareholders.
<PAGE>
- -----------------------------------------------------------------------------
Investment Chart
- -----------------------------------------------------------------------------
This chart summarizes the Funds' investments and investment practices.
The SAI contains more details. All percentages are based on a Fund's total
assets except where otherwise noted. See "What are the Risks of Investing in the
Funds?" for a description of the risks involved with the Funds' investment
practices.
------------------------------------------ ------- ---------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Framling- Framlington
Acceler- ton Framling- Inter-national
Investments and ating Equity Emerging ton Growth
Investment Practices Growth Balanced Selection Markets Healthcare
------------------------------------------ ------------- -------------- -------------- ------------- -------------- --------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
Foreign Securities. Includes
securities issued by non-U.S. 25% 25% 25% Y Y Y
companies. Present more risks than
U.S. securities.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
Lower-Rated Debt Securities. Fixed
Income Securities which are rated
below investment grade by Standard & Y Y Y Y Y Y
Poor's Ratings Service, Moody's
Investors Service Inc. or other
nationally recognized rating
agency. Considered riskier than
investment grade securities.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
Investment-Grade Asset Backed
Securities. Includes debt N Y N N N N
securities backed by mortgages,
installment sales contracts and
credit card receivables.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
Stripped Securities. Includes
participations in trusts that hold
U.S. Treasury and agency securities N Y N N N N
which represent either the interest
payments or principal payments on
the securities or combinations of
both.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
Forward Foreign Currency Exchange
Contracts. Obligations of a Fund to
purchase or sell a specific currency
at a future date at a set price. Y Y Y Y Y Y
May decrease a Fund's loss due to a
change in currency value, but also
limits gains from currency changes.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
When-Issued and Delayed Delivery
Securities. Securities purchased at
a set price, with delivery and Y Y Y Y Y Y
payment in the future. The value of
securities may change between the
time the price is set and payment.
Not to be used for speculation.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
Futures and Options on Futures. 1
Contracts in which a Fund agrees, at
maturity, to make delivery of or Y Y Y Y Y Y
receive securities, the cash value
of an index or foreign currency.
Used for hedging purposes or to
maintain liquidity.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
Real Estate
Equity
Growth Inter- Micro- Mid- Multi- Investment Small- Small
& national Cap Cap Season Cap Company
Income Equity Equity Growth Growth Value Growth Value
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
25% Y 25% 25% 25% N 25% 25% 25%
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
20% Y Y Y Y Y Y Y Y
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
N N N N N N N N N
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
N N N N N N N N N
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
Y Y Y Y Y N Y Y Y
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
Y Y Y Y Y Y Y Y Y
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
Y Y Y Y Y Y Y Y Y
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
Framling- Framlington
Acceler- ton Framling- Inter-national
Investments and ating Equity Emerging ton Growth
Investment Practices Growth Balanced Selection Markets Healthcare
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
Options. A Fund may buy options
giving it the right to require a
buyer to buy a security held by the
Fund (put options), buy options
giving it the right to require a
seller to sell securities to the
Fund (call options), sell (write) Y Y Y Y Y Y
options giving a buyer the right to
require the Fund to buy securities
from the buyer or write options
giving a buyer the right to require the Fund to sell securities to the buyer
during a set time at a set price. Options may relate to stock indices,
individual securities, foreign currencies and futures contracts. See the SAI
for more details and additional limitations.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
Reverse Repurchase Agreements. A
Fund sells securities and agrees to
buy them back later at an agreed Y Y Y Y Y Y
upon time and price. A method to
borrow money for temporary purposes.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
Illiquid Securities. Typically
there is no ready market for these 15% 15% 15% 15% 15% 15%
securities, which inhibits the
ability to sell them and to obtain
their full market value, or there
are legal restrictions on their
resale by the Fund.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
Lending Securities. May lend
securities to financial institutions 25% 25% 25% 25% 25% 25%
which pay for the use of the
securities. May increase return.
Slight risk of borrower failing
financially.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
Key:
Y = investment allowed without restriction
N = investment not allowed
1 The limitation on margins and premiums for futures is 5% of a Fund's assets
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
Real Estate
Equity
Growth Inter- Micro- Mid- Multi- Investment Small- Small
& national Cap Cap Season Cap Company
Income Equity Equity Growth Growth Value Growth Value
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
Y Y Y Y Y Y Y Y Y
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
Y Y Y Y N Y Y Y Y
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
15% 15% 15% 15% 15% 15% 15% 15% 15%
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
25% 25% 25% 25% 25% 25% 25% 25% 25%
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
</TABLE>
<PAGE>
- ------------------------------------------------------------------------------
57
- -----------------------------------------------------------------------------
What are the Risks of Investing in the Funds?
Investing in the Funds may be less risky than investing in individual
stocks due to the diversification of investing in a portfolio of many different
stocks; however, such diversification does not eliminate all risks. Because the
Funds invest mostly in Equity Securities, rises and falls in the stock market in
general, as well as in the value of particular Equity Securities held by the
Funds, can affect the Funds' performance. Your investment in the Funds is not
guaranteed. The net asset value of the Funds will change daily and you might not
recoup the amount you invest in the Funds.
The Funds are not meant to provide a vehicle for playing short-term
swings in the stock market. Consistent with a long-term investment approach,
investors in a Fund should be prepared and able to maintain their investments
during periods of adverse market conditions. By itself, no Fund constitutes a
balanced investment program and there is no guarantee that any Fund will achieve
its investment objective since there is uncertainty in every investment.
A Fund's risk is mostly dependent on the types of securities it
purchases and its investment techniques. Each Fund is authorized to use options,
futures, and forward foreign currency exchange contracts, which are types of
derivative instruments. Derivative instruments are instruments that derive their
value from a different underlying security, index or financial indicator. 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 equity
securities; (4) 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; (5) leverage risk, that is, the risk that adverse price movements in an
instrument can result in a loss substantially greater than the Fund's initial
investment in that instrument (in some cases, the potential loss is unlimited);
and (6) particularly in the case of privately-negotiated instruments, the risk
that the counterparty will not perform its obligations, which could leave the
Fund worse off than if it had not entered into the position.
To the extent that a Fund invests in illiquid securities, the Fund
risks not being able to sell securities at the time and the price that it would
like. The Fund may therefore have to lower the price, sell substitute securities
or forego an investment opportunity, each of which might adversely affect the
Fund.
The risks of the various investment techniques the Funds use are
described in more detail in the SAI.
Micro-Cap Equity Fund, Small-Cap Value Fund, Mid-Cap Growth Fund
and Small Company Growth Fund
The Advisor believes that smaller companies can provide greater growth
potential and potentially higher returns than larger firms. Investing in smaller
companies, however, is riskier than investing in larger companies. The stock of
smaller companies may trade infrequently and in lower volume, making it more
difficult for a Fund to sell the stocks of smaller companies when it chooses.
Smaller companies may have limited product lines, markets, financial resources
and distribution channels, which makes them more sensitive to changing economic
conditions. Stocks of smaller companies historically have had larger
fluctuations in price than stocks of larger companies included in the S&P 500.
<PAGE>
Framlington Emerging Markets Fund, Framlington International Growth Fund
and International Equity Fund
Investing in any of the above-referenced Funds, with its larger
investment in foreign securities, may involve more risk than investing in a U.S.
equity fund for the following reasons: (1) there may be less public information
available about foreign companies than is available about U.S. companies; (2)
foreign companies are not generally subject to the uniform accounting, auditing
and financial reporting standards and practices applicable to U.S. companies;
(3) foreign stock markets have less volume than the U.S. market, and the
securities of some foreign companies are less liquid and more volatile than the
securities of comparable U.S. companies; (4) there may be less government
regulation of stock exchanges, brokers, listed companies and banks in foreign
countries than in the U.S.; (5) the Fund may incur fees on currency exchanges
when it changes investments from one country to another; (6) the Fund's foreign
investments could be affected by expropriation, confiscatory taxation,
nationalization of bank deposits, establishment of exchange controls, political
or social instability or diplomatic developments; (7) fluctuations in foreign
exchange rates will affect the value of the Fund's portfolio securities, the
value of dividends and interest earned, gains and loses realized on the sale of
securities, net investment income and unrealized appreciation or depreciation of
investments; and (8) possible imposition of dividend or interest withholding by
a foreign country.
Real Estate Equity Investment Fund
The Fund will invest primarily in the real estate industry and may
invest more than 25% of its assets in any one sector of the real estate
industry. As a result, the Fund will be particularly vulnerable to declines in
real estate prices and new construction rates. The Fund may be riskier than a
fund investing in a broader range of industries.
Framlington Healthcare Fund
The Fund will invest most of its assets in the healthcare industry,
which is particularly affected by rapidly changing technology and extensive
government regulation, including cost containment measures. The Fund may be
riskier than a fund investing in a broader range of industries.
- -----------------------------------------------------------------------------
PERFORMANCE
- -----------------------------------------------------------------------------
How is the Funds' Performance Calculated?
There are various ways in which the Funds may calculate and report
their performance. Performance is calculated separately for each class of
shares.
One method is to show a Fund's total return. Cumulative total return is
the percentage change in the value of an amount invested in a class of shares of
a Fund over a stated period of time and takes into account reinvested dividends
plus in the case of Class A Shares, the payment of the maximum sales charge and,
in the case of Class B and Class C Shares, the maximum CDSC. Cumulative total
return most closely reflects the actual performance of a Fund. However, a
shareholder who opts to receive dividends in cash, a Class A shareholder who
paid a sales charge lower than 5.5%, or a Class B or C shareholder who paid
lower than the maximum CDSC will have a different return than the reported
performance.
Average annual total return refers to the average annual compounded
rates of return over a specified period on an investment in shares of a Fund
determined by comparing the initial amount invested to the ending redeemable
value of the amount, taking into account reinvested dividends, the payment of
the maximum sales charge on Class A Shares, and the payment of the maximum CDSC
on Class B and Class C Shares.
Each Fund may also publish its current yield. Yield is the net
investment income generated by a share of a Fund during a 30-day period divided
by the maximum offering price on the 30th day. "Maximum offering price" includes
the sales charge for Class A Shares.
The Funds may sometimes publish total returns that do not take into
account sales charges and such returns will be higher than returns which include
sales charges. You should be aware that (i) past performance does not indicate
how a Fund will perform in the future; and (ii) each Fund's return and net asset
value will fluctuate, so you cannot necessarily use a Fund's performance data to
compare it to investment in certificates of deposit, savings accounts or other
investments that provide a fixed or guaranteed yield.
Each Fund may compare its performance to that of other mutual funds,
such as the performance of similar funds reported by Lipper Analytical Services,
Inc. or information reported in national financial publications (such as Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times) or
in local or regional publications. Each Fund may also compare its total return
to indices such as the S&P 500 and other broad-based indices. These indices show
the value of selected portfolios of securities (assuming reinvestment of
interest and dividends) which are not managed by a portfolio manager. The Funds
may report how they are performing in comparison to the Consumer Price Index, an
indication of inflation reported by the U.S. Government.
Where Can I Obtain Performance Data?
The Wall Street Journal and certain local newspapers report information
on the performance of mutual funds. In addition, performance information is
contained in the Funds' annual report dated June 30 of each year and semi-annual
report dated December 31 of each year, which will automatically be mailed to
shareholders. To obtain copies of financial reports or performance information,
call (800) 438-5789.
- ------------------------------------------------------------------------------
PURCHASES AND EXCHANGES OF SHARES
- ------------------------------------------------------------------------------
Which Share Class Should I Choose For My Investment?
Each of the Funds offers Class A, Class B and Class C Shares. Each
Class has its own cost structure, allowing you to choose the one that best meets
your requirements given the amount of your purchase and the intended length of
your investment. You should consider both ongoing annual expenses and initial or
contingent deferred sales charges in estimating the costs of investing in a
particular class of shares.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Class A Class B Class C
Front end sales charge. There No front end sales charge. No front end sales charge or
are several ways to reduce these All your money goes to work for CDSC, except for a CDSC for
sales charges. you right away. redemptions made within the
first year after investing.
Lower annual expenses than Higher annual expenses than All your money goes to work for
Class B and Class C Shares. Class A Shares. you right away.
A CDSC on shares you sell Shares do not convert to
within six years of purchase. another class.
</TABLE>
<PAGE>
Automatic conversion to Class
Higher annual expenses than A
Shares approximately six Class A
Shares. years after issuance, thus
reducing future annual expenses.
CDSC is waived for certain
redemptions.
Each Fund also issues Class K and Class Y Shares, which have different
sales charges, expense levels and performance. Class K and Class Y Shares are
available to limited types of investors. Call (800) 438-5789 to obtain more
information concerning Class K and Class Y Shares.
What Price Do I Pay For Shares?
Class A Shares are sold at the "net asset value next determined" by the
Funds plus any "applicable sales charge" and Class B and Class C Shares are sold
at the "net asset value next determined" by the Funds. These terms are explained
below. You should be aware that broker-dealers (other than the Funds'
Distributor) may charge investors additional fees if shares are purchased
through them.
NET ASSET VALUE. Except in certain limited circumstances, each Fund determines
its net asset value ("NAV") on each day the New York Stock Exchange ("NYSE") is
open for trading (a "Business Day") at the close of such trading (normally 4:00
p.m. Eastern time). Each Fund calculates NAV separately for each class of
shares. The "net asset value next determined" is the NAV calculated at 4:00 p.m.
on the day the purchase order for shares is received, if the purchase order is
received prior to or at 4:00 p.m., and is the net asset value calculated at 4:00
p.m. on the next Business Day, if the purchase order is received after 4:00 p.m.
NAV is calculated by totaling the value of all of the assets of a Fund allocated
to a particular class of shares, subtracting the Fund's liabilities and expenses
charged to that class and dividing the result by the number of shares of that
class outstanding.
APPLICABLE SALES CHARGE. Except in the circumstances described below, you must
pay a sales charge at the time of purchase of Class A Shares. The sales charge
as a percentage of your investment decreases as the amount you invest increases.
The current sales charge rates and commissions paid to selected dealers are as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales Charge
as a Percentage of
Dealer Reallowance as a
Your Percentage of the
Investment Net Asset Value Offering Price
Less than $25,000 5.50% 5.82% 5.00%
$25,000 but less than $50,000 5.25% 5.54% 4.75%
$50,000 but less than $100,000 4.50% 4.71% 4.00%
$100,000 but less than $250,000 3.50% 3.63% 3.25%
$250,000 but less than $500,000 2.50% 2.56% 2.25%
$500,000 but less than $1,000,000 1.50% 1.52% 1.25%
$1,000,000 or more None* None* (see below)**
* No initial sales charge applies on investments of $1 million or more.
However, a CDSC of 1% is imposed on certain redemptions within one year of
purchase. Class A Shares of the Trust Funds purchased on or before June 27, 1995
are subject to a different CDSC, which is described in the SAI. ** The
Distributor will pay a 1% commission to dealers who initiate and are responsible
for purchases of $1 million or more.
</TABLE>
The Distributor may pay the entire commission to dealers. If that
occurs, the dealer may be considered an "underwriter" under Federal securities
laws.
SALES CHARGE WAIVERS. We will waive the initial sales charge on sales of
Class A Shares to the following types of purchasers:
(1) individuals with an investment account or relationship with the Advisor;
(2) full-time employees and retired employees of the Advisor, employees of
the Funds' administrator, distributor, custodian and outside counsel
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 described below;
(5) individuals who reinvest a distribution from a qualified retirement plan for
which the Advisor serves as investment advisor; (6) individuals who reinvest the
proceeds of redemptions from Class Y Shares of the Funds of the Trust, the
Company or Framlington,
within 60 days of redemption;
(7) banks and other financial institutions that have entered into
agreements with the Trust, the Company or Framlington to provide
shareholder services for customers ("Customers") (including Customers
of such banks and other financial institutions, and the immediate
family members of such Customers);
(8) financial planners or employee benefit plan consultants acting for the
accounts of their clients; (9) employer sponsored retirement plans which are
administered by Universal Pensions, Inc. ("UPI Plans"); and (10) employer
sponsored 401(k) plans that are administered by Merrill Lynch Group Employee
Services ("Merrill Lynch Plans") which
meet the criteria described below under "Qualified Employer Sponsored
Retirement Plans".
Qualified Employer Sponsored Retirement Plans
We will waive the initial sales charge on purchases of Class A Shares
by employer sponsored retirement plans that are qualified under Section 401(a)
of the Code (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 Company or Framlington or (2) have at least 75 eligible plan
participants. In addition, we will waive the CDSC of 1% charged on certain
redemptions within one year of purchase for Qualified Employee Benefit Plan
purchases that meet the above criteria. A 1% commission will be paid by the
Distributor to dealers and other entities (as permitted by applicable Federal
and state law) who initiate and are responsible for Qualified Employee Benefit
Plan purchases that meet the above criteria. For purposes of this sales charge
waiver, Simplified Employee Pension Plans ("SEPs"), Individual Retirement
Accounts ("IRAs") and UPI Plans are not considered to be Qualified Employee
Benefit Plans.
We also will waive (i) the initial sales charge on Class A Shares on
purchases by UPI and (ii) the CDSC of 1% imposed on certain redemptions within
one year of purchase for UPI Plans. The Distributor will pay a 1% commission to
dealers and others (as permitted by applicable Federal and state law) who
initiate and are responsible for UPI Plan purchases.
We will waive the initial sales charge for all investments by Merrill
Lynch Plans if (i) the Plan is recordkept on a daily valuation basis by Merrill
Lynch Group Employee Services ("Merrill Lynch") and, on the date the plan
sponsor (the "Plan Sponsor") signs the Merrill Lynch Recordkeeping Service
Agreement, the Plan has $3 million or more in assets invested in broker/dealer
funds not advised or managed by Merrill Lynch Asset Management, L.P. ("MLAM")
that are made available pursuant to a Services Agreement between Merrill Lynch
and the Funds' principal underwriter or distributor and in funds advised or
managed by MLAM (collectively, the "Applicable Investments"); or (ii) the Plan
is recordkept on a daily valuation basis by an independent recordkeeper whose
services are provided through a contract or alliance arrangement with Merrill
Lynch, and on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping
Service Agreement, the Plan has $3 million or more in assets, excluding money
market funds, invested in Applicable Investments; or (iii) the Plan has 500 or
more eligible employees, as determined by the Merrill Lynch plan conversion
manager, on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping
Service Agreement.
SALES CHARGE REDUCTIONS. You may qualify for reduced sales charges in the
following cases:
Letter of Intent. If you intend to purchase at least $25,000 of Class A,
Class B and Class C Shares of the Funds you may wish to complete the Letter
of Intent Section of your Account Application Form. By doing so, you agree
to invest a certain amount over a 13-month period. You would pay a sales
charge on any Class A Shares you purchase during the 13 months based on the
total amount to be invested under the Letter of Intent. You can apply any
investments you made in any of the funds during the preceding 90-day period
toward fulfillment of the Letter of Intent (although there will be no
refund of sales charges you paid during the 90-day period). You should
inform the Transfer Agent that you have a Letter of Intent each time you
make an investment.
You are not obligated to purchase the amount specified in the Letter of
Intent. If you purchase less than the amount specified, however, you must
pay the difference between the sales charge paid and the sales charge
applicable to the purchases actually made. The Custodian will hold such
amount in escrow. The Custodian will pay the escrowed funds to your account
at the end of the 13 months unless you do not complete your intended
investment.
o Quantity Discounts. You may combine purchases of Class A Shares that are
made by you, your spouse, your children under age 21 and your IRA when
calculating the sales charge. You must notify your broker or the Transfer
Agent to qualify.
o Right of Accumulation. You may add the value of any Class A, Class B and
Class C Shares of non-money market funds of the Trust, the Company or
Framlington you already own to the amount of your next Class A investment
for purposes of calculating the sales charge at the time of current
purchase. You must notify your broker or the Transfer Agent to qualify.
Certain brokers may not offer these programs or may impose conditions
on use of these programs. You should consult with your broker prior to
purchasing the Funds' shares.
For further information on sales charge waivers and reductions call the
Funds at (800) 438-5789.
When Can I Purchase Shares?
Shares of each Fund are sold on a continuous basis and can be purchased
on any Business Day.
<PAGE>
What is the Minimum Required Investment?
The minimum initial investment for Class A, Class B and Class C Shares
of a Fund is $500 and subsequent investments must be at least $50. Purchases in
excess of $250,000 must be for Class A or Class C Shares.
How Can I Purchase Shares?
You can purchase Class A, Class B and Class C Shares in a number of
different ways. You may place orders directly through the Transfer Agent or the
Distributor or through arrangements with your authorized broker.
o By Broker. Any broker authorized by the Distributor can sell you shares
of the Funds. Please note that brokers may charge you fees
for their services.
o By Mail. You may open an account by mailing a completed and signed Account
Application Form and a check or other negotiable bank draft (payable to
the Munder Funds) for $500 or more to: The Munder Funds, c/o Investor
Services Group, P.O. Box 5130, Westborough, Massachusetts 01581-5130. You
can obtain an Account Application Form by calling (800) 438-5789. Be sure
to specify on your Account Application Form the class of shares being
purchased. If the class is not specified, your purchase will automatically
be invested in Class A Shares. For additional investments send a letter
stating the Fund and share class you wish to purchase, your name and your
account number with a check for $50 or more to the address listed above.
o By Wire. To open a new account, you should call the Funds at (800)
438-5789 to obtain an account number and complete wire instructions prior
to wiring any funds. Within seven days of purchase, you must send a
completed Account Application Form containing your certified taxpayer
identification number to Investor Services Group at the address provided
above. Wire instructions must state the Fund name, share class, your
registered name and your account number. Your bank wire 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.:
You may make additional investments at any time using the wire procedures
described above. Note that banks may charge fees for transmitting wires.
o Automatic Investment Plan ("AIP"). Under the AIP you may arrange for
periodic investments in a Fund through automatic deductions from a
checking or savings account. To enroll in the AIP you should complete the
AIP Application Form or call the Funds at (800) 438-5789. The minimum
pre-authorized investment amount is $50. You may discontinue the AIP at
any time. We may discontinue the AIP on 30 days' written notice to you.
o Reinvestment Privilege. Once a year you may reinvest redemption proceeds
from Class A, B and C Shares of a Fund (or Class A, B and C Shares of
another non-money market fund of the Trust, the Company or Framlington) in
shares of the same class of the same Fund without any sales charges, if
the reinvestment is made within 60 days of redemption. You or your broker
must notify the Transfer Agent in writing at the time of reinvestment in
order to eliminate the sales charge.
The Transfer Agent will send you confirmations of the opening of an
account and of all subsequent purchases, exchanges or redemptions in the
account. If your account has been set up by a broker or other investment
professional, account activity will be detailed in their statements to you. You
will not be issued a share certificate, unless you request one in writing. We
reserve the right to (i) reject any purchase order if, in our opinion, it is in
the Funds' best interest to do so and (ii) suspend the offering of shares of any
Class for any period of time.
See the SAI for further information regarding purchases of the Funds'
shares.
How Can I Exchange Shares?
You may exchange shares of the Funds for shares of the same class of
other funds of the Trust, the Company or Framlington based on their relative net
asset values. Class A Shares of a money market fund of the Trust or the Company
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
Trust or the Company for which a sales charge was paid, can be exchanged for
Class A Shares of a fund of the Trust, the Company or Framlington. Class B and
Class C Shares will continue to age from the date of the original purchase and
will retain the same CDSC rate as they had before the exchange.
You must meet the minimum purchase requirements for the fund of the
Trust, the Company or Framlington that you purchase by exchange. If you are
exchanging into shares of a fund with a higher sales charge, you must pay the
difference at the time of the exchange. Please note that a share exchange is a
taxable event and accordingly, you may realize a taxable gain or loss. Before
making an exchange request, read the Prospectus of the fund you wish to purchase
by exchange. You can obtain a Prospectus for any fund of the Trust, the Company
or Framlington by contacting your broker or the Funds at (800) 438-5789. Brokers
may charge a fee for handling exchanges.
o Exchanges by Telephone. You may give exchange instructions by telephone to
the Funds at (800) 438-5789. You may not exchange shares by telephone if
you hold share certificates. We reserve the right to reject any telephone
exchange request and to place restrictions on telephone exchanges.
o Exchanges by Mail. You may send exchange orders to your broker or to us
at the Munder Funds c/o Investor Services Group, P.O. Box
5130, Westborough, Massachusetts 01581-5130.
We may modify or terminate the exchange privilege at any time. You will
be given notice of any material modifications except where notice is not
required.
- ------------------------------------------------------------------------------
REDEMPTIONS OF SHARES
- ----------------------------------------------------------------------------
What Price Do I Receive for Redeemed Shares?
The redemption price is the net asset value next determined after we
receive the redemption request in proper order. We will reduce the amount you
receive by the amount of any applicable CDSC. See "Purchases of Shares - What
Price Do I Pay for Shares?" for an explanation of how the net asset value next
determined is calculated.
- -----------------------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGES
- ----------------------------------------------------------------------------
You pay a CDSC when you redeem:
Class A Shares that are part of an investment of at least $1 million
within one year of buying them Class B Shares within six years of buying
them Class C Shares within one year of buying them
The CDSC schedule for Class B shares purchased after June 27, 1995 is
set forth below. See the SAI for the CDSC schedule for Class B Shares purchased
before that time. The CDSC is based on the original net asset value at the time
of your investment or the net asset value at the time of redemption, whichever
is lower.
<TABLE>
<CAPTION>
<S> <C> <C>
Class B Shares
Years Since Purchase CDSC
- -------------------- ----
First...................................................................... 5.00%
Second..................................................................... 4.00%
Third...................................................................... 3.00%
Fourth..................................................................... 3.00%
Fifth...................................................................... 2.00%
Sixth...................................................................... 1.00%
Seventh and thereafter..................................................... 0.00%
</TABLE>
.........The Distributor pays sales commissions of 4.00% of the purchase
price of Class B Shares of the Funds to brokers at the time of sale that
initiate and are responsible for purchases of such Class B Shares of the Funds.
.........You will not pay a CDSC to the extent that the value of the
redeemed shares represents:
reinvestment of dividends or capital gains distributions
capital appreciation of shares redeemed
When you redeem shares, we will assume that you are redeeming first
shares representing reinvestment of dividends and capital gains distributions,
then any appreciation on shares redeemed, and then remaining shares held by you
for the longest period of time. We will calculate the holding period of shares
of a Fund acquired through an exchange of shares of the Munder Money Market Fund
from the date that the shares of the Fund were initially purchased.
- ---------------------------------------------------------------------------
CDSC WAIVERS
- -------------------------------------------------------------------------
We will waive the CDSC payable upon redemptions of shares which
you
purchased after June 27, 1995 for:
redemptions made within one year after the death of a shareholder or
registered joint owner minimum required distributions made from an IRA or
other retirement plan account after you reach age 70 1/2 involuntary
redemptions made by the Fund
Consult the SAI for Class B Share CDSC waivers which apply when you
redeem shares purchased on or before June 27, 1995.
We will waive the CDSC for Class B Shares for all redemptions by
Merrill Lynch Plans if: (i) the Plan is recordkept on a daily valuation basis by
Merrill Lynch; or (ii) the Plan is recordkept on a daily valuation basis by an
independent recordkeeper whose services are provided through a contract or
alliance arrangement with Merrill Lynch; or (iii) the Plan has less than 500
eligible employees, as determined by the Merrill Lynch plan conversion manager,
on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement.
When Can I Redeem Shares?
You can redeem shares on any Business Day, provided all required
documents have been received by the Transfer Agent. A Fund may temporarily stop
redeeming shares when the NYSE is closed or trading on the NYSE is restricted,
when an emergency exists and the Funds cannot sell their assets or accurately
determine the value of their assets or if the SEC orders the Funds to suspend
redemptions.
How Can I Redeem Shares?
You may redeem shares of the Funds in several ways:
o By Mail. You may mail your redemption request to: The Munder Funds, c/o
Investor Services Group, P.O. Box 5130, Westborough, Massachusetts
01581-5130. The redemption request should state the name of the Fund,
share class, account number, amount of redemption, account name and where
to send the proceeds. All account owners must sign. If a stock certificate
has been issued to you, you must endorse the stock certificate and return
it together with the written redemption request.
A signature guarantee is required for the following redemption
requests: (a) redemptions proceeds greater than $50,000; (b) redemption
proceeds not being made payable to the owner of the account; (c)
redemption proceeds not being mailed to the address of record on the
account or (d) if the redemption proceeds are being transferred to another
Munder Funds account with a different registration. You can obtain a
signature guarantee from a financial institution such as a commercial
bank, trust company, savings association or from a securities firm having
membership on a recognized securities exchange.
o By Telephone. You can redeem your shares by calling your broker or the
Funds at (800) 438-5789. There is no minimum requirement for telephone
redemptions paid by check. The Transfer Agent may deduct a wire fee (currently
$7.50) for wire redemptions under $5,000.
If you are redeeming at least $1,000 of shares and you have authorized
expedited redemption on your Account Application Form, simply call the
Fund prior to 4:00 p.m. (Eastern Time), and request the funds be mailed to
the commercial bank or registered broker-dealer you designated on your
Account Application Form. We will send your redemption amount to you on
the next Business Day. We reserve the right at any time to change or
impose fees for this expedited redemption procedure.
We record all telephone calls for your protection and take measures to
identify the caller. If the Transfer Agent properly acts on telephone
instructions and follows the reasonable procedures to ensure against
unauthorized transactions, neither the Trust, the Company, the Distributor
nor the Transfer Agent will be responsible for any losses. If these
procedures are not followed, the Transfer Agent may be liable to you for
losses resulting from unauthorized instructions.
During periods of unusual economic or market activity, you may
experience difficulties or delays in effecting telephone redemptions. In
such cases you should consider placing your redemption request by mail.
Automatic Withdrawal Plan ("AWP"). If you have an account value of $2,500
or more in a Fund, you may redeem shares on a monthly, quarterly,
semi-annual or annual basis. The minimum withdrawal is $50. We usually
process withdrawals on the 20th day of the month and promptly send you
your redemption amount. You may enroll in the AWP by completing the AWP
Application Form available through the Transfer Agent. To participate in
the AWP you must have your dividends automatically reinvested and may not
hold share certificates. You may change or cancel the AWP at any time upon
notice to the Transfer Agent. You should not buy Class A Shares (and pay a
sales charge) while you participate in the AWP and you must pay any
applicable CDSCs when you redeem shares.
o Involuntary Redemption. We may redeem your account if its value falls
below $500 as a result of redemptions (but not as a result of a decline in
net asset value). You will be notified in writing and allowed 60 days to
increase the value of your account to the minimum investment level.
When Will I Receive Redemption Amounts?
We will typically send redemption amounts to you within seven Business
Days after you redeem shares. We may hold redemption amounts from the sale of
shares you purchased by check until the purchase check has cleared, which may be
as long as 15 days.
- -----------------------------------------------------------------------------
STRUCTURE AND MANAGEMENT OF THE FUNDS
- ----------------------------------------------------------------------------
How are the Funds Structured?
The Trust, the Company and Framlington are each an open-end management
investment company, which is a mutual fund that sells and redeems shares every
day that it is open for business. They are managed under the direction of their
governing Boards of Trustees and Directors, which are responsible for the
overall management of the Trust, the Company and Framlington and supervise the
Funds' service providers. The Trust and Framlington are organized as
Massachusetts business trusts and the Company is a Maryland corporation.
Who Manages and Services the Funds?
Investment Advisor. The Funds' investment advisor is Munder Capital Management,
a Delaware general partnership with its principal offices at 480 Pierce Street,
Birmingham, Michigan 48009. The principal partners of the Advisor are MCM,
Munder Group LLC, Woodbridge and WAM Holdings, Inc. ("WAM"). MCM was founded in
February, 1985 as a Delaware corporation and was a registered investment
advisor. Woodbridge and WAM are indirect, wholly-owned subsidiaries of Comerica
Incorporated. Mr. Lee P. Munder, the Advisor's chief executive officer,
indirectly owns or controls a majority of the partnership interests in the
Advisor. As of June 30, 1997, the Advisor and its affiliates had approximately
$41 billion in assets under management, of which $22 billion were invested in
equity securities, $8 billion were invested in money market or other short-term
instruments, and $11 billion were invested in other fixed income securities.
The Advisor provides overall investment management for each Fund,
provides research and credit analysis, and is responsible for all purchases and
sales of portfolio securities (other than the Framlington Funds).
The Advisor is responsible for the overall management of the
Framlington Funds. Framlington Overseas Investment Management Limited, the
sub-advisor of the Framlington Funds, is responsible for buying and selling
securities for the Framlington Funds. It is an indirect 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.
During the fiscal year ended June 30, 1997, the Advisor was paid an
advisory fee at an annual rate based on the average daily net assets of each
Fund (after waivers, if any) as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Accelerating Growth Fund 0.75% Balanced Fund 0.65%
Framlington Emerging Market Fund 1.25% Framlington Healthcare Fund 1.00%
Framlington International Growth Fund 1.00% Growth & Income Fund 0.75%
Micro-Cap Equity Fund 1.00% International Equity Fund 0.75%
Multi-Season Growth Fund 0.75%* Mid-Cap Growth Fund 0.74%
Small-Cap Value Fund 0.75% Real Estate Equity Investment Fund 0.74%
Value Fund 0.74% Small Company Growth Fund 0.75%
- -----------------
* The Advisor waived advisory fees during the past fiscal year for the
Multi-Season Growth Fund. The Advisor is entitled to receive an annual fee
equal to .1.00% of the first $500 million of the Multi-Season Growth Fund's
average daily net assets, .75% of the Fund's average daily net assets over
$500 million.
</TABLE>
The Equity Selection Fund pays an advisory fee at the annual rate of
.75% of average daily net assets. As of the date of this Prospectus, the Equity
Selection Fund had not commenced operations.
The Sub-Advisor is entitled to receive an advisory fee equal to one
half of the fee paid to the Advisor by each of the Framlington Funds as
compensation for its services as Sub-Advisor. The Advisor pays fees to the
Sub-Advisor and the Framlington Funds pay no fees directly to the Sub-Advisor.
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. The Advisor makes such payments out of its own resources;
there are no additional costs to the Funds or their shareholders.
The Advisor selects broker-dealers to execute portfolio transactions
for the Funds based on best price and execution terms. The Advisor may consider
as a factor the number of shares sold by the broker-dealer.
Performance of Framlington Funds Managed by the Sub-Advisor
The tables below contain certain performance information 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
Framlington Funds. See "Fund Choices" and "What are the Funds' Investments and
Investment Practices?" 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 Framlington 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 Framlington
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 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 December 31, 1996.
You should not rely on the following performance data of the
Sub-Advisor's client accounts as an indication of future performance of the
Framlington Funds. It should be noted that the management of the Funds will be
affected by regulatory requirements under the Investment Company Act of 1940
(the "1940 Act") and requirements of the Internal Revenue Code of 1986, as
amended, to qualify as a regulated investment company.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
U.K. S&P Healthcare
Period Ended Health Composite Index
December 31, 1996 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%
</TABLE>
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 reflective of U.K. tax. Source: Micropal.
S&P Healthcare Composite Index performance shows capital change
in U.S. Dollars but does not reflect the deduction of fees,
expenses and taxes. Source: Datastream.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MSCI
Canadian Emerging
Emerging Markets
Period Ended Markets Total
December 31, 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.
</TABLE>
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 tracked by S&P. 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.
Transfer Agent. First Data Investor Services Group, Inc. is the Funds'
transfer agent. Investor Services Group is a wholly owned subsidiary of First
Data Corporation and is located at 53 State Street, Boston, Massachusetts 02109.
Administrator. State Street Bank and Trust Company ("State Street" or the
"Administrator") is the Fund's administrator. State Street is located at 225
Franklin Street, Boston, Massachusetts 02110. State Street generally assists the
Company, the Trust and Framlington in all aspects of their administration and
operations including the maintenance of financial records and fund accounting.
As compensation for its services, State Street is entitled to receive fees,
based on the aggregate daily net assets of the Funds and certain other
investment portfolios that are advised by the Advisor for which it provides
services, computed daily and payable monthly at the rate of:
- ------------.
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Funds.
Custodian. Comerica Bank (the "Custodian"), whose principal business address is
One Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides
custodial services to the Funds. No compensation is paid to the Custodian for
its services. State Street also serves as sub-custodian to the Fund. As
compensation for its services, the Sub-Custodian is entitled to receive fees,
based on the aggregate average daily net assets of the Fund and certain other
investment portfolios that are advised by the Advisor for which the
Sub-Custodian provides services, computed daily and payable monthly at an annual
rate of .01% of average daily net assets. The Sub-Custodian also receives
certain transaction based fees.
Distributor. Funds Distributor Inc. is the distributor of the Funds' shares
and is located at 60 State Street, Boston, Massachusetts 02109. It markets and
sells the Funds' shares.
For an additional description of the services performed by the
Administrator, the Transfer Agent, the Custodian, the Sub-Custodian and the
Distributor, see the SAI.
Distribution Services Arrangement
Under Rule 12b-1 of the 1940 Act, the Funds have adopted Service Plans
with respect to their Class A Shares and Service and Distribution Plans with
respect to their Class B and Class C Shares. Under the Plans, each Fund uses its
assets to finance activities relating to the distribution of its shares to
investors and the provision of certain shareholder services. The Distributor is
paid a service fee at an annual rate of up to 0.25% of the value of average
daily net assets of the Funds' Class A Shares. The Distributor also is paid a
service fee at an annual rate of 0.25% and a distribution fee at an annual rate
of up to 0.75% of the value of the average daily net assets of the Funds' Class
B and Class C Shares. The Distributor uses the service fees primarily to pay
ongoing trail commissions to securities dealers (which may include the
Distributor itself) and other financial organizations which provide shareholder
services for the Funds. These services include, among other things, processing
new shareholder account applications, reporting to the Fund's Transfer Agent all
transactions by customers and serving as the primary information source to
customers concerning the Funds.
What are My Rights as a Shareholder?
All shareholders have equal voting, liquidation and other rights. You
are entitled to one vote for each share you hold and a fractional vote for each
fraction of a share you hold. You will be asked to vote on matters affecting the
Trust, the Company or Framlington as a whole and affecting your particular Fund.
You will not vote by Class unless expressly required by law or when the Trustees
or Directors determine the matter to be voted on affects only the interests of
the holders of a particular class of shares. The Trust, the Company and
Framlington will not hold annual shareholder meetings, but special meetings may
be held at the written request of shareholders owning more than 10% of
outstanding shares for the purpose of removing a Trustee or Director. Under
Massachusetts law, it is possible that a shareholder may be personally liable
for the Trust's or Framlington's obligations. If a shareholder were required to
pay a debt of a Fund, however, the Trust and Framlington have committed to
reimburse the shareholder in full from their assets. The SAI contains more
information regarding voting rights.
Comerica Bank currently has the right to vote a majority of the
outstanding shares of the Funds as agent, custodian or trustee for its customers
and therefore it is considered to be a controlling person of the Trust, the
Company and Framlington.
<PAGE>
- ---------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
- ---------------------------------------------------------------------------
When Will I Receive Distributions From the Funds?
As a shareholder, you are entitled to your share of net income and
capital gains, if any, on a Fund's investments. The Funds pass their earnings
along to investors in the form of dividends. Dividend distributions are the
dividends or interest earned on investments after expenses. The net income of
the Accelerating Growth Fund, Balanced Fund, Growth & Income Fund, Index 500
Fund and Small Company Growth Fund is paid quarterly as a dividend. Dividends
from net income, if any, are paid at least annually by the Equity Selection
Fund, Framlington Emerging Markets Fund, Framlington Healthcare Fund,
Framlington International Growth Fund, International Equity Fund, Micro-Cap
Equity Fund, Mid-Cap Growth Fund, Multi-Season Growth Fund, Small-Cap Value Fund
and Value Fund; and monthly by the Real Estate Equity Investment Fund. Each Fund
distributes its net realized capital gains (including net short-term capital
gains), if any, at least annually.
It is possible that a Fund may make a distribution in excess of the
Fund's current and accumulated earnings and profits. You will treat such a
distribution as a return of capital which is applied against and reduces your
basis in your shares. You will treat the excess of any such distribution over
your basis in your shares, as gain from a sale or exchange of the shares.
How Will Distributions Be Made?
The Funds will pay dividend and capital gains distributions in
additional shares of the same class of a Fund. If you wish to receive
distributions in cash, either indicate this request on your Account Application
Form or notify the Funds at (800) 438-5789.
Are There Tax Implications of My Investments in the Funds?
This section contains a brief summary of the tax implications of
ownership in the Funds' shares. A more detailed discussion of Federal income tax
considerations is contained in the SAI. You should consult your tax advisor
regarding the impact of owning the Funds' shares on your own personal tax
situation including the applicability of any state and local taxes.
Each Fund intends to continue to qualify as a regulated investment
company under the Internal Revenue Code, in which case it generally pays no
Federal income tax on the earnings or capital gains it distributes to
shareholders. Dividends of investment company income by each Fund will be
taxable to you as ordinary income, unless you are exempt from Federal income
taxes. Dividends from a Fund's long-term capital gains are taxable on a capital
gain (regardless of how long you have held the shares). Please note that the
above tax treatment applies regardless of whether you receive your distributions
in cash or additional shares. Federal income taxes for distributions to an IRA
or to a qualified retirement plan are deferred. Income dividends will qualify
for the dividends received deduction for corporations to the extent of the total
qualifying dividends received by the distributing Fund from domestic
corporations for the year. Any distribution that is declared in October,
November or December but not actually paid until January of the following year
will be taxable in the year declared. When you redeem, transfer or exchange
shares, you may have a taxable gain or loss depending on whether the price you
pay for the shares has a value higher or longer than your tax basis in the
shares. If you hold the shares for six months or less, and during that time you
received a capital gain dividend, any loss you realize on the sale of those
shares will be treated as a long-term loss to the extent of the earlier
distribution.
You will receive from each Fund in which you are a shareholder shortly
after the end of each year, a statement of the amount and nature of the
distributions made to you during the year.
Dividends and certain interest income earned from foreign securities by
the International Equity Fund, [International Bond Fund, Framlington Emerging
Markets Fund and Framlington International Growth Fund] will, and the other
Funds may, be subject to foreign withholding or other taxes. Under certain
circumstances the International Equity Fund may be in a position (in which case
it would) "pass-through" to you the right to a credit or deduction for income or
other tax credits earned from foreign investments.
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 electing 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.
- ---------------------------------------------------------------------------
ADDITIONAL INFORMATION
- ---------------------------------------------------------------------------
Shareholder Communications. You will receive unaudited Semi-Annual Reports and
Audited Annual Reports on a regular basis from the Funds. In addition, you will
also receive updated Prospectuses or Supplements to this Prospectus. In order to
eliminate duplicate mailings the Funds will only send one copy of the above
communications to (1) accounts with the same primary record owner, (2) joint
tenant accounts, (3) tenant in common accounts and (4) accounts which have the
same address.
Application for new accounts
Class A, B & C Shares
Application for new accounts
The
Munder
Funds Please print or type
PLEASE MAIL YOUR COMPLETED APPLICATION ALONG WITH YOUR CHECK TO:
The Munder Funds
c/o First Data Investor Services Group, Inc.
P.O. Box 5130
Westborough, MA 01580-5130
If you have any questions regarding this application, please
telephone the Transfer Agent at 1.800.438.5789
PLEASE CHECK ONE: New Account Change to Existing Options -
Account Number:
1 ACCOUNT REGISTRATION
Name Social Security Number
Joint Owner (if any) (If Joint Tenancy, use Social
Security of first joint owner)
OR
Uniform Transfer to Minor:
for:
Custodian Name (one custodian only) Minor's Name (one minor only)
State (Custodian's State of Residence) Minor's Social Security
Number
OR
Trust Corporation Other (please specify)
Trust/Corporation name
Trust Date Trust Identification Number
2 MAILING ADDRESS (address for reports, dividends, statements
and redemption proceeds)
Street Apt.
City State Zip Code Telephone Number
Non-Resident Alien: Yes No
If Yes, Country of Residence
3 INITIAL INVESTMENT
With as little as $500* you can invest in any Munder Fund. Please
be sure to read the prospectus carefully before investing or
sending money. You may request an additional prospectus by
calling 1.800.438.5789.
NAME OF FUND CLASS A CLASS B CLASS C
INVESTMENT AMT.
Munder Accelerating Growth Fund
$
Munder All-Season Aggressive Fund
Munder All-Season Moderate Fund
Munder All-Season Conservative Fund
Munder Balanced Fund
Munder Growth & Income Fund
Munder Index 500 Fund
Munder International Equity Fund
Munder Micro-Cap Equity Fund
Munder Mid-Cap Growth Fund
Munder Multi-Season Growth Fund
Munder Real Estate Equity Investment Fund
Munder Small-Cap Value Fund
Munder Small Company Growth Fund
Munder Value Fund
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
Munder Bond Fund
Munder Intermediate Bond Fund
Munder International Bond Fund
Munder Short Term Treasury Fund
Munder Michigan Triple Tax-Free Bond Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
Munder U.S. Government Income Fund
Munder Cash Investment Fund N/A N/A
Munder Money Market Fund N/A N/A
Munder Tax-Free Money Market Fund N/A N/A
Munder U.S. Treasury Money Market Fund N/A
N/A
Total Amount Invested
$
By check (Payable to The Munder Funds)
By Wire. Account Number: (Account number assigned
by Bank from which assets were wired.)
*$50 per Fund if the Automatic Investment Plan Option is being
established at this time (please complete section 5).
4 DISTRIBUTION OPTION (check one. If none, "A" will be
assigned.)
If adding this option to an already existing account, please
complete Section 12 for a signature guarantee.
A. Reinvest dividends and capital gains in additional Fund
shares.
B. Pay dividends in cash; reinvest capital gains in
additional Fund shares.
C. Pay dividends and capital gains in cash.
D. Please send my: Dividends Dividends & Capital
Gains (choose one)
directly to my checking/savings account.
I (We) authorize The Munder Funds to deposit distributions into
the following Checking OR Savings account:
Please Staple Void Check Or Deposit Slip Here
Bank Name Address
ABA Number (Bank Routing Number) Account Number Bank
Account Registration
Wiring Instructions
5 AUTOMATIC INVESTMENT PLAN (optional)
YES, I(we) wish to participate in the Automatic Investment Plan
(AIP). I(We) authorize First Data Investor Services Group, Inc.
(First Data), The Munder Funds' transfer agent, to invest
automatically $ ($50 minimum) for me(us) on a:
Monthly OR Quarterly (please choose either the
5th or the 20th of the month) basis and draw a bank draft in
payment of each of these investments against my(our) Checking
OR Savings account. For the purpose of verifying my(our) bank
account number, I (we) have enclosed a blank check or deposit slip
marked void and have signed the bank authorization below.
Name of Fund Checking/Savings Account Number
ABA Number (Bank Routing Number)
Please note that your bank will clear and process each bank draft
and will include it with your regular statements. However,
acceptance of this authorization is conditional upon approval of
your authorization by your bank, which will allow First Data, the
transfer agent for The Munder Funds, to act as your agent with
regard to the Automatic Investment Plan (AIP). The AIP will
automatically terminate without notice if any bank draft is not
paid upon presentation by First Data, to your bank. The AIP may
be modified or terminated at any time, upon thirty (30)-days
written notice.
Signature of Depositor Date
Signature of Joint Depositor (if any) Date
Please Staple Void Check Or Deposit Slip Here
6 CHECKWRITING PRIVILEGES (optional)
Income & Money Market Funds Class A shares only.
If adding this option to an already existing account, please
complete Section 12 for a signature guarantee.
If you are opening an account for any of The Munder Income and/or
Money Market Funds (Class A Shares only), you are entitled to the
checkwriting option. Redemption checks may be written for amounts
of $500 or more. To obtain checks, please complete the signature
card below. All persons named in the Account Registration in
Section 1 must sign the signature card. For Corporate, Trust or
Partnership accounts, only authorized signers must sign. By
signing this signature card, you agree to be subject to the
customary rules and regulations governing checking accounts, as
well as instructions and rules of the Fund now in effect, and as
amended from time to time, that pertain to the use of redemption
checks.
Please fill out the following Signature Card to be eligible for
Checkwriting and indicate the Fund(s) for which you are requesting
this service:
Fund(s)
Fund(s)
Account Registration: (Exactly as it appears on your account
confirmation or statement for existing accounts only)
Name Account Number
Street City State Zip Code
Authorized Signatures: (Exactly as it appears in Part 1 of the
Application)
Print Name Signature
Print Name Signature
Print Name Signature
Check here if more than one signature is required per check:
2 3 Other:
7 AUTOMATIC WITHDRAWAL PLAN (optional)
The minimum account balance must be $2,500 or more.
If adding this option to an already existing account, please
complete section 12 for a signature guarantee.
YES, I authorize the redemption of shares from my Munder Fund
account to meet withdrawal payments on the 20th of each month.
Name Of Fund That Shares Will Be Redeemed From Account
Number (if applicable)
Amount of Monthly Payments ($50 minimum per Fund) Start Date
(Payment is to begin on the next payment period unless a later
date is indicated)
Payments will be made to: Owner's address of record only
OR Other listed below
Name (if bank, indicate account number)
Address Checking OR Savings
Account
For the purpose of verifying my (our) bank account number, I(we)
have enclosed a blank check or deposit slip marked void and have
signed the bank authorization below.
Name of Fund Account Number (if applicable)
ABA Number (Bank Routing Number)
Please note that your bank will clear and process each bank
deposit and will include it with your regular statement. However,
acceptance of this authorization is conditional upon approval of
your authorization by your bank, which will allow the transfer
agent for The Munder Funds to act as your Agent with regard to
Automatic Withdrawal Plan (AWP). The AWP may be modified or
terminated at any time, upon thirty (30) days written notice.
Signature of Depositor Date Signature of Joint
Depositor (if any) Date
Please Staple Void Check Or Deposit Slip Here
8 REDUCED SALES CHARGE (optional) Class A Shares only
Rights of Accumulation:
Investors may qualify for reduced sales charges by aggregating the
total purchases of all Munder Class A Shares, excluding Money
Market Funds, to determine the applicable sales charge for current
purchases. To determine the aggregated amount of all non-money
market funds, you will need to total the current purchases as well
as shares that are already beneficially owned by the investor for
which a sales charge has already been paid. Please see the
prospectus for additional information regarding Rights of
Accumulation.
I apply for the Rights of Accumulation reduced sales charges based
on the following accounts in The Munder Funds.
Fund Account No.
Fund Account No.
Fund Account No.
Letter of Intent:
You may qualify for reduced sales charges if you plan to make
additional investments in The Munder Funds within a 13 month
period. By indicating a level of anticipated investment and by
signing this application, you agree to the terms of the Letter of
Intent as set forth in the Prospectus, and as follows: "Although
I am not obligated to do so, I intend to invest over a 13 month
period an aggregate amount of at lease" (check one):
$25,000 $50,000 $100,000
$250,000 $500,000 $1,000,000
9 TELEPHONE REDEMPTION & EXCHANGE AGREEMENT
Please check the box if you want this option.
I(We) authorize First Data to act upon instructions received
by telephone from me(us) to redeem or to exchange shares of The
Munder Funds.
1. I(We) relieve the Funds or First Data of any liability for the
loss, cost or expense for acting upon such instructions reasonably
believed to be from me(us).
2. I(We) assume responsibility for notifying the Funds within
seven (7) business days if a confirmation for the transaction is
not received or is incorrect.
3. If an exchange involves an initial investment into a Fund, the
account registration will carry the same registration as set forth
above.
4. An exchange deemed to be the initial purchase of a Fund must
meet the minimum initial investment requirement of $500 per Fund
unless the shareholder is establishing an Automatic Investment
Plan.
5. Redemption proceeds will be sent only to my account address of
record.
Name Name
Account # Account #
Date Date
10 AUTHORIZATIONS, CERTIFICATIONS AND SIGNATURES
By signing the application, I(we) hereby certify under the penalty
of perjury that the information on this application is true,
complete and correct and that:
I(We) understand that this order is subject to acceptance by The
Munder Funds.
I(We) agree that The Munder Funds, Funds Distributor, Inc., First
Data, Munder Capital Management or any of its affiliates,
officers, directors or employees will not be liable for any loss,
expense or cost for acting upon instructions or inquiries
reasonably believed to be genuine. Shares of the Funds 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.
I(We) represent that I am (we are) of legal age and capacity and
have read the Prospectus(es) for The Munder Funds selected, and
agree to its (their) terms. First Data, is hereby appointed agent
to receive dividends and distributions for automatic reinvestment
unless otherwise directed in Section 4
I(We) understand and acknowledge that a sales charge may be levied
against the dollars that I(we) invest in The Munder Funds. (See
the Prospectus(es) for reduced sales charge information.)
Please sign below exactly as the account is to be registered.
Corporation, etc. indicate titles:
Signature Date Name (please print)
Signature Date Name (please print)
11 TAXPAYER IDENTIFICATION
The Internal Revenue Service requires that all taxpayers provide
their Taxpayer Identification Numbers (Social Security Numbers)
and sign in the space provided in the section below. Failure by
non-exempt taxpayers to furnish us with the correct Taxpayer
Identification Number will result in withholding of 31% of all
taxable dividends paid and/or withholding on certain other
payments (this is referred to as backup withholding). Please
insert your Social Security Number or Tax Identification Number in
the space provided below as indicated by the following table:
TYPE OF REGISTRATION TAX I.D. NUMBER TO BE
USED
Individual Account Social Security #
of Applicant
Joint Account Social Security #
of Either Person
Custodian Account for Minor Social Security #
of Minor
Trust or Corporation Tax Identification
Number
Taxpayer Identification Number Name of
Taxpayer Whose Number Appears Above
Taxpayer Identification:
I (the Investor) certify under penalties of perjury that:
(1) The Social Security Number or taxpayer identification number
shown above is correct and may be sued for any custodial or trust
account opened for me by The Munder Funds, and
(2) I (the Investor) am not subject to backup withholding
because:
(a) I am exempt from Backup Withholding
(b) I have not been notified by the Internal Revenue
Service ("IRS") that I am, as a result of failure to report all
interest or dividends, or
(c) the IRS has notified me that I am no longer
subject to backup withholding.
The certification in this paragraph is required from all non-
exempt persons to prevent backup withholding of 31% of all taxable
distribution and gross redemption proceeds under the Federal
income tax law.
Check here if you are subject to backup withholding or have
not received a notice from the IRS advising you that backup
withholding has been terminated.
Authorization:
Signature of Owner Date Title (if signing
for corporation, trusts, etc.)
Signature of Owner Date Title (if signing
for corporation, trusts, etc.)
12 SIGNATURE GUARANTEE
If following options are being established on an existing account,
the shareholder(s) signature(s) need(s) to be signature
guaranteed.
Eligible guarantor institutions generally include banks,
broker/dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings
associations:
Option #4 - Distribution Option
Option #6 - Checkwriting Privileges
Option #7 - Automatic Withdrawal Plan
Signature of Guaranteed (if required) Name of Guarantor
13 NAV CERTIFICATION (For NAV Accounts only)
(See Prospectus for complete definition)
I certify that I am a/an:
Individual with an investment account or relationship with
the Advisor; or
Full-time employee or retired employee of the Advisor, or an
immediate family member of such persons; or
Employee of the Funds' Administrator, Distributor and
Custodian, or an immediate family member of such persons; or
Registered broker/dealer; or
Pension or profit-sharing or employee benefit plan or trust;
or
Financial institution, financial planner or employee benefit
plan consultant acting for the account of my client.
I also certify that:
This purchase is for personal investment purposes and the shares
acquired hereunder shall not be resold except through redemption
by the Fund.
This purchase is being made for myself as outlined in the Fund's
prospectus. I agree to notify you in writing of any change in the
foregoing and agree not to purchase additional fund shares at net
asset value unless I am entitled to do so under the Fund's
prospectus.
I understand that the privilege to purchase fund shares at net
asset value may be modified or terminated at any time.
I(we) understand that this order is subject to acceptance by
The Munder Funds.
Sign below exactly as the account is to be registered.
Corporation, etc. indicate titles:
Signature Date Name (please print)
Signature Date Name (please print)
Munder Funds Approval
FOR DEALER USE ONLY We hereby authorize First Data Investor
Services Group, Inc., to act as our agent in connection with
transactions authorized by this Application and agree to notify
First Data Investor Services Group, Inc., of any purchase made
under a Letter of Intent or Right of Accumulation.
Dealer's Name Main Office Address
Representative's Name Branch # Rep #
Branch Address Telephone #
Authorized Signature of Dealer Title
Shares of the Munder Funds are not deposits or obligations of, or
guaranteed or endorsed by any bank, and are not federally insured
by the Federal Deposit Insurance Corporation, the Federal Reserve
Board, or any other agency. All mutual fund shares involve
certain investment risks, including the possible loss of
principal.
DISTRIBUTOR: Funds Distributor, Inc. APPABC-F006
PROSPECTUS
Class K Shares
The Munder Funds Trust (the "Trust"), The Munder Funds, Inc. (the
"Company") and The Munder Framlington Funds Trust ("Framlington") are open-end
investment companies. This Prospectus describes the investment portfolios
offered by the Trust (the "Trust Funds"), the Company (the "Company Funds") and
Framlington ("Framlington Funds") described below (referred to as the "Funds"):
<TABLE>
<CAPTION>
<S> <C>
Munder Accelerating Growth Fund Munder Small-Cap Value Fund
Munder Balanced Fund Munder Small Company Growth Fund
Munder Equity Selection Fund ** Munder Value Fund
Munder Framlington Emerging Markets Fund Munder Bond Fund
Munder Framlington Healthcare Fund Munder Intermediate Bond Fund
Munder Framlington International Growth Fund Munder International Bond Fund
Munder Growth & Income Fund Munder U.S. Government Income Fund
Munder Index 500 Fund Munder Michigan Triple Tax-Free Bond Fund *
Munder International Equity Fund Munder Tax-Free Bond Fund
Munder Micro-Cap Equity Fund Munder Tax-Free Intermediate Bond Fund
Munder Mid-Cap Growth Fund Munder Short Term Treasury Fund
Munder Multi-Season Growth Fund Munder Cash Investment Fund
Munder Real Estate Equity Investment Fund Munder Tax-Free Money Market Fund
Munder U.S. Treasury Money Market Fund
<FN>
* The Michigan Triple Tax-Free Bond Fund is offered only in the State of Michigan.
** As of the date of this Prospectus, the Munder Equity Selection Fund is not available for purchase.
</FN>
</TABLE>
Munder Capital Management (the "Advisor") serves as the investment
advisor of the Funds.
This Prospectus explains the objectives, policies, risks and fees of
each Fund. You should read this Prospectus carefully before investing and retain
it for future reference. A Statement of Additional Information ("SAI")
describing each of the Funds has been filed with the Securities and Exchange
Commission (the "SEC") and is incorporated by reference into this Prospectus.
You can obtain the SAI free of charge by calling the Funds at (800) 438-5789. In
addition, the SEC maintains a Web site (http://www.sec.gov) that contains the
SAI 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 federally insured or guaranteed. An
investment in the Funds involves investment risks, including the possible loss
of the principal amount invested.
Although each of the Cash Investment Fund, Tax-Free Money Market Fund
and U.S. Treasury Money Market Fund seeks to maintain a constant net asset value
of $1.00 per share, there can be no assurance that each Fund can do so on a
continuing basis.
Securities offered by this Prospectus have not been approved or
disapproved by the SEC or any state securities commission nor has the SEC or any
state securities commission passed upon the accuracy or adequacy of this
Prospectus. Any representation to the contrary is a criminal offense.
Call Toll-Free for Shareholder Services:
(800) 438-5789
The date of this Prospectus is _________________, 1997
<PAGE>
TABLE OF CONTENTS
Fund Highlights
What are the key facts regarding the Funds?.............................
Financial Information
Fund Choices
What Funds are offered?.................................................
Who may want to invest in the Funds?....................................
What are the Funds' investments and investment practices?...............
What are the risks of investing in the Funds?...........................
Performance
How is the Funds' performance calculated?...............................
Where can I obtain performance data?....................................
Purchases of Shares
What price do I pay for shares?.........................................
When can I purchase shares?.............................................
How can I purchase shares?..............................................
Redemptions of Shares
What price do I receive for redeemed shares?............................
When can I redeem shares?...............................................
How can I redeem shares?................................................
When will I receive redemption amounts?.................................
Structure and Management of the Funds
How are the Funds structured?...........................................
Who manages and services the Funds?.....................................
What are my rights as a shareholder?....................................
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?.......................
How will distributions be made?.........................................
Are there tax implications of my investments in the Funds?..............
Additional Information..................................................
Appendix A..............................................................
<PAGE>
- ------------------------------------------------------------------------
FUND HIGHLIGHTS
- ------------------------------------------------------------------------
What Are the Key Facts Regarding the Funds?
Q:.......What are the Funds' goals?
A: o The Accelerating Growth Fund, Equity Selection Fund, Framlington
Emerging Markets Fund, Framlington Healthcare Fund, Framlington
International Growth Fund, International Equity Fund, Micro-Cap Equity
Fund, Mid-Cap Growth Fund, Multi-Season Growth Fund, Small-Cap Value
Fund, Small Company Growth Fund and Value Fund primarily seek to
provide long-term capital appreciation.
o The Index 500 Fund seeks to provide price performance and income that
is comparable to the Standard & Poor's 500 Composite Stock Price Index
("S&P 500").
o The Balanced Fund, Growth & Income Fund and Real Estate Equity
Investment Fund seek to provide capital appreciation and current
income.
o The Bond Fund seeks to provide a high level of current income with
capital appreciation as a secondary consideration.
o The Intermediate Bond Fund seeks to provide a competitive rate of
return which exceeds the inflation rate and the return provided by
money market instruments.
o The International Bond Fund seeks to realize a competitive total
return through a combination of current income and capital
appreciation.
o The U.S. Government Income Fund seeks to provide high current
income.
o The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund seek to
provide current interest income exempt from Federal income taxes.
o The Michigan Triple Tax-Free Bond Fund seeks to provide as high a
level of current interest income exempt from regular Federal income
taxes, Michigan state income tax and Michigan intangibles tax as is
consistent with prudent investment management and preservation of
capital.
o The Short Term Treasury Fund seeks to provide an enhanced money
market return consistent with the preservation of capital.
o The Cash Investment Fund and U.S. Treasury Money Market
Fund seek as high a level of current interest income as is
consistent with maintaining liquidity and stability of
principal.
o The Tax-Free Money Market Fund seeks to provide as high a level of
current interest income exempt from Federal income taxes as is
consistent with maintaining liquidity and stability of principal.
<PAGE>
Q: What are the Funds' strategies?
A: Accelerating Growth Fund, Equity Selection Fund, Framlington Emerging
Markets Fund, Framlington Healthcare Fund, Framlington International
Growth Fund, Growth & Income Fund, International Equity Fund, Micro-Cap
Equity Fund, Mid-Cap Growth Fund, Multi-Season Growth Fund, Real Estate
Equity Investment Fund, Small-Cap Value Fund, Small Company Growth Fund
and Value Fund (the "Equity Funds")
o These invest primarily in equity securities.
Balanced Fund
o This Fund allocates its assets primarily among three types of assets
- Equity Securities, Fixed Income Securities and Cash Equivalents.
"Equity Securities" include common stocks, preferred stocks, warrants
and other securities convertible into common stock. "Fixed Income
Securities" are securities which either pay interest at set times at
either fixed or variable rates, or which realize a discount upon
maturity. Fixed Income Securities include corporate bonds, debentures,
notes and other similar corporate debt instruments, zero coupon bonds
(discount debt obligations that do not make interest payments) and
variable amount master demand notes that permit the amount of
indebtedness to vary in addition to providing for periodic adjustments
in the interest rates. "Cash Equivalents" are instruments which are
highly liquid and virtually free of investment risk.
Index 500 Fund
o This Fund invests primarily in Equity Securities and it normally will hold
the securities of at least 80% of the issuers in the S&P 500. The Fund is
managed through a "quantitative" or "indexing" investment approach, which
attempts to duplicate the investment composition and performance of the S&P
500 through statistical procedures.
Bond Fund, Intermediate Bond Fund, International Bond Fund and U.S.
Government Income Fund (the "Bond Funds")
o These Funds, other than the Tax-Free Funds, U.S. Government Income Fund and
the Short Term Treasury Fund, invest primarily in Fixed Income Securities.
o The U.S. Government Income Fund invests primarily in obligations of the
U.S. government and its agencies and instrumentalities.
Short Term Treasury Fund
o The Short Term Treasury Fund invests only in U.S. Treasury securities and
repurchase agreements relating to U.S. Treasury securities.
Michigan Triple Tax-Free Bond Fund, Tax-Free Bond Fund and Tax-Free Intermediate
Bond Fund (the "Tax-Free Funds")
o The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund invest primarily
in Municipal Obligations. "Municipal Obligations" are obligations of
states, territories and possessions of the United States and the District
of Columbia, and their political subdivisions, agencies, instrumentalities
and authorities, the interest on which is exempt from regular Federal
income tax.
o The Michigan Triple Tax-Free Bond Fund invests primarily in Michigan
Municipal Obligations. "Michigan Municipal Obligations" are municipal
obligations issued by the State of Michigan and its political subdivisions,
the interest on which is exempt from Federal income taxes, Michigan state
income tax and Michigan intangibles tax.
Cash Investment Fund, Tax-Free Money Market Fund and U.S. Treasury Money
Market Fund (the "Money Market Funds")
o The Funds invest solely in dollar-denominated debt securities with
remaining maturities of 13 months or less and maintain an average
dollar-weighted portfolio maturity of 90 days or less.
Each Fund implements a different investment strategy which is described
in this Prospectus.
Q: What are the Funds' risks?
A: With respect to the Equity Funds, the Bond Funds, the Tax-Free Funds and
Short Term Treasury Fund, the net asset value, which is determined on every
business day, will change daily. The net asset value changes due to changes in
the price of securities owned by each Fund as a result of rises and falls in the
stock market in general, perceptions about the stocks of particular companies,
perceptions about particular industries and, in the case of an international
fund, changes in exchange rates. You should note that you could lose a portion
of the amount you invest in a Fund.
With respect to the Money Market Funds, the performance per share may
change based on many factors, including: interest rate levels, the quality of
the instruments in each Fund's investment portfolio, national and international
economic conditions and general market conditions. It is expected that each
Money Market Fund will maintain a net asset value of $1.00 per share, although
there is no assurance that it will be able to do so on a continuous basis.
The International Equity Fund, Framlington International Growth Fund,
Framlington Emerging Markets Fund and International Bond Fund invest mostly in
Foreign Securities. "Foreign Securities" are securities issued by foreign
governments and their agencies, instrumentalities or political subdivisions,
supra-national organizations and foreign corporations. Foreign Securities are
generally considered to be riskier than securities issued by U.S. companies due
to factors such as freezes on convertibility of currency, the rise and fall of
foreign currency exchange rates, political instability and differences in
accounting and reporting standards. Certain of the other Funds also may invest
in Foreign Securities.
The Micro-Cap Equity Fund, Small-Cap Value Fund, Mid-Cap Growth Fund
and Small Company Growth Fund invest primarily in small- or mid-capitalization
companies and may invest in emerging growth companies. Investments in such
companies are riskier than investments in larger, more established companies as
a result of larger fluctuations in earnings, greater reliance on a few key
customers, and other factors.
The Real Estate Equity Investment Fund concentrates its investments in
the real estate industry and the Framlington Healthcare Fund concentrates its
investments in the healthcare industry. Because each of the Funds concentrates
its investments in one industry, it may pose greater risks and experience larger
fluctuations in value than portfolios invested in a broader range of industries.
The International Bond Fund, Michigan Triple-Tax Free Bond Fund and the
Tax-Free Intermediate Bond Fund are "non-diversified" funds, meaning they can
concentrate their investments in fewer issuers than a diversified fund. Because
these Funds may own securities of fewer issuers, they may pose greater risks and
experience larger fluctuations than funds invested in more issuers.
Q: What are the options for investment in the Funds?
A: Each Equity, Bond, and Tax-Free Fund and Short Term Treasury Fund offer
five different investment options, or classes: Class A, B, C, K and Y. The Money
Market Funds offer Class A, K and Y Shares. Class A, B, C and Y Shares are
offered in other prospectuses.
Q: How do I buy and sell shares of the Funds?
A: Class K Shares of each Fund are available to customers ("Customers") of banks
and other institutions, and the immediate family members of such Customers, that
have entered into agreements with us to provide shareholder services for
Customers. You may purchase shares through such a bank or financial institution.
Shares may be redeemed (sold back to the Fund) through your financial
institution or, in some cases, through the free checkwriting privilege.
Q: What shareholder privileges do the Funds offer?
A: o Free checkwriting (certain Funds only - See "Redemption of Shares").
Q: When and how are distributions made?
A: Dividends paid at least quarterly (if available): Accelerating
Growth Fund, Balanced Fund, Growth & Income Fund, Index 500 Fund, Small
Company Growth Fund and International Bond Fund.
Dividends paid at least annually: Equity Selection Fund, Framlington
Emerging Markets Fund, Framlington Healthcare Fund, Framlington International
Growth Fund, International Equity Fund, Micro-Cap Equity Fund, Mid-Cap Growth
Fund, Multi-Season Growth Fund, Small-Cap Value Fund and Value Fund.
Dividends paid monthly: Real Estate Equity Investment Fund, Bond Fund,
Intermediate Bond Fund, U.S. Government Income Fund, Michigan Triple Tax-Free
Bond Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund, Short Term
Treasury Fund, Cash Investment Fund, Tax-Free Money Market Fund, and U.S.
Treasury Money Market Fund.
The Funds distribute capital gains at least annually. Unless you elect
to receive distributions in cash, we will use all dividends and capital gain
distributions of a Fund to purchase additional shares of that Fund.
Q: Who manages the Funds' assets?
A: Munder Capital Management is the Funds' investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Funds
other than the Framlington Funds. The Advisor provides overall investment
management of the Framlington Funds. Framlington Overseas Investment Management
Limited (the "Sub-Advisor") is responsible for all purchases and sales of
securities held by the Framlington Funds.
<PAGE>
- -----------------------------------------------------------------------------
FINANCIAL INFORMATION
- -----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES1
- -----------------------------------------------------------------------------
The purpose of this table is to assist you in understanding the
expenses a shareholder in the Funds will bear directly.
Maximum Sales Charge on Purchase None
(as a % of Offering Price)
Sales Charge Imposed on Reinvested Dividends None
Maximum Deferred Sales Charge None
Redemption Fees2 None
Exchange Fees None
Notes:
1. Does not include fees which institutions may charge for services they
provide to you.
2. The Funds' transfer agent may charge a fee of $7.50 for wire
redemptions under $5,000.
- ------------------------------------------------------------------------------
FUND OPERATING EXPENSES
- ------------------------------------------------------------------------------
The purpose of this table is to assist you in understanding the
expenses charged directly to each Fund, which investors in the Funds will bear
indirectly. Such expenses include payments to Trustees, Directors, auditors,
legal counsel and service providers (such as the Advisor), registration fees,
and distribution fees. The fees shown are based on fees for the Funds' past
fiscal year, except for the Equity Selection Fund and the Framlington Funds, in
which expenses are estimated for the current fiscal year. Because of the 12b-1
fee, you may over the long term pay more than the amount of the maximum
permitted front-end sales charge.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Framlington
ANNUAL FUND Accelerating Equity Emerging Framlington
OPERATING Growth Balanced Selection Markets Healthcare
EXPENSES Fund Fund Fund Fund Fund
---- ---- ---- ---- ----
(as a % of
average net assets)
- -------------------
Advisory Fees .75% .65% .75% 1.25% 1.00%
Shareholder Servicing Fees .25% .25% .25% .25% .25%
Other Expenses (after expense .20% .32% .25% .29%+ .30%+
---- ---- ---- ----- ----
reimbursements)
Total Fund 1.20% 1.22% 1.25% 1.79%+ 1.55%+
Operating Expenses
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Framlington Growth
ANNUAL FUND International & Index International Micro-Cap Mid-Cap
OPERATING Growth Income 500 Equity Equity Growth
EXPENSES Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----
(as a % of
average net assets)
- -------------------
Advisory Fees 1.00% .75% .07%* .75% 1.00% .74%
Shareholder Servicing Fees .25% .25% .25% .25% .25% .25%
Other Expenses (after expense .30%+ .20% .22%+ .26% .25%+ .25%+
----- ---- ----- ---- ----- -----
reimbursements)
Total Fund 1.55%+ 1.20% .54%*+ 1.26% 1.50%+ 1.24%+
Operating Expenses
Real Estate
ANNUAL FUND Multi-Season Equity Investment Small-Cap Small
OPERATING Growth Fund Value Company Value
EXPENSES Fund Fund Growth Fund Fund
---- ---- ----------- ----
(as a % of
average net assets)
- -------------------
Advisory Fees .75%* .74% .75% .75% .74%
Shareholder Servicing Fees .25% .25% .25% .25% .25%
Other Expenses (after expense .25% .11%+ .38%+ .22% .28%+
---- ---- ---- ---- ----
reimbursements)
Total Fund 1.25%* 1.10%+ 1.38%+ 1.22% 1.27%+
Operating Expenses
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
U.S. Michigan
ANNUAL FUND Intermediate International Government Triple Tax-Free
OPERATING Bond Bond Bond Income Tax-Free Bond
EXPENSES Fund Fund Fund Fund Bond Fund Fund
---- ---- ---- ---- --------- --------
(as a % of
average net assets)
- -------------------
Advisory Fees .50% .50% .50% .50% .50%* .50%
Shareholder Servicing Fees .25% .25% .25% .25% .25% .25%
Other Expenses (after .21% .18% .39%+ .21% .13% .20%
---- ---- ----- ---- ---- ----
expense reimbursements)
Total Fund .96% .93% 1.14%+ .96% .88%* .95%
Operating Expenses
ANNUAL FUND Tax-Free Short Term Cash Tax-Free U.S. Treasury
OPERATING Intermediate Treasury Investment Money Market Money Market
EXPENSES Bond Fund Fund Fund Fund Fund
--------- ---- ---- ---- ----
(as a % of
average net assets)
- -------------------
Advisory Fees .50% .25% .35% .35% .35%
Shareholder Servicing Fees .25% .25% .15% .15% .15%
Other Expenses (after expense .18% .27%+ .20% .18% .19%
---- ---- ---- ---- ----
reimbursements)
Total Fund .93% .77%+ .70% .68% .69%
Operating Expenses
- -----------------------------
<FN>
*Reflects advisory fee after waivers. Waivers are described on page 10.
+The Advisor voluntarily reimbursed the Fund for certain operating expenses. In
the absence of such expense reimbursements, total fund operating expenses would
have been as follows: 5.43% for the Framlington Emerging Markets Fund; 7.33% for
the Framlington Healthcare Fund; 2.56% for Framlington International Growth
Fund; .64% for the Index 500 Fund; 7.90% for the Micro-Cap Equity Fund; 1.46%
for the Mid-Cap Growth Fund; 1.38% for the Real Estate Equity Investment Fund;
1.51% for the Small Cap Value Fund; 1.31% for the Value Fund; 1.18% for the
International Bond Fund; and .80% for the Short Term Treasury Fund.
</FN>
</TABLE>
- -----------------------------------------------------------------------------
EXAMPLE
- -----------------------------------------------------------------------------
This example shows the amount of expenses you would pay (directly or
indirectly) on a $1,000 investment in the Fund assuming (1) a 5% annual return
and (2) redemption at the end of the time periods. This example is not a
representation of past or future performance or operating expenses; actual
performance or operating expenses may be larger or smaller than those shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Accelerating Growth Fund......................... 12 38 66 145
Balanced Fund.................................... 12 39 67 148
Equity Selection Fund............................ 13 40 69 151
Framlington Emerging Markets Fund................ 18 56 97 211
Framlington Healthcare Fund...................... 16 49 84 185
Framlington International Growth Fund............ 16 49 84 185
Growth & Income Fund............................. 12 38 66 145
Index 500 Fund................................... 6 17 30 68
International Equity Fund........................ 13 40 69 152
Micro-Cap Equity Fund............................ 15 47 82 179
Mid-Cap Growth Fund.............................. 13 39 68 150
Multi-Season Growth Fund......................... 13 40 69 151
Real Estate Equity Investment Fund............... 14 43 74 162
Small-Cap Value Fund............................. 14 44 76 166
Small Company Growth Fund........................ 12 39 67 148
Value Fund....................................... 13 40 70 153
Bond Fund........................................ 10 31 53 118
Intermediate Bond Fund........................... 9 30 51 114
International Bond Fund.......................... 12 36 63 139
U.S. Government Income Fund...................... 10 31 53 118
Michigan Triple Tax-Free Bond Fund............... 9 28 49 108
Tax-Free Bond Fund............................... 10 30 53 117
Tax-Free Intermediate Bond Fund.................. 9 30 51 114
Cash Investment Fund............................. 7 22 39 87
Short Term Treasury Fund......................... 8 25 43 95
Tax-Free Money Market Fund....................... 7 22 38 85
U.S. Treasury Money Market Fund.................. 7 22 38 86
</TABLE>
The Advisor expects to waive a portion of its fees with respect to the
Index 500 Fund and Multi-Season Growth Fund and reimburse expenses with respect
to the Framlington Emerging Markets Fund, Framlington Healthcare Fund,
Framlington International Growth Fund, Index 500 Fund, Micro-Cap Equity Fund,
Mid-Cap Growth Fund, Real Estate Equity Investment Fund, Small-Cap Value Fund,
Value Fund, International Bond Fund and Short Term Treasury Fund during the
current fiscal year. The Advisor may discontinue such waivers and/or expense
reimbursements at any time in its sole discretion. Without waivers and/or
expense reimbursements, an investor in Class K Shares of the Funds would pay the
following expenses on a $1,000 investment, assuming redemption after one, three,
five and then years, respectively, and assuming a hypothetical 5% annual return:
$54, $162, $269 and $531 for the Framlington Emerging Markets Fund, $72, $212,
$346 and $653 for the Framlington Healthcare Fund, $26, $80, $136 and $290 for
the Framlington International Growth Fund, $7, $20, $36 and $80 for the Index
500 Fund, $78, $227, $367 and $684 for the Micro-Cap Equity Fund, $15, $46, $80
and $175 for the Mid-Cap Growth Fund, $14, $44, $76 and $166 for the Real Estate
Equity Investment Fund, $15, $48, $82 and $180 for the Small Cap Value Fund,
$13, $42, $72 and $158 for the Value Fund, $12, $37, $65 and $143 for the
International Bond Fund and $8, $26, $44 and $99 for the Short Term Treasury
Fund. Without waivers and/or expense reimbursements, the total fund operating
expenses an investor would pay for Class K Shares would be 5.43% for the
Framlington Emerging Markets Fund; 7.33% for the Framlington Healthcare Fund;
2.56% for Framlington International Growth Fund; .64% for the Index 500 Fund;
7.90% for the Micro-Cap Equity Fund; 1.46% for the Mid-Cap Growth Fund; 1.38%
for the Real Estate Equity Investment Fund; 1.51% for the Small Cap Value Fund;
1.31% for the Value Fund; 1.18% for the International Bond Fund and .80% for the
Short Term Treasury Fund.
- -----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------
The following financial highlights were audited by Ernst & Young LLP
except that, for periods ended prior to June 30, 1995 for the Multi-Season
Growth Fund, such financial highlights are derived from financial statements
audited by another auditor. Class K Shares of the Equity Selection Fund were not
offered during the periods shown. This information should be read in conjunction
with the Funds' most recent Annual Reports, which are incorporated by reference
into the SAI. You may obtain the Annual Reports without charge by calling (800)
438-5789.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Accelerating Growth Fund
--------------------------------------------------------------------------------
Year Period Year Period
Ended Year Ended Ended Year Year Ended
6/30/97 Ended 6/30/95 2/28/95 Ended Ended 2/29/92
(b) 6/30/96 (d) (e) 2/28/94 2/28/93 (a)
Net Asset Value, Beginning of Period...................
Income from Investment Operations:
Net investment income/(loss)......................
Net realized and unrealized gain/(loss)
on investments................................
Total from investment operations..................
Less Distributions:
Dividends from net investment income..............
Distributions from net realized gains.............
Total distributions...............................
Net Asset Value, End of Period.........................
Total Return (b)..................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands)..........
Ratio of operating expenses to average net
assets.................................................
Ratio of net investment income/(loss)
to average net assets.........................
Portfolio turnover rate...........................
Ratio of operating expenses to
average net assets without waivers............
Average commission rate (f).......................
<FN>
(a) The Accelerating Growth Fund Class K Shares commenced operations on November 23, 1992.
(b) Total return represents aggregate total return for the period indicated and does not reflect any
applicable sales charges.
(c) Annualized.
(d) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as
investment advisor for the Fund as a result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
(f) Average commission rate paid per share of securities purchased and sold by the Fund.
(g) Amount represents less than $0.01 per share.
(h) Per share numbers have been calculated using the average shares method, which more appropriately
represents the per share data for the period since the use of the undistributed net investment income method did
not accord with the results of operations.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Balanced Fund
---------------- ---------------- --------------- -------------- ----------------
Year Period Period Year Period
Ended Ended Ended Ended Ended
6/30/97 (g) 6/30/96 (g) 6/30/95 (d) 2/28/95 (e) 2/28/94 (a)
Net Asset Value, Beginning of Period..............
Income from Investment Operations:
Net investment income........................
Net realized and unrealized gain/(loss)
on investments...........................
Total from investment operations.............
Less Distributions:
Dividends from net investment income......... Distributions from net
realized gains........
Total distributions..........................
Net Asset Value, End of Period....................
Total Return (b).............................
Ratios to Average Net Assets/Supplemental Data:...
Net Assets, End of Period (in thousands).....
Ratio of operating expenses to average
net
assets...................................
Ratio of net investment income to
average net assets.......................
Portfolio turnover rate......................
Ratio of operating expenses to
average net assets without waivers.......
Average commission rate (f)..................
<FN>
(a) The Balanced Fund Class K Shares commenced operations on April 16, 1993.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as
investment advisor for the Fund as a result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
(f) Average commission rate paid per share of securities purchased and sold by the Fund.
(g) Per share numbers have been calculated using the average shares method, which more appropriately
presents the per share data for the period since the use of the undistributed net investment income method did
not accord with the results of operations.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Framlington Framlington Framlington
Emerging Healthcare International
Markets Fund Fund Growth Fund
-------------------- --------------- ------------------
Year Year Year
Ended Ended Ended
6/30/97 (a, e) 6/30/97 (a, e) 6/30/97 (a, e)
Income from Investment Operations:
Net investment income................................
Net realized and unrealized gain on investments......
Total from investment operations.....................
Less Distributions:
Dividends from net investment income.................
Total distributions..................................
Net Asset Value, End of Period............................
Total Return (b).....................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands).............
Ratio of operating expenses to average net assets....
Ratio of net investment income to average net assets
Portfolio turnover rate..............................
Ratio of operating expenses to
average net assets without waivers...............
Average commission rate (d)..........................
<FN>
(a) The Framlington Emerging Markets Fund Class K Shares commenced operations
on January 10, 1997. The Framlington Healthcare Fund Class K Shares
commenced operations on April 1, 1997. The Framlington International
Growth Fund Class K Shares commenced operations on January 10, 1997.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Growth & Income Fund
---------------- -------------- -------------- -----------------
Year Year Period Year
Ended Ended Ended Ended
6/30/97 (f) 6/30/96 (f) 6/30/95 (d) 2/28/95 (a, e)
Net Asset Value, Beginning of Period........................
Income from Investment Operations:
Net investment income..................................
Net realized and unrealized gain on investments........
Total from investment operations.......................
Less Distributions:
Dividends from net investment income...................
Distributions from net realized gains..................
Total distributions....................................
Net Asset Value, End of Period..............................
Total Return (b).......................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands)...............
Ratio of operating expenses to average net assets......
Ratio of net investment income to average net assets...
Portfolio turnover rate................................
Ratio of operating expenses to
average net assets without waivers.................
Average commission rate (g)............................
<FN>
(a) The Growth & Income Fund Class K Shares commenced operations on July 5,
1994.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) Average commission rate paid per share of securities purchased and sold by the Fund.
(h) Amount represents less than $0.01 per share.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Index 500 Fund
------------------------------------------------------------------
Year Ended Year Ended
6/30/97 6/30/96 (d)
Net Asset Value, Beginning of Period
Income from Investment Operations:
Net investment income................................
Net realized and unrealized gain on investments......
Total from investment operations.....................
Less Distributions:
Dividends from net investment income.................
Distributions from net realized gains................
Total distributions..................................
Net Asset Value, End of Period............................
Total Return (b).....................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands).............
Ratio of operating expenses to average net assets....
Ratio of net investment income to average net assets
Portfolio turnover rate..............................
Ratio of operating expenses to
average net assets without waivers...............
Net investment income per share without waivers......
Average commission rate (g)..........................
<FN>
..................
(a) The Index 500 Fund Class K Shares commenced operations on December 7, 1992.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(g) Average commission rate paid per share of securities purchased and sold by the Fund.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Index 500 Fund
------------------------------------------------------------------------------------------------
Period Year Year Period
Ended Ended Ended Ended
6/30/95 (b) 2/28/95 (e, f) 2/28/94 2/28/93 (g)
Class A Class A Class A Class A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
International Equity Fund
------------------------------------------------------------
Year
Ended
6/30/97 (d)
Net Asset Value, Beginning of Period..........................
Income from Investment Operations:
Net investment income/(loss).............................
Net realized and unrealized gain on investments..........
Total from investment operations.........................
Less Distributions:
Dividends from net investment income....................
Distributions from net realized gains....................
Total distributions......................................
Net Asset Value, End of Period................................
Total Return (b).........................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands).................
Ratio of operating expenses to average net assets........
Ratio of net investment income to average net assets.....
Portfolio turnover rate..................................
Ratio of operating expenses to
average net assets without waivers...................
Average commission rate (g)..............................
<FN>
(a) The International Equity Fund Class K Shares commenced operations on
November 23, 1992.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(g) Average commission rate paid per share of securities purchased and sold by the Fund.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
International Equity Fund
- ---------------------------------------------------------------------------------------------------------------------
Year Period Year Year Period
Ended Ended Ended Ended Ended
6/30/96 (d) 6/30/95 (e) 2/28/95 (d, f) 2/28/94 2/28/93 (a)
----------- ----------- -------------- ------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Micro-Cap Micro-Cap
Equity Fund Growth Fund
----------------------------- ---------------- ----------------
Period Year Period
Ended Ended Ended
6/30/97 (a, e) 6/30/97 (e) 6/30/96 (a, e)
Net Asset Value, Beginning of Period......................
Income from Investment Operations:
Net investment loss..................................
Net realized and unrealized gain on investments......
Total from investment operations.....................
Less Distributions:
Dividends from net investment income.................
Total distributions..................................
Net Asset Value, End of Period............................
Total Return (b).....................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands).............
Ratio of operating expenses to average net assets....
Ratio of net investment loss to average net assets...
Portfolio turnover rate..............................
Ratio of operating expenses to
average net assets without expenses reimbursed...
Average commission rate (d)
<FN>
(a) The Micro-Cap Equity Fund Class K Shares commenced operations on December
31, 1996. Mid-Cap Growth Fund Class K Shares commenced operations on
October 2, 1995.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Multi-Season Growth Fund
------------------ ---------------- ------------------------
Year Year Period
Ended Ended Ended
6/30/97 (e) 6/30/96 (e) 6/30/95 (d, g)
Net Asset Value, Beginning of Period.............
Income from Investment Operations:
Net investment income.......................
Net realized and unrealized gain/(loss)
on investments..........................
Total from investment operations............
Less Distributions:
Dividends from net investment income........ Distributions from net
realized gains.......
Total distributions.........................
Net Asset Value, End of Period...................
Total Return (b)............................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands)....
Ratio of operating expenses to
average net assets......................
Ratio of net investment income to
average net assets......................
Portfolio turnover rate.....................
Ratio of operating expenses to
average net assets without waivers......
Average commission rate (f).................
<FN>
(a) The Multi-Season Growth Fund Class K Shares commenced operations on June 23, 1995.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) Average commission rate paid per share of securities purchased and sold by the Fund.
(g) On June 23, 1995, the Multi-Season Growth Fund acquired the assets and
certain liabilities of the Ambassador Established Company Growth Fund.
(h) Amount represents less than $0.01 per share.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Real Estate Equity Small-Cap
Investment Fund Value Fund
------------------------------ --------------------------------
Period Period
Ended Ended
6/30/97 (a) 6/30/97 (a)
Net Asset Value, Beginning of Period......................
Income from Investment Operations:
Net investment income................................
Net realized and unrealized gain/(loss) on investments
Total from investment operations.....................
Less Distributions:
Dividends from net investment income.................
Total distributions..................................
Net Asset Value, End of Period............................
Total Return (b).....................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands).............
Ratio of operating expenses to average net assets....
Ratio of net investment loss to average net assets...
Portfolio turnover rate..............................
Ratio of operating expenses to
average net assets without waivers
and/or expense reimbursements....................
Average commission rate (d)..........................
<FN>
(a) The Real Estate Equity Investment Fund Class K Shares commenced
operations on October 3, 1996. The Small-Cap Value Fund Class K Shares
commenced operations on December 31, 1996.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by the Fund.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Small Company Growth Fund
-------------------------------- ------------------------------
Year Year
Ended Ended
6/30/97 6/30/96 (g)
Net Asset Value, Beginning of Period......................
Income from Investment Operations:
Net investment loss.................................
Net realized and unrealized gain/(loss) on investments
Total from investment operations.....................
Less Distributions:
Dividends from net investment income.................
Distributions from net realized gains................
Total distributions..................................
Net Asset Value, End of Period............................
Total Return (b).....................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands).............
Ratio of operating expenses to average net assets....
Ratio of net investment loss to average net assets...
Portfolio turnover rate..............................
Ratio of operating expenses to
average net assets without waivers...............
Average commission rate (f)..........................
<FN>
(a) The Small Company Growth Fund Class K Shares commenced operations on
November 23, 1992. (b) Total return represents aggregate total return for the
period indicated.
(c) Annualized.
(d) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(f) Average commission rate paid per share of securities purchased and sold by the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Small Company Growth Fund
- ---------------------------------------------------------------------------------------------------------------------
Period Year Year Period
Ended Ended Ended Ended
6/30/95 (d) 2/28/95 (e) 2/28/94 2/28/93 (a)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Value Fund
-------------------------------- ---------------------------
Year Period
Ended Ended
6/30/97 6/30/96 (a, e)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income....................
Net realized and unrealized gain
on investments.......................
Total from investment operations.........
Less Distributions:
Dividends from net investment income..... Distributions from net realized
gains....
Total distributions......................
Net Asset Value, End of Period................
Total Return (b).........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands).
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Portfolio turnover rate..................
Ratio of operating expenses to
average net assets without waivers and/or
expenses reimbursed...........................
Average commission rate (e)..............
<FN>
(a) The Value Fund Class K Shares commenced operations on November 30, 1995.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Bond Fund
---------- ------------ -------------- ----------- ----------- -----------------
Year
Year Year Period Ended Year Period
Ended Ended Ended 2/28/95 Ended Ended
6/30/97 6/30/96 6/30/95 (e) (d, f) 2/28/94 2/28/93 (a)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income....................
Net realized and unrealized gain/(loss)
on investments.......................
Total from investment operations.........
Less Distributions:
Dividends from net investment income..... Distributions from net realized
gains....
Total distributions......................
Net Asset Value, End of Period................
Total Return (b).........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands).
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Portfolio turnover rate..................
Ratio of operating expenses to
average net assets without waivers...
<FN>
(a) The Bond Fund Class K Shares commenced operations on November 23, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Intermediate Bond Fund
------------ ------------- -------------- ------------ ------------ ------------
Year Year Period Year Year Period
Ended Ended Ended Ended Ended Ended
6/30/97 6/30/96 6/30/95 (d) 2/28/95(e) 2/28/94 2/28/93(a)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income....................
Net realized and unrealized gain/(loss)
on investments.......................
Total from investment operations.........
Less Distributions:
Dividends from net investment income..... Distributions from net realized
gains....
Total distributions......................
Net Asset Value, End of Period................
Total Return (b).........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands).
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Portfolio turnover rate..................
Ratio of operating expenses to
average net assets without waivers...
<FN>
(a) The Intermediate Bond Fund Class K Shares commenced operations on November 20, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
International Bond Fund U.S. Government Income Fund
Period Year Year Period Period
Ended Ended Ended Ended Ended
6/30/97(a) 6/30/97 6/30/96 (f) 6/30/95 (a) 2/28/95 (a, d, e)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income....................
Net realized and unrealized
gain/(loss) on investments...........
Total from investment operations.........
Less Distributions:
Dividends from net investment
income...............................
Distributions from net realized gains....
Total distributions......................
Net Asset Value, End of Period................
Total Return (b).........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in
thousands)...........................
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Portfolio turnover rate..................
Ratio of operating expenses to
average net assets without
waivers and/or expenses
reimbursed...........................
<FN>
(a) The International Bond Fund Class K Shares commenced operations on March
24, 1997. The U.S. Government Income Fund Class K Shares commenced
operations on July 5, 1994.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) Amount represents less than $0.01 per share.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Michigan Triple Tax-Free Bond Fund
------------ ---------------- --------------- ---------------- ---------------
Year Year Period Year Period
Ended Ended Ended Ended Ended
6/30/97 6/30/96 (d) 6/30/95 (d, e) 2/28/95 (d, f) 2/28/94 (a)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income....................
Net realized and unrealized gain/(loss)
on investments.......................
Total from investment operations.........
Less Distributions:
Dividends from net investment income.....
Distributions from net realized gains....
Total distributions......................
Net Asset Value, End of Period................
Total Return (b).........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands).
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Portfolio turnover rate..................
Ratio of operating expenses to
average net assets without waivers...
Net investment income per share
without waivers......................
<FN>
(a) The Michigan Triple Tax-Free Bond Fund Class K Shares commenced operations on January 3, 1994.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) Per share numbers have been calculated using the average shares method, which more appropriately presents
the per share data for the period since the use of the undistributed net
investment income method did not accord with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(g) Amount represents less than $0.01 per share.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Tax-Free Bond Fund
------------- ---------------- --------------- ----------------
Year Year Period Period
Ended Ended Ended Ended
6/30/97(f) 6/30/96 (f) 6/30/95 (d, f) 2/28/95 (a, e)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income....................
Net realized and unrealized gain
on investments.......................
Total from investment operations.........
Less Distributions:
Dividends from net investment income..... Distributions from net realized
gains....
Total distributions......................
Net Asset Value, End of Period................
Total Return (b).........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands).
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Portfolio turnover rate..................
Ratio of operating expenses to
average net assets without waivers...
Net investment income per share
without waivers......................
<FN>
(a) The Tax-Free Bond Fund Class K Shares commenced operations on July 5, 1994.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the monthly average shares
method, which more appropriately presents the per share data for the
period since the use of the undistributed net investment income method
did not accord with the results of operations.
</FN>
</TABLE>
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Tax-Free Intermediate Bond Fund
--------- ------------- ------------- ------------- --------- --------------
Year Year Period Year Year Period
Ended Ended Ended Ended Ended Ended
6/30/97 6/30/96 (f) 6/30/95 (d) 2/28/95 (e) 2/28/94 2/28/93 (e)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income....................
Net realized and unrealized gain/(loss)
on investments.......................
Total from investment operations.........
Less Distributions:
Dividends from net investment income..... Distributions from net realized
gains....
Total distributions......................
Net Asset Value, End of Period................
Total Return (b).........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands).
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Portfolio turnover rate..................
Ratio of operating expenses to
average net assets without waivers
and/or expense reimbursements........
<FN>
(a) The Tax-Free Intermediate Bond Fund Class K Shares commenced operations on
February 9, 1987. (b) Total return represents aggregate total return for the
period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) This information represents results of operations of the St. Clair Tax-Free Intermediate Fund, the
predecessor fund of the Munder Tax-Free Intermediate Bond Fund. The assets and liabilities of the St.
Clair Tax-Free Intermediate Fund were transferred to The Munder Funds Trust on November 20, 1992. On June
22, 1992, Woodbridge Capital Management replaced Manufacturers Bank, N.A. as investment advisor for the
Fund.
</FN>
</TABLE>
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Tax-Free Intermediate Bond Fund
------------ ----------- ------------ ------------ ----------- -----------
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
7/31/92 7/31/91 7/31/90 (e) 7/31/89 (e) 7/31/88 7/31/87
(e) (e) (e) (a,e,g)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income....................
Net realized and unrealized gain/(loss)
on investments.......................
Total from investment operations.........
Less Distributions:
Dividends from net investment income..... Distributions from net realized
gains....
Total distributions......................
Net Asset Value, End of Period................
Total Return (b).........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands).
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Portfolio turnover rate..................
Ratio of operating expenses to
average net assets without waivers...
Net investment income per share
without waivers......................
<FN>
(a) The Tax-Free Intermediate Bond Fund Class K Shares commenced operations on
February 9, 1987. (b) Total return represents aggregate total return for the
period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) This information represents results of operations of the St. Clair Tax-Free Intermediate Fund, the
predecessor fund of the Munder Tax-Free Intermediate Bond Fund. The assets and liabilities of the St.
Clair Tax-Free Intermediate Fund were transferred to The Munder Funds Trust on November 20, 1992. On June
22, 1992, Woodbridge Capital Management replaced Manufacturers Bank, N.A. as investment advisor for the
Fund.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Short-Term Treasury Fund
--------------------------------
--------------------------------
Period
Ended
6/30/97 (a, d)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income....................
Net realized and unrealized gain/(loss)
on investments.......................
Total from investment operations.........
Less Distributions:
Dividends from net investment income..... Distributions from net realized
gains....
Total distributions......................
Net Asset Value, End of Period................
Total Return (b).........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands).
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Portfolio turnover rate..................
Ratio of operating expenses to
average net assets without waivers
and/or expense reimbursements........
<FN>
(a) The Short-Term Treasury Fund Class K Shares commenced operations on
April 25, 1997
(b) Total return represents aggregate total return for the period
indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Cash Investment Fund
----------------------------------------------------------------
---------- ---------- ---------- --------- ---------- ----------
Period Year Period
Year Year Ended Ended Year Ended
Ended Ended 6/30/95 2/28/95 Ended 2/28/93
6/30/97 6/30/96 (d) (e) 2/28/94 (a, e)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income...................
Total from investment operations........
Less Distributions:
Dividends from net investment income....
Total distributions.....................
Net Asset Value, End of Period................
Total Return (b)........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands)
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Ratio of operating expenses to
average net assets without waivers...
<FN>
(a) The Cash Investment Fund Class K Shares commenced operations on November 23, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as
investment advisor for the Fund as a result of the consolidation of the investment advisory businesses
of Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Tax-Free Money Market Fund
---------------------------------------------------------------------
Period Year
Year Year Ended Ended Year Period
Ended Ended 6/30/95 2/28/95 Ended Ended
6/30/97 6/30/96 (d) (e) 2/28/94 2/28/93
Net Asset Value, Beginning of
Period
Income from Investment Operations:
Net investment income...................
Total from investment
operations....................................
Less Distributions:
Dividends from net
investment income.............................
Total distributions.....................
Net Asset Value, End of Period................
Total Return (b)........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period
(in thousands).......................
Ratio of operating expenses
to
average net assets...................
Ratio of net investment
income to
average net assets...................
Ratio of operating expenses
to
average net assets
without waivers...............................
<FN>
(a) The Tax-Free Money Market Fund Class K Shares commenced operations on November 23, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as
investment advisor for the Fund as a result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury Money Market Fund
---------- ---------- ---------- ---------- ---------- ----------
Period Year Period
Year Year Ended Ended Year Ended
Ended Ended 6/30/95 2/28/95 Ended 2/28/93
6/30/97 6/30/96 (d) (e) 2/28/94 (a)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income...................
Total from investment operations........
Less Distributions:
Dividends from net investment
income
Total distributions.....................
Net Asset Value, End of Period................
Total Return (b)........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in
thousands)....................................
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Ratio of operating expenses to
average net assets without
waivers
<FN>
(a) The U.S. Treasury Money Market Fund Class K Shares commenced operations on November 25, 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as
investment advisor for the Fund as a result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
</FN>
</TABLE>
<PAGE>
- -----------------------------------------------------------------------------
FUND CHOICES
- -----------------------------------------------------------------------------
What Funds are Offered?
This Prospectus offers Class K Shares of the 27 funds described below.
This section summarizes each Fund's principal investments. The sections entitled
"What are the Funds' Investments and Investment Practices?" and "What are the
Risks of Investing in the Funds?" and the SAI give more information about the
Funds' investment techniques and risks. Capitalized terms are explained in the
section entitled "What are the Funds' Investments and Investment Practices."
- -----------------------------------------------------------------------------
ACCELERATING GROWTH FUND
- -----------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide long-term
capital appreciation; its secondary goal is to provide income. Under normal
conditions, the Fund will invest at least 65% of its assets in Equity
Securities.
In choosing Equity Securities, the Advisor considers, among other
factors:
the potential for accelerated earnings growth the maintenance of a
substantial competitive advantage a focused management team a stable
balance sheet
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------------------
BALANCED FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide an attractive
investment return through a combination of growth of capital and current income.
The Fund will allocate its assets among three asset groups: Equity Securities,
Fixed Income Securities and Cash Equivalents.
The Fund normally will invest at least 25% of its assets in Fixed Income
Securities and no more than 75% of its assets in Equity Securities. The
Fund will notify shareholders at least 30 days before changing this policy.
The Advisor will allocate the Fund's assets to the three
asset groups based on its view of the following factors, among others:
general market and economic conditions and trends interest rates and
inflation rates fiscal and monetary developments long-term corporate
earnings growth
The Advisor will try to take advantage of changing economic conditions
by adjusting the ratio of Equity Securities to Fixed Income Securities or Cash
Equivalents. For example, if the Advisor believes that rapid economic growth
will lead to better corporate earnings in the future, then it might increase the
Fund's Equity Securities holdings and reduce its Fixed Income Securities and
Cash Equivalents holdings.
PORTFOLIO MANAGEMENT. Leonard J. Barr II, James Robinson and Ann J. Conrad
jointly manage the Fund's assets. Mr. Barr, Mr. Robinson and Ms. Conrad have
managed the Fund since February 1995, June 1995 and its inception in March 1993,
respectively. Mr. Barr is a Senior Vice President and Director of Research of
the Advisor. From April 1988 to February 1995, he was Vice President and
Director of Research for Old MCM, Inc. ("MCM"), the predecessor to the Advisor.
Mr. Robinson is, and has been, a Vice President and Chief Investment
Officer-Fixed Income of the Advisor or MCM since 1987. Ms. Conrad is a Vice
President and Director of Specialty Products of the Advisor, and held similar
titles with Woodbridge Capital Management, Inc. ("Woodbridge"), the Fund's
previous investment advisor, since June 1992.
- -----------------------------------------------------------------------------
EQUITY SELECTION FUND
- -----------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide shareholders
with long-term capital appreciation.
Under normal market conditions, the Fund will invest at least 65% of its
assets in Equity Securities.
The Advisor's dedicated research team invests the Fund's assets in Equity
Securities which it believes are of high quality and undervalued compared
to stocks of other companies in the same industry.
The Fund generally invests in issuers with market capitalizations of at
least $3 billion.
The Fund diversifies its assets by industry in approximately the same
weightings as those of the S&P 500.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------------------
FRAMLINGTON EMERGING MARKETS FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund seeks to provide long-term capital
appreciation. The Fund invests at least 65% of its assets in companies in
emerging market countries, as defined by the World Bank, the International
Finance Corporation, the United Nations or the European Bank for Reconstruction
and Development.
A company will be considered to be in an emerging market country if:
the company is organized under the laws of, or has a principal office in,
an emerging market country, the company's stock is traded primarily in an
emerging market country, most of the company's assets are in an emerging
market country, or most of the company's revenues or profits come from
goods produced or sold, investments made or services
performed in an emerging market country.
PORTFOLIO MANAGEMENT. William Calvert is the Fund's portfolio manager.
Prior to joining the Sub-Advisor, Mr. Calvert was an Economic Strategist for LCF
Edmond de Rothschild Securities (1993-1997), Vice President-Emerging Markets for
Citibank Global Asset Management (1993) and Far East Fund Manager for Municipal
Mutual Insurance (1989-1992).
- ------------------------------------------------------------------------------
FRAMLINGTON HEALTHCARE FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation by investing in companies providing healthcare and medical services
and products worldwide. Currently, most of such companies are located in the
United States.
The Fund will invest in:
pharmaceutical producers
biotechnology firms
medical device and instrument manufacturers distributors of healthcare
products healthcare providers and managers other healthcare service
companies
Under normal conditions, the Fund will invest at least 65% of its
assets in healthcare companies, which are companies for which at least 50% of
sales, earnings or assets arise from or are dedicated to health services or
medical technology activities.
PORTFOLIO MANAGEMENT. Antony Milford is the head of the Specialist Desk for
the Sub-Advisor. He is the Fund's primary portfolio manager, a position he has
held since the Fund's inception. Mr. Milford has managed funds for the
Sub-Advisor since 1971.
- ------------------------------------------------------------------------------
FRAMLINGTON INTERNATIONAL GROWTH FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation. Under normal market conditions, at least 65% of the Fund's assets
will be invested in Equity Securities in at least three foreign countries.
The Sub-Advisor will choose companies that demonstrate:
above-average profitability
high quality management
the ability to grow significantly in their countries
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Sub-Advisor makes investment decisions for the Fund. Simon Key,
Chief Investment Officer of the Sub-Advisor, heads the committee.
- ------------------------------------------------------------------------------
GROWTH & INCOME FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide capital
appreciation and current income. It primarily invests in dividend-paying Equity
Securities and is designed for investors seeking current income and capital
appreciation from the equity markets.
Under normal circumstances, the Fund will invest at least 65% of its
assets in income-producing common stocks and convertible preferred stocks.
The Fund may also purchase Fixed Income Securities which are convertible
into or exchangeable for common stock.
The Fund may invest up to 35% of its assets in Fixed Income Securities,
including 20% of its assets in Fixed Income Securities that are rated below
investment grade.
The Advisor generally selects large, well-known companies that it
believes have favorable prospects for dividend growth and capital appreciation.
The Fund will seek to produce a current yield greater than the S&P 500.
The Fund focuses on dividend-paying Equity Securities because, over
time, dividend income has accounted for a significant portion of the total
return of the S&P 500. In addition, dividends are usually a more stable and
predictable source of return than capital appreciation. The Advisor believes
that stocks which distribute a high level of current income have more stable
prices than those which pay below average dividends.
PORTFOLIO MANAGEMENT. Otto Hinzmann, Jr. is the Fund's portfolio manager, a
position he has held since February 1995. Mr. Hinzmann has been a Vice President
and Director of Equity Management of the Advisor or MCM since January 1987.
- ------------------------------------------------------------------------------
INDEX 500 FUND
- ------------------------------------------------------------------------------
GOALS AND PRINCIPAL INVESTMENTS. The goal of the Fund is to provide performance
and income that is comparable to the S&P 500. The S&P 500 is an index of 500
stocks which emphasize large capitalization companies. See Appendix A for more
information on the S&P 500. The Fund will normally hold the securities of at
least 400 of the stocks in the S&P 500.
The Fund will try to achieve a correlation between the performance of
its portfolio and that of the S&P 500 of at least .95. A correlation of 1.0
would mean that changes in the Fund's price mirror exactly changes in the S&P
500. The timing of purchases and redemptions, changes in securities markets,
level of the Fund's assets and other factors affect the Fund's ability to
exactly track the S&P 500's performance.
The Fund is managed through the use of a "quantitative" investment
approach and tries to mirror the composition and performance of the S&P 500
through statistical procedures. The Advisor does not use traditional methods of
fund investment management, i.e., it does not select stocks on the basis of
economic, financial and market analysis. Because the Fund pays brokerage costs
and other fees, its return may be lower than that of the S&P 500.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Kenneth A. Schluchter III jointly
manage the Fund. Mr. Johnson, a Chief Investment Officer of the Advisor, has
served as the portfolio manager of the Fund since July 1992. Mr. Schluchter, who
has managed the Fund since June 1997, was previously a Systems Developer and
Data Analyst for Compuware Incorporated (1993 - 1995) and a Business Analyst for
Central Transport Incorporated (1989 - 1993).
- ------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation. The Fund invests primarily in Foreign Securities and ADRs and
EDRs. At least once a quarter, the Advisor creates a list of Foreign Securities
and ADRs and EDRs (the "Securities List") which the Fund may purchase based on
the country where the company is located, its competitive advantages, its past
financial record, its future prospects for growth and the market for its
securities. The Advisor updates the Securities List frequently (but at least
quarterly), adds new securities to the Securities List if they are eligible and
sells securities not on the updated Securities List as soon as practicable.
After the Advisor creates the Securities List, it divides the list into
two sections. The first section is designed to provide broad coverage of
international markets. The second section increases exposure to securities that
the Advisor expects will perform better than other stocks in their industry
sectors and their markets as a whole. When the Advisor believes broader market
exposure will benefit the Fund, it will allocate up to 80% of the Fund's assets
in first section securities. When the Advisor identifies strong potential for
specific securities to perform well, the Fund may invest up to 50% of its assets
in second section securities.
Under normal market conditions, at least 65% of the Fund's assets are
invested in Equity Securities in at least three foreign countries.
The Fund will emphasize companies with a market capitalization of at least
$100 million.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Theodore Miller jointly manage
the Fund. Mr. Johnson, a Chief Investment Officer of the Advisor, and Mr.
Miller, senior portfolio manager of the Fund, have managed the Fund since July
1992 and October 1996, respectively. Mr. Miller previously worked as the primary
analyst for the Fund (1996) and for Interacciones Global Inc. (1993-1995) and
McDonald & Co. Securities Inc. (1991-1993).
- -------------------------------------------------------------------------------
MICRO-CAP EQUITY FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation. It invests primarily in Equity Securities of smaller
capitalization companies. The Fund attempts to provide investors with
potentially higher returns than a fund that invests primarily in larger more
established companies. Since smaller capitalization companies are generally not
as well known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
Under normal market conditions, the Fund will invest at least 65% of its
assets in Equity Securities of companies having a market capitalization of
$200 million or less, which is considerably less than the market
capitalization of S&P 500 companies.
The Advisor will choose companies that:
present the ability to grow significantly over the next several years may
benefit from changes in technology, regulations and industry sector trends
are still in the developmental stage and may have limited product lines
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------------------
MID-CAP GROWTH FUND
- ------------------------------------------------------------------------------
GOAL AND OBJECTIVES. The Fund's goal is to provide long-term capital
appreciation. The Fund invests at least 65% of its assets in the Equity
Securities of companies with market capitalizations between $100 million and $5
billion. Its style, which focuses on both growth prospects and valuation, is
known as GARP (Growth at a Reasonable Price) and seeks to produce attractive
returns during various market environments.
The Advisor chooses the Fund's investments as follows: The Advisor
reviews the earnings growth of approximately 10,000 companies over the past
three years. It invests in approximately 50 to 100 companies based on:
superior earnings growth
financial stability
relative market value
price changes compared to the Standard & Poor's Mid-Cap 400 Index
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------------------
MULTI-SEASON GROWTH FUND
- ------------------------------------------------------------------------------
GOAL AND OBJECTIVES. The Fund's goal is to provide long-term capital
appreciation. This objective is considered "fundamental" and cannot be changed
without shareholder approval. Its style, which focuses on both growth prospects
and valuation, is known as GARP (Growth at a Reasonable Price) and seeks to
produce attractive returns during various market environments. The Fund invests
at least 65% of its assets in Equity Securities. The Fund generally invests in
Equity Securities of market capitalizations of over $1 billion.
The Advisor chooses the Fund's investments as follows: The Advisor
reviews the earnings growth of approximately 5,500 companies over the past five
years. It invests in approximately 50 to 100 companies based on:
superior earnings growth
financial stability
relative market value
price changes compared to the S&P 500
PORTFOLIO MANAGEMENT. The portfolio managers of the Fund, Leonard J. Barr
II and Lee P. Munder, have managed the Fund since its inception in February
1995. Mr. Barr is the Senior Vice President and Director of Research of the
Advisor. From April 1988 to February 1995 he held similar positions with MCM.
Mr. Munder is the President and Chief Executive Officer of the Advisor,
positions he has held with the Advisor or MCM since 1985.
- ------------------------------------------------------------------------------
REAL ESTATE EQUITY INVESTMENT FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide both capital
appreciation and current income. This goal is "fundamental" and cannot be
changed without shareholder approval. The Fund invests primarily in U.S.
companies which are principally engaged in the real estate industry or which own
significant real estate. A company is "principally engaged" in the real estate
industry if at least 50% of its assets, gross income or net profits are
attributable to ownership, construction, management or sale of residential,
commercial or industrial real estate. The Fund will not own real estate
directly.
Under normal conditions, the Fund invests at least 65% of its total
assets in Equity Securities of U.S. companies in the real estate industry
including:
equity real estate investment trusts ("REITS")
brokers, home builders and real estate developers
companies with substantial real estate holdings (for example, paper and
lumber producers, hotels and entertainment companies)
manufacturers and distributors of building supplies
mortgage REITS
financial institutions which issue or service mortgages
In addition, the Fund may invest:
up to 35% of its assets in companies other than real estate industry companies
in Fixed Income Securities including up to 5% of its assets in debt
securities rated below investment grade or unrated if secured by real
estate assets if the Advisor believes that the underlying collateral is
sufficient
in REITS only if they are traded on a securities exchange or NASDAQ
PORTFOLIO MANAGEMENT. Peter K. Hoglund is the portfolio manager of the
Fund, a position he has held since October 1996. Mr. Hoglund formerly was the
primary analyst of the Fund (October 1994 to October 1996).
- ------------------------------------------------------------------------------
SMALL-CAP VALUE FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation, with income as a secondary objective. It invests primarily in
Equity Securities of smaller capitalization companies. The Fund attempts to
provide investors with potentially higher returns than a fund that invests
primarily in larger more established companies. Since small companies are
generally not as well known to investors and have less of an investor following
than larger companies, they may provide higher returns due to inefficiencies in
the marketplace.
Under normal market conditions, the Fund will invest at least 65% of its
assets in Equity Securities of companies with market capitalizations below
$750 million, which is less than the market capitalization of S&P 500
companies.
The Advisor will concentrate on companies that it believes
are undervalued. A company's Equity Securities may be undervalued because it is
temporarily overlooked or out of favor due to general economic conditions, a
market decline, industry conditions or developments affecting the particular
company. The Fund will usually invest in Equity Securities of companies with low
price/earnings ratios, low price/cash flow ratios and low price/book values
compared to the general market.
In addition to valuation, the Advisor considers these factors, among
others, in choosing companies:
a stable or improving earnings record sound finances above-average growth
prospects participation in a fast growing industry strategic niche
position in a specialized market adequate capitalization
PORTFOLIO MANAGEMENT. Gerald Seizert and Edward Eberle jointly manage the
Fund. Mr. Seizert has managed the Fund since it commenced operations. Prior to
joining the Advisor in 1995, Mr. Seizert was a Director and Managing Partner of
Loomis, Sayles & Company, L.P. Mr. Eberle, who has managed the Fund since March
1997, was formerly the primary analyst for the Fund. Prior to joining the
Advisor in 1995, he was an Executive Vice President and Portfolio Manager for
Westpointe Financial Corporation.
- ------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation. The Fund invests primarily in Equity Securities of smaller
capitalization companies. The Fund attempts to provide investors with
potentially higher returns than a fund that invests primarily in larger more
established companies. Since smaller capitalization companies are generally not
as well-known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
Under normal market conditions, the Fund will invest at least 65% of the
Fund's assets in Equity Securities of companies with market capitalizations
below $750 million, which is less than the market capitalization of S&P 500
companies.
The Advisor considers these factors, among others, in choosing companies:
above-average growth prospects
participation in a fast-growing industry
strategic niche position in a specialized market
adequate capitalization
PORTFOLIO MANAGEMENT. Carl Wilk and Michael P. Gura jointly manage the
Fund. Mr. Wilk, a Senior Portfolio Manager of the Advisor, has managed the Fund
since October 1996 and was the Fund's primary analyst (1995 to 1996). Prior to
joining the Advisor in 1995, Mr. Wilk was a Senior Equity Research Analyst at
Woodbridge. Mr. Gura has managed the Fund since March 1997. Prior to joining the
Advisor in 1995, Mr. Gura was a Vice President, Senior Equity Analyst for
Woodbridge (1994 - 1995) and an investment officer for Manufacturers National
Bank Trust (1989 - 1994).
- -------------------------------------------------------------------------------
VALUE FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation, with income as a secondary objective. The Fund invests primarily
in the Equity Securities of well-established companies with intermediate to
large capitalizations, which typically exceed $750 million.
The Fund will invest at least 65% of its assets in Equity Securities.
The Advisor will concentrate on companies that it believes are
undervalued. A company's Equity Securities may be undervalued because it is
temporarily overlooked or out of favor due to general economic conditions, a
market decline, industry conditions or developments affecting the particular
company. The Fund will usually invest in Equity Securities of companies with low
price/earnings ratios, low price/cash flow ratios and low price/book values
compared to the general market.
In addition to valuation, the Advisor considers these factors, among
others, in choosing companies:
a stable or improving earnings record sound finances above-average growth
prospects participation in a fast growing industry strategic niche
position in a specialized market adequate capitalization
PORTFOLIO MANAGEMENT. Gerald Seizert and Edward Eberle jointly manage the
Fund. Mr. Seizert has managed the Fund since it commenced operations. Prior to
joining the Advisor in 1995, Mr. Seizert was a Director and Managing Partner of
Loomis, Sayles & Company, L.P. Mr. Eberle, who has managed the Fund since
October 1996, was formerly the primary analyst for the Fund. Prior to joining
the Advisor in 1995, he was an Executive Vice President and Portfolio Manager
for Westpointe Financial Corporation.
- ------------------------------------------------------------------------------
BOND FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a high level
of current income and, secondarily, capital appreciation.
Under normal market conditions, at least 65% of the Fund's assets will be
invested in Fixed Income Securities.
The Fund's dollar-weighted average maturity will generally be between six
and fifteen years.
PORTFOLIO MANAGEMENT. James C. Robinson and Gregory A. Prost jointly manage
the Fund. Mr. Robinson and Mr. Prost have managed the Fund since March 1995 and
May 1995, respectively. Mr. Robinson has been a Vice President and Chief
Investment Officer of the Advisor or MCM since 1987. Mr. Prost has been a Senior
Fixed Income Portfolio Manager of the Advisor or MCM since 1995. Prior to
joining the Advisor, he was a Vice President and Senior Fund Manager for First
of America Investment Corp.
- ------------------------------------------------------------------------------
INTERNATIONAL BOND FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to realize a competitive
total return through a combination of current income and capital appreciation.
Under normal market conditions, at least 65% of the Fund's assets will be
invested in Foreign Securities of issuers in at least three countries other than
the United States. The Fund's dollar-weighted average maturity will generally be
between three and 15 years. The Fund will invest mostly in:
foreign debt obligations issued by foreign governments and their
agencies, instrumentalities or political subdivisions
debt securities issued or guaranteed by supra-national organizations, such
as the World Bank debt securities of banks or bank holding companies
corporate debt securities other debt securities, including those
convertible into foreign stock.
PORTFOLIO MANAGEMENT. Gregory A. Prost and Sharon E. Fayolle jointly manage
the Fund. Mr. Prost, Senior Fixed Income Portfolio Manager of the Advisor or
MCM, has managed the Fund since October 1996. Prior to joining MCM in 1995, he
was a Vice President and Senior Fund Manager for First of America Investment
Corp. Ms. Fayolle, Vice President and Director of Money Market Trading for the
Advisor or MCM, has managed the Fund since October 1996. Prior to joining MCM in
1996, she was a European Portfolio Manager for Ford Motor Company.
<PAGE>
- ------------------------------------------------------------------------------
INTERMEDIATE BOND FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a competitive rate
of return which, over time, exceeds the rate of inflation and the return
provided by money market instruments.
Under normal conditions, at least 65% of the Fund's assets will be
invested in Fixed Income Securities. The Fund's dollar-weighted average
maturity will generally be between three and eight years.
PORTFOLIO MANAGEMENT. Anne K. Kennedy and James C. Robinson jointly manage
the Fund. Ms. Kennedy, Vice President and Director of Corporate Bond Trading of
the Advisor or MCM since 1991, has managed the Fund since March 1995. Mr.
Robinson, Vice President and Chief Investment Officer of the Advisor or MCM
since 1987, has managed the Fund since March 1995.
- -------------------------------------------------------------------------------
U.S. GOVERNMENT INCOME FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide high current
income.
Under normal market conditions, at least 65% of the Fund's assets will
be invested in U.S. government obligations.
The Fund's dollar-weighted average maturity generally will be between six
and fifteen years.
PORTFOLIO MANAGEMENT. James C. Robinson and Peter G. Root jointly manage
the Fund. Mr. Robinson, Vice President and Chief Investment Officer of the
Advisor or MCM since 1987, and Mr. Root, Vice President and Director of
Government Securities Trading of the Advisor since March 1995, have managed the
Fund since March 1995. Mr. Root joined MCM in 1991.
- ------------------------------------------------------------------------------
MICHIGAN TRIPLE TAX-FREE BOND FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide as high a level of
current interest income exempt from regular Federal income taxes, Michigan state
income and Michigan intangibles tax as is consistent with prudent investment
management and preservation of capital.
Except during temporary defensive periods, at least 65% of the Fund's net
assets are invested in Michigan Municipal Obligations.
The Fund will invest primarily in Michigan Municipal Obligations which
have remaining maturities of between three and 30 years.
The Fund's dollar-weighted average maturity will generally be between ten
and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(1985-1993).
- -------------------------------------------------------------------------------
TAX-FREE BOND FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a high level of
current interest income exempt from Federal income taxes and to generate as
competitive a long-term rate of return as is consistent with prudent investment
management and preservation of capital.
Under normal market conditions, at least 65% of the Fund's assets will be
invested in Municipal Obligations. Except during temporary defensive
periods, at least 80% of the Fund's net assets will be invested in
Municipal Obligations whose interest is exempt from regular Federal income
tax. This fundamental policy may only be changed with shareholder approval.
The Fund invests primarily in intermediate-term and long-term Municipal
Obligations which have remaining maturities of between three and 30 years.
The Fund's dollar-weighted average maturity will generally be between ten
and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(1985-1993).
- -------------------------------------------------------------------------------
TAX-FREE INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a competitive
level of current interest income exempt from regular Federal income taxes and a
total return which, over time, exceeds the rate of inflation and the return
provided by tax-free money market instruments.
Under normal market conditions, at least 65% of the Fund's assets will be
invested in Municipal Obligations. Except during temporary defensive
periods, at least 80% of the Fund's assets will be invested in Municipal
Obligations whose interest is exempt from regular Federal income tax. The
Fund invests in Michigan Municipal Obligations from time to time. The Fund
generally buys obligations with remaining maturities of ten years or less.
The portfolio's dollar-weighted average maturity will generally be between
three and eight years, but may be up to ten years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(1985-1993).
- ----------------------------------------------------------------------------
SHORT TERM TREASURY FUND
- ----------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide investors with an
enhanced money market return consistent with capital preservation. Under normal
conditions, the Fund invests all of its assets in U.S. Treasury securities and
repurchase agreements fully collateralized by U.S. Treasury securities. The
Fund's dollar-weighted average portfolio maturity usually will not exceed two
years.
The Fund seeks to generate a total return which exceeds money market
instruments while minimizing the fluctuation of its net asset value. The Fund,
however, is not a money market fund and its net asset value may fluctuate.
PORTFOLIO MANAGEMENT. Sharon E. Fayolle, Vice President and Director of
Money Market Trading for the Advisor, has managed the Fund since October 1996.
Prior to joining the Advisor in 1996, she was a European Portfolio Manager for
Ford Motor Company.
<PAGE>
- ----------------------------------------------------------------------------
CASH INVESTMENT FUND
- ----------------------------------------------------------------------------
The Fund's primary goal is to provide as high a level of current interest
income as is consistent with maintaining liquidity and stability of
principal.
The Fund invests in a broad range of short-term, high quality, U.S. dollar
-denominated instruments.
- -----------------------------------------------------------------------------
U.S. TREASURY MONEY MARKET FUND
- -----------------------------------------------------------------------------
The Fund's goal is to provide as high a level of current interest income
as is consistent with maintaining liquidity and stability of principal.
The Fund invests its assets solely in short-term bonds, bills and notes
issued by the U.S. Treasury (including "stripped" securities), and in
repurchase agreements relating to such obligations.
- ----------------------------------------------------------------------------
TAX-FREE MONEY MARKET FUND
- ----------------------------------------------------------------------------
The Fund's goal is to provide shareholders with as high a level of current
interest income exempt from Federal income taxes as is consistent with
maintaining liquidity and stability of principal.
The Fund invests substantially all of its assets in short-term, U.S.
dollar-denominated Municipal Obligations, the interest on which is exempt
from regular Federal income tax.
Under normal market conditions, the Fund will invest at least 80% of its
net assets in Municipal Obligations.
Who May Want To Invest in the Funds?
Equity Funds
These Funds are designed for investors who desire potentially high
capital appreciation and who can accept short-term variations in return for
potentially greater returns over the long term. In general, the greater the
risk, the greater the potential reward. Investors who have a short time horizon,
who desire a high level of income or who are conservative in their investment
approach may wish to invest in other portfolios offered by the Trust and the
Company.
Bond Funds and Tax-Free Funds
These Funds are designed for investors who desire potentially higher
returns than more conservative fixed rate investments or money market funds and
who seek current income. The Tax-Free Funds may be desirable for investors who
seek current income which is primarily tax-exempt. When you choose among the
Funds, you should consider both the expected yield of the Funds and potential
changes in each Fund's share price. The yield and potential price changes of a
Fund's shares depend on the quality and maturity of the obligations in its
portfolio, as well as on other market conditions.
Short Term Treasury Fund and Money Market Funds
These Funds are designed for investors who desire a high level of
income and liquidity and, in the case of the Money Market Funds, stability of
principal.
What are the Funds' Investments and Investment Practices?
Each Equity Fund invests primarily in Equity Securities, which includes
common stocks, preferred stocks, warrants and other securities convertible into
common stocks. Many of the common stocks the Funds (other than Growth & Income
Fund) will buy will not pay dividends; instead, stocks will be bought for the
potential that their prices will increase, providing capital appreciation for
the Fund. The value of Equity Securities will fluctuate due to many factors,
including the past and predicted earnings of the issuer, the quality of the
issuer's management, general market conditions, the forecasts for the issuer's
industry and the value of the issuer's assets. Holders of Equity Securities only
have rights to value in the company after all debts have been paid, and they
could lose their entire investment in a company that encounters financial
difficulty. Warrants are rights to purchase securities at a specified time at a
specified price.
Each Fund may invest in Cash Equivalents, which are high-quality,
short-term money market instruments including, among other things, commercial
paper, bankers' acceptances and negotiable certificates of deposit of banks or
savings and loan associations, short-term corporate obligations and short-term
securities issued by, or guaranteed by, the U.S. Government and its agencies or
instrumentalities. These instruments will be used primarily pending investment,
to meet anticipated redemptions or as a temporary defensive measure. If a Fund
is investing defensively, it may not be pursuing its investment objective.
All Funds may enter into Repurchase Agreements. Under a repurchase
agreement, a Fund agrees to purchase securities from a seller and the seller
agrees to repurchase the securities at a later time, typically within seven
days, at a set price. The seller agrees to set aside collateral at least equal
to the repurchase price. This ensures that the Fund will receive the purchase
price at the time it is due, unless the seller defaults or declares bankruptcy,
in which event the Fund will bear the risk of possible loss due to adverse
market action or delays in liquidating the underlying obligation. With respect
to the Money Market Funds, the securities held subject to a repurchase agreement
may have stated maturities exceeding 397 days provided the repurchase agreement
itself matures in 397 days.
All Funds may Lend Securities to broker-dealers and other financially
sound institutional investors who will pay the Funds for the use of the
securities, thus increasing the Funds' returns. The borrower must set aside cash
or liquid high-grade debt securities equal to the value of the securities
borrowed at all times during the terms of the loan. Loans may not exceed 331/3%
of the value of a Fund's total assets. Risks involved in such transactions
include possible delay in recovering the loaned securities and possible loss of
the securities or the collateral if the borrower fails financially.
The Equity Funds may purchase American Depository Receipts ("ADRs"),
European Depository Receipts ("EDRs") and Global Depository Receipts ("GDRs").
ADRs are issued by U.S. financial institutions and EDRs and GDRs are issued by
European financial institutions. They are receipts evidencing ownership of
underlying Foreign Securities.
The Funds (other than the U.S. Treasury Money Market Fund) may buy
shares of registered Money Market Funds. The Funds will bear a portion of the
expenses of any investment company whose shares they purchase, including
operating costs and investment advisory, distribution and administration fees.
These expenses would be in addition to a Fund's own expenses. Each Fund may
invest up to 10% of its assets in other investment companies and no more than 5%
of its assets in any one investment company.
Each Fund may purchase Fixed Income Securities. Fixed Income Securities
are securities which either pay interest at set times at either fixed or
variable rates, or which realize a discount upon maturity. Fixed Income
Securities include corporate bonds, debentures, notes and other similar
corporate debt instruments, zero coupon bonds (discount debt obligations that do
not make interest payments) and variable amount master demand notes that permit
the amount of indebtedness to vary in addition to providing for periodic
adjustments in the interest rate. Each Fund may purchase U.S. Government
Securities, which are securities issued by, or guaranteed by, the U.S.
Government or its agencies or instrumentalities. Such securities include U.S.
Treasury bills, which have initial maturities of less than one year, U.S.
Treasury notes, which have initial maturities of one to ten years, U.S. Treasury
bonds, which generally have initial maturities of greater than ten years, and
obligations of the Federal Home Loan Mortgage Corporation, Federal National
Mortgage Association and Government National Mortgage Association.
Each Fund may Borrow Money in an amount up to 5% of its assets for
temporary purposes and in an amount up to 33 1/3% of its assets to meet
redemptions. This is a "fundamental" policy which only can be changed by
shareholders.
All of the Funds, other than the International Bond Fund, the Michigan
Triple Tax-Free Bond Fund and the Tax-Free Intermediate Bond Fund, are
classified as "diversified funds." With respect to 75% of each diversified
Fund's assets, each diversified fund cannot invest more than 5% of its assets in
one issuer (other than the U.S. Government and its agencies and
instrumentalities). In addition, each diversified fund cannot invest more than
25% of its assets in a single issuer. These restrictions do not apply to the
non-diversified funds.
The Tax-Free Funds will acquire long-term instruments only which are
rated "A" or better by Moody's Investors Service Inc. ("Moody's") or Standard &
Poor's Rating Service ("S&P") or, if unrated, are of comparable quality. Such
Funds will acquire short-term instruments only which (i) have short-term debt
ratings in the top two categories by at least one nationally recognized
statistical rating organization, (ii) are issued by an issuer with such ratings
or (iii), if unrated, are of comparable quality.
The Advisor does not intend to invest more than 25% of a Fund's assets
in securities whose issuers are in the same state, except that the Advisor may
invest more than 25% of the Michigan Triple Tax-Free Bond Fund's and the
Tax-Free Intermediate Bond Fund's assets in Michigan Municipal Obligations.
Each Tax-Free Fund may invest in short-term money market instruments on
a temporary basis or for temporary investment purposes. Short-term money market
instruments include U.S. government obligations, debt securities of issuers
having a rating within the two highest categories of either S&P or Moody's, and
certificates of deposit or bankers' acceptances of domestic branches of U.S.
banks with at least $1 billion in assets.
Each Money Market Fund will invest primarily in Eligible Securities (as
defined by the SEC) with remaining maturities of 397 days or less as defined by
the SEC (although securities subject to repurchase agreements, variable and
floating rate securities and certain other securities may bear longer
maturities), and the dollar-weighted average portfolio maturity of each Money
Market Fund will not exceed 90 days. Eligible Securities consist of securities
that are determined by the Advisor, under guidelines established by the Boards
of Trustees and Directors, to present minimal credit risk. Each Money Market
Fund may also hold uninvested cash pending investment of late payments for
purchase orders or during temporary defensive periods.
Investment Charts
These charts summarize the Funds' investments and investment practices.
The SAI contains more details. All percentages are based on a Fund's total
assets except where otherwise noted. See "What are the Risks of Investing in the
Funds?" for a description of the risks involved with the Funds' investment
practices.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
EQUITY FUNDS
- ----------------------------------------------------------------------------------------------------------------------------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- -------------
Framling- Framlington
Acceler- ton Framling- Inter-national
Investments and ating Equity Emerging ton Growth
Investment Practices Growth Balanced Selection Markets Healthcare
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Foreign Securities. Includes
securities issued by non-U.S.
companies. Present more risks than 25% 25% 25% Y Y Y
U.S. securities.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Lower-Rated Debt Securities. Fixed
income securities which are rated
below investment grade by Standard & Y Y Y Y Y Y
Poor's Ratings Service, Moody's
Investors Service Inc. or other
nationally recognized rating
agency. Considered riskier than
investment grade securities.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Investment-Grade Asset Backed
Securities. Includes debt N Y N N N N
securities backed by mortgages,
installment sales contracts and
credit card receivables.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Stripped Securities. Includes
participations in trusts that hold
U.S. Treasury and agency securities N Y N N N N
which represent either the interest
payments or principal payments on
the securities or combinations of
both.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Forward Foreign Currency Exchange
Contracts. Obligations of a Fund to
purchase or sell a specific currency
at a future date at a set price. Y Y Y Y Y Y
May decrease a Fund's loss due to a
change in currency value, but also
limits gains from currency changes.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
When-Issued and Delayed Delivery
Securities. Securities purchased at
a set price, with delivery and Y Y Y Y Y Y
payment in the future. The value of
securities may change between the
time the price is set and payment.
Not to be used for speculation.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Futures and Options on Futures.1
Contracts in which a Fund agrees, at
maturity, to make delivery of or Y Y Y Y Y Y
receive securities, the cash value
of an index or foreign currency.
Used for hedging purposes or to
maintain liquidity.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
Real Estate
Equity
Growth Inter- Micro- Mid- Multi- Invest-ment Small- Small
& national Cap Cap Season Cap Company
Income Index 500 Equity Equity Growth Growth Value Growth Value
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
25% 25% Y 25% 25% 25% N 25% 25% 25%
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
20% Y Y Y Y Y Y Y Y Y
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
N N N N N N N N N N
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
N N N N N N N N N N
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
Y Y Y Y Y Y N Y Y Y
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
Y Y Y Y Y Y Y Y Y Y
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
Y Y Y Y Y Y Y Y Y Y
------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- ------------ --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
EQUITY FUNDS (continued)
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Framling- Framlington
Acceler- ton Framling- Inter-national
Investments and ating Equity Emerging ton Growth
Investment Practices Growth Balanced Selection Markets Healthcare
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Options. A Fund may buy options
giving it the right to require a
buyer to buy a security held by the
Fund (put options), buy options
giving it the right to require a
seller to sell securities to the
Fund (call options), sell (write) Y Y Y Y Y Y
options giving a buyer the right to
require the Fund to buy securities
from the buyer or write options
giving a buyer the right to require the Fund to sell securities to the buyer
during a set time at a set price. Options may relate to stock indices,
individual securities, foreign currencies or futures contracts. See the SAI for
more details and additional limitations.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Reverse Repurchase Agreements. A
Fund sells securities and agrees to
buy them back later at an agreed Y Y Y Y Y Y
upon time and price. A method to
borrow money for temporary purposes.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Illiquid Securities. Typically
there is no ready market for these 15% 15% 15% 15% 15% 15%
securities, which inhibits the
ability to sell them and to obtain
their full market value, or there
are legal restrictions on their
resale by the Fund.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Lending Securities. May lend
securities to financial institutions 25% 25% 25% 25% 25% 25%
which pay for the use of the
securities. May increase return.
Slight risk of borrower failing
financially.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Key:
Y = investment allowed without restriction
N = investment not allowed
1 The limitation on margins and premiums for futures is 5% of a Fund's assets
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- --------
Real Estate
Equity
Growth Inter- Micro- Mid- Multi- Invest-ment Small- Small
& national Cap Cap Season Cap Company
Income Index 500 Equity Equity Growth Growth Value Growth Value
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- --------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- --------
Y Y Y Y Y Y Y Y Y Y
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- --------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- --------
Y Y Y Y Y Y Y Y Y Y
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- --------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- --------
15% 15% 15% 15% 15% 15% 15% 15% 15% 15%
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- --------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- --------
25% 25% 25% 25% 25% 25% 25% 25% 25% 25%
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ ------------- --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
BOND FUNDS
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
U.S.
Government
Investments and Bond Intermediate International Income
Investment Practices Fund Bond Fund Bond Fund Fund
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
Foreign Securities. Securities issued by
foreign governments and their agencies,
instrumentalities or political subdivisions,
supranational organizations, and foreign 25% 25% Y 25%
corporations.
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
Preferred Stock. May be convertible to common
stock. Preferred stock ranks senior to common
stock in capital structure and payment of
dividends. Y Y Y Y
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
Asset-Backed Securities. Includes debt
securities backed by mortgages, installment
sales contracts and credit card receivables. Y Y Y Y
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
Interest Rate and Currency Swaps. Agreement to
exchange payments calculated on the basis of
relative interest or currency rates. Y 1 Y1 Y1 Y1
Derivative instruments used solely for hedging.
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
Interest Rate Caps and Floors. Entitle
purchaser to receive payments of interest to
the extent that a specified reference rate N N Y N
exceeds or falls below a predetermined level.
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
Stripped Securities. Includes participations
in trusts that hold U.S. Treasury and agency
securities which represent either the interest
or principal payments on the securities or Y Y Y Y
combinations of both.
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
Reverse Repurchase Agreements. A Fund sells
securities and agrees to buy them back later
at an agreed upon time and price. A method to
borrow money for temporary purposes. Y Y Y Y
---------------------------------------------------- -------------- ------------------ ------------------ ---------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
BOND FUNDS (continued)
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
U.S.
Government
Investments and Bond Intermediate International Income
Investment Practices Fund Bond Fund Bond Fund Fund
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
Forward Foreign Currency Exchange Contracts.
Obligations of a Fund to purchase or sell a specific
currency at a future date at a set price. May
decrease a Fund's loss due to a change in currency
value, but also limits gains from currency changes. Y Y Y Y
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
U.S. Bank Obligations. U.S. dollar denominated bank
obligations, including certificates of deposit,
bankers' acceptances, bank notes, time deposits
issued by U.S. or savings institutions having total
assets in excess of $1 billion. Y Y Y Y
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
Supranational Organization Obligation. Fixed income
securities issued or guaranteed by supranational
organizations such as the World Bank. N N Y N
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
Guaranteed Investment Contracts. Agreements of a
Fund to make payments to an insurance company's
general account in exchange for a minimum level of
interest based on an index. Y Y Y Y
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
When-Issued Purchases and Forward Commitments.
Agreement by a Fund to purchase securities at a set
price, with payment and delivery in the future. The
value of the securities may change between the time
the price is set and payment. Not to be used for Y Y Y Y
speculation.
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
Illiquid Securities. Typically there is no ready
market for these securities, which limits the
ability to sell them for full market value, or they 15%2 15%2 15%2 15%2
are restricted as to resale.
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
Futures and Options on Futures.3 Contracts in which a Fund has the right or the
obligation to make delivery of, or receive, securities, the cash value of an
index or foreign currency. Used for hedging
purposes or to maintain liquidity. Y Y Y Y
---------------------------------------------------------- ------------- ---------------- ----------------- -----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
---------------------------------------------------------- ------------ ----------------- ----------------- -----------------
U.S.
Government
Investments and Bond Intermediate International Income
Investment Practices Fund Bond Fund Bond Fund Fund
---------------------------------------------------------- ------------ ----------------- ----------------- -----------------
---------------------------------------------------------- ------------ ----------------- ----------------- -----------------
Options. A Fund may buy options giving it the right to require a buyer to buy a
security held by the Fund (put options), buy options giving it the right to
require a seller to sell securities to the Fund (call options), sell (write)
options giving a buyer the right to require the Fund to buy securities from the
buyer or write options giving a buyer the right
to require the Fund to sell securities to the buyer Y Y Y Y
during a set time at a set price. Options may relate
to stock indices, individual securities or foreign
currencies. See the SAI for more details and
additional limitations.
---------------------------------------------------------- ------------ ----------------- ----------------- -----------------
---------------------------------------------------------- ------------ ----------------- ----------------- -----------------
Lending Securities. May lend securities to financial
institutions which pay for the use of securities.
May increase return. Slight risk of borrower 331/3% 331/3% 25% 331/3%
declaring bankruptcy.
---------------------------------------------------------- ------------ ----------------- ----------------- -----------------
KEY:
Y = Investment allowed without restriction N = Investment not allowed 1 Interest
rate swaps only 2 Based on net assets
3 The limitation on margins and premiums for futures is 5% of a Fund's assets
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TAX-FREE FUNDS AND SHORT TERM TREASURY FUND
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
Michigan Tax-Free
Short Term Triple Tax-Free Intermediate
Investments and Treasury Tax-Free Bond Bond
Investment Practices Fund Bond Fund Fund Fund
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
Municipal Obligations. Payable from the issuer's general
revenue, the revenue of a specific project, current N Y Y Y
revenues or a reserve fund.
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
Michigan Municipal Obligations. Municipal Obligations
issued by the State of Michigan and its political N Y Y Y
subdivisions.
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
Foreign Securities. Obligations issued by foreign
governments and their agencies, instrumentalities or
political subdivisions, supranational organizations, and N 10% 10% 10%
foreign corporations.
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
Guaranteed Investment Contracts. Agreements of a Fund to
make payments to an insurance company's general account
in exchange for a minimum level of interest based on an N Y Y Y
index.
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
When-Issued Purchases and Forward Commitments. Agreement
by a Fund to purchase securities at a set price, with
payment and delivery in the future. The value of the
securities may change between the time the price is set Y Y Y Y
and payment. May not be used for speculation.
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
Illiquid Securities. Typically there is no ready market
for these securities, which limits the ability to sell 115% 115% 115% 115%
them for full market value, or they are restricted as to
resale.
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
Lending Securities. May lend securities to financial
institutions which pay for the use of securities. May
increase return. Slight risk of borrower declaring 331/3% 331/3% 331/3% 331/3%
bankruptcy.
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
U.S. Treasury Securities. Includes U.S. Treasury bills,
notes and bonds. Y Y Y Y
- ----------------------------------------------------------- -------------- ----------------- ---------------- -----------------
KEY:
Y = Investment allowed without restriction N = Investment not allowed 1Based on
net assets
</TABLE>
<PAGE>
MONEY MARKET FUNDS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
<PAGE>
- ----------------------------------------------------------------- -------------- ------------- ------------
U.S.
Investments and Cash Tax-Free Treasury
Investment Practices Investment Money Money
- -----------------------------------------------------------------
- ----------------------------------------------------------------- -------------- ------------- ------------
Corporate Obligations:
o Commercial paper (including paper of Canadian cos., Y N N
Canadian branches of U.S. cos., and Europaper)
o Corporate bonds Y N N
o Other short-term obligations Y N N
o Variable Master Demand Notes Y N N
o Bond Debentures Y N N
o Notes Y N N
- ----------------------------------------------------------------- -------------- ------------
- ----------------------------------------------------------------- -------------- ------------- ------------
Asset-backed Securities. Includes debt securities backed by Y N N
mortgages, installment sales contracts and credit card
receivables.
- ----------------------------------------------------------------- -------------- ------------
- ----------------------------------------------------------------- -------------- ------------- ------------
U.S. Government Obligations:
o Issued or guaranteed by U.S. Government Y N Y
o Issued or guaranteed by U.S. Government agencies and
instrumentalities Y N N
- ----------------------------------------------------------------- -------------- ------------- ------------
-------------- ------------- ------------
Bank Obligations. U.S. dollar- denominated only; includes CDs, Y N N
bankers' acceptances, bank notes, deposit notes and
interest-bearing savings and time deposits, issued by U.S. or
foreign banks or savings institutions with total assets greater than $1 billion.
- ----------------------------------------------------------------- -------------- ------------
- ----------------------------------------------------------------- -------------- ------------- ------------
Foreign Banks and Foreign Branches of Domestic Banks. Includes 25% N N
ECDs, ETDs, CTDs, Schedule Bs, Yankee CDs and Yankee BAs.
- ----------------------------------------------------------------- -------------- ------------- ------------
- ----------------------------------------------------------------- -------------- ------------- ------------
Stripped Securities:
o Participation in trusts that hold U.S. treasury and Y Y N
agency securities
o U.S. Treasury-issued receipts Y Y 35%
o Non-U.S. Treasury receipts Y Y N
- ----------------------------------------------------------------- -------------- ------------
- ----------------------------------------------------------------- -------------- ------------- ------------
Municipal Revenue Obligations. Obligations the interest on May be more
which is paid solely from the revenues of similar projects. N than 25% N
- ----------------------------------------------------------------- -------------- ------------
- ----------------------------------------------------------------- -------------- ------------- ------------
Municipal Obligations. Payable from the issuer's general 5% 25% in any N
revenue, the revenue of a specific project, current revenues or one state
a reserve fund.
- ----------------------------------------------------------------- -------------- ------------- ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MONEY MARKET FUNDS (Continued)
- ------------------------------------------------------------- ------------- ------------- -----------------
Investments and Cash Tax-Free U.S. Treasury
Investment Practices Investment Money Money
- -------------------------------------------------------------
- ------------------------------------------------------------- ------------- ------------- -----------------
Reverse Repurchase Agreements. A Fund sells securities and Y * N Y *
agrees to buy them back later at an agreed upon time and
price. A method to borrow money for temporary purposes.
- ------------------------------------------------------------- ------------- ------------- -----------------
Guaranteed Investment Contracts. Agreements of a Fund to Y N N
make payments to an insurance company's general account in
exchange for a minimum level of interest based on an index.
- ------------------------------------------------------------- ------------- ------------- -----------------
When-Issued Purchases and Forward Commitments. Agreement Not Not Not expected to
by a Fund to purchase securities at a set price, with expected to expected to exceed 25%
payment and delivery in the future. The value of the exceed 25% exceed 25%
securities may change between the time the price is set and
payment. Not to be used for speculation.
- ------------------------------------------------------------- ------------- ------------- -----------------
Foreign Securities. Debt obligations issued by foreign 25% N N
governments, and their agencies, instrumentalities or
political subdivisions, supranational organizations, and
foreign corporations or convertible into foreign stock.
- ------------------------------------------------------------- ------------- ------------- -----------------
Illiquid Securities. Typically there is no ready market 10% 10% 10%
for these securities, which limits the ability to sell them
for full market value, or there are legal restrictions on
their resale by a Fund.
- ------------------------------------------------------------- ------------- ------------- -----------------
- ------------------------------------------------------------- ------------- ------------- -----------------
Lending Securities. May lend securities to financial 331/3% 331/3% 331/3%
institutions which pay for the use of securities. May
increase return. Slight risk of borrower failing
financially.
- ------------------------------------------------------------- ------------- ------------- -----------------
Key:
Y= investment allowed without restriction
N= investment not allowed
* = deemed borrowing; subject to the borrowing limitations
</TABLE>
<PAGE>
What are the Risks of Investing in the Funds?
All Funds
Consistent with a long-term investment approach, investors in a Fund
should be prepared and able to maintain their investments during periods of
adverse market conditions. By itself, no Fund constitutes a balanced investment
program and there is no guarantee that any Fund will achieve its investment
objective since there is uncertainty in every investment.
A fund's risk is mostly dependent on the types of securities it
purchases and its investment techniques. Certain Funds are authorized to use
options, futures, and forward foreign currency exchange contracts, which are
types of derivative instruments. Derivative instruments are instruments that
derive their value from a different underlying security, index or financial
indicator. 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) 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; (5) leverage risk, that is, the risk that
adverse price movements in an instrument can result in a loss substantially
greater than the Fund's initial investment in that instrument (in some cases,
the potential loss is unlimited); and (6) particularly in the case of
privately-negotiated instruments, the risk that the counterparty will not
perform its obligations, which could leave the Fund worse off than if it had not
entered into the position.
The risks of the various investment techniques the Funds use are
described in more detail in the SAI.
Equity Funds
Investing in these Funds may be less risky than investing in individual
stocks due to the diversification of investing in a portfolio of many different
stocks; however, such diversification does not eliminate all risks. Because the
Funds invest mostly in Equity Securities, rises and falls in the stock market in
general, as well as in the value of particular Equity Securities held by the
Funds, can affect the Funds' performance. Your investment in the Funds is not
guaranteed. The net asset value of the Funds will change daily and you might not
recoup the amount you invest in the Funds.
Bond Funds, Tax-Free Funds and Short Term Treasury Fund
The value of each Fund's shares, like the value of most securities,
will rise and fall in response to changes in economic conditions, interest rates
and the market's perception of the underlying securities held by the Fund.
Investing in the Funds may be less risky than investing in individual Fixed
Income Securities due to the diversification of investing in a portfolio
containing many different Fixed Income Securities; however, such diversities
does not eliminate all risks. The Funds invest mostly in Fixed Income
Securities, whose values typically rise when interest rates fall and fall when
interest rates rise. Fixed Income Securities with shorter maturities (time
period until repayment) tend to be less affected by interest rate changes, but
generally offer lower yields than securities with longer maturities. Current
yield levels should not be considered representative of yields for any future
time. Securities with variable interest rates may exhibit greater price
variations than ordinary securities. Zero coupon bonds are subject to greater
market fluctuations from changing interest rates than debt obligations of
comparable maturities which make current distributions of interest.
Money Market Funds
Each Money Market Fund attempts to maintain a constant net asset value of
$1.00 per share. However, your investment in the Funds is not guaranteed.
Although the Cash Investment Fund and U.S. Treasury Money Market Fund
expect under normal market conditions to be as fully invested as possible, each
Fund may hold uninvested cash pending investment of late payments for purchase
orders (or other payments) or during temporary defensive periods. Uninvested
cash will not earn income. In general, investments in the Cash Investment Fund
and U.S. Treasury Money Market Fund will not earn as high a level of current
income as longer-term or lower quality securities. Longer-term and lower quality
securities, however, generally have less liquidity, greater market risk and more
fluctuation in market value.
Although the Tax-Free Money Market Fund may invest more than 25% of its
nets assets in municipal revenue obligations, the interest on which is paid
solely from revenues of similar projects, the Tax-Fee Money Market Fund does not
intend to do so on a regular basis. If it does, the Fund will be riskier than a
fund which does not concentrate to such an extent on similar projects.
Micro-Cap Equity Fund, Small-Cap Value Fund, Mid-Cap Growth Fund
and Small Company Growth Fund
The Advisor believes that smaller companies can provide greater growth
potential and potentially higher returns than larger firms. Investing in smaller
companies, however, is riskier than investing in larger companies. The stock of
smaller companies may trade infrequently and in lower volume, making it more
difficult for a Fund to sell the stocks of smaller companies when it chooses.
Smaller companies may have limited product lines, markets, financial resources
and distribution channels, which makes them more sensitive to changing economic
conditions. Stocks of smaller companies historically have had larger
fluctuations in price than stocks of larger companies included in the S&P 500.
Framlington Emerging Markets Fund, Framlington International Growth Fund,
International Equity Fund and International Bond Fund
Investing in any of the Funds, with its larger investment in Foreign
Securities, may involve more risk than investing in a U.S. fund for the
following reasons: (1) there may be less public information available about
foreign companies than is available about U.S. companies; (2) foreign companies
are not generally subject to the uniform accounting, auditing and financial
reporting standards and practices applicable to U.S. companies; (3) foreign
markets have less volume than U.S. markets, and the securities of some foreign
companies are less liquid and more volatile than the securities of comparable
U.S. companies; (4) there may be less government regulation of stock exchanges,
brokers, listed companies and banks in foreign countries than in the United
States.; (5) the Fund may incur fees on currency exchanges when it changes
investments from one country to another; (6) the Fund's foreign investments
could be affected by expropriation, confiscatory taxation, nationalization of
bank deposits, establishment of exchange controls, political or social
instability or diplomatic developments; (7) fluctuations in foreign exchange
rates will affect the value of the Fund's portfolio securities, the value of
dividends and interest earned, gains and loses realized on the sale of
securities, net investment income and unrealized appreciation or depreciation of
investments; and (8) possible imposition of dividend or interest withholding by
a foreign country.
Real Estate Equity Investment Fund
The Fund will invest primarily in the real estate industry and may
invest more than 25% of its assets in any one sector of the real estate
industry. As a result, the Fund will be particularly vulnerable to declines in
real estate prices and new construction rates. The Fund may be riskier than a
fund investing in a broader range of industries.
Framlington Healthcare Fund
The Fund will invest most of its assets in the healthcare industry,
which is particularly affected by rapidly changing technology and extensive
government regulation, including cost containment measures. The Fund may be
riskier than a fund investing in a broader range of industries.
International Bond Fund, Michigan Triple Tax-Free Bond Fund and Tax-Free
Intermediate Bond Fund
These Funds are non-diversified and hold securities of a limited number
of issuers. The Funds may, therefore, pose a greater risk to investors than an
investment in a diversified fund. The Michigan Triple Tax-Free Bond Fund invests
primarily in Michigan Municipal Obligations. If Michigan issuers suffer serious
financial difficulties jeopardizing their ability to pay their obligations, the
value of such Fund may decline.
- -------------------------------------------------------------------------------
PERFORMANCE
- -------------------------------------------------------------------------------
How is the Funds' Performance Calculated?
There are various ways in which the Funds may calculate and report
their performance. Performance is calculated separately for each class of
shares.
One method is to show a Fund's total return. Cumulative total return is
the percentage change in the value of an amount invested in a class of shares of
a Fund over a stated period of time and takes into account reinvested dividends.
Cumulative total return most closely reflects the actual performance of a Fund.
Average annual total return refers to the average annual compounded
rates of return over a specified period on an investment in shares of a Fund
determined by comparing the initial amount invested to the ending redeemable
value of the amount, taking into account reinvested dividends.
Each Fund may also publish its current yield. Yield is the net
investment income generated by a share of a Fund during a 30-day period divided
by the maximum offering price on the 30th day.
The current yield of shares in the Money Market Funds refers to the net
income generated by an investment in shares over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized."
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. "Effective yield" is calculated similarly but,
when annualized, the income earned by an investment in a class is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. The
"tax-equivalent yield" of shares of the Tax-Free Money Market Fund may also be
quoted from time to time, which shows the level of taxable yield needed to
produce an after-tax equivalent to the tax-free yield of a particular class.
This is done by increasing the yield (calculated as above) by the amount
necessary to reflect the payment of Federal and/or state income taxes at a
stated rate.
You should be aware that (i) past performance does not indicate how a
Fund will perform in the future; and (ii) each Fund's return and net asset value
will fluctuate, so you cannot necessarily use a Fund's performance data to
compare it to investment in certificates of deposit, savings accounts or other
investments that provide a fixed or guaranteed yield.
Each Fund may compare its performance to that of other mutual funds,
such as the performance of similar funds reported by Lipper Analytical Services,
Inc. or information reported in national financial publications (such as Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times) or
in local or regional publications. Each Fund may also compare its total return
to broad-based indices. These indices show the value of selected portfolios of
securities (assuming reinvestment of interest and dividends) which are not
managed by a portfolio manager. The Funds may report how they are performing in
comparison to the Consumer Price Index, an indication of inflation reported by
the U.S. Government.
Where Can I Obtain Performance Data?
The Wall Street Journal and certain local newspapers report information
on the performance of mutual funds. In addition, performance information is
contained in the Funds' annual report dated June 30 of each year and semi-annual
report dated December 31 of each year, which will automatically be mailed to
shareholders. To obtain copies of financial reports or performance information,
call (800) 438-5789.
- ------------------------------------------------------------------------------
PURCHASES AND EXCHANGES OF SHARES
- ------------------------------------------------------------------------------
Customers of banks and other institutions, and the immediate family
members of such Customers, that have entered into agreements with us to provide
shareholder services for Customers may purchase Class K Shares. Customers may
include individuals, trusts, partnerships and corporations. Each Fund also
issues other classes of shares, which have different sales charges, expense
levels and performance. Call (800) 438-5789 to obtain more information
concerning the Funds' other classes of shares.
What Price Do I Pay For Shares?
Class K Shares are sold at the "net asset value next determined" by the
Funds without any initial sales charge. Except in certain limited circumstances,
each Fund determines its net asset value ("NAV") on each day the New York Stock
Exchange is open for trading (a "Business Day") at the close of such trading
(normally 4:00 p.m. Eastern time). The Money Market Funds also determine their
NAVs at 2:45 p.m. (Eastern time). If we receive your purchase order and payment
for a Money Market Fund by 2:45 p.m. (Eastern time) on a Business Day, you will
receive dividends on that day. NAV is calculated separately for each class of
shares of a Fund. NAV is calculated by totaling the value of all of the assets
of a Fund allocated to a particular class of shares, subtracting the Fund's
liabilities and expenses charged to that class and dividing the result by the
number of shares of that class outstanding.
When Can I Purchase Shares?
Shares of each Fund are sold on a continuous basis and can be purchased
on any Business Day.
How Can I Purchase Shares?
All share purchases are effected through a Customer's account at an
institution and confirmations of share purchases 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.
You will not be issued a share certificate, unless you request one in
writing. We reserve the right to (i) reject any purchase order if, in our
opinion, it is in the Funds' best interest to do so and (ii) suspend the
offering of shares of any Class for any period of time.
You may pay for shares of each Fund, other than the Real Estate Equity
Investment Fund, with securities which the Fund is allowed to hold.
- ------------------------------------------------------------------------------
REDEMPTIONS OF SHARES
- ------------------------------------------------------------------------------
What Price Do I Receive for Redeemed Shares?
The redemption price is the
net asset value next
determined after we
receive the redemption
request in proper
order. When Can I
Redeem Shares?
You can redeem shares on any Business Day, provided all required
documents have been received by the Transfer Agent. A Fund may temporarily stop
redeeming shares when the NYSE is closed or trading on the NYSE is restricted,
when an emergency exists and the Funds cannot sell their assets or accurately
determine the value of their assets or if the SEC orders the Funds to suspend
redemptions.
How Can I Redeem Shares?
Redemption orders are effected at the net asset value per share next
determined after receipt of the order by the Transfer Agent. Shares held by an
institution on behalf of its customers must be redeemed in accordance with
instructions and limitations pertaining to the account at that institution.
o Free Checkwriting. Free checkwriting is available to holders of Class K
Shares of the Bond Funds (other than the International Bond Fund),
Tax-Free Funds and Money Market Funds who complete the Signature Card
Section of the Account Application Form. You may write checks in the
amount of $500 or more and you may not close a Fund account by writing
a check. We may change or terminate this program on 30 days' notice to
you.
When Will I Receive Redemption Amounts?
If we receive a redemption order for a Fund before 4:00 p.m. (Eastern
time) on a Business Day, we will normally wire payment to the redeeming
institution on the next Business Day. With respect to a Money Market Fund, if we
receive a redemption order before noon (Eastern time) on a Business Day, we will
normally wire payment on the same Business Day. We may delay wiring redemption
proceeds for up to seven days if we feel an earlier payment would have a
negative impact on the Fund.
- ------------------------------------------------------------------------------
STRUCTURE AND MANAGEMENT OF THE FUNDS
- ------------------------------------------------------------------------------
How are the Funds Structured?
The Trust, the Company and Framlington are each an open-end management
investment company, which is a mutual fund that sells and redeems shares every
day that it is open for business. They are managed under the direction of their
governing Boards of Trustees and Directors, which are responsible for the
overall management of the Trust, the Company and Framlington and supervise the
Funds' service providers. The Trust and Framlington are organized as
Massachusetts business trusts and the Company is a Maryland corporation.
Who Manages and Services the Funds?
Investment Advisor. The Funds' investment advisor is Munder Capital Management,
a Delaware general partnership with its principal offices at 480 Pierce Street,
Birmingham, Michigan 48009. The principal partners of the Advisor are MCM,
Munder Group LLC, Woodbridge and WAM Holdings, Inc. ("WAM"). MCM was founded in
February, 1985 as a Delaware corporation and was a registered investment
advisor. Woodbridge and WAM are indirect, wholly-owned subsidiaries of Comerica
Incorporated. Mr. Lee P. Munder, the Advisor's chief executive officer,
indirectly owns or controls a majority of the partnership interests in the
Advisor. As of June 30, 1997, the Advisor and its affiliates had approximately
$41 billion in assets under management, of which $22 billion were invested in
equity securities, $8 billion were invested in money market or other short-term
instruments, and $11 billion were invested in other fixed income securities.
The Advisor provides overall investment management for each Fund (other
than the Framlington Funds), provides research and credit analysis, and is
responsible for all purchases and sales of portfolio securities.
The Advisor is responsible for the overall management of the
Framlington Funds. Framlington Overseas Investment Management Limited, the
sub-advisor of the Framlington Funds, is responsible for buying and selling
securities for the Framlington Funds. It is an indirect 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.
During the fiscal year ended June 30, 1997, the Advisor was paid an
advisory fee at an annual rate based on the average daily net assets of each
Fund (after waivers and/or expense reimbursements, if any) as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Accelerating Growth Fund 0.75% Balanced Fund 0.65%
Framlington Emerging Markets Fund 1.25% Framlington Healthcare Fund 1.00%
Framlington International Growth Fund 1.00% Growth & Income Fund 0.75%
Index 500 Fund 0.07% International Equity Fund 0.75%
Micro-Cap Equity Fund 1.00% Mid-Cap Growth Fund 0.74%
Multi-Season Growth Fund 1.00% Real Estate Equity Investment Fund 0.74%
Small-Cap Value Fund 0.75% Small Company Growth Fund 0.75%
Value Fund 0.74% Bond Fund 0.50%
Intermediate Bond Fund 0.50% International Bond Fund 0.50%
U.S. Government Income Fund 0.50% Michigan Triple Tax-Free Bond Fund 0.50%
Tax-Free Bond Fund 0.50% Tax-Free Intermediate Bond Fund 0.50%
Short Term Treasury Fund 0.25% Cash Investment Fund 0.35%
Tax-Free Money Market Fund 0.35% U.S. Treasury Money Market Fund 0.35%
</TABLE>
The Equity Selection Fund had not commenced operations as of the date of this
Prospectus.
The Advisor waived advisory fees during the past fiscal year for the
Index 500 Fund and the Multi-Season Growth Fund. The Advisor is entitled to
receive an annual fee equal to .20% of the first $250 million of the Index 500
Fund's average daily net assets, .12% of the next $250 million of the Fund's
average daily net assets and .07% of the Fund's average daily net assets over
$500 million. The Advisor is also entitled to receive an annual fee equal to
1.00% of the first $500 million of the Multi-Season Growth Fund's average daily
net assets and .75% of the Fund's average daily net assets over $500 million.
The Sub-Advisor is entitled to receive an advisory fee equal to
one-half of the fee paid to the Advisor by each of the Framlington Funds as
compensation for its services as Sub-Advisor. The Advisor pays fees to the
Sub-Advisor and the Framlington Funds pay no fees directly to the Sub-Advisor.
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. The Advisor may make such payments out of its own
resources and there are no additional costs to the Funds or their shareholders.
The Advisor selects broker-dealers to execute portfolio transactions
for the Funds based on best price and execution terms. The Advisor may consider
as a factor the number of shares sold by the broker-dealer.
Performance Information. The tables below contain performance information for
certain Funds created through the conversion of a common or collective trust
fund which had investment objectives and policies similar to those of the
corresponding Funds. Immediately before and after the conversion, the same
person managed both the common or collective trust fund and the corresponding
Fund.
The table for each Fund
o includes the performance of the common or collective trust fund and the
performance of the corresponding Fund blended together o assumes that net invest
income and dividends have been reinvested o assumes that the common or
collective trust fund paid the same levels of fees and expenses as the
corresponding Fund currently pays o does not reflect any potential negative
impact on the common and collective trust funds' performance if they had been
subjected to
the same regulatory restrictions as the corresponding Fund
o indicates past performance only and does not predict future results
[Numbers will be updated to June 30, 1997]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder Accelerating
Period Ended Growth Fund
December 31, 1996 (Class K)* S&P 500**
----------------- --------- -------
1 Year 13.07% 22.96%
3 Years 9.40% 19.67%
5 Years .............................................. 11.06% 15.22%
Inception on January 1, 1990 12.34% 14.40%
- --------------------------
<FN>
* Converted from collective trust fund to mutual fund on November 23, 1992.
** S&P 500 performance shows total return in U.S. dollars but does not reflect the deduction of fees, expenses and taxes.
Source: Lipper Analytical Services, Inc.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder Small Company
Period Ended Growth Fund Russell 2000
December 31, 1996 (Class K)* Index**
----------------- --------- -----
1 Year 37.17% 16.49%
3 Years 20.24% 13.68%
5 Years .............................................. 18.30% 15.64%
10 Years.................................16.95%........ 12.41%
Inception on December 31, 1982......................... 15.29% 12.71%
- --------------------------
<FN>
* Converted from collective trust fund to mutual fund on November 23, 1992.
** Russell 2000 Index performance shows total return in U.S. dollars but does not reflect the deduction of fees,
expenses and taxes. Source: Lipper Analytical Services, Inc.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder International
Period Ended Equity Fund FT/S&P Actuaries
December 31, 1996 (Class K)* World Index ex. U.S.**
1 Year 10.41% 6.48%
3 Years 4.89% 8.42%
5 Years .............................................. 9.14% 7.93%
Inception on September 30, 1990........................ 10.37% 10.31%
- --------------------------
<FN>
* Converted from collective trust fund to mutual fund on November 23, 1992.
** FT/S&P Actuaries World Index ex. U.S. performance shows total return in U.S. dollars but does not reflect the deduction
of fees, expenses and taxes. Source: Ibbotson Associates, Inc.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder
Period Ended Index 500 Fund S&P 500
December 31, 1996 (Class K)* Index**
----------------- ---------- -----
1 Year 22.47% 22.96%
3 Years 19.34% 19.67%
5 Years .............................................. 14.87% 15.22%
Inception on January 27, 1988 15.51% 16.08%
- --------------------------
<FN>
* Converted from collective trust fund to mutual fund on December 7, 1992.
** S&P 500 Index performance shows total return in U.S. dollars but does not reflect the deduction of fees, expenses
and taxes. Source: Lipper Analytical Services, Inc.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder Lehman Brothers
Period Ended Bond Fund Gov't/Corp. Bond
December 31, 1996 (Class K)* Index**
----------------- ---------- -----
1 Year 2.72% 2.90%
3 Years 5.10% 5.79%
5 Years .............................................. 5.48% 7.18%
10 Years 7.28% 8.38%
- --------------------------
<FN>
* Converted from collective trust fund to mutual fund on November 23, 1992.
** Lehman Brothers Government/Corporate Bond Index performance shows total return in U.S. dollars but does not
reflect the deduction of fees, expenses and taxes.
Source: Lipper Analytical Services, Inc.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder
U.S. Government Lehman Brothers
Period Ended Income Fund Gov't/Corp. Bond
December 31, 1996 (Class K)* Index**
----------------- ---------- -----
1 Year 3.13% 2.90%
3 Years 4.43% 5.79%
5 Years .............................................. 6.32% 7.18%
10 Years 7.48% 7.76%
- --------------------------
<FN>
* Converted from collective trust fund to mutual fund on July 5, 1994.
** Lehman Brothers Government/Corporate Bond Index performance shows total return in U.S. dollars but does not
reflect the deduction of fees, expenses and taxes.
Source: Lipper Analytical Services, Inc.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder Lehman Brothers
Intermediate Intermediate
Period Ended Bond Fund Gov't/Corp.
December 31, 1996 (Class K)* Bond Index**
----------------- ---------- ----------
1 Year 3.13% 4.05%
3 Years 4.49% 5.58%
5 Years .............................................. 5.65% 6.53%
10 Years 7.04% 7.91%
Inception on March 31, 1982............................ 9.22% 10.47%
- --------------------------
<FN>
* Converted from collective trust fund to mutual fund on November 20, 1992.
** Lehman Brothers Intermediate Government/Corporate Bond Index performance shows total return in U.S. dollars but does
not reflect the deduction of fees, expenses and taxes.
Source: Lipper Analytical Services, Inc.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder
Tax-Free Lehman
Period Ended Bond Fund 15-Year Muni
December 31, 1996 (Class K)* Bond Index**
----------------- ---------- ----------
1 Year 2.38% 4.65%
3 Years 4.24% 5.44%
5 Years .............................................. 6.67% 8.05%
10 Years 6.57% N/A%
- --------------------------
<FN>
* Converted from common trust fund to mutual fund on July 5, 1994.
** Lehman 15-Year Municipal Bond Index performance shows total return in U.S. dollars but does not reflect the deduction
of fees, expenses and taxes.
Source: Lipper Analytical Services, Inc.
</FN>
</TABLE>
Indices
The S&P 500 is an unmanaged index of common stock prices, including
reinvestment of dividends.
The Russell 2000 Index is a capitalization weighted total return index
which is comprised of 2,000 of the smallest capitalized U.S. domiciled companies
whose stock is traded in the United States on the New York Stock Exchange,
American Stock Exchange and the NASDAQ.
The FT/S&P Actuaries World Index ex. U.S. is an unmanaged index used to
portray global equity market excluding the U.S. The Index is weighted based on
the market capitalization of those stocks selected to represent each country and
includes gross reinvestment of dividends.
The Lehman Brothers Government/Corporate Bond Index is weighted
composite of (i) Lehman Brothers Government Bond Index, which is comprised of
all publicly issued, non-convertible debt of the U.S. Government or any agency
thereof, quasi-Federal corporations, and corporate debt guaranteed by the U.S.
Government and (ii) Lehman Brothers Corporate Bond Index, which is comprised of
all public fixed-rate, non-convertible investment-grade domestic corporate debt,
excluding collateralized mortgage obligations.
The Lehman Brothers Intermediate Government/Corporate Bond Index is a
weighted composite of (i) Lehman Brothers Intermediate Government Bond Index,
which is comprised of all publicly issued, non-convertible debt of the U.S.
Government or any agency thereof, quasi-Federal corporations and corporate debt
guaranteed by the U.S. Government with a maturity of between one and ten years
and (ii) Lehman Brothers Corporate Bond Index.
The Lehman Brothers 15-Year Municipal Bond Index is a performance
benchmark for the long-term investment-grade tax-exempt bond market.
Performance of Framlington Funds Managed by the Sub-Advisor
The tables below contain certain performance information 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
Framlington Funds. See "Fund Choices" and "What are the Funds' Investments and
Investment Practices." 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 Framlington 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 Framlington
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 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 December 31, 1996.
[Numbers to be updated to December 31, 1996.]
You should not rely on the following performance data of the
Sub-Advisor's client accounts as an indication of future performance of the
Framlington Funds. It should be noted that the management of the Funds will be
affected by regulatory requirements under the Investment Company Act of 1940
(the "1940 Act") and requirements of the Internal Revenue Code of 1986, as
amended, to qualify as a regulated investment company.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
U.K. S&P Healthcare
Period Ended Health Composite Index
September 30, 1996 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%
</TABLE>
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
reflective of U.K. tax. Source: Micropal.
S&P Healthcare Composite Index performance shows capital change in U.S.
Dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Datastream.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
MSCI
Canadian 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%
</TABLE>
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 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 tracked by S&P. 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.
Transfer Agent. First Data Investor Services Group, Inc. is the Funds'
transfer agent. Investor Services Group is a wholly-owned subsidiary of First
Data Corporation and is located at 53 State Street, Boston, Massachusetts 02109.
Administrator. State Street Bank and Trust Company ("State Street" or the
"Administrator") is the Funds' administrator. State Street is located at 225
Franklin Street, Boston, Massachusetts 02110. State Street generally assists the
Company, the Trust and Framlington in all aspects of their administration and
operations including the maintenance of financial records and fund accounting.
As compensation for its services, State Street is entitled to receive fees,
based on the aggregate daily net assets of the Funds and certain other
investment portfolios that are advised by the Advisor for which it provides
services, computed daily and payable monthly at the rate of:
- ---------------------.
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Funds.
Custodian. Comerica Bank (the "Custodian"), whose principal business address is
One Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides
custodial services to the Funds. No compensation is paid to the Custodian for
its services. State Street also serves as Sub-Custodian to the Funds. As
compensation for its services, the Sub-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
Sub-Custodian provides services, computed daily and payable monthly at an annual
rate of .01% of average daily net assets. The Sub-Custodian also receives
certain transaction based fees.
Distributor. Funds Distributor Inc. is the distributor of the Funds' shares
and is located at 60 State Street, Boston, Massachusetts 02109. It markets and
sells the Funds' shares.
The Funds have 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 Funds. The agreements require the
institutions to provide shareholder services to their Customers who from time to
time own of record or beneficially Class K Shares in return for payment by a
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. Payments
under the Class K Plan are not tied exclusively to the shareholder expenses
actually incurred by the institutions and the payments may exceed service
expenses actually incurred.
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 the Funds 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 inquires from
Customers concerning their investment in Class K Shares; arranging for bank
wires; and providing such other similar services as may be reasonably requested.
For an additional description of the services performed by the
Administrator, the Transfer Agent, the Custodian, the Sub-Custodian and the
Distributor, see the SAI.
What are My Rights as a Shareholder?
All shareholders have equal voting, liquidation and other rights. You
are entitled to one vote for each share you hold and a fractional vote for each
fraction of a share you hold. You will be asked to vote on matters affecting the
Trust, the Company or Framlington as a whole and affecting your particular Fund.
You will not vote by Class unless expressly required by law or when the Trustees
or Directors determine the matter to be voted on affects only the interests of
the holders of a particular class of shares. The Trust, the Company and
Framlington will not hold annual shareholder meetings, but special meetings may
be held at the written request of shareholders owning more than 10% of
outstanding shares for the purpose of removing a Trustee or Director. Under
Massachusetts law, it is possible that a shareholder may be personally liable
for the Trust's or Framlington's obligations. If a shareholder were required to
pay a debt of a Fund, however, the Trust and Framlington have committed to
reimburse the shareholder in full from their assets. The SAI contains more
information regarding voting rights.
Comerica Bank currently has the right to vote a majority of the
outstanding shares of the Funds as agent, custodian or trustee for its customers
and therefore it is considered to be a controlling person of the Trust, the
Company and Framlington.
- -----------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
When Will I Receive Distributions From the Funds?
As a shareholder, you are entitled to your share of net income and
capital gains, if any, on a Fund's investments. The Funds pass their earnings
along to investors in the form of dividends. Dividend distributions are the
dividends or interest earned on investments after expenses. The Accelerating
Growth Fund, Balanced Fund, Growth & Income Fund, Small Company Growth Fund and
International Bond Fund pay dividends quarterly. The Equity Selection Fund,
Framlington Emerging Markets Fund, Framlington Healthcare Fund, Framlington
International Growth Fund, International Equity Fund, Micro-Cap Equity Fund,
Mid-Cap Growth Fund, Multi-Season Growth Fund, Small-Cap Value Fund and Value
Fund pay dividends at least annually. The Bond Funds (other than the
International Bond Fund), the Tax-Free Funds and the Money Market Funds pay
dividends monthly.
Each Fund's net realized capital gains (including net short-term
capital gains), if any, are distributed at least annually.
It is possible that a Fund may make a distribution in excess of the
Fund's current and accumulated earnings and profits. You will treat such a
distribution as a return of capital which is applied against and reduces your
basis in your shares. To the extent that the amount of any such distribution
exceeds your basis in your shares, the excess will be treated by you as gain
from a sale or exchange of the shares.
How Will Distributions Be Made?
Dividend and capital gains distributions will be paid in additional
shares of the same class of a Fund. If you wish to receive distributions in
cash, either indicate this request on your Account Application Form or notify
the Fund at (800) 438-5789.
Are There Tax Implications of My Investments in the Funds?
This section contains a brief summary of the tax implications of
ownership in the Funds' shares. A more detailed discussion of Federal income tax
considerations is contained in the SAI. You should consult your tax advisor
regarding the impact of owning the Funds' shares on your own personal tax
situation including the applicability of any state and local taxes.
Each Fund intends to continue to qualify as a regulated investment
company under the Internal Revenue Code, in which case it generally pays no
Federal income tax on the earnings or capital gains it distributes to
shareholders. Dividends of investment company income by each Fund will be
taxable to you as ordinary income, unless you are exempt from Federal income
taxes. Dividend's from a Fund's long-term capital gains are taxable on a capital
gain (regardless of how long you have held the shares). Please note that the
above tax treatment applies regardless of whether you receive your distributions
in cash or additional shares. Federal income taxes for distributions to an IRA
or to a qualified retirement plan are deferred. Income dividends will qualify
for the dividends received deduction for corporations to the extent of the total
qualifying dividends received by the distributing Fund from domestic
corporations for the year. Any distribution that is declared in October,
November or December but not actually paid until January of the following year
will be taxable in the year declared. When you redeem, transfer or exchange
shares, you may have a taxable gain or loss depending on whether the price you
pay for the shares has a value higher or longer than your tax basis in the
shares. If you hold the shares for six months or less, and during that time you
received a capital gain dividend, any loss you realize on the sale of those
shares will be treated as a long-term loss to the extent of the earlier
distribution.
You will receive from each Fund in which you are a shareholder shortly
after the end of each year, a statement of the amount and nature of the
distributions made to you during the year.
Dividends and certain interest income earned from foreign securities by
the International Equity Fund will, and the other Funds may, be subject to
foreign withholding or other taxes. Under certain circumstances the
International Equity Fund may be in a position (in which case it would)
"pass-through" to you the right to a credit or deduction for income or other tax
credits earned from foreign investments.
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 electing 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.
- ------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- ------------------------------------------------------------------------------
Shareholder Communications. You will receive unaudited Semi-Annual Reports and
Audited Annual Reports on a regular basis from the Funds. In addition, you will
also receive updated Prospectuses or Supplements to this Prospectus. In order to
eliminate duplicate mailings, the Funds will only send one copy of the above
communications to (1) accounts with the same primary record owner, (2) joint
tenant accounts, (3) tenant in common accounts and (4) accounts which have the
same address.
<PAGE>
APPENDIX A
The Index 500 Fund is not sponsored, endorsed, sold or promoted by S&P.
S&P makes no representation or warranty, express or implied, to the owners of
the Index 500 Fund or any member of the public regarding the advisability of
investing in securities generally or in the Index 500 Fund particularly or the
ability of the S&P 500 Index to trace general stock market performance. S&P's
only relationship to the Trust is the licensing of certain trademarks and trade
names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to the Trust or the Index 500 Fund. S&P has no
obligation to take the needs of the Trust or the owners of the Index 500 Fund
into consideration in determining, composing or calculating the S&P 500 Index.
S&P is not responsible for and has not participated in the determination of the
prices and amount of the Index 500 Fund or the timing of the issuance or sale of
the Index 500 Fund or in the determination or calculation of the equation by
which the Index 500 Fund is to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or trading of the
Index 500 Fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P
500 Index or any data included therein and S&P shall have no liability for any
errors, omissions, or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the Trust, owners of the Index 500
Fund, or any other person or entity from the use of the S&P 500 Index or any
data included therein. S&P makes no express or implied warranties, and expressly
disclaims all warranties of merchantability of fitness for a particular purpose
or use with respect to the S&P 500 Index or any data included therein. Without
limiting any of the foregoing, in no event shall S&P have any liability for any
special, punitive, indirect, or consequential damages (including lost profits),
even if notified of the possibility of such damages.
"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," and
"500" are trademarks of McGraw-Hill, Inc. and have been licensed for use by the
Trust. The Index 500 Fund is not sponsored, endorsed, sold or promoted by S&P
and S&P makes no representation regarding the advisability of investing in the
Index 500 Fund.
PROSPECTUS
Class Y Shares
The Munder Funds Trust (the "Trust"), The Munder Funds, Inc. (the
"Company") and The Munder Framlington Funds Trust ("Framlington") are open-end
investment companies. This Prospectus describes the investment portfolios
offered by the Trust (the "Trust Funds"), the Company (the "Company Funds") and
Framlington ("Framlington Funds") described below (referred to as the "Funds"):
<TABLE>
<CAPTION>
<S> <C> <C>
Munder Accelerating Growth Fund Munder Value Fund
Munder Balanced Fund Munder Bond Fund
Munder Equity Selection Fund ** Munder Intermediate Bond Fund
Munder Framlington Emerging Markets Fund Munder International Bond Fund
Munder Framlington Healthcare Fund Munder U.S. Government Income Fund
Munder Framlington International Growth Fund Munder Michigan Triple Tax-Free Bond Fund *
Munder Growth & Income Fund Munder Tax-Free Bond Fund
Munder International Equity Fund Munder Tax-Free Intermediate Bond Fund
Munder Micro-Cap Equity Fund Munder Short Term Treasury Fund
Munder Mid-Cap Growth Fund Munder Cash Investment Fund
Munder Multi-Season Growth Fund Munder Money Market Fund
Munder Real Estate Equity Investment Fund Munder Tax-Free Money Market Fund
Munder Small-Cap Value Fund Munder U.S. Treasury Money Market Fund
Munder Small Company Growth Fund
<FN>
* The Michigan Triple Tax-Free Bond Fund is offered only in the State of Michigan.
** As of the date of this prospectus, the Munder Equity Selection Fund is not available for purchase.
</FN>
</TABLE>
Munder Capital Management (the "Advisor") serves as the investment
advisor of the Funds.
This Prospectus explains the objectives, policies, risks and fees of
each Fund. You should read this Prospectus carefully before investing and retain
it for future reference. A Statement of Additional Information ("SAI")
describing each of the Funds has been filed with the Securities and Exchange
Commission (the "SEC") and is incorporated by reference into this Prospectus.
You can obtain the SAI free of charge by calling the Funds at (800) 438-5789. In
addition, the SEC maintains a Web site (http://www.sec.gov) that contains the
SAI 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 federally insured or guaranteed. An
investment in the Funds involves investment risks, including the possible loss
of the principal amount invested.
Although each of the Cash Investment Fund, Money Market Fund, Tax-Free
Money Market Fund and U.S. Treasury Money Market Fund seeks to maintain a
constant net asset value of $1.00 per share, there can be no assurance that each
Fund can do so on a continuing basis.
Securities offered by this Prospectus have not been approved or
disapproved by the SEC or any state securities commission nor has the SEC or any
state securities commission passed upon the accuracy or adequacy of this
Prospectus. Any representation to the contrary is a criminal offense.
Call Toll-Free for Shareholder Services:
(800) 438-5789
The date of this Prospectus is _________________, 1997
TABLE OF CONTENTS
Fund Highlights
What are the key facts regarding the Funds?.................................
Financial Information
Fund Choices
What Funds are offered?.....................................................
Who may want to invest in the Funds?........................................
What are the Funds' investments and investment practices?...................
What are the risks of investing in the Funds?...............................
Performance
How is the Funds' performance calculated?...................................
Where can I obtain performance data?........................................
Purchases and Exchanges of Shares
What price do I pay for shares?.............................................
When can I purchase shares?.................................................
What is the minimum required investment?....................................
How can I purchase shares?..................................................
How can I exchange shares?..................................................
Redemptions of Shares
What price do I receive for redeemed shares?................................
When can I redeem shares?...................................................
How can I redeem shares?....................................................
When will I receive redemption amounts?.....................................
Structure and Management of the Funds
How are the Funds structured?...............................................
Who manages and services the Funds?........................................
What are my rights as a shareholder?........................................
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?...........................
How will distributions be made?.............................................
Are there tax implications of my investments in the Funds?..................
Additional Information......................................................
- -------------------------------------------------------------------------------
FUND HIGHLIGHTS
- -------------------------------------------------------------------------------
What Are the Key Facts Regarding the Funds?
Q:.......What are the Funds' goals?
A: o The Accelerating Growth Fund, Equity Selection Fund, Framlington
Emerging Markets Fund, Framlington Healthcare Fund, Framlington
International Growth Fund, International Equity Fund, Micro-Cap Equity
Fund, Mid-Cap Growth Fund, Multi-Season Growth Fund, Small-Cap Value
Fund, Small Company Growth Fund and Value Fund primarily seek to
provide long-term capital appreciation.
o The Balanced Fund, Growth & Income Fund and Real Estate Equity
Investment Fund seek to provide capital appreciation and current
income.
o The Bond Fund seeks to provide a high level of current income with
capital appreciation as a secondary consideration.
o The Intermediate Bond Fund seeks to provide a competitive rate of
return which exceeds the inflation rate and the return provided by
money market instruments.
o The International Bond Fund seeks to realize a competitive total
return through a combination of current income and capital
appreciation.
o The U.S. Government Income Fund seeks to provide high current income.
o The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund seek to
provide current interest income exempt from Federal income taxes.
o The Michigan Triple Tax-Free Bond Fund seeks to provide as high a
level of current interest income exempt from regular Federal income
taxes, Michigan state income tax and Michigan intangibles tax as is
consistent with prudent investment management and preservation of
capital.
o The Short Term Treasury Fund seeks to provide an enhanced money
market return consistent with the preservation of capital.
o The Cash Investment Fund and U.S. Treasury Money Market Fund seek as high
a level of current interest income as is consistent with maintaining liquidity
and stability of principal.
o The Money Market Fund seeks to provide current income consistent with
the preservation of capital and liquidity.
o The Tax-Free Money Market Fund seeks to provide as high a level of
current interest income exempt from Federal income taxes as is
consistent with maintaining liquidity and stability of principal.
Q: What are the Funds' strategies?
A: Accelerating Growth Fund, Equity Selection Fund, Framlington Emerging
Markets Fund, Framlington Healthcare Fund, Framlington International
Growth Fund, Growth & Income Fund, International Equity Fund, Micro-Cap
Equity Fund, Mid-Cap Growth Fund, Multi-Season Growth Fund, Real Estate
Equity Investment Fund, Small-Cap Value Fund, Small Company Growth Fund
and Value Fund (the "Equity Funds")
o These invest primarily in equity securities.
Balanced Fund
o This Fund allocates its assets primarily among three types of assets
- Equity Securities, Fixed Income Securities and Cash Equivalents.
"Equity Securities" include common stocks, preferred stocks, warrants
and other securities convertible into common stock. "Fixed Income
Securities" are securities which either pay interest at set times at
either fixed or variable rates, or which realize a discount upon
maturity. Fixed Income Securities include corporate bonds, debentures,
notes and other similar corporate debt instruments, zero coupon bonds
(discount debt obligations that do not make interest payments) and
variable amount master demand notes that permit the amount of
indebtedness to vary in addition to providing for periodic adjustments
in the interest rates. "Cash Equivalents" are instruments which are
highly liquid and virtually free of investment risk.
Bond Fund, Intermediate Bond Fund, International Bond Fund and U.S.
Government Income Fund (the "Bond Funds")
o These Funds, other than the Tax-Free Funds, the U.S. Government Income
Fund and the Short Term Treasury Fund, invest primarily in Fixed Income
Securities.
o The U.S. Government Income Fund invests primarily in obligations of the
U.S. government and its agencies and instrumentalities.
Short Term Treasury Fund
o The Short Term Treasury Fund invests primarily in U.S. Treasury
securities and repurchase agreements relating to U.S. Treasury securities.
Michigan Triple Tax-Free Bond Fund, Tax-Free Bond Fund and Tax-Free
Intermediate Bond Fund
o The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund invest
primarily in Municipal Obligations. "Municipal Obligations" are
obligations of states, territories and possessions of the United States
and the District of Columbia, and their political subdivisions,
agencies, instrumentalities and authorities, the interest on which is
exempt from regular Federal income tax.
o The Michigan Triple Tax-Free Bond Fund invests primarily in Michigan
Municipal Obligations. "Michigan Municipal Obligations" are municipal
obligations issued by the State of Michigan and its political
subdivisions, the interest on which is exempt from Federal income
taxes, Michigan state income tax and Michigan intangibles tax.
Cash Investment Fund, Money Market Fund, Tax-Free Money Market Fund and
U.S. Treasury Money Market Fund (the "Money Market Funds")
o The Funds invest solely in dollar-denominated debt securities with
remaining maturities of 13 months or less and maintain an average
dollar-weighted portfolio maturity of 90 days or less.
Each Fund implements a different investment strategy which is described
in this Prospectus.
Q: What are the Funds' risks?
A: With respect to the Equity Funds, the Bond Funds, the Tax-Free Funds and
Short Term Treasury Fund, the net asset value, which is determined on every
business day, will change daily. The net asset value changes due to changes in
the price of securities owned by each Equity Fund as a result of rises and falls
in the stock market in general, perceptions about the stocks of particular
companies, perceptions about particular industries and, in the case of an
international fund, changes in exchange rates. The value of the Bond Funds'
portfolio securities typically varies inversely with changes in interest rates.
Longer term bond funds are generally more sensitive to interest rate changes
than shorter term bond funds. You should note that you could lose a portion of
the amount you invest in a Fund.
With respect to the Money Market Funds, the performance per share may
change based on many factors, including: interest rate levels, the quality of
the instruments in each Fund's investment portfolio, national and international
economic conditions and general market conditions. It is expected that each
Money Market Fund will maintain a net asset value of $1.00 per share, although
there is no assurance that they will be able to do so on a continuous basis.
The International Equity Fund, Framlington International Growth Fund,
Framlington Emerging Markets Fund and the International Bond Fund invest mostly
in Foreign Securities. "Foreign Securities" are securities issued by foreign
governments and their agencies, instrumentalities or political subdivisions,
supra-national organizations and foreign corporations. Foreign Securities are
generally considered to be riskier than securities issued by U.S. companies due
to factors such as freezes on convertibility of currency, the rise and fall of
foreign currency exchange rates, political instability and differences in
accounting and reporting standards. Certain of the other Funds also may invest
in Foreign Securities.
The Micro-Cap Equity Fund, Small-Cap Value Fund, Mid-Cap Growth Fund
and Small Company Growth Fund invest primarily in small- or mid-capitalization
companies and may invest in emerging growth companies. Investments in such
companies are riskier than investments in larger, more established companies as
a result of larger fluctuations in earnings, greater reliance on a few key
customers, and other factors.
The Real Estate Equity Investment Fund concentrates its investments in
the real estate industry and the Framlington Healthcare Fund concentrates its
investments in the healthcare industry. Because each of the Funds concentrates
its investments in one industry, it may pose greater risks and experience larger
fluctuations in net asset value than portfolios invested in a broader range of
industries.
The International Bond Fund, Michigan Triple-Tax Free Bond Fund and the
Tax-Free Intermediate Bond Fund are "non-diversified" funds, meaning they can
concentrate their investments in fewer issuers than a diversified fund. Because
these Funds may own securities of fewer issuers, they may pose greater risks and
experience larger fluctuations than funds invested in more issuers.
<PAGE>
Q: What are the options for investment in the Funds?
A: Each Equity, Bond and Tax-Free Fund and the Short Term Treasury Fund
offers five different investment options, or classes: Class A, B, C, K and Y.
The Money Market Fund offers Class A, B, C and Y Shares and Cash Investment
Fund, Tax-Free Money Market Fund and U.S. Treasury Money Market Fund offer Class
A, K and Y Shares. Class A, B, C and K Shares are offered in other prospectuses.
Q: How do I buy and sell shares of the Funds?
A: [Funds Distributor Inc. (the "Distributor") sells shares of the Funds. You
may purchase shares from the Distributor through broker-dealers or other
financial institutions or from the Funds' transfer agent, First Data Investor
Services Group, Inc. ("Investor Services Group" or the "Transfer Agent"), by
mailing the attached application with a check to Investor Services Group.]
Fiduciary and discretionary accounts of institutions and institutional investors
must invest at least $500,000 for all Funds except Real Estate Equity Investment
Fund which requires an initial investment of $250,000. Other types of investors
are not subject to any required minimum investment.
Shares may be redeemed (sold back to the Fund) through your bank or
financial institution or, in some cases, through the free checkwriting
privilege.
You may also acquire the Funds' shares by exchanging shares of the same
class of other funds of the Trust, the Company and Framlington, and exchange
Fund shares for shares of the same class of other funds of the Trust, the
Company and Framlington.
Q: What shareholder privileges do the Funds offer?
A: o Automatic Investment Plan
o Automatic Withdrawal Plan
o Reinvestment Privilege
o Free Checkwriting (certain Funds only - See
"Redemption of Shares")
Q: When and how are distributions made?
A: Dividends paid at least quarterly (if available): Accelerating
Growth Fund, Balanced Fund, Growth & Income Fund, Small Company Growth Fund
and International Bond Fund.
Dividends paid at least annually: Equity Selection Fund, Framlington
Emerging Markets Fund, Framlington Healthcare Fund, Framlington International
Growth Fund, International Equity Fund, Micro-Cap Equity Fund, Mid-Cap Growth
Fund, Multi-Season Growth Fund, Small-Cap Value Fund and Value Fund.
Dividends paid monthly: Real Estate Equity Investment Fund, Bond Fund,
Intermediate Bond Fund, U.S. Government Income Fund, Michigan Triple Tax-Free
Bond Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund, Short Term
Treasury Fund, Cash Investment Fund, Money Market Fund, Tax-Free Money Market
Fund and U.S. Treasury Money Market Fund.
The Funds distribute capital gains at least annually. Unless you elect
to receive distributions in cash, we will use all dividends and capital gain
distributions of a Fund to purchase additional shares of that Fund.
Q: Who manages the Funds' assets?
A: Munder Capital Management is the Funds' investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Funds
other than the Framlington Funds. The Advisor provides overall investment
management of the Framlington Funds. Framlington Overseas Investment Management
Limited (the "Sub-Advisor") is responsible for all purchases and sales of
securities held by the Framlington Funds.
- -------------------------------------------------------------------------------
FINANCIAL INFORMATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES1
- -------------------------------------------------------------------------------
The purpose of this table is to assist you in understanding the
expenses a shareholder in the Funds will bear directly.
Maximum Sales Charge on Purchase None
(as a % of Offering Price)
Sales Charge Imposed on Reinvested Dividends None
Maximum Deferred Sales Charge None
Redemption Fees2 None
Exchange Fees None
Notes:
1. Does not include fees which institutions may charge for services they
provide to you.
2. The Funds' transfer agent may charge a fee of $7.50 for wire
redemptions under $5,000.
- -------------------------------------------------------------------------------
FUND OPERATING EXPENSES
- -------------------------------------------------------------------------------
The purpose of this table is to assist you in understanding the
expenses charged directly to each Fund, which investors in the Funds will bear
indirectly. Such expenses include payments to Trustees, Directors, auditors,
legal counsel and service providers (such as the Advisor), registration fees,
and distribution fees. The fees shown are based on fees for the Funds' past
fiscal year, except for the Framlington Funds and the Equity Selection,
Micro-Cap Equity, Small Cap Value and International Bond Funds, in which
expenses are estimated for the current fiscal year.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Framlington Framlington
ANNUAL FUND Accelerating Equity Emerging Framlington International
OPERATING EXPENSES Growth Balanced Selection Markets Healthcare Growth
-
Fund Fund Fund Fund Fund Fund
(as a % of
average net assets)
Advisory Fees .75% .65% .75% 1.25% 1.00% 1.00%
Other Expenses + .20% .32% .25% .29%++ .30%++ .30%++
==== ==== ==== ==== ==== ====
Total Fund .95% .97% 1.00% 1.54%++ 1.30%++ 1.30%++
Operating Expenses +
ANNUAL FUND Growth & International Micro-Cap Mid-Cap Multi-Season
OPERATING Income Equity Equity Growth Growth
EXPENSES Fund Fund Fund Fund Fund
---- ---- ---- ---- ----
(as a % of
average net assets)
- -------------------
Advisory Fees .75% .75% 1.00% .74% .75%*
Other Expenses + .20% .26% .25%++ .25%++ .25%
==== ==== ==== ==== ====
Total Fund .95% 1.01% 1.25%++ .99%++ 1.00%*
Operating Expenses +
ANNUAL FUND Real Estate Small-Cap Small
OPERATING Equity Value Company Value
EXPENSES Investment Fund Fund Growth Fund Fund
--------------- ---- ----------- ----
(as a % of
average net assets)
- -------------------
Advisory Fees .74% .75% .75% .74%
Other Expenses + .11%++ .38%++ .22% .28%++
==== ==== ==== ====
Total Fund .85%++ 1.13%++ .97% 1.02%++
Operating Expenses +
U.S. Michigan
ANNUAL FUND International Government Triple Tax-Free
OPERATING EXPENSES Bond Intermediate Bond Income Tax-Free Bond
-
Fund Bond Fund Fund Fund Bond Fund Fund
(as a % of
average net assets)
Advisory Fees .50% .50% .50% .50% .50%* .50%
Other Expenses + .21% .18% .39%++ .21% .13% .20%
==== ==== ==== ==== ==== ====
Total Fund .71% .68% .89%++ .71% .63%* .70%
Operating Expenses +
ANNUAL FUND Tax-Free Short Term Cash Money Tax-Free U.S. Treasury
OPERATING EXPENSES Intermediate Treasury Investment Market Money Market Fund Money Market
- ----
Bond Fund Fund Fund Fund Fund
(as a % of
average net assets)
Advisory Fees .50% .25% .35% .40% .35% .35%
Other Expenses + .18% .27%++ .20% .24% .18% .19%
==== ==== ==== ==== ==== ====
Total Fund .68% .52%++ .55% .64% .53% .54%
Operating Expenses +
<FN>
+ After expense reimbursements, if any.
++ Without expense reimbursements, the total fund operating expenses an
investor would pay for Class Y Shares would be 5.18% for the Framlington
Emerging Markets Fund, 7.08% for the Framlington Healthcare Fund, 2.56%
for the Framlington International Growth Fund, 7.65% for the Micro-Cap
Equity Fund, 1.21% for the Mid-Cap Growth Fund, 1.13% for the Real Estate
Equity Investment Fund, 1.26% for the Small-Cap Value Fund, 1.06% for the
Value Fund, .93% for the International Bond Fund and .55% for the Short
Term Treasury Fund.
* The Advisor waived advisory fees.
</FN>
</TABLE>
- -------------------------------------------------------------------------------
EXAMPLE
- -------------------------------------------------------------------------------
This example shows the amount of expenses you would pay (directly or
indirectly) on a $1,000 investment in the Funds assuming (1) a 5% annual return
and (2) redemption at the end of the time periods. This example is not a
representation of past or future performance or operating expenses; actual
performance or operating expenses may be larger or smaller than those shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Accelerating Growth Fund......................... $10 $30 $53 $117
Balanced Fund.................................... $10 $31 $54 $119
Equity Selection Fund............................ $10 $32 N/A N/A
Framlington Emerging Markets Fund................ $16 $49 $84 $183
Framlington Healthcare Fund...................... $13 $41 $71 $157
Framlington International Growth Fund............ $13 $41 $71 $157
Growth & Income Fund............................. $10 $30 $53 $117
International Equity Fund........................ $10 $32 $56 $124
Micro-Cap Equity Fund............................ $13 $40 $69 $151
Mid-Cap Growth Fund.............................. $10 $32 $55 $121
Multi-Season Growth Fund......................... $10 $32 $55 $122
Real Estate Equity Investment Fund............... $11 $35 $61 $134
Small-Cap Value Fund............................. $12 $36 $62 $137
Small Company Growth Fund........................ $10 $31 $54 $119
Value Fund....................................... $10 $32 $56 $125
Bond Fund........................................ $7 $23 $40 $88
Intermediate Bond Fund........................... $7 $22 $38 $85
International Bond Fund.......................... $9 $28 $49 $110
U.S. Government Income Fund...................... $7 $23 $40 $88
Michigan Triple Tax-Free Bond Fund............... $6 $20 $35 $79
Tax-Free Bond Fund............................... $7 $22 $39 $87
Tax-Free Intermediate Bond Fund.................. $7 $22 $39 $85
Short Term Treasury Fund......................... $5 $17 $29 $65
Cash Investment Fund............................. $6 $18 $31 $69
Money Market Fund................................ $7 $20 $36 $80
Tax-Free Money Market Fund....................... $5 $17 $30 $66
U.S. Treasury Money Market Fund.................. $6 $17 $30 $68
</TABLE>
<PAGE>
.........The Advisor expects to waive a portion of its fees with respect to the
Index 500 Fund, Multi-Season Growth Fund and Michigan Triple Tax-Free Bond Fund
and reimburse expenses with respect to the Framlington Emerging Markets Fund,
Framlington Healthcare Fund, Framlington International Growth Fund, Micro-Cap
Equity Fund, Mid-Cap Growth Fund, Real Estate Equity Investment Fund, Small-Cap
Value Fund, Value Fund, International Bond Fund and Short Term Treasury Fund
during the current fiscal year. The Advisor may discontinue such waivers and/or
expense reimbursements at any time in its sole discretion. Without waivers
and/or expense reimbursements, an investor in Class Y Shares of the Funds would
pay the following expenses on a $1,000 investment, assuming redemption after
one, three, five and ten years, respectively, and assuming a hypothetical 5%
annual return: $_____, $_____, $_____ and $_____ for the Framlington Emerging
Markets Fund, $____, $_____, $_____ and $_____ for the Framlington Healthcare
Fund, $_____, $_____, $_____ and $_____ for the Framlington International Growth
Fund, $_____, $_____, $_____ and $_____ for the Index 500 Fund, $_____, $_____,
$_____ and $_____ for the Micro-Cap Equity Fund, $_____, $_____, $_____ and
$_____ for the Mid-Cap Growth Fund, $____, $_____, $_____ and $____ for the Real
Estate Equity Investment Fund, $____, $_____, $_____ and $____ for the Small Cap
Value Fund, $____, $_____, $_____ and $_____ for the Value Fund, $_____, $_____,
$_____ and $_____ for the International Bond Fund and $_____, $_____, $_____ and
$_____ for the Short Term Treasury Fund. Without waivers and/or expense
reimbursements, the total fund operating expenses an investor would pay for
Class Y Shares would be 5.18% for the Framlington Emerging Markets Fund; 7.08%
for the Framlington Healthcare Fund; 2.56% for Framlington International Growth
Fund; 7.65% for the Micro-Cap Equity Fund; 1.21% for the Mid-Cap Growth Fund;
1.13% for the Real Estate Equity Investment Fund; 1.26% for the Small Cap Value
Fund; 1.06% for the Value Fund; .93% for the International Bond Fund and .55%
for the Short Term Treasury Fund.
- ------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
The following financial highlights were audited by Ernst & Young LLP
except that, for periods ended prior to June 30, 1995 for the Multi-Season
Growth Fund and Money Market Fund, such financial highlights are derived from
financial statements audited by another auditor. Class Y Shares of the Equity
Selection Fund were not offered during the periods shown. This information
should be read in conjunction with the Funds' most recent Annual Reports, which
are incorporated by reference into the SAI. You may obtain the Annual Reports
without charge by calling (800) 438-5789.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Accelerating Growth Fund
-----------------------------------------------------
Year Year Period
Ended Ended Ended
6/30/97 6/30/96 6/30/95 (a)
Net Asset Value, Beginning of Period..........................
Income from Investment Operations:
Net investment income....................................
Net realized and unrealized gain on investments..........
Total from investment operations.........................
Less Distributions:
Dividends from net investment income.....................
Distributions from net realized gains....................
Total distributions......................................
Net Asset Value, End of Period................................
Total Return (b).........................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands).................
Ratio of operating expenses to average net assets........
Ratio of net investment income to average net assets.....
Portfolio turnover rate..................................
Ratio of operating expenses to
average net assets without waivers...................
Average commission rate (g)..............................
<FN>
(a) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(b) Amount represents less than $0.01 per share.
(c) Total return represents aggregate total return for the period indicated and does not reflect any
applicable sales charges.
(d) Annualized.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(f) The Accelerating Growth Fund Class Y Shares commenced operations on December
1, 1991. (g) Average commission rate paid per share of securities purchased and
sold by the Fund.
(h) Amount rounds to less than 0.01%.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Accelerating Growth Fund
- ---------------------------------------------------------------------------------------------------------------------
Year Year Year Period
Ended Ended Ended Ended
2/28/95 (e) 2/28/94 2/28/93 2/29/92 (f)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Balanced Fund
------------- ------------- ---------------- ------------- -------------
Year Year Period Year Period
Ended Ended Ended Ended Ended
6/30/97 6/30/96 (g) 6/30/95 (a) 2/28/95 (d) 2/28/94 (e)
Net Asset Value, Beginning of Period...............
Income from Investment Operations:
Net investment income.........................
Net realized and unrealized gain on investments
Total from investment operations..............
Less Distributions:
Dividends from net investment income.......... Distributions from net
realized gains.........
Total distributions...........................
Net Asset Value, End of Period.....................
Total Return (b)..............................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands)......
Ratio of operating expenses to average net assets
Ratio of net investment income to
average net assets........................
Portfolio turnover rate.......................
Ratio of operating expenses to
average net assets without waivers........
Average commission rate (f)...................
<FN>
(a) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(b) Total return represents aggregate total return for the period indicated and does not reflect any
applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(e) The Balanced Fund Class Y Shares commenced operations on April 13, 1993. (f)
Average commission rate paid per share of securities purchased and sold by the
Fund. (g) Per share numbers have been calculated using the average shares
method, which more appropriately presents
the per share data for the period since the use of the undistributed net
investment income method did not accord with the results of operations.
(h) The Framlington Emerging Markets Class Y Shares commenced operations on ___________________.
(i) The Framlington Healthcare Fund Class Y Shares commenced operations on _____________________.
(j) The Framlington International Growth Fund Class Y Shares commenced operations on ________________.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Framlington Emerging Framlington Framlington International
Markets Fund Healthcare Fund Growth Fund
- ------------------------------------------- ---------------------------------------- ------------------------------------------
Year Year Year
Ended Ended Ended
6/30/97 (h) 6/30/97 (i) 6/30/97 (j)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Growth & Income Fund
--------------- -------------- --------------- ------------------
Year Year Period Year
Ended Ended Ended Ended
6/30/97 6/30/96 (h) 6/30/95 (a) 2/28/95 (d, e)
Net Asset Value, Beginning of Period........................
Income from Investment Operations:
Net investment loss....................................
Net realized and unrealized gain on investments........
Total from investment operations.......................
Less Distributions:
Dividends from net investment income...................
Distributions from net realized gains..................
Total distributions....................................
Net Asset Value, End of Period..............................
Total Return (b).......................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands)...............
Ratio of operating expenses to average net assets......
Ratio of net investment loss to average net assets.....
Portfolio turnover rate................................
Ratio of operating expenses to
average net assets without waivers.................
Average commission rate (g)............................
<FN>
(a) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(b) Total return represents aggregate total return for the period indicated and does not reflect any
applicable sales charges.
(c) Annualized.
(d) The Growth & Income Fund Class Y Shares commenced operations on July 5,
1994.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(i) The International Equity Fund Class Y Shares commenced operations on
December 1, 1991.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
International Equity Fund
- ---------------------------------------------------------------------------------------------------------------------
Year Year Period Year Year Year Period
Ended Ended Ended Ended Ended Ended Ended
6/30/97 6/30/96 (h) 6/30/95 (a) 2/28/95 (e, h) 2/28/94 2/28/93 2/28/92 (i)
------- ----------- ----------- -------------- ------- ------- -----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Micro-Cap Equity Fund Mid-Cap Growth Fund
-------------------------- -------------------- -----------------
Period Year Period
Ended Ended Ended
6/30/97 (a) 6/30/97 (e) 6/30/96 (a, e)
Net Asset Value, Beginning of Period......................
Income from Investment Operations:
Net investment loss..................................
Net realized and unrealized gain on investments......
Total from investment operations.....................
Less Distributions:
Dividends from net investment income.................
Distributions from net realized gains................
Total distributions..................................
Net Asset Value, End of Period............................
Total Return (b).....................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands).............
Ratio of operating expenses to average net assets....
Ratio of net investment loss to average net assets...
Portfolio turnover rate..............................
Ratio of operating expenses to
average net assets without waivers...............
Average commission rate (e)
<FN>
(a) The Micro-Cap Equity Fund Class Y Shares commenced operations on March 26, 1996. The Mid-Cap Growth Fund
Class Y Shares commenced operations on August 14, 1995. The Multi-Season Growth Fund Class Y Shares
commenced operations on August 16, 1993.
(b) Annualized.
(c) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(d) Average commission rate paid per share of securities purchased and sold by the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(f) On June 23, 1995, the Multi-Season Growth Fund acquired the assets and
certain liabilities of the Ambassador Established Company Growth Fund.
(g) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
(h) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(i) Amount represents less than $0.01 per share.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Multi-Season Growth Fund
- ----------------------- --------------------- ------------------------ -------------------- -------------------------
Period
Year Year Ended Year Period
Ended Ended 6/30/95 Ended Ended
6/30/97 (e) 6/30/96 (e) (f, g, h) 12/31/94 12/31/93 (a)
----------- ----------- --------- -------- ------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Real Estate Investment Small-Cap
Equity Fund Value Fund
-------------- -------------- ------------ -------------------
Period Period
Year Year Ended Ended
Ended Ended 6/30/95 6/30/97
6/30/97 6/30/96 (f) (a, d) (a, f)
Net Asset Value, Beginning of Period......................
Income from Investment Operations:
Net investment loss..................................
Net realized and unrealized gain on investments......
Total from investment operations.....................
Less Distributions:
Dividends from net investment income.................
Distributions from net realized gains................
Total distributions..................................
Net Asset Value, End of Period............................
Total Return (b).....................................
Ratios to Average Net Assets/Supplemental Data:
Net Assets, End of Period (in thousands).............
Ratio of operating expenses to average net assets....
Ratio of net investment loss to average net assets...
Portfolio turnover rate..............................
Ratio of operating expenses to
average net assets without waivers...............
Average commission rate (e)..........................
<FN>
(a) The Real Estate Equity Investment Fund Class Y Shares commenced operations on October 3, 1994. The
Small-Cap Value Fund Class Y Shares commenced operations on December 26, 1996. The Small Company Growth
Fund Class Y Shares commenced operations on December 1, 1991.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(e) Average commission rate paid per share of securities purchased and sold by the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
(g) Fiscal year changed to June 30. Prior to this, the fiscal year end was the last day of February.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Small Company Growth Fund
- ---------------------------------------------------------------------------------------------------------------------
Year Year Period Year Year Period Period
Ended Ended Ended Ended Ended Ended Ended
6/30/97 6/30/96 (f) 6/30/95 (g) 2/28/95 (d) 2/28/94 2/28/93 2/29/92 (a)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Value Fund
-------------------------- ---------------------------
Year Period
Ended Ended
6/30/97 (e) 6/30/96 (a, e)
Net Asset Value, Beginning of Period...................
Income from Investment Operations:
Net investment income/(loss)......................
Net realized and unrealized gain
on investments................................
Total from investment operations..................
Less Distributions:
Dividends from net investment income..............
Distributions from net realized gains.............
Total distributions...............................
Net Asset Value, End of Period.........................
Total Return (b)..................................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands)..........
Ratio of operating expenses to
average net assets............................
Ratio of net investment income/(loss) to
average net assets............................
Portfolio turnover rate...........................
Ratio of operating expenses to
average net assets without waivers
and expenses reimbursed...................
Average commission rate (d).......................
<FN>
(a) The Value Fund Class Y Shares commenced operations on August 18, 1995.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Bond Fund
----------- --------- ----------------- ---------- ---------- ----------- -------------
Year Period
Year Year Period Ended Year Year Ended
Ended Ended Ended 2/28/95 Ended Ended 2/29/92
6/30/97 6/30/96 6/30/95 (d) (e, f) 2/28/94 2/28/93 (a)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income....................
Net realized and unrealized
gain/(loss) on investments...........
Total from investment operations.........
Less Distributions:
Dividends from net
investment income....................
Distributions from net realized gains....
Total distributions......................
Net Asset Value, End of Period................
Total Return (b).........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period
(in thousands).......................
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Portfolio turnover rate..................
Ratio of operating expenses to
average net assets
without waivers..................
<FN>
(a) The Bond Fund Class Y Shares commenced operations on December 1, 1991.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) Per share numbers have been calculated using the average shares method, which more appropriately presents
the per share data for the period since the use of the undistributed net
investment income method did not accord with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Intermediate Bond Fund
---------- ---------- ------------- --------- ---------- --------- -------------
Year
Year Year Period Ended Year Year Period
Ended Ended Ended 2/28/95 Ended Ended Ended
6/30/97 6/30/96 6/30/95 (a) (d) 2/28/94 2/28/93 2/29/92 (e)
Net Asset Value, Beginning of Period........
Income from Investment Operations:
Net investment income................
Net realized and unrealized gain/(loss)
on investments...................
Total from investment operations.....
Less Distributions:
Dividends from net investment income...
Distributions from net realized gains
Total distributions..................
Net Asset Value, End of Period............
Total Return (b).....................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands)
Ratio of operating expenses to
average net assets...............
Ratio of net investment income to
average net assets...............
Portfolio turnover rate..............
Ratio of operating expenses to
average net assets without waivers
Net investment income per share
without waivers..................
<FN>
(a) The Intermediate Bond Fund Class Y Shares commenced operations on December
1, 1991.
(b) Total return represents aggregate total return for the period
indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
International Bond Fund U.S. Government Income Fund
---------------------------------
---------------- ------------- ------------- -----------------
Period Year Year Period Period
Ended Ended Ended Ended Ended
6/30/97 (a) 6/30/97 6/30/96 (f) 6/30/95 (d) 2/28/95 (a, e)
----------- ------- ----------- ----------- --------------
Net Asset Value, Beginning of Period....
Income from Investment Operations:
Net investment income..............
Net realized and unrealized
gain/(loss) on investments.....
Total from investment operations...
Less Distributions:
Dividends from net
investment income..............
Distributions from net realized gains
Total distributions................
Net Asset Value, End of Period..........
Total Return (b)...................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period
(in thousands).................
Ratio of operating expenses to
average net assets.............
Ratio of net investment income to
average net assets.............
Portfolio turnover rate............
Ratio of operating expenses to
average net assets
without waivers............
<FN>
(a) The International Bond Fund Class Y Shares commenced operations on
October 2, 1996 and the U.S. Government Income Fund Class Y Shares
commenced operations on July 5, 1994.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed net investment income method did not accord
with the results of operations.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Michigan Triple Tax-Free Bond Fund
------------- --------------- ---------------- --------------- ---------------
Year Year Period Year Period
Ended Ended Ended Ended Ended
6/30/97 (e) 6/30/96 (e) 6/30/95 (d, e) 2/28/95 (e, f) 2/28/94 (a)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income....................
Net realized and unrealized gain/(loss)
on investments.......................
Total from investment operations.........
Less Distributions:
Dividends from net investment income.....
Total distributions......................
Net Asset Value, End of Period................
Total Return (b).........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands).
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Portfolio turnover rate..................
Ratio of operating expenses to
average net assets without waivers...
<FN>
(a) The Michigan Triple Tax-Free Bond Fund Class Y Shares commenced operations on January 3, 1994.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) Per share numbers have been calculated using the average shares method, which more appropriately presents
the per share data for the period since the use of the undistributed net
investment income method did not accord with the results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Tax-Free Bond Fund
------------- ---------------- --------------- ----------------
Year Year Period Period
Ended Ended Ended Ended
6/30/97 (e) 6/30/96 (e) 6/30/95 (d, e) 2/28/95 (a, f)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income....................
Net realized and unrealized gain
on investments.......................
Total from investment operations.........
Less Distributions:
Dividends from net investment income..... Distributions from net realized
gains....
Total distributions......................
Net Asset Value, End of Period................
Total Return (c).........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands).
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Portfolio turnover rate..................
Ratio of operating expenses to
average net assets without waivers...
Net investment income per share
without waivers......................
<FN>
(a) The Tax-Free Bond Fund Class Y Shares commenced operations on July 21, 1994.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) Per share numbers have been calculated using the monthly average shares method, which more appropriately
presents the per share data for the period since the use of the
undistributed net investment income method did not accord with the
results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Short Term
Tax-Free Intermediate Bond Fund Treasury Fund
----------- ------------ ----------- ----------- ----------- ----------- -----------------
Year Year Period Year Year Period
Ended Ended Ended Ended Year Ended Ended
6/30/97 6/30/96 6/30/95 2/28/95 Ended 2/28/93 6/30/97
(f) (f) (d) (e) 2/28/94 (a) (a)
--- --- --- --- ------- --- ---
Net Asset Value, Beginning of Period......
Income from Investment Operations:
Net investment income................
Net realized and unrealized
gain/(loss)
on investments...................
Total from investment operations.....
Less Distributions:
Dividends from net investment
income
Distributions from net realized
gains
Total distributions..................
Net Asset Value, End of Period............
Total Return (b).....................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in
thousands)....................................
Ratio of operating expenses to
average net assets...............
Ratio of net investment income to
average net assets...............
Portfolio turnover rate..............
Ratio of operating expenses to
average net assets without
waivers
<FN>
(a) The Tax-Free Intermediate Bond Fund Class Y Shares commenced operations on
December 17, 1992 and the Short Term Treasury Fund Class Y Shares commenced
operations on January 29, 1997. (b) Total return represents aggregate total
return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as
investment advisor for the Fund as a result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash Investment Fund
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Period Year Period
Year Year Ended Ended Year Year Year Ended
Ended Ended 6/30/95 2/28/95 Ended Ended Ended 2/28/91
6/30/97 6/30/96 (d) (e) 2/28/94 2/28/93 2/29/92 (a)
Net Asset Value, Beginning of Period......
Income from Investment Operations:
Net investment income...............
Total from investment operations....
Less Distributions:
Dividends from net investment
income
Total distributions.................
Net Asset Value, End of Period............
Total Return (b)....................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in
thousands)
Ratio of operating expenses to
average net assets...............
Ratio of net investment income
to
average net assets...............
Ratio of operating expenses to
average net assets without
waivers
<FN>
(a) The Cash Investment Fund Class Y Shares commenced operations on March 14, 1990.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as
investment advisor for the Fund as a result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Money Market Fund
------------ ------------- ----------------- ---------------- ---------------
Year Year Period Year Period
Ended Ended Ended Ended Ended
6/30/97 6/30/96 6/30/95 (d, e) 12/31/94 12/31/93 (a)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income....................
Total from investment operations.........
Less Distributions:
Dividends from net investment income.....
Total distributions......................
Net Asset Value, End of Period................
Total Return (c).........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in thousands).
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Ratio of operating expenses to
average net assets without waivers...
<FN>
(a) The Money Market Fund Class Y Shares commenced operations on August 18,
1993.
(b) Total return represents aggregate total return for the period
indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was December 31.
(e) On February 1, 1995, Munder Capital Management replaced Munder Capital Management, Inc. as investment
advisor for the Fund as a result of the consolidation of the investment advisory businesses of Woodbridge
Capital Management, Inc. and Munder Capital Management, Inc.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tax-Free Money Market Fund
----------- ---------- ----------- ---------- ----------- ---------- ---------- -------------
Period Year
Year Year Ended Ended Year Year Year Period
Ended Ended 6/30/95 2/28/95 Ended Ended Ended Ended
6/30/97 6/30/96 (d) (e) 2/28/94 2/28/93 2/29/92 2/28/91 (a)
Net Asset Value, Beginning of
Period
Income from Investment Operations:
Net investment income...............
Total from investment
operations................................
Less Distributions:
Dividends from net
investment income.........................
Total distributions.................
Net Asset Value, End of Period............
Total Return (b)....................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period
(in thousands)...................
Ratio of operating expenses
to
average net assets...............
Ratio of net investment
income to
average net assets...............
Ratio of operating expenses
to
average net assets
without waivers...........................
Net investment income per
share
without waivers..................
<FN>
(a) The Tax-Free Money Market Fund Class Y Shares commenced operations on March 14, 1990.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as
investment advisor for the Fund as a result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Money Market Fund
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Period Year Period
Year Year Ended Ended Year Year Year Ended
Ended Ended 6/30/95 2/28/95 Ended Ended Ended 2/28/91
6/30/97 6/30/96 (d) (e) 2/28/94 2/28/93 2/29/92 (a)
Net Asset Value, Beginning of Period..........
Income from Investment Operations:
Net investment income...................
Total from investment operations........
Less Distributions:
Dividends from net investment
income
Total distributions.....................
Net Asset Value, End of Period................
Total Return (b)........................
Ratios to Average Net Assets
/Supplemental Data:
Net Assets, End of Period (in
thousands)....................................
Ratio of operating expenses to
average net assets...................
Ratio of net investment income to
average net assets...................
Ratio of operating expenses to
average net assets without
waivers
Net investment income per share
without waivers......................
<FN>
(a) The U.S. Treasury Money Market Fund Class Y Shares commenced operations on March 14, 1990.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Fiscal year end changed to June 30. Prior to this, the fiscal year end was the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital Management, Inc. as
investment advisor for the Fund as a result of the consolidation of the investment advisory businesses of
Woodbridge Capital Management, Inc. and Munder Capital Management, Inc.
</FN>
</TABLE>
- -------------------------------------------------------------------------------
FUND CHOICES
- -------------------------------------------------------------------------------
What Funds are Offered?
This Prospectus offers Class Y Shares of the 27 funds described below.
This section summarizes each Fund's principal investments. The sections entitled
"What are the Funds' Investments and Investment Practices?" and "What are the
Risks of Investing in the Funds?" and the SAI give more information about the
Funds' investment techniques and risks.
- -------------------------------------------------------------------------------
ACCELERATING GROWTH FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide long-term
capital appreciation; its secondary goal is to provide income. Under normal
conditions, the Fund will invest at least 65% of its assets in Equity
Securities.
In choosing Equity Securities, the Advisor considers, among other
factors:
the potential for accelerated earnings growth the maintenance of a
substantial competitive advantage a focused management team a stable
balance sheet
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ---------------------------------------------------------------------------
BALANCED FUND
- ----------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide an attractive
investment return through a combination of growth of capital and current income.
The Fund will allocate its assets among three asset groups: Equity Securities,
Fixed Income Securities and Cash Equivalents.
The Fund normally will invest at least 25% of its assets in Fixed
Income Securities and no more than 75% of its assets in Equity
Securities. The Fund will notify shareholders at least 30 days before
changing this policy.
The Advisor will allocate the Fund's assets to the three
asset groups based on its view of the following factors, among others:
general market and economic conditions and trends interest rates and
inflation rates fiscal and monetary developments long-term corporate
earnings growth
The Advisor will try to take advantage of changing economic conditions
by adjusting the ratio of Equity Securities to Fixed Income Securities or Cash
Equivalents. For example, if the Advisor believes that rapid economic growth
will lead to better corporate earnings in the future, then it might increase the
Fund's Equity Securities holdings and reduce its Fixed Income Securities and
Cash Equivalents holdings.
PORTFOLIO MANAGEMENT. Leonard J. Barr II, James Robinson and Ann J. Conrad
jointly manage the Fund's assets. Mr. Barr, Mr. Robinson and Ms. Conrad have
managed the Fund since February 1995, June 1995 and its inception in March 1993,
respectively. Mr. Barr is a Senior Vice President and Director of Research of
the Advisor. From April 1988 to February 1995, he was Vice President and
Director of Research for Old MCM, Inc. ("MCM"), the predecessor to the Advisor.
Mr. Robinson is, and has been, a Vice President and Chief Investment
Officer-Fixed Income of the Advisor or MCM since 1987. Ms. Conrad is a Vice
President and Director of Specialty Products of the Advisor, and held similar
titles with Woodbridge Capital Management, Inc. ("Woodbridge"), the Fund's
previous investment advisor, since June 1992.
- ------------------------------------------------------------------------------
EQUITY SELECTION FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide shareholders
with long-term capital appreciation.
Under normal market conditions, the Fund will invest at least 65% of
its assets in Equity Securities.
The Advisor's dedicated research team invests the Fund's assets in
Equity Securities which it believes are of high quality and undervalued
compared to stocks of other companies in the same industry.
The Fund generally invests in issuers with market capitalizations of
at least $3 billion.
The Fund diversifies its assets by industry in approximately the same
weightings as those of the S&P 500.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------------------
FRAMLINGTON EMERGING MARKETS FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund seeks to provide long-term capital
appreciation. The Fund invests at least 65% of its assets in companies in
emerging market countries, as defined by the World Bank, the International
Finance Corporation, the United Nations or the European Bank for Reconstruction
and Development.
A company will be considered to be in an emerging market country if:
the company is organized under the laws of, or has a principal office
in, an emerging market country, the company's stock is traded
primarily in an emerging market country, most of the company's assets
are in an emerging market country, or most of the company's revenues
or profits come from goods produced or sold, investments made or
services performed in an emerging market country.
PORTFOLIO MANAGEMENT. William Calvert is the Fund's portfolio manager.
Prior to joining the Sub-Advisor, Mr. Calvert was an Economic Strategist for LCF
Edmond de Rothschild Securities (1993-1997), Vice President-Emerging Markets for
Citibank Global Asset Management (1993) and Far East Fund Manager for Municipal
Mutual Insurance (1989-1992).
- -------------------------------------------------------------------------------
FRAMLINGTON HEALTHCARE FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation by investing in companies providing healthcare and medical services
and products worldwide. Currently, most of such companies are located in the
United States.
The Fund will invest in:
pharmaceutical producers
biotechnology firms
medical device and instrument manufacturers distributors of healthcare
products healthcare providers and managers other healthcare service
companies
Under normal conditions, the Fund will invest at least 65% of its
assets in healthcare companies, which are companies for which at least 50% of
sales, earnings or assets arise from or are dedicated to health services or
medical technology activities.
PORTFOLIO MANAGEMENT. Antony Milford is the head of the Specialist Desk for
the Sub-Advisor. He is the Fund's primary portfolio manager, a position he has
held since the Fund's inception. Mr. Milford has managed funds for the
Sub-Advisor since 1971.
- -------------------------------------------------------------------------------
FRAMLINGTON INTERNATIONAL GROWTH FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation. Under normal market conditions, at least 65% of the Fund's assets
will be invested in Equity Securities in at least three foreign countries.
The Sub-Advisor will choose companies that demonstrate:
above-average profitability
high quality management
the ability to grow significantly in their countries
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Sub-Advisor makes investment decisions for the Fund. Simon Key,
Chief Investment Officer of the Sub-Advisor, heads the committee.
- ------------------------------------------------------------------------------
GROWTH & INCOME FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide capital
appreciation and current income. It primarily invests in dividend-paying Equity
Securities and is designed for investors seeking current income and capital
appreciation from the equity markets.
Under normal circumstances, the Fund will invest at least 65% of its
assets in income-producing common stocks and convertible preferred
stocks.
The Fund may also purchase Fixed Income Securities which are
convertible into or exchangeable for common stock.
The Fund may invest up to 35% of its assets in Fixed Income
Securities, including 20% of its assets in Fixed Income Securities that
are rated below investment grade.
The Advisor generally selects large, well-known companies that it
believes have favorable prospects for dividend growth and capital appreciation.
The Fund will seek to produce a current yield greater than the S&P 500.
The Fund focuses on dividend-paying Equity Securities because, over
time, dividend income has accounted for a significant portion of the total
return of the S&P 500. In addition, dividends are usually a more stable and
predictable source of return than capital appreciation. The Advisor believes
that stocks which distribute a high level of current income have more stable
prices than those which pay below average dividends.
PORTFOLIO MANAGEMENT. Otto Hinzmann, Jr. is the Fund's portfolio manager, a
position he has held since February 1995. Mr. Hinzmann has been a Vice President
and Director of Equity Management of the Advisor or MCM since January 1987.
- ------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation. The Fund invests primarily in Foreign Securities and ADRs and
EDRs. At least once a quarter, the Advisor creates a list of Foreign Securities
and ADRs and EDRs (the "Securities List") which the Fund may purchase based on
the country where the company is located, its competitive advantages, its past
financial record, its future prospects for growth and the market for its
securities. The Advisor updates the Securities List frequently (but at least
quarterly), adds new securities to the Securities List if they are eligible and
sells securities not on the updated Securities List as soon as practicable.
After the Advisor creates the Securities List, it divides the list into
two sections. The first section is designed to provide broad coverage of
international markets. The second section increases exposure to securities that
the Advisor expects will perform better than other stocks in their industry
sectors and their markets as a whole. When the Advisor believes broader market
exposure will benefit the Fund, it will allocate up to 80% of the Fund's assets
in first section securities. When the Advisor identifies strong potential for
specific securities to perform well, the Fund may invest up to 50% of its assets
in second section securities.
Under normal market conditions, at least 65% of the Fund's assets are
invested in Equity Securities in at least three foreign countries.
The Fund will emphasize companies with a market capitalization of at
least $100 million.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Theodore Miller jointly manage
the Fund. Mr. Johnson, a Chief Investment Officer of the Advisor, and Mr.
Miller, senior portfolio manager of the Fund, have managed the Fund since July
1992 and October 1996, respectively. Mr. Miller previously worked as the primary
analyst for the Fund (1996) and for Interacciones Global Inc. (1993-1995) and
McDonald & Co. Securities Inc. (1991-1993).
<PAGE>
- ------------------------------------------------------------------------------
MICRO-CAP EQUITY FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation. It invests primarily in Equity Securities of smaller
capitalization companies. The Fund attempts to provide investors with
potentially higher returns than a fund that invests primarily in larger more
established companies. Since smaller capitalization companies are generally not
as well known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
Under normal market conditions, the Fund will invest at least 65% of
its assets in Equity Securities of companies having a market
capitalization of $200 million or less, which is considerably less than
the market capitalization of S&P 500 companies.
The Advisor will choose companies that:
present the ability to grow significantly over the next several years
may benefit from changes in technology, regulations and industry
sector trends are still in the developmental stage and may have
limited product lines
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------------------
MID-CAP GROWTH FUND
- -------------------------------------------------------------------------------
GOAL AND OBJECTIVES. The Fund's goal is to provide long-term capital
appreciation. The Fund invests at least 65% of its assets in the Equity
Securities of companies with market capitalizations between $100 million and $5
billion. Its style, which focuses on both growth prospects and valuation, is
known as GARP (Growth at a Reasonable Price) and seeks to produce attractive
returns during various market environments.
The Advisor chooses the Fund's investments as follows: The Advisor
reviews the earnings growth of approximately 10,000 companies over the past
three years. It invests in approximately 50 to 100 companies based on:
superior earnings growth
financial stability
relative market value
price changes compared to the Standard & Poor's Mid-Cap 400 Index
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
- ------------------------------------------------------------------------------
MULTI-SEASON GROWTH FUND
- ------------------------------------------------------------------------------
GOAL AND OBJECTIVES. The Fund's goal is to provide long-term capital
appreciation. This objective is considered "fundamental" and cannot be changed
without shareholder approval. Its style, which focuses on both growth prospects
and valuation, is known as GARP (Growth at a Reasonable Price) and seeks to
produce attractive returns during various market environments. The Fund invests
at least 65% of its assets in Equity Securities. The Fund generally invests in
Equity Securities of market capitalizations of over $1 billion.
The Advisor chooses the Fund's investments as follows: The Advisor
reviews the earnings growth of approximately 5,500 companies over the past five
years. It invests in approximately 50 to 100 companies based on:
superior earnings growth
financial stability
relative market value
price changes compared to the S&P 500
PORTFOLIO MANAGEMENT. The portfolio managers of the Fund, Leonard J. Barr
II and Lee P. Munder, have managed the Fund since its inception in February
1995. Mr. Barr is the Senior Vice President and Director of Research of the
Advisor. From April 1988 to February 1995, he held similar positions with MCM.
Mr. Munder is the President and Chief Executive Officer of the Advisor,
positions he has held with the Advisor or MCM since 1985.
- -------------------------------------------------------------------------------
REAL ESTATE EQUITY INVESTMENT FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide both capital
appreciation and current income. This goal is "fundamental" and cannot be
changed without shareholder approval. The Fund invests primarily in U.S.
companies which are principally engaged in the real estate industry or which own
significant real estate. A company is "principally engaged" in the real estate
industry if at least 50% of its assets, gross income or net profits are
attributable to ownership, construction, management or sale of residential,
commercial or industrial real estate. The Fund will not own real estate
directly.
Under normal conditions, the Fund invests at least 65% of its total
assets in Equity Securities of U.S. companies in real estate industry including:
equity real estate investment trusts ("REITS")
brokers, home builders and real estate developers
companies with substantial real estate holdings (for example, paper
and lumber producers, hotels and entertainment companies)
manufacturers and distributors of building supplies
mortgage REITS
financial institutions which issue or service mortgages
In addition, the Fund may invest:
up to 35% of its assets in companies other than real estate industry
companies in Fixed Income Securities, including up to 5% of its
assets in Fixed Income Securities rated below investment grade or
unrated if secured by real estate assets if the Advisor
believes that the underlying collateral is sufficient
in REITS only if they are traded on a securities exchange or NASDAQ
PORTFOLIO MANAGEMENT. Peter K. Hoglund is the portfolio manager of the
Fund, a position he has held since October 1996. Mr. Hoglund formerly was the
primary analyst of the Fund (October 1994 to October 1996).
<PAGE>
- ------------------------------------------------------------------------------
SMALL-CAP VALUE FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation, with income as a secondary objective. It invests primarily in
Equity Securities of smaller capitalization companies. The Fund attempts to
provide investors with potentially higher returns than a fund that invests
primarily in larger more established companies. Since small companies are
generally not as well known to investors and have less of an investor following
than larger companies, they may provide higher returns due to inefficiencies in
the marketplace.
Under normal market conditions, the Fund will invest at least 65% of
its assets in Equity Securities of companies with market
capitalizations below $750 million, which is less than the market
capitalization of S&P 500 companies.
The Advisor will concentrate on companies that it believes
are undervalued. A company's Equity Securities may be undervalued because it is
temporarily overlooked or out of favor due to general economic conditions, a
market decline, industry conditions or developments affecting the particular
company. The Fund will usually invest in Equity Securities of companies with low
price/earnings ratios, low price/cash flow ratios and low price/book values
compared to the general market.
In addition to valuation, the Advisor considers these factors, among
others, in choosing companies:
a stable or improving earnings record sound finances above-average
growth prospects participation in a fast growing industry strategic
niche position in a specialized market adequate capitalization
PORTFOLIO MANAGEMENT. Gerald Seizert and Edward Eberle jointly manage the
Fund. Mr. Seizert has managed the Fund since it commenced operations. Prior to
joining the Advisor in 1995, Mr. Seizert was a Director and Managing Partner of
Loomis, Sayles & Company, L.P. Mr. Eberle, who has managed the Fund since March
1997, was formerly the primary analyst for the Fund. Prior to joining the
Advisor in 1995, he was an Executive Vice President and Portfolio Manager for
Westpointe Financial Corporation.
- ------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation. The Fund invests primarily in Equity Securities of smaller
capitalization companies. The Fund attempts to provide investors with
potentially higher returns than a fund that invests primarily in larger more
established companies. Since smaller capitalization companies are generally not
as well known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
Under normal market conditions, the Fund will invest at least 65% of
the Fund's assets in Equity Securities of companies with market
capitalizations below $750 million, which is less than the market
capitalization of S&P 500 companies.
The Advisor considers these factors, among others, in choosing
companies:
above-average growth prospects
participation in a fast-growing industry
strategic niche position in a specialized market
adequate capitalization
PORTFOLIO MANAGEMENT. Carl Wilk and Michael P. Gura jointly manage the
Fund. Mr. Wilk, a Senior Portfolio Manager of the Advisor, has managed the Fund
since October 1996 and was the Fund's primary analyst (1995 to 1996). Prior to
joining the Advisor in 1995, Mr. Wilk was a Senior Equity Research Analyst at
Woodbridge. Mr. Gura has managed the Fund since March 1997. Prior to joining the
Advisor in 1995, Mr. Gura was a Vice President, Senior Equity Analyst for
Woodbridge (1994 - 1995) and an investment officer for Manufacturers National
Bank Trust (1989 - 1994).
- -------------------------------------------------------------------------------
VALUE FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term capital
appreciation, with income as a secondary objective. The Fund invests primarily
in the Equity Securities of well-established companies with intermediate to
large capitalizations, which typically exceed $750 million.
The Fund will invest at least 65% of its assets in Equity Securities.
The Advisor will concentrate on companies that it believes are
undervalued. A company's Equity Securities may be undervalued because it is
temporarily overlooked or out of favor due to general economic conditions, a
market decline, industry conditions or developments affecting the particular
company. The Fund will usually invest in Equity Securities of companies with low
price/earnings ratios, low price/cash flow ratios and low price/book values
compared to the general market.
In addition to valuation, the Advisor considers these factors, among
others, in choosing companies:
a stable or improving earnings record sound finances above-average
growth prospects participation in a fast growing industry strategic
niche position in a specialized market adequate capitalization
PORTFOLIO MANAGEMENT. Gerald Seizert and Edward Eberle jointly manage the
Fund. Mr. Seizert has managed the Fund since it commenced operations. Prior to
joining the Advisor in 1995, Mr. Seizert was a Director and Managing Partner of
Loomis, Sayles & Company, L.P. Mr. Eberle, who has managed the Fund since
October 1996, was formerly the primary analyst for the Fund. Prior to joining
the Advisor in 1995, he was an Executive Vice President and Portfolio Manager
for Westpointe Financial Corporation.
- ----------------------------------------------------------------------------
BOND FUND
- ----------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a high level
of current income and, secondarily, capital appreciation.
Under normal market conditions, at least 65% of the Fund's assets will
be invested in Fixed Income Securities.
The Fund's dollar-weighted average maturity will generally be between
six and fifteen years.
PORTFOLIO MANAGEMENT. James C. Robinson and Gregory A. Prost jointly manage
the Fund. Mr. Robinson and Mr. Prost have managed the Fund since March 1995 and
May 1995, respectively. Mr. Robinson has been a Vice President and Chief
Investment Officer of the Advisor or MCM since 1987. Mr. Prost has been a Senior
Fixed Income Portfolio Manager of the Advisor or MCM since 1995. Prior to
joining the Advisor, he was a Vice President and Senior Fund Manager for First
of America Investment Corp.
- ---------------------------------------------------------------------------
INTERNATIONAL BOND FUND
- ---------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to realize a competitive
total return through a combination of current income and capital appreciation.
Under normal market conditions, at least 65% of the Fund's assets will be
invested in Foreign Securities of issuers in at least three countries other than
the United States. The Fund's dollar-weighted average maturity will generally be
between three and 15 years. The Fund will invest mostly in:
foreign debt obligations issued by foreign governments and
their agencies, instrumentalities or political subdivisions
debt securities issued or guaranteed by supra-national organizations,
such as the World Bank debt securities of banks or bank holding
companies corporate debt securities other debt securities, including
those convertible into foreign stock.
PORTFOLIO MANAGEMENT. Gregory A. Prost and Sharon E. Fayolle jointly manage
the Fund. Mr. Prost, Senior Fixed Income Portfolio Manager of the Advisor or
MCM, has managed the Fund since October 1996. Prior to joining MCM in 1995, he
was a Vice President and Senior Fund Manager for First of America Investment
Corp. Ms. Fayolle, Vice President and Director of Money Market Trading for the
Advisor or MCM, has managed the Fund since October 1996. Prior to joining MCM in
1996, she was a European Portfolio Manager for Ford Motor Company.
- -------------------------------------------------------------------------------
INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a competitive rate
of return which, over time, exceeds the rate of inflation and the return
provided by money market instruments.
Under normal conditions, at least 65% of the Fund's assets will be
invested in Fixed Income Securities. The Fund's dollar-weighted
average maturity will generally be between three and eight years.
PORTFOLIO MANAGEMENT. Anne K. Kennedy and James C. Robinson jointly manage
the Fund. Ms. Kennedy, Vice President and Director of Corporate Bond Trading of
the Advisor or MCM since 1991, has managed the Fund since March 1995. Mr.
Robinson, Vice President and Chief Investment Officer of the Advisor or MCM
since 1987, has managed the Fund since March 1995.
- ------------------------------------------------------------------------------
U.S. GOVERNMENT INCOME FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide high current
income.
Under normal market conditions, at least 65% of the Fund's assets will
be invested in U.S. Government obligations.
The Fund's dollar-weighted average maturity will generally be between
six and fifteen years.
PORTFOLIO MANAGEMENT. James C. Robinson and Peter G. Root jointly manage
the Fund. Mr. Robinson, Vice President and Chief Investment Officer of the
Advisor or MCM since 1987, and Mr. Root, Vice President and Director of
Government Securities Trading of the Advisor since March 1995, have managed the
Fund since March 1995. Mr. Root joined MCM in 1991.
- -------------------------------------------------------------------------------
MICHIGAN TRIPLE TAX-FREE BOND FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide as high a level of
current interest income exempt from regular Federal income taxes, Michigan state
income and Michigan intangibles tax as is consistent with prudent investment
management and preservation of capital.
Except during temporary defensive periods, at least 65% of the Fund's
net assets are invested in Michigan Municipal Obligations.
The Fund will invest primarily in Michigan Municipal Obligations which
have remaining maturities of between three and 30 years.
The Fund's dollar-weighted average maturity will generally be between
ten and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank.
- -------------------------------------------------------------------------------
TAX-FREE BOND FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a high level of
current interest income exempt from Federal income taxes and to generate as
competitive a long-term rate of return as is consistent with prudent investment
management and preservation of capital.
Under normal market conditions, at least 65% of the Fund's assets will
be invested in Municipal Obligations.
Except during temporary defensive periods, at least 80% of the Fund's
net assets will be invested in Municipal Obligations whose interest is
exempt from regular Federal income tax. This fundamental policy may
only be changed with shareholder approval.
The Fund invests primarily in intermediate-term and long-term
Municipal Obligations which have remaining maturities of between three
and 30 years.
The Fund's dollar-weighted average maturity will generally be between
ten and twenty years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank.
- -------------------------------------------------------------------------------
TAX-FREE INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide a competitive
level of current interest income exempt from regular Federal income taxes and a
total return which, over time, exceeds the rate of inflation and the return
provided by tax-free money market instruments.
Under normal market conditions, at least 65% of the Fund's assets will
be invested in Municipal Obligations.
Except during temporary defensive periods, at least 80% of the Fund's
net assets will be invested in Municipal Obligations whose interest is
exempt from regular Federal income tax.
The Fund invests in Michigan Municipal Obligations from time to time.
The Fund generally buys obligations with remaining maturities of ten
years or less. The Fund's dollar-weighted average maturity will
generally be between three and eight years, but may be
up to ten years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank.
- ------------------------------------------------------------------------------
SHORT TERM TREASURY FUND
- ------------------------------------------------------------------------------
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide investors with an
enhanced money market return consistent with capital preservation. Under normal
conditions, the Fund invests all of its assets in U.S. Treasury securities and
repurchase agreements fully collateralized by U.S. Treasury securities. The
Fund's dollar-weighted average portfolio maturity usually will not exceed two
years.
The Fund seeks to generate a total return which exceeds money market
instruments while minimizing the fluctuation of its net asset value. The Fund,
however, is not a money market fund and its net asset value may fluctuate.
PORTFOLIO MANAGEMENT. Sharon E. Fayolle, Vice President and Director of
Money Market Trading for the Advisor, has managed the Fund since October 1996.
Prior to joining the Advisor in 1996, she was a European Portfolio Manager for
Ford Motor Company.
- ------------------------------------------------------------------------------
CASH INVESTMENT FUND
- ------------------------------------------------------------------------------
The Fund's primary goal is as high a level of current interest income
as is consistent with maintaining liquidity and stability of principal.
The Fund invests in a broad range of short-term, high quality, U.S.
dollar-denominated instruments.
- ------------------------------------------------------------------------------
U.S. TREASURY MONEY MARKET FUND
- ------------------------------------------------------------------------------
The Fund's goal is to provide as high a level of current interest
income as is consistent with maintaining liquidity and stability of
principal.
The Fund invests its assets solely in short-term bonds, bills and
notes issued by the U.S. Treasury (including "stripped" securities),
and in repurchase agreements relating to such obligations.
- ------------------------------------------------------------------------------
TAX-FREE MONEY MARKET FUND
- ------------------------------------------------------------------------------
The Fund's goal is to provide shareholders with as high a level of
current interest income exempt from Federal income taxes as is
consistent with maintaining liquidity and stability of principal.
The Fund invests substantially all of its assets in short-term, U.S.
dollar-denominated Municipal Obligations, the interest on which is
exempt from regular Federal income tax.
Under normal market conditions, the Fund will invest at least 80% of
its net assets in Municipal Obligations.
- -----------------------------------------------------------------------------
MONEY MARKET FUND
- -----------------------------------------------------------------------------
The Fund's goal is to provide current income consistent with the
preservation of capital and liquidity. The Fund invests its assets in
a broad range of short-term, high quality, U.S. dollar-denominated
instruments, such as bank, commercial and other obligations (including
Federal, state and local government obligations) that are available in
the money markets.
Who May Want To Invest in the Funds?
Equity Funds
These Funds are designed for investors who desire potentially high
capital appreciation and who can accept short-term variations in return for
potentially greater returns over the long term. In general, the greater the
risk, the greater the potential reward. Investors who have a short time horizon,
who desire a high level of income or who are conservative in their investment
approach may wish to invest in other portfolios offered by the Trust and the
Company.
Bond Funds and Tax-Free Bond Funds
These Funds are designed for investors who desire potentially higher
returns than more conservative fixed rate investments or money market funds and
who seek current income. The Michigan Triple Tax-Free Bond Fund, Tax-Free Bond
Fund and Tax-Free Intermediate Bond Fund may be desirable for investors who seek
primarily tax-exempt income. When you choose among the Funds, you should
consider both the expected yield of the Funds and potential changes in each
Fund's share price. The yield and potential price changes of a Fund's shares
depend on the quality and maturity of the obligations in its portfolio, as well
as on other market conditions.
Short Term Treasury Fund and Money Market Funds
These Funds are designed for investors who desire a high level of
income and liquidity and, in the case of the Money Market Funds, stability of
principal.
What are the Funds' Investments and Investment Practices?
Each Equity Fund invests primarily in Equity Securities, which includes
common stocks, preferred stocks, warrants and other securities convertible into
common stocks. Many of the common stocks the Funds (other than Growth & Income
Fund) will buy will not pay dividends; instead, stocks will be bought for the
potential that their prices will increase, providing capital appreciation for
the Funds. The value of Equity Securities will fluctuate due to many factors,
including the past and predicted earnings of the issuer, the quality of the
issuer's management, general market conditions, the forecasts for the issuer's
industry and the value of the issuer's assets. Holders of Equity Securities only
have rights to value in the company after all debts have been paid, and they
could lose their entire investment in a company that encounters financial
difficulty. Warrants are rights to purchase securities at a specified time at a
specified price.
Each Fund may invest in Cash Equivalents, which are high-quality,
short-term money market instruments including, among other things, commercial
paper, bankers' acceptances and negotiable certificates of deposit of banks or
savings and loan associations, short-term corporate obligations and short-term
securities issued by, or guaranteed by, the U.S. Government and its agencies or
instrumentalities. These instruments will be used primarily pending investment,
to meet anticipated redemptions or as a temporary defensive measure. If a Fund
is investing defensively, it may not be pursuing its investment objective.
All Funds may enter into Repurchase Agreements. Under a repurchase
agreement, a Fund agrees to purchase securities from a seller and the seller
agrees to repurchase the securities at a later time, typically within seven
days, at a set price. The seller agrees to set aside collateral at least equal
to the repurchase price. This ensures that the Fund will receive the purchase
price at the time it is due, unless the seller defaults or declares bankruptcy,
in which event the Fund will bear the risk of possible loss due to adverse
market action or delays in liquidating the underlying obligation. With respect
to the Money Market Funds, the securities held subject to a repurchase agreement
may have stated maturities exceeding 397 days provided the repurchase agreement
itself matures in 397 days.
The Equity Funds may purchase American Depository Receipts ("ADRs"),
European Depositary Receipts ("EDRs") and Global Depository Receipts ("GDRs").
ADRs are issued by U.S. financial institutions and GDRs and EDRs are issued by
European financial institutions. They are receipts evidencing ownership of
underlying Foreign Securities.
The Funds other than the U.S. Treasury Money Market Fund may buy shares
of registered Money Market Funds. The Funds will bear a portion of the expenses
of any investment company whose shares they purchase, including operating costs
and investment advisory, distribution and administration fees. These expenses
would be in addition to a Fund's own expenses. Each Fund may invest up to 10% of
its assets in other investment companies and no more than 5% of its assets in
any one investment company.
All Funds may purchase Fixed Income Securities. Fixed Income Securities
are securities which either pay interest at set times at either fixed or
variable rates, or which realize a discount upon maturity. Fixed Income
Securities include corporate bonds, debentures, notes and other similar
corporate debt instruments, zero coupon bonds (discount debt obligations that do
not make interest payments) and variable amount master demand notes that permit
the amount of indebtedness to vary in addition to providing for periodic
adjustments in the interest rate. Each Fund may purchase U.S. Government
Securities, which are securities issued by, or guaranteed by, the U.S.
Government or its agencies or instrumentalities. Such securities include U.S.
Treasury bills, which have initial maturities of less than one year, U.S.
Treasury notes, which have initial maturities of one to ten years, U.S. Treasury
bonds, which generally have initial maturities of greater than ten years, and
obligations of the Federal Home Loan Mortgage Corporation, Federal National
Mortgage Association and Government National Mortgage Association.
Each Fund may Borrow Money in an amount up to 5% of its assets for
temporary purposes and in an amount up to 33 1/3% of its assets to meet
redemptions. This is a "fundamental" policy which only can be changed by
shareholders.
All of the Funds, other than the International Bond Fund, the Michigan
Triple Tax-Free Bond Fund and the Tax-Free Intermediate Bond Fund, are
classified as "diversified funds." With respect to 75% of each diversified
Fund's assets, each diversified fund cannot invest more than 5% of its assets in
one issuer (other than the U.S. Government and its agencies and
instrumentalities). In addition, each diversified fund cannot invest more than
25% of its assets in a single issuer. These restrictions do not apply to the
non-diversified funds.
The Tax-Free Funds will acquire long-term instruments only which are
rated "A" or better by Moody's Investors Service Inc. ("Moody's") or Standard &
Poor's Rating Service ("S&P") or, if unrated, are of comparable quality. Such
Funds will acquire short-term instruments only which (i) have short-term debt
ratings in the top two categories by at least one nationally recognized
statistical rating organization, (ii) are issued by an issuer with such ratings
or (iii), if unrated, are of comparable quality.
The Advisor does not intend to invest more than 25% of a Fund's assets
in securities whose issuers are in the same state, except that the Advisor may
invest more than 25% of the Michigan Triple Tax-Free Bond Fund's and the
Tax-Free Intermediate Bond Fund's assets in Michigan Municipal Obligations.
Each Tax-Free Fund may invest in short-term money market instruments on
a temporary basis or for temporary investment purposes. Short-term money market
instruments include U.S. government obligations, debt securities of issuers
having a rating within the two highest categories of either S&P or Moody's, and
certificates of deposit or bankers' acceptances of domestic branches of U.S.
banks with at least $1 billion in assets.
Each Money Market Fund will invest primarily in Eligible Securities (as
defined by the SEC) with remaining maturities of 397 days or less as defined by
the SEC (although securities subject to repurchase agreements, variable and
floating rate securities and certain other securities may bear longer
maturities), and the dollar-weighted average portfolio maturity of each Money
Market Fund will not exceed 90 days. Eligible Securities consist of securities
that are determined by the Advisor, under guidelines established by the Boards
of Trustees and Directors, to present minimal credit risk. Each Fund may also
hold uninvested cash pending investment of late payments for purchase orders or
during temporary defensive periods.
Investment Charts
These charts summarize the Funds' investments and investment practices.
The SAI contains more details. All percentages are based on a Fund's total
assets except where otherwise noted. See "What are the Risks of Investing in the
Funds?" for a description of the risks involved with the Funds' investment
practices.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
EQUITY FUNDS
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Framling- Framlington
Acceler- ton Framling- Inter-national
Investments and ating Equity Emerging ton Growth
Investment Practices Growth Balanced Selection Markets Healthcare
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Foreign Securities. Includes
securities issued by non-U.S.
companies. Present more risks than 25% 25% 25% Y Y Y
U.S. securities.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Lower-Rated Debt Securities. Fixed
income securities which are rated
below investment grade by Standard & Y Y Y Y Y Y
Poor's Ratings Service, Moody's
Investors Service Inc. or other
nationally recognized rating
agency. Considered riskier than
investment grade securities.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Investment-Grade Asset Backed
Securities. Includes debt N Y N N N N
securities backed by mortgages,
installment sales contracts and
credit card receivables.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Stripped Securities. Includes
participations in trusts that hold
U.S. Treasury and agency securities N Y N N N N
which represent either the interest
payments or principal payments on
the securities or combinations of
both.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Forward Foreign Currency Exchange
Contracts. Obligations of a Fund to
purchase or sell a specific currency
at a future date at a set price. Y Y Y Y Y Y
May decrease a Fund's loss due to a
change in currency value, but also
limits gains from currency changes.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
When-Issued and Delayed Delivery
Securities. Securities purchased at
a set price, with delivery and Y Y Y Y Y Y
payment in the future. The value of
securities may change between the
time the price is set and payment.
Not to be used for speculation.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Futures and Options on Futures.1
Contracts in which a Fund has the
right or the obligation to make Y Y Y Y Y Y
delivery of or receive securities,
the cash value of an index or
foreign currency. Used for hedging
purposes or to maintain liquidity.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
Real Estate
Equity
Growth Inter- Micro- Mid- Multi- Invest-ment Small- Small
& national Cap Cap Season Cap Company
Income Equity Equity Growth Growth Value Growth Value
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
25% Y 25% 25% 25% N 25% 25% 25%
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
20% Y Y Y Y Y Y Y Y
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
N N N N N N N N N
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
N N N N N N N N N
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
Y Y Y Y Y N Y Y Y
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
Y Y Y Y Y Y Y Y Y
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
Y Y Y Y Y Y Y Y Y
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
EQUITY FUNDS (continued)
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Framling- Framlington
Acceler- ton Framling- Inter-national
Investments and ating Equity Emerging ton Growth
Investment Practices Growth Balanced Selection Markets Healthcare
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Options. A Fund may buy options
giving it the right to require a
buyer to buy a security held by the
Fund (put options), buy options
giving it the right to require a
seller to sell securities to the
Fund (call options), sell (write) Y Y Y Y Y Y
options giving a buyer the right to
require the Fund to buy securities
from the buyer or write options
giving a buyer the right to require the Fund to sell securities to the buyer
during a set time at a set price. Options may relate to stock indices,
individual securities, foreign currencies or futures contracts. See the SAI for
more details and additional limitations.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Reverse Repurchase Agreements. A
Fund sells securities and agrees to
buy them back later at an agreed Y Y Y Y Y Y
upon time and price. A method to
borrow money for temporary purposes.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Illiquid Securities. Typically
there is no ready market for these 15% 15% 15% 15% 15% 15%
securities, which inhibits the
ability to sell them and to obtain
their full market value, or there
are legal restrictions on their
resale by the Fund.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Lending Securities. May lend
securities to financial institutions
which pay for the use of the
securities. May increase return. 25% 25% 25% 25% 25% 25%
Slight risk of borrower failing
financially.
------------------------------------------ ------------- -------------- -------------- ------------- -------------- ---------------
Key:
Y = investment allowed without restriction
N = investment not allowed
1 The limitation on margins and premiums for futures is 5% of a Fund's assets
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
Real Estate
Equity
Growth Inter- Micro- Mid- Multi- Invest-ment Small- Small
& national Cap Cap Season Cap Company
Income Equity Equity Growth Growth Value Growth Value
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
Y Y Y Y Y Y Y Y Y
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
Y Y Y Y N Y Y Y Y
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
15%/5% 15%/5% 15%/10% 15%/5%
15% 15% 15% excluding excluding excluding 15% 15% excluding
Rule 144A Rule 144A Rule 144A Rule 144A
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
25% 25% 25% 25% 25% 25% 25% 25% 25%
------------ ------------ ------------- ------------ ------------ ------------ ------------ ------------ -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
BOND FUNDS
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
Investments and Bond Intermediate International U.S. Government
Investment Practices Fund Bond Fund Bond Fund Income Fund
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
Foreign Securities. Securities issued by
foreign governments and their agencies,
instrumentalities or political subdivisions,
supranational organizations, and foreign
corporations. 25% 25% Y 25%
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
Preferred Stock. May be convertible to common
stock. Preferred stock ranks senior to common
stock in capital structure and payment of
dividends. Y Y Y Y
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
Asset-Backed Securities. Includes debt
securities backed by mortgages, installment
sales contracts and credit card receivables. Y Y Y Y
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
Interest Rate and Currency Swaps. Agreement to
exchange payments calculated on the basis of
relative interest or currency rates.
Derivative instruments used solely for hedging. Y1 Y1 Y1 Y1
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
Interest Rate Caps and Floors. Entitle
purchaser to receive payments of interest to
the extent that a specified reference rate N N Y N
exceeds or falls below a predetermined level.
---------------------------------------------------- -------------- ------------------- --------------------- ------------------
---------------------------------------------------- -------------- ------------------- --------------------- ------------------
Stripped Securities. Includes participations
in trusts that hold U.S. Treasury and agency
securities which represent either the interest
or principal payments on the securities or Y Y Y Y
combinations of both.
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
---------------------------------------------------- -------------- ------------------- --------------------- --------------------
Reverse Repurchase Agreements. A Fund sells
securities and agrees to buy them back later
at an agreed upon time and price. A method to
borrow money for temporary purposes. Y Y Y Y
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
BOND FUNDS (continued)
---------------------------------------------------- --------------- ------------------ --------------------- -------------------
Investments and Bond Intermediate International U.S. Government
Investment Practices Fund Bond Fund Bond Fund Income Fund
---------------------------------------------------- --------------- ------------------ --------------------- -------------------
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
Forward Foreign Currency Exchange Contracts.
Obligations of a Fund to purchase or sell a
specific currency at a future date at a set
price. May decrease a Fund's loss due to a
change in currency value, but also limits
gains from currency changes. Y Y Y Y
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
U.S. Bank Obligations. U.S. dollar
denominated bank obligations, including
certificates of deposit, bankers' acceptances,
bank notes, time deposits issued by U.S. banks
or savings institutions having total assets in
excess of $1 billion. Y Y Y Y
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
Supranational Organization Obligation. Fixed
income securities issued or guaranteed by
supranational organizations such as the World N N Y N
Bank.
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
Guaranteed Investment Contracts. Agreements of
a Fund to make payments to an insurance
company's general account in exchange for a
minimum level of interest based on an index.
Y Y Y Y
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
When-Issued Purchases and Forward
Commitments. Agreement by a Fund to purchase
securities at a set price, with payment and
delivery in the future. The value of the
securities may change between the time the
price is set and payment. Not to be used for
speculation. Y Y Y Y
---------------------------------------------------- -------------- ------------------- --------------------- ------------------
---------------------------------------------------- -------------- ------------------- --------------------- ------------------
Illiquid Securities. Typically there is no
ready market for these securities, which
limits the ability to sell them for full 15%2 15%2 15%2 15%2
market value, or they are restricted as to
resale.
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
Futures and Options on Futures.3 Contracts in which a Fund has the right or the
obligation to make delivery of, or receive, securities, the cash value of an
index or foreign currency. Used for hedging purposes
or to maintain liquidity. Y Y Y Y
---------------------------------------------------- -------------- ------------------- --------------------- ------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
BOND FUNDS (continued)
---------------------------------------------------- --------------- ------------------ --------------------- -------------------
Investments and Bond Intermediate International U.S. Government
Investment Practices Fund Bond Fund Bond Fund Income Fund
---------------------------------------------------- --------------- ------------------ --------------------- -------------------
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
Options. A Fund may buy options giving it the right to require a buyer to buy a
security held by the Fund (put options), buy options giving it the right to
require a seller to sell securities to the Fund (call options), sell (write)
options giving a buyer the right to require the Fund to buy securities from the
buyer or write options giving a buyer the right to require the Fund to sell
securities to the buyer during a set time at a set price. Options may relate to
stock indices,
individual securities or foreign currencies. Y Y Y Y
See the SAI for more details and additional
limitations.
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
Lending Securities. May lend securities to
financial institutions which pay for the use
of securities. May increase return. Slight
risk of borrower failing financially. 33 1/3 33 1/3% 25% 33 1/3%
---------------------------------------------------- -------------- ------------------- --------------------- -------------------
Key:
Y = Investment allowed without restriction
N = Investment not allowed
1 Interest rate swaps only
2 Based on net assets
3 The limitation on margins and premiums for futures is 5% of a Fund's assets
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TAX-FREE FUNDS AND SHORT TERM TREASURY FUND
------------------------------------------------------- ------------- ----------------- --------------- ------------------
Short Term Michigan Tax-Free
Treasury Triple Tax-Free Intermediate
Investments and Fund Tax-Free Bond Bond
Investment Practices Bond Fund Fund Fund
------------------------------------------------------- ------------- ----------------- --------------- ------------------
------------------------------------------------------- ------------- ----------------- --------------- ------------------
Municipal Obligations. Payable from the issuer's
general revenue, the revenue of a specific project, N Y Y Y
current revenues or a reserve fund.
------------------------------------------------------- ------------- ----------------- --------------- ------------------
------------------------------------------------------- ------------- ----------------- --------------- ------------------
Michigan Municipal Obligations. Municipal
Obligations issued by the State of Michigan and its N Y Y Y
political subdivisions.
------------------------------------------------------- ------------- ----------------- --------------- ------------------
------------------------------------------------------- ------------- ----------------- --------------- ------------------
Foreign Securities. Securities issued by foreign
governments and their agencies, instrumentalities or
political subdivisions, supranational organizations,
and foreign corporations. N 25% 25% 25%
------------------------------------------------------- ------------- ----------------- --------------- ------------------
------------------------------------------------------- ------------- ----------------- --------------- ------------------
Short-Term Money Market Instruments. High quality short-term instruments
including, among other things, commercial paper, bankers' acceptances
certificates of deposit and short-term corporate obligations.
Y Y Y Y
------------------------------------------------------- ------------- ----------------- --------------- ------------------
------------------------------------------------------- ------------- ----------------- --------------- ------------------
Guaranteed Investment Contracts. Agreements of a
Fund to make payments to an insurance company's
general account in exchange for a minimum level of
interest based on an index. N Y Y Y
------------------------------------------------------- ------------- ----------------- --------------- ------------------
------------------------------------------------------- ------------- ----------------- --------------- ------------------
When-Issued Purchases and Forward Commitments.
Agreement by a Fund to purchase securities at a set
price, with payment and delivery in the future. The
value of the securities may change between the time
the price is set and payment. May not be used for N Y Y Y
speculation.
------------------------------------------------------- ------------- ----------------- --------------- ------------------
------------------------------------------------------- ------------- ----------------- --------------- ------------------
Illiquid Securities. Typically there is no ready
market for these securities, which limits the ability
to sell them for full market value, or they are 15%1 15%1 15%1 15%1
restricted as to resale.
------------------------------------------------------- ------------- ----------------- --------------- ------------------
------------------------------------------------------- ------------- ----------------- --------------- ------------------
Lending Securities. May lend securities to financial
institutions which pay for the use of securities.
May increase return. Slight risk of borrower failing 25% 25% 25% 25%
financially.
------------------------------------------------------- ------------- ----------------- --------------- ------------------
------------------------------------------------------- ------------- ----------------- --------------- ------------------
U.S. Treasury Securities. Includes U.S. Treasury
bills, notes and bonds. Y Y Y Y
------------------------------------------------------- ------------- ----------------- --------------- ------------------
Key:
Y = Investment allowed without restriction
N = Investment not allowed
1 Based on net assets
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
MONEY MARKET FUNDS
-------------------------------------- --------------- -------------- ------------------ ----------------------
Investments and Cash Money Tax-Free U.S. Treasury
Investment Practices Investment Market Money Money
--------------------------------------
-------------------------------------- --------------- -------------- ------------------ ----------------------
Corporate Obligations:
o Commercial paper (including Y Y N N
paper of Canadian cos.,
Canadian branches of U.S.
cos., and Europaper)
o Corporate bonds Y Y N N
o Other short-term obligations Y Y N N
o Variable Master Demand Notes Y Y N N
o Bond Debentures Y Y N N
o Notes Y Y N N
Y Y N N
Y Y N N
-------------------------------------- --------------- -------------- ------------------ ----------------------
-------------------------------------- --------------- -------------- ------------------ ----------------------
Asset-backed Securities. Includes Y Y N N
debt securities backed by mortgages,
installment sales contracts and
credit card receivables.
-------------------------------------- --------------- -------------- ------------------ ----------------------
-------------------------------------- --------------- -------------- ------------------ ----------------------
U.S. Government Obligations:
o Issued or guaranteed by Y Y N Y
U.S. Government
o Issued or guaranteed by Y Y N N
U.S. Government agencies
and instrumentalities
-------------------------------------- --------------- -------------- ------------------ ----------------------
--------------- -------------- ------------------ ----------------------
Bank Obligations. U.S. dollar- Y Y N N
denominated only; includes CDs,
bankers' acceptances, bank notes,
deposit notes and interest-bearing
savings and time deposits, issued by
U.S. or foreign banks or savings
institutions with total assets
greater than $1 billion.
-------------------------------------- --------------- -------------- ------------------ ----------------------
-------------------------------------- --------------- -------------- ------------------ ----------------------
Foreign Banks and Foreign Branches 25% 25% N N
of Domestic Banks. Includes ECDs,
ETDs, CTDs, Schedule Bs, Yankee CDs and Yankee BAs.
-------------------------------------- --------------- -------------- ------------------ ----------------------
-------------------------------------- --------------- -------------- ------------------ ----------------------
Stripped Securities:
o Participation in trusts Y Y Y N
that hold U.S. treasury and
agency securities
o U.S. Treasury-issued Y Y Y 35%
receipts
o Non-U.S. Treasury receipts Y Y Y N
-------------------------------------- --------------- -------------- ------------------ ----------------------
-------------------------------------- --------------- -------------- ------------------ ----------------------
Municipal Revenue Obligations.
Obligations the interest on which is N N May be more than N
paid solely from the revenues of 25%
similar projects.
-------------------------------------- --------------- -------------- ------------------ ----------------------
-------------------------------------- --------------- -------------- ------------------ ----------------------
Municipal Obligations. Payable from 5% 5% 25% in any one N
the issuer's general revenue, the state
revenue of a specific project,
current revenues or a reserve fund.
-------------------------------------- --------------- -------------- ------------------ ----------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
MONEY MARKET FUNDS (continued)
--------------------------------------- -------------- --------------- -------------- -------------------------
Investments and Cash Money Tax-Free U.S. Treasury
Investment Practices Investment Market Money Money
---------------------------------------
--------------------------------------- -------------- --------------- -------------- -------------------------
Reverse Repurchase Agreements. A Y* Y N Y*
Fund sells securities and agrees to
buy them back later at an agreed upon
time and price. A method to borrow
money for temporary purposes.
--------------------------------------- -------------- --------------- -------------- -------------------------
Guaranteed Investment Contracts. Y Y N N
Agreements of a Fund to make payments
to an insurance company's general
account in exchange for a minimum
level of interest based on an index.
--------------------------------------- -------------- --------------- -------------- -------------------------
When-Issued Purchases and Forward Not expected Not expected Not expected Not
Commitments. Agreement by a Fund to to exceed 25% to exceed 25% to exceed 25% expected to
purchase securities at a set price, exceed 25%
with payment and delivery in the
future. The value of the securities
may change between the time the price
is set and payment. Not to be used
for speculation.
--------------------------------------- -------------- --------------- -------------- -------------------------
Foreign Securities. Debt obligations 25% 25% N N
issued by foreign governments, and
their agencies, instrumentalities or
political subdivisions, supranational
organizations, and foreign
corporations or convertible into
foreign stock.
--------------------------------------- -------------- --------------- -------------- -------------------------
Illiquid Securities. Typically there 10% 10% 10% 10%
is no ready market for these
securities, which limits the ability
to sell them for full market value, or there are legal
restrictions on their resale by a Fund.
--------------------------------------- -------------- --------------- -------------- -------------------------
Key:
Y= investment allowed without restriction
N= investment not allowed
* = deemed borrowing; subject to the borrowing limitations
</TABLE>
<PAGE>
What are the Risks of Investing in the Funds?
All Funds
Consistent with a long-term investment approach, investors in a Fund
should be prepared and able to maintain their investments during periods of
adverse market conditions. By itself, no Fund constitutes a balanced investment
program and there is no guarantee that any Fund will achieve its investment
objective since there is uncertainty in every investment.
A fund's risk is mostly dependent on the types of securities it
purchases and its investment techniques. Certain Funds are authorized to use
options, futures, and forward foreign currency exchange contracts, which are
types of derivative instruments. Derivative instruments are instruments that
derive their value from a different underlying security, index or financial
indicator. 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) 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; (5) leverage risk, that is, the risk that
adverse price movements in an instrument can result in a loss substantially
greater than the Fund's initial investment in that instrument (in some cases,
the potential loss is unlimited); and (6) particularly in the case of
privately-negotiated instruments, the risk that the counterparty will not
perform its obligations, which could leave the Fund worse off than if it had not
entered into the position.
The risks of the various investment techniques the Funds use are
described in more detail in the SAI.
Equity Funds
Investing in these Funds may be less risky than investing in individual
stocks due to the diversification of investing in a portfolio of many different
stocks; however, such diversification does not eliminate all risks. Because the
Funds invest mostly in Equity Securities, rises and falls in the stock market in
general, as well as in the value of particular Equity Securities held by the
Funds, can affect the Funds' performance. Your investment in the Funds is not
guaranteed. The net asset value of the Funds will change daily and you might not
recoup the amount you invest in the Funds.
Bond Funds, Tax-Free Funds and Short Term Treasury Fund
The value of each Fund's shares, like the value of most securities,
will rise and fall in response to changes in economic conditions, interest rates
and the market's perception of the underlying securities held by the Fund.
Investing in the Funds may be less risky than investing in individual Fixed
Income Securities due to the diversification of investing in a portfolio
containing many different Fixed Income Securities; however, such diversities
does not eliminate all risks. The Funds invest mostly in Fixed Income
Securities, whose values typically rise when interest rates fall and fall when
interest rates rise. Fixed Income Securities with shorter maturities (time
period until repayment) tend to be less affected by interest rate changes, but
generally offer lower yields than securities with longer maturities. Current
yield levels should not be considered representative of yields for any future
time. Securities with variable interest rates may exhibit greater price
variations than ordinary securities. Zero coupon bonds are subject to greater
market fluctuations from changing interest rates than debt obligations of
comparable maturities which make current distributions of interest.
Money Market Funds
Each Money Market Fund attempts to maintain a constant net asset value of
$1.00 per share. However, your investment in the Funds is not guaranteed.
Although the Cash Investment Fund, Money Market Fund and U.S. Treasury
Money Market Fund expect under normal market conditions to be as fully invested
as possible, each Fund may hold uninvested cash pending investment of late
payments for purchase orders (or other payments) or during temporary defensive
periods. Uninvested cash will not earn income. In general, investments in the
Cash Investment Fund, Money Market Fund and U.S. Treasury Money Market Fund will
not earn as high a level of current income as longer-term or lower quality
securities. Longer-term and lower quality securities, however, generally have
less liquidity, greater market risk and more fluctuation in market value.
Although the Tax-Free Money Market Fund may invest more than 25% of its
nets assets in municipal revenue obligations, the interest on which is paid
solely from revenues of similar projects, the Tax-Fee Money Market Fund does not
intend to do so on a regular basis. If it does, the Fund will be riskier than a
fund which does not concentrate to such an extent on similar projects.
Micro-Cap Equity Fund, Small-Cap Value Fund, Mid-Cap Growth Fund and Small
Company Growth Fund
The Advisor believes that smaller companies can provide greater growth
potential and potentially higher returns than larger firms. Investing in smaller
companies, however, is riskier than investing in larger companies. The stock of
smaller companies may trade infrequently and in lower volume, making it more
difficult for a Fund to sell the stocks of smaller companies when it chooses.
Smaller companies may have limited product lines, markets, financial resources
and distribution channels, which makes them more sensitive to changing economic
conditions. Stocks of smaller companies historically have had larger
fluctuations in price than stocks of larger companies included in the S&P 500.
Framlington Emerging Markets Fund, Framlington International Growth Fund,
International Equity Fund and International Bond Fund
Investing in any these Funds, with its larger investment in Foreign
Securities, may involve more risk than investing in a U.S. fund for the
following reasons: (1) there may be less public information available about
foreign companies than is available about U.S. companies; (2) foreign companies
are not generally subject to the uniform accounting, auditing and financial
reporting standards and practices applicable to U.S. companies; (3) foreign
markets have less volume than U.S. markets, and the securities of some foreign
companies are less liquid and more volatile than the securities of comparable
U.S. companies; (4) there may be less government regulation of stock exchanges,
brokers, listed companies and banks in foreign countries than in the United
States; (5) the Fund may incur fees on currency exchanges when it changes
investments from one country to another; (6) the Fund's foreign investments
could be affected by expropriation, confiscatory taxation, nationalization of
bank deposits, establishment of exchange controls, political or social
instability or diplomatic developments; (7) fluctuations in foreign exchange
rates will affect the value of the Fund's portfolio securities, the value of
dividends and interest earned, gains and loses realized on the sale of
securities, net investment income and unrealized appreciation or depreciation of
investments; and (8) possible imposition of dividend or interest withholding by
a foreign country.
<PAGE>
Real Estate Equity Investment Fund
The Fund will invest primarily in the real estate industry and may
invest more than 25% of its assets in any one sector of the real estate
industry. As a result, the Fund will be particularly vulnerable to declines in
real estate prices and new construction rates. The Fund may be riskier than a
fund investing in a broader range of industries.
Framlington Healthcare Fund
The Fund will invest most of its assets in the healthcare industry,
which is particularly affected by rapidly changing technology and extensive
government regulation, including cost containment measures. The Fund may be
riskier than a fund investing in a broader range of industries.
International Bond Fund, Michigan Triple Tax-Free Bond Fund and Tax-Free
Intermediate Bond Fund
These Funds are non-diversified and hold securities of a limited number
of issuers. The Funds may, therefore, pose a greater risk to investors than an
investment in a diversified fund. The Michigan Triple Tax-Free Bond Fund invests
primarily in Michigan Municipal Obligations. If Michigan issuers suffer serious
financial difficulties jeopardizing their ability to pay their obligations, the
value of such Fund may decline.
- ------------------------------------------------------------------------------
PERFORMANCE
- ------------------------------------------------------------------------------
How is the Funds' Performance Calculated?
There are various ways in which the Funds may calculate and report
their performance. Performance is calculated separately for each class of
shares.
One method is to show a Fund's total return. Cumulative total return is
the percentage change in the value of an amount invested in a class of shares of
a Fund over a stated period of time and takes into account reinvested dividends.
Cumulative total return most closely reflects the actual performance of a Fund.
Average annual total return refers to the average annual compounded
rates of return over a specified period on an investment in shares of a Fund
determined by comparing the initial amount invested to the ending redeemable
value of the amount, taking into account reinvested dividends.
Each Fund may also publish its current yield. Yield is the net
investment income generated by a share of a Fund during a 30-day period divided
by the maximum offering price on the 30th day.
The current yield of shares in the Money Market Funds refers to the net
income generated by an investment in shares over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized."
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. "Effective yield" is calculated similarly but,
when annualized, the income earned by an investment in a class is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. The
"tax-equivalent yield" of shares of the Tax-Free Money Market Fund may also be
quoted from time to time, which shows the level of taxable yield needed to
produce an after-tax equivalent to the tax-free yield of a particular class.
This is done by increasing the yield (calculated as above) by the amount
necessary to reflect the payment of Federal and/or state income taxes at a
stated rate.
You should be aware that (i) past performance does not indicate how a
Fund will perform in the future; and (ii) each Fund's return and net asset value
will fluctuate, so you cannot necessarily use a Fund's performance data to
compare it to investment in certificates of deposit, savings accounts or other
investments that provide a fixed or guaranteed yield.
Each Fund may compare its performance to that of other mutual funds,
such as the performance of similar funds reported by Lipper Analytical Services,
Inc. or information reported in national financial publications (such as Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times) or
in local or regional publications. Each Fund may also compare its total return
to broad-based indices. These indices show the value of selected portfolios of
securities (assuming reinvestment of interest and dividends) which are not
managed by a portfolio manager. The Funds may report how they are performing in
comparison to the Consumer Price Index, an indication of inflation reported by
the U.S. Government.
Where Can I Obtain Performance Data?
The Wall Street Journal and certain local newspapers report information
on the performance of mutual funds. In addition, performance information is
contained in the Funds' annual report dated June 30 of each year and semi-annual
report dated December 31 of each year, which will automatically be mailed to
shareholders. To obtain copies of financial reports or performance information,
call (800) 438-5789.
- -------------------------------------------------------------------------------
PURCHASES AND EXCHANGES OF SHARES
- -------------------------------------------------------------------------------
The following persons may purchase Class Y Shares:
o Fiduciary and discretionary accounts of institutions
o institutional investors (including banks, savings
institutions, credit unions and other financial
institutions, pension, profit sharing and employee benefit
plans and trusts, insurance companies, investment
companies, investment advisors and broker-dealers acting
either for their own accounts or for the accounts of
institutional investors)
o Directors, trustees, officers and employees of the Trust,
the Company, Framlington, the Advisor and the Distributor o
the Advisor's investment advisory clients o family members of
employees of the Advisor
Each Fund also issues other classes of shares, which have different
sales charges, expense levels and performance. Class K Shares are available to
limited types of investors. Call (800) 438-5789 to obtain more information
concerning the Funds' other classes of shares.
What Price Do I Pay For Shares?
Class Y Shares are sold at the net asset value next determined by the
Funds without any initial sales charge. You should be aware that broker-dealers
(other than the Funds' Distributor) may charge investors additional fees if
shares are purchased through them.
Except in certain limited circumstances, each Fund determines its net
asset value ("NAV") on each day the New York Stock Exchange ("NYSE") is open for
trading (a "Business Day") at the close of such trading (normally 4:00 p.m.
Eastern time). The Money Market Funds also determine their NAVs at 2:45 p.m.
(Eastern time). If we receive your purchase order and payment for a Money Market
Fund by 2:45 p.m. (Eastern time) on a Business Day, you will receive dividends
on that day. Each Fund calculates NAV separately for each class of shares of a
Fund. NAV is calculated by totaling the value of all of the assets of a Fund
allocated to a particular class of shares, subtracting the Fund's liabilities
and expenses charged to that class and dividing the result by the number of
shares of that class outstanding.
When Can I Purchase Shares?
Shares of each Fund are sold on a continuous basis and can be purchased
on any Business Day.
What is the Minimum Required Investment?
The minimum initial investment by fiduciary and discretionary accounts
of institutions and institutional investors for Class Y Shares of the Real
Estate Equity Investment Fund is $250,000 and $500,000 for Class Y Shares of all
other Funds. Other types of investors are not subject to any minimum required
investment.
How Can I Purchase Shares?
You can purchase Class Y Shares in a number of different ways. You may
place orders for Class Y Shares directly through the Transfer Agent or the
Distributor or through arrangements with a financial institution.
o Through a Financial Institution. You may purchase shares through a
financial institution through procedures established with that
institution. Confirmations of share purchases will be sent to the
institution.
o By Mail. You may open an account by mailing a completed and signed
Account Application Form and a check or other negotiable bank draft
(payable to the Munder Funds) to: The Munder Funds, c/o Investor
Services Group, P.O. Box 5130, Westborough, Massachusetts 01581-5130.
You can obtain an Account Application Form by calling (800) 438-5789.
For additional investments, send a letter stating the Fund and share
class you wish to purchase, your name and your account number with a
check for $50 or more to the address listed above.
o By Wire. To open a new account, you should call the Funds at (800)
438-5789 to obtain an account number and complete wire instructions
prior to wiring any funds. Within seven days of purchase, you must send
a completed Account Application Form containing your certified taxpayer
identification number to Investor Services Group at the address
provided above. Wire instructions must state the Fund name, share
class, your registered name and your account number. Your bank wire
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.:
You may make additional investments at any time using the wire
procedures described above. Note that banks may charge fees for transmitting
wires.
o Automatic Investment Plan ("AIP"). Under the AIP, you may arrange for
periodic investments in a Fund through automatic deductions from a
checking or savings account. To enroll in the AIP you should complete
the AIP Application Form or call the Funds at (800) 438-5789. The
minimum pre-authorized investment amount is $50. You may discontinue
the AIP at any time. We may discontinue the AIP on 30 days' written
notice to you.
You will not be issued a share certificate, unless you request one in
writing. We reserve the right to (i) reject any purchase order if, in our
opinion, it is in the Funds' best interest to do so and (ii) suspend the
offering of shares of any Class for any period of time. You may pay for shares
of each Fund, other than the Real Estate Equity Investment Fund, with securities
which the Fund is allowed to hold.
See the SAI for further information regarding purchases of the Funds'
shares.
How Can I Exchange Shares?
You may exchange Class Y Shares of the Funds for Class Y Shares of
other funds of the Trust, the Company or Framlington based on their relative net
asset values.
You must meet the minimum purchase requirements for the fund of the
Trust, the Company or Framlington that you purchase by exchange. You must pay
any difference in sales charge at the time of exchange. Please note that a share
exchange may be a taxable event and accordingly, you may realize a taxable gain
or loss. Before making an exchange request, read the Prospectus of the fund you
wish to purchase by exchange. You can obtain a Prospectus for any fund of the
Trust, the Company or Framlington by contacting your broker or the Funds at
(800) 438-5789. Brokers may charge a fee for handling exchanges.
We may modify or terminate the exchange privilege at any time. You will
be given notice of any material modifications except where notice is not
required.
- -------------------------------------------------------------------------------
REDEMPTIONS OF SHARES
- -------------------------------------------------------------------------------
What Price Do I Receive for Redeemed Shares?
The redemption price is the
net asset value next
determined after we
receive the redemption
request in proper
order. When Can I
Redeem Shares?
You can redeem shares on any Business Day, provided all required
documents have been received by the Transfer Agent. A Fund may temporarily stop
redeeming shares when the NYSE is closed or trading on the NYSE is restricted,
when an emergency exists and the Funds cannot sell their assets or accurately
determine the value of their assets or if the SEC orders the Funds to suspend
redemptions.
How Can I Redeem Shares?
Redemption orders are effected at the net asset value per share next
determined after receipt of the order by the Transfer Agent. Shares held by an
institution on behalf of its customers must be redeemed in accordance with
instructions and limitations pertaining to the account at that institution.
o Involuntary Redemption. We may redeem your account if its value falls
below $500 as a result of redemptions (but not as a result of a decline
in net asset value). You will be notified in writing and allowed 60
days to increase the value of your account to the minimum investment
level.
o Free Checkwriting. Free checkwriting is available to holders of Class Y
Shares of the Bond Funds (other than International Bond Fund), Tax-Free
Funds and Money Market Funds who complete the Signature Card Section of
the Account Application Form. You may write checks in the amount of
$500 or more and you may not close a Fund account by writing a check.
We may change or terminate this program on 30 days' notice to you.
When Will I Receive Redemption Amounts?
If we receive a redemption order for a Fund before 4:00 p.m. (Eastern
time) on a Business Day, we will normally wire payment to the redeeming
institution on the next Business Day. With respect to a Money Market Fund, if we
receive a redemption order before noon (Eastern time) on a Business Day, we will
normally wire payment on the same Business Day. We may delay wiring redemption
proceeds for up to seven days if we feel an earlier payment would have a
negative impact on the Fund.
- -------------------------------------------------------------------------------
STRUCTURE AND MANAGEMENT OF THE FUNDS
- -------------------------------------------------------------------------------
How are the Funds Structured?
The Trust, the Company and Framlington are each an open-end management
investment company, which is a mutual fund that sells and redeems shares every
day that it is open for business. They are managed under the direction of their
governing Boards of Trustees and Directors, which are responsible for the
overall management of the Trust, the Company and Framlington and supervise the
Funds' service providers. The Trust and Framlington are organized as
Massachusetts business trusts and the Company is a Maryland corporation.
Who Manages and Services the Funds?
Investment Advisor. The Funds' investment advisor is Munder Capital Management,
a Delaware general partnership with its principal offices at 480 Pierce Street,
Birmingham, Michigan 48009. The principal partners of the Advisor are MCM,
Munder Group LLC, Woodbridge and WAM Holdings, Inc. ("WAM"). MCM was founded in
February, 1985 as a Delaware corporation and was a registered investment
advisor. Woodbridge and WAM are indirect, wholly-owned subsidiaries of Comerica
Incorporated. Mr. Lee P. Munder, the Advisor's chief executive officer,
indirectly owns or controls a majority of the partnership interests in the
Advisor. As of June 30, 1997, the Advisor and its affiliates had approximately
$41 billion in assets under management, of which $22 billion were invested in
equity securities, $8 billion were invested in money market or other short-term
instruments, and $11 billion were invested in other fixed income securities.
The Advisor provides overall investment management for each Fund (other
than the Framlington Funds), provides research and credit analysis, and is
responsible for all purchases and sales of portfolio securities.
The Advisor is responsible for the overall management of the
Framlington Funds. Framlington Overseas Investment Management Limited, the
sub-advisor of the Framlington Funds, is responsible for buying and selling
securities for the Framlington Funds. It is an indirect 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.
During the fiscal year ended June 30, 1997, the Advisor was paid an
advisory fee at an annual rate based on the average daily net assets of each
Fund (after waivers and/or expense reimbursements, if any) as follows:
<PAGE>
Accelerating Growth Fund 0.75%
Balanced Fund 0.65%
Framlington Emerging Markets Fund 1.25%
Framlington Healthcare Fund 1.00%
Framlington International Growth Fund 1.00%
Growth & Income Fund 0.75%
International Equity Fund 0.75%
Micro-Cap Equity Fund 1.00%
Mid-Cap Growth Fund 0.74%
Multi-Season Growth Fund 0.75%
Real Estate Equity Investment Fund 0.74%
Small-Cap Value Fund 0.75%
Small Company Growth Fund 0.75%
Value Fund 0.74%
Bond Fund 0.50%
Intermediate Bond Fund 0.50%
International Bond Fund 0.50%
U.S. Government Income Fund 0.50%
Michigan Triple Tax-Free Fund 0.50%
Tax-Free Bond Fund 0.50%
Tax-Free Intermediate Bond Fund 0.50%
Short Term Treasury Fund 0.50%
Money Market Fund 0.40%
Cash Investment Fund 0.35%
Tax-Free Money Market Fund 0.35%
U.S. Treasury Money Market Fund 0.35%
The Equity Selection Fund had not commenced operations as of the date of this
Prospectus.
The Advisor waived advisory fees during the past fiscal year for the
Multi-Season Growth Fund. The Advisor is also entitled to receive an annual fee
equal to 1.00% of the first $500 million of the Multi-Season Growth Fund's
average daily net assets and .75% of the Fund's average daily net assets over
$500 million.
The Sub-Advisor is entitled to receive an advisory fee equal to
one-half of the fee paid to the Advisor by each of the Framlington Funds as
compensation for its services as Sub-Advisor. The Advisor pays fees to the
Sub-Advisor and the Framlington Funds pay no fees directly to the Sub-Advisor.
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. The Advisor makes such payments out of its own resources
and there are no additional costs to the Funds or their shareholders.
The Advisor selects broker-dealers to execute portfolio transactions
for the Funds based on best price and execution terms. The Advisor may consider
as a factor the number of shares sold by the broker-dealer.
Performance Information. The tables below contain performance information for
certain Funds created through the conversion of a common or collective trust
fund which had investment objectives and policies similar to those of the
corresponding Funds. Immediately before and after the conversion, the same
person managed both the common or collective trust fund and the corresponding
Fund.
The table for each Fund
o includes the performance of the common or collective trust fund and the
performance of the corresponding Fund blended together o assumes that net invest
income and dividends have been reinvested o assumes that the common or
collective trust fund paid the same levels of fees and expenses as the
corresponding Fund currently pays o does not reflect any potential negative
impact on the common and collective trust funds' performance if they had been
subjected to
the same regulatory restrictions as the corresponding Fund
o indicates past performance only and does not predict future results
[Numbers to be updated to June 30, 1997]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder Accelerating
Period Ended Growth Fund
December 31, 1996 (Class Y)* S&P 500**
----------------- --------- -------
1 Year 13.07% 22.96%
3 Years 9.40% 19.67%
5 Years .............................................. 11.06% 15.22%
Inception on January 1, 1990 12.34% 14.40%
- --------------------------
<FN>
* Converted from collective trust fund to mutual fund on December 1, 1991.
** S&P 500 performance shows total return in U.S. dollars but does not reflect the deduction of fees, expenses and taxes.
Source: Lipper Analytical Services, Inc.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder Small Company
Period Ended Growth Fund Russell 2000
December 31, 1996 (Class Y)* Index**
----------------- --------- -----
1 Year 37.17% 16.49%
3 Years 20.24% 13.68%
5 Years .............................................. 18.30% 15.64%
10 Years.................................16.95%........ 12.41%
Inception on December 31, 1982......................... 15.29% 12.71%
- --------------------------
<FN>
* Converted from collective trust fund to mutual fund on December 1, 1991.
** Russell 2000 Index performance shows total return in U.S. dollars but does not reflect the deduction of fees,
expenses and taxes.
Source: Lipper Analytical Services, Inc.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder International
Period Ended Equity Fund FT/S&P Actuaries
December 31, 1996 (Class Y)* World Index ex. U.S.**
1 Year 10.41% 6.48%
3 Years 4.89% 8.42%
5 Years .............................................. 9.14% 7.93%
Inception on September 30, 1990........................ 10.37% 10.31%
- --------------------------
<FN>
* Converted from collective trust fund to mutual fund on December 1, 1991.
** FT/S&P Actuaries World Index ex. U.S. performance shows total return in U.S. dollars but does not reflect the deduction
of fees, expenses and taxes.
Source: Ibbotson Associates, Inc.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder
Period Ended Index 500 Fund S&P 500
December 31, 1996 (Class Y)* Index**
----------------- ---------- -----
1 Year 22.47% 22.96%
3 Years 19.34% 19.67%
5 Years .............................................. 14.87% 15.22%
Inception on January 27, 1988 15.51% 16.08%
- --------------------------
<FN>
* Converted from collective trust fund to mutual fund on December 1, 1991.
** S&P 500 Index performance shows total return in U.S. dollars but does not reflect the deduction of fees, expenses
and taxes.
Source: Lipper Analytical Services, Inc.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder Lehman Brothers
Period Ended Bond Fund Gov't/Corp. Bond
December 31, 1996 (Class Y)* Index**
----------------- ---------- -----
1 Year 2.72% 2.90%
3 Years 5.10% 5.79%
5 Years .............................................. 5.48% 7.18%
10 Years 7.28% 8.38%
- --------------------------
<FN>
* Converted from collective trust fund to mutual fund on December 1, 1991.
** Lehman Brothers Government/Corporate Bond Index performance shows total return in U.S. dollars but does not
reflect the deduction of fees, expenses and taxes.
Source: Lipper Analytical Services, Inc.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder
U.S. Government Lehman Brothers
Period Ended Income Fund Gov't/Corp. Bond
December 31, 1996 (Class Y)* Index**
----------------- ---------- -----
1 Year 3.13% 2.90%
3 Years 4.43% 5.79%
5 Years .............................................. 6.32% 7.18%
10 Years 7.48% 7.76%
- --------------------------
<FN>
* Converted from collective trust fund to mutual fund on July 5, 1994.
** Lehman Brothers Government/Corporate Bond Index performance shows total return in U.S. dollars but does not
reflect the deduction of fees, expenses and taxes.
Source: Lipper Analytical Services, Inc.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder Lehman Brothers
Intermediate Intermediate
Period Ended Bond Fund Gov't/Corp.
December 31, 1996 (Class Y)* Bond Index**
----------------- ---------- ----------
1 Year 3.13% 4.05%
3 Years 4.49% 5.58%
5 Years .............................................. 5.65% 6.53%
10 Years 7.04% 7.91%
Inception on March 31, 1982............................ 9.22% 10.47%
- --------------------------
<FN>
* Converted from collective trust fund to mutual fund on December 1, 1991.
** Lehman Brothers Intermediate Government/Corporate Bond Index performance shows total return in U.S. dollars but does
not reflect the deduction of fees, expenses and taxes.
Source: Lipper Analytical Services, Inc.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Munder
Tax-Free Lehman
Period Ended Bond Fund 15-Year Muni
December 31, 1996 (Class Y)* Bond Index**
----------------- ---------- ----------
1 Year 2.38% 4.65%
3 Years 4.24% 5.44%
5 Years .............................................. 6.67% 8.05%
10 Years 6.57% N/A%
- --------------------------
<FN>
* Converted from common trust fund to mutual fund on July 21, 1994.
** Lehman 15-Year Municipal Bond Index performance shows total return in U.S. dollars but does not reflect the deduction
of fees, expenses and taxes.
Source: Lipper Analytical Services, Inc.
</FN>
</TABLE>
Indices
The S&P 500 is an unmanaged index of common stock prices, including
reinvestment of dividends.
The Russell 2000 Index is a capitalization weighted total return index
which is comprised of 2,000 of the smallest capitalized U.S. domiciled companies
whose stock is traded in the United States on the New York Stock Exchange,
American Stock Exchange and the NASDAQ.
The FT/S&P Actuaries World Index ex. U.S. is an unmanaged index used to
portray global equity market excluding the U.S. The Index is weighted based on
the market capitalization of those stocks selected to represent each country and
includes gross reinvestment of dividends.
The Lehman Brothers Government/Corporate Bond Index is weighted
composite of (i) Lehman Brothers Government Bond Index, which is comprised of
all publicly issued, non-convertible debt of the U.S. Government or any agency
thereof, quasi-Federal corporations, and corporate debt guaranteed by the U.S.
Government and (ii) Lehman Brothers Corporate Bond Index, which is comprised of
all public fixed-rate, non-convertible investment-grade domestic corporate debt,
excluding collateralized mortgage obligations.
The Lehman Brothers Intermediate Government/Corporate Bond Index is a
weighted composite of (i) Lehman Brothers Intermediate Government Bond Index,
which is comprised of all publicly issued, non-convertible debt of the U.S.
Government or any agency thereof, quasi-Federal corporations and corporate debt
guaranteed by the U.S. Government with a maturity of between one and ten years
and (ii) Lehman Brothers Corporate Bond Index.
The Lehman Brothers 15-Year Municipal Bond Index is a performance
benchmark for the long-term investment-grade tax-exempt bond market.
Performance of Framlington Funds Managed by the Sub-Advisor
The tables below contain certain performance information 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
Framlington Funds. See "Fund Choices" and "What are the Funds' Investments and
Investment Practices." 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 Framlington 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 Framlington
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 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 December 31, 1996.
[Numbers to be updated to December 31, 1996.]
You should not rely on the following performance data of the
Sub-Advisor's client accounts as an indication of future performance of the
Framlington Funds. It should be noted that the management of the Funds will be
affected by regulatory requirements under the Investment Company Act of 1940
(the "1940 Act") and requirements of the Internal Revenue Code of 1986, as
amended, to qualify as a regulated investment company.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
U.K. S&P Healthcare
Period Ended Health Composite Index
September 30, 1996 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%
</TABLE>
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
reflective U.K. tax. Source: Micropal.
S&P Healthcare Composite Index performance shows capital change in U.S.
Dollars but does not reflect the deduction of fees, expenses and taxes. Source:
Datastream.
<TABLE>
<S> <C> <C> <C>
MSCI
Canadian 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%
</TABLE>
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 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 tracked by S&P. 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.
Transfer Agent. First Data Investor Services Group, Inc. is the Funds'
transfer agent. Investor Services Group is a wholly-owned subsidiary of First
Data Corporation and is located at 53 State Street, Boston, Massachusetts 02109.
Administrator. State Street Bank and Trust Company ("State Street" or the
"Administrator") is the Funds' administrator. State Street is located at 225
Franklin Street, Boston, Massachusetts 02110. State Street generally assists the
Company, the Trust and Framlington in all aspects of their administration and
operations including the maintenance of financial records and fund accounting.
As compensation for its services, State Street is entitled to receive fees,
based on the aggregate daily net assets of the Funds and certain other
investment portfolios that are advised by the Advisor for which it provides
services, computed daily and payable monthly at the rate of:
- ----------------.
State Street has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. State Street pays the Distributor a fee for these
services out of its own resources at no cost to the Funds.
Custodian. Comerica Bank (the "Custodian"), whose principal business address is
One Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides
custodial services to the Funds. No compensation is paid to the Custodian for
its services. State Street also serves as Sub-Custodian to the Funds. As
compensation for its services, the Sub-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
Sub-Custodian provides services, computed daily and payable monthly at an annual
rate of .01% of average daily net assets. The Sub-Custodian also receives
certain transaction based fees.
Distributor. Funds Distributor Inc. is the distributor of the Funds' shares
and is located at 60 State Street, Boston, Massachusetts 02109. It markets and
sells the Funds' shares.
For an additional description of the services performed by the
Administrator, Transfer Agent, the Custodian, the Sub-Custodian and the
Distributor, see the SAI.
<PAGE>
What are My Rights as a Shareholder?
All shareholders have equal voting, liquidation and other rights. You
are entitled to one vote for each share you hold and a fractional vote for each
fraction of a share you hold. You will be asked to vote on matters affecting the
Trust, the Company or Framlington as a whole and affecting your particular Fund.
You will not vote by Class unless expressly required by law or when the Trustees
or Directors determine the matter to be voted on affects only the interests of
the holders of a particular class of shares. The Trust, the Company and
Framlington will not hold annual shareholder meetings, but special meetings may
be held at the written request of shareholders owning more than 10% of
outstanding shares for the purpose of removing a Trustee or Director. Under
Massachusetts law, it is possible that a shareholder may be personally liable
for the Trust's or Framlington's obligations. If a shareholder were required to
pay a debt of a Fund, however, the Trust and Framlington have committed to
reimburse the shareholder in full from their assets. The SAI contains more
information regarding voting rights.
Comerica Bank currently has the right to vote a majority of the
outstanding shares of the Funds as agent, custodian or trustee for its customers
and therefore it is considered to be a controlling person of the Trust, the
Company and Framlington.
<PAGE>
- -------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
- -------------------------------------------------------------------------------
When Will I Receive Distributions From the Funds?
As a shareholder, you are entitled to your share of net income and
capital gains, if any, on a Fund's investments. The Funds pass their earnings
along to investors in the form of dividends. Dividend distributions are the
dividends or interest earned on investments after expenses. The Accelerating
Growth Fund, Balanced Fund, Growth & Income Fund, Small Company Growth Fund and
International Bond Fund pay dividends quarterly. The Equity Selection Fund,
Framlington Emerging Markets Fund, Framlington Healthcare Fund, Framlington
International Growth Fund, International Equity Fund, Micro-Cap Equity Fund,
Mid-Cap Growth Fund, Multi-Season Growth Fund, Small-Cap Value Fund and Value
Fund pay dividends at least annually. The Bond Funds (other than the
International Bond Fund) and the Cash Investment Fund, Money Market Fund, U.S.
Treasury Money Market Fund and Tax-Free Money Market Fund pay dividends monthly.
Each Fund's net realized capital gains (including net short-term
capital gains), if any, are distributed at least annually.
It is possible that a Fund may make a distribution in excess of the
Fund's current and accumulated earnings and profits. You will treat such a
distribution as a return of capital which is applied against and reduces your
basis in your shares. To the extent that the amount of any such distribution
exceeds your basis in your shares, the excess will be treated by you as gain
from a sale or exchange of the shares.
How Will Distributions Be Made?
Dividend and capital gains distributions will be paid in additional
shares of the same class of a Fund. If you wish to receive distributions in
cash, either indicate this request on your Account Application Form or notify
the Fund at (800) 438-5789.
Are There Tax Implications of My Investments in the Funds?
This section contains a brief summary of the tax implications of
ownership in the Funds' shares. A more detailed discussion of Federal income tax
considerations is contained in the SAI. You should consult your tax advisor
regarding the impact of owning the Funds' shares on your own personal tax
situation including the applicability of any state and local taxes.
Each Fund intends to continue to qualify as a regulated investment
company under the Internal Revenue Code, in which case it generally pays no
Federal income tax on the earnings or capital gains it distributes to
shareholders. Dividends of investment company income by each Fund will be
taxable to you as ordinary income, unless you are exempt from Federal income
taxes. Dividend's from a Fund's long-term capital gains are taxable on a capital
gain (regardless of how long you have held the shares). Please note that the
above tax treatment applies regardless of whether you receive your distributions
in cash or additional shares. Federal income taxes for distributions to an IRA
or to a qualified retirement plan are deferred. Income dividends will qualify
for the dividends received deduction for corporations to the extent of the total
qualifying dividends received by the distributing Fund from domestic
corporations for the year. Any distribution that is declared in October,
November or December but not actually paid until January of the following year
will be taxable in the year declared. When you redeem, transfer or exchange
shares, you may have a taxable gain or loss depending on whether the price you
pay for the shares has a value higher or longer than your tax basis in the
shares. If you hold the shares for six months or less, and during that time you
received a capital gain dividend, any loss you realize on the sale of those
shares will be treated as a long-term loss to the extent of the earlier
distribution.
You will receive from each Fund in which you are a shareholder shortly
after the end of each year, a statement of the amount and nature of the
distributions made to you during the year.
Dividends and certain interest income earned from foreign securities by
the International Equity Fund will, and the other Funds may, be subject to
foreign withholding or other taxes. Under certain circumstances the
International Equity Fund may be in a position (in which case it would)
"pass-through" to you the right to a credit or deduction for income or other tax
credits earned from foreign investments.
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 electing 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.
- ------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- ------------------------------------------------------------------------------
Shareholder Communications. You will receive unaudited Semi-Annual Reports and
Audited Annual Reports on a regular basis from the Funds. In addition, you will
also receive updated Prospectuses or Supplements to this Prospectus. In order to
eliminate duplicate mailings, the Funds will only send one copy of the above
communications to (1) accounts with the same primary record owner, (2) joint
tenant accounts, (3) tenant in common accounts and (4) accounts which have the
same address.
<TABLE>
<CAPTION>
<S> <C> <C>
Munder Accelerating Growth Fund Munder Small Company Growth Fund
Munder Balanced Fund Munder Value Fund
Munder Equity Selection Fund* Munder Bond Fund
Munder Framlington Emerging Markets Fund Munder Intermediate Bond Fund
Munder Framlington International Growth Fund Munder International Bond Fund
Munder Framlington Healthcare Fund Munder Short Term Treasury Fund
Munder Index 500 Fund Munder U.S. Government Income Fund
Munder Growth & Income Fund Munder Michigan Triple Tax-Free Bond Fund
Munder International Equity Fund Munder Tax-Free Bond Fund
Munder Micro-Cap Equity Fund Munder Tax-Free Intermediate Bond Fund
Munder Mid-Cap Growth Fund Munder Cash Investment Fund
Munder Multi-Season Growth Fund Munder Money Market Fund
Munder Real Estate Equity Investment Fund Munder Tax-Free Money Market Fund
Munder Small-Cap Value Fund Munder U.S. Treasury Money Market Fund
</TABLE>
(collectively, the "Funds")
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information, which has been filed with the
Securities and Exchange Commission (the "SEC"), provides supplementary
information pertaining to all classes of shares representing interests in each
of the investment portfolios listed above. The Munder Funds, Inc. (the
"Company") currently offers a selection of fourteen investment portfolios, ten
of which are offered in this Statement of Additional Information; The Munder
Funds Trust (the "Trust") currently offers a selection of fifteen investment
portfolios, each of which are described in this Statement of Additional
Information; and The Munder Framlington Funds Trust ("Framlington") currently
offers a selection of three investment portfolios, each of which is described in
this Statement of Additional Information. This Statement of Additional
Information is not a prospectus, and should be read only in conjunction with the
Trust's, Framlington's and the Company's Prospectuses dated __________1997. A
copy of each Prospectus may be obtained through Funds Distributor, Inc. (the
"Distributor"), or by calling (800) 438-5789. This Statement of Additional
Information is dated _______________1997.
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.
- ------------------------
* As of the date of this Statement of Additional Information, the Munder Equity
Selection Fund is not currently available for purchase.
<PAGE>
TABLE OF CONTENTS
Page
General...................................................................
Fund Investments..........................................................
Risk Factors and Special Considerations -- Index 500 Fund.................
Risk Factors and Special Considerations -- Michigan Bond Fund and
Tax-Free Intermediate Bond Fund.....................................
Investment Limitations....................................................
Trustees, Directors and Officers..........................................
Investment Advisory and Other Service Arrangements........................
Portfolio Transactions....................................................
Additional Purchase and Redemption Information............................
Net Asset Value...........................................................
Performance Information...................................................
Taxes.....................................................................
Additional Information Concerning Shares..................................
Miscellaneous.............................................................
Registration Statement....................................................
Financial Statements......................................................
Appendix A................................................................
Appendix B................................................................
No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional Information or in
each Prospectus in connection with the offering made by each Prospectus 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 following Funds are described in this Statement of Additional Information:
The Munder Funds Trust
Munder Accelerating Growth Fund ("Accelerating Growth Fund") Munder Balanced
Fund ("Balanced Fund") Munder Growth & Income Fund ("Growth & Income Fund")
Munder Index 500 Fund ("Index 500 Fund") Munder International Equity Fund
("International Equity Fund") Munder Small Company Growth Fund ("Small Company
Growth Fund") Munder Bond Fund ("Bond Fund") Munder Intermediate Bond Fund
("Intermediate Bond Fund") Munder U.S. Government Income Fund ("U.S. Income
Fund") Munder Michigan Triple Tax-Free Bond Fund ("Michigan Bond Fund") Munder
Tax-Free Bond Fund ("Tax-Free Bond Fund") Munder Tax-Free Intermediate Bond Fund
("Tax-Free Intermediate Bond Fund") Munder Cash Investment Fund ("Cash
Investment Fund") Munder Tax-Free Money Market Fund ("Tax-Free Money Market
Fund") Munder U.S. Treasury Money Market Fund ("U.S. Treasury Money Market
Fund")
The Munder Funds, Inc.
Munder Equity Selection Fund ("Equity Selection Fund") Munder Micro-Cap Equity
Fund ("Micro-Cap Fund") Munder Mid-Cap Growth Fund ("Mid-Cap Fund") Munder
Multi-Season Growth Fund ("Multi-Season Fund") Munder Real Estate Equity
Investment Fund ("Real Estate Fund") Munder Small-Cap Value Fund ("Small-Cap
Value Fund") Munder Value Fund ("Value Fund") Munder International Bond Fund
("International Bond Fund") Munder Short Term Treasury Fund ("Short Term
Treasury Fund") Munder Money Market Fund ("Money Market Fund")
The Munder Framlington Funds Trust
Framlington Emerging Markets Fund ("Emerging Markets Fund")
Framlington Healthcare Fund ("Healthcare Fund")
Framlington International Growth Fund ("International Growth Fund")
The Trust was organized on August 30, 1989 under the name "PDB Fund,"
which was changed in November, 1989 to "Opportunity Funds", and in
February, 1990 to "Ambassador Funds" and in June, 1995 to "The Munder Funds
Trust." The Tax-Free Intermediate Bond Fund originally commenced operations
on February 9, 1987 as a separate portfolio of the St. Clair Tax-Free Fund,
Inc. On November 20, 1992, the St. Clair Tax-Free Intermediate Bond Fund
was reorganized as the Ambassador Tax-Free Intermediate Bond Fund. The
Company was organized as a Maryland corporation on November 18, 1992.
Framlington was organized as a Massachusetts business trust on October 30,
1996.
<PAGE>
As stated in each Prospectus, the investment advisor of each
Fund is Munder Capital Management (the "Advisor"). The principal partners
of the Advisor are Old MCM, Inc., Munder Group LLC, Woodbridge Capital
Management, Inc. 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.
Framlington Overseas Investment Management Limited (the "Sub-Advisor")
serves as sub-advisor for the three Framlington Funds. The Sub-Advisor is a
subsidiary of Framlington Group Limited, incorporated in England and Wales
which, through its subsidiaries, provides a wide range of investment
services. Framlington Group Limited 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.
Capitalized terms used herein and not otherwise defined have the same
meanings as are given to them in each Prospectus.
FUND INVESTMENTS
The following supplements the information contained in each Prospectus
concerning the investment objectives and policies of the Funds. With the
exception of the policy to invest at least 80% of each of Tax-Free Bond
Fund's and Tax-Free Money Market Fund's assets in municipal obligations
bearing tax-exempt interest and the investment objectives of Multi-Season
Fund, Real Estate Fund and Money Market Fund, 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 a Fund will achieve its objective. A
description of applicable credit ratings is set forth in Appendix A hereto.
For purposes of this Statement of Additional Information, the Accelerating
Growth Fund, Equity Selection Fund, Growth & Income Fund, Index 500 Fund,
International Equity Fund, Micro-Cap Fund, Mid-Cap Fund, Multi-Season Fund,
Real Estate Fund, Small-Cap Value Fund, Small Company Growth Fund, Value
Fund, International Growth Fund, Emerging Markets Fund and Healthcare Fund
are referred to as the "Equity Funds"; The Bond Fund, Intermediate Bond
Fund, and U.S. Income Fund are referred to as the "Bond Funds"; the
Michigan Bond Fund, Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund
are referred to as the "Tax-Free Bond Funds" and Cash Investment Fund,
Money Market Fund, Tax-Free Money Fund and U.S. Treasury Fund are referred
to as the "Money Market Funds."
Borrowing. The Funds are authorized to borrow money in amounts up to
5% of the value of their total assets at the time of such borrowings for
temporary purposes, and are 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 the Funds 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, the Funds may be required
to sell some of their 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. Borrowed funds are subject to interest costs that may or may not be
offset by amounts earned on the borrowed funds. A Fund may also be required
to maintain minimum average balances 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. Each Fund may, in connection with permissible borrowings,
transfer as collateral, securities owned by the Funds. .........
Foreign Securities. Each Equity Fund (except Real Estate Fund,
International Equity Fund, International Growth Fund, Emerging Markets Fund
and Healthcare Fund), each Bond Fund, the Balanced Fund, the Cash
Investment Fund and each Tax-Free Bond Fund may invest up to 25% of its
assets in foreign securities. Under normal market conditions, the
International Equity Fund, International Bond Fund and International Growth
Fund will each invest at least 65% of its assets in securities of issuers
located in at least three countries other than the United States. The
Emerging Markets Fund will invest at least 65% of its assets in emerging
markets countries. There is no limit on the Healthcare Fund's investments
in foreign securities. The Mid-Cap Fund and the Multi-Season Fund typically
will only purchase foreign securities which are represented by American
Depositary Receipts ("ADRs") listed on a domestic securities exchange or
included in the NASDAQ National Market System, or foreign securities listed
directly on a domestic securities exchange or included in the NASDAQ
National Market System. ADRs are receipts typically issued by a United
States bank or trust company evidencing ownership of the underlying foreign
securities. Certain such institutions issuing ADRs may not be sponsored by
the issuer. A non-sponsored depositary may not provide the same shareholder
information that a sponsored depositary is required to provide under its
contractual arrangements with the issuer.
The International Bond Fund will primarily invest in foreign debt
obligations denominated in foreign currencies, including the European Currency
Unit ("ECU"), which are issued by foreign governments and governmental agencies,
instrumentalities or political subdivisions; debt securities issued or
guaranteed by supranational organizations (as defined below); corporate debt
securities; bank or bank holding company debt securities and other debt
securities including those convertible into foreign stock. For the purposes of
the 65% limitation with respect to the International Bond Fund's designation as
an international bond fund, the securities described in this paragraph are
considered "international bonds."
Income and gains on foreign 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. Such
concerns are particularly heightened for emerging markets and eastern european
countries.
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 a Fund's investment opportunities, including
restrictions on investment in issuers or industries deemed sensitive to
national interest; (iv) foreign taxation; (v) the absence of developed
legal structures governing private or foreign investment or allowing for
judicial redress for injury to private property; (vi) the absence, until
recently in certain Eastern European countries, of a capital market
structure or market-oriented economy; and (vii) the possibility that recent
favorable economic developments in Eastern Europe may be slowed or reversed
by unanticipated political or social events in such countries.
Investments in Eastern European countries may involve risks of
nationalization, expropriation and confiscatory taxation. The Communist
governments of a number of East European countries expropriated large amounts of
private property in the past, in many cases without adequate compensation, and
there can be no assurance that such expropriation will not occur in the future.
In the event of such expropriation, the Fund could lose a substantial portion of
any investments it has made in the affected countries. Further, no accounting
standards exist in Eastern European countries. Finally, even though certain
Eastern European currencies may be convertible into United States dollars, the
conversion rates may be artificial to the actual market values and may be
adverse to Fund shareholders.
The Advisor (Sub-Advisor with respect to the Framlington Funds)
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 the 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 the 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.
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.
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 Advisor or Sub-Advisor, as the case may be,
will attempt to avoid unfavorable consequences and to take advantage of
favorable developments in particular nations where, from time to time, it places
a Fund's investments.
The exercise of this flexible policy may include decisions to purchase
securities with substantial risk characteristics and other decisions such as
changing the emphasis on investments from one nation to another and from one
type of security to another. Some of these decisions may later prove profitable
and others may not. No assurance can be given that profits, if any, will exceed
losses.
Forward Foreign Currency Transactions. In order to protect against a
possible loss on investments resulting from a decline or appreciation in the
value of a particular foreign currency against the U.S. dollar or another
foreign currency, the Equity Funds (excluding the Real Estate Fund), the
Balanced Fund, the Bond Funds and the International Bond Fund are authorized to
enter into forward foreign currency exchange contracts ("forward currency
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 a Fund 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, a
Fund 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 Advisor (Sub-Advisor with respect to the Framlington Funds),
anticipates that a particular foreign currency may decline substantially
relative to the U.S. dollar or other leading currencies, in order to reduce
risk, a Fund 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 Fund's
securities denominated in such foreign currency. Similarly, when the obligations
held by a Fund create a short position in a foreign currency, the Fund 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. A Fund will also incur costs in connection with forward foreign
currency exchange contracts and conversions of foreign currencies and U.S.
dollars.
A separate account consisting of cash or liquid securities equal to the
amount of a Fund's assets that could be required to consummate forward contracts
will be established with the Funds' 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 Fund. 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 Fund's price to sell the currency. A forward
contract to buy a foreign currency is "covered" if a Fund holds a forward
contract (or call 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 Equity Funds, the Balanced
Fund, the Bond Funds and the International Bond Fund currently expect that they
may purchase and sell futures contracts on interest-bearing securities or
securities or bond indices, and may purchase and sell call and put options on
futures contracts. For a detailed description of futures contracts and related
options, see Appendix B to this Statement of Additional Information.
Interest Rate Swap Transactions. Each of the Bond Funds and the
International Bond Fund may enter into interest rate swap agreements for
purposes of attempting to obtain a particular desired return at a lower cost to
the Funds than if the Funds had invested directly in an instrument that yielded
that desired return. Interest rate swap transactions involve the exchange by a
Bond Fund or the International Bond Fund with another party of its commitments
to pay or receive interest, such as an exchange of fixed rate payments for
floating rate payments. Typically, the parties with which the Bond Funds and the
International Bond Fund will enter into interest rate swap transactions will be
brokers, dealers or other financial institutions known as "counterparties."
Certain Federal income tax requirements may, however, limit the Bond Funds' and
the International Bond Fund's ability to engage in certain interest rate
transactions. Gains from transaction in interest rate swaps distributed to
shareholders of the Bond Funds and the International Bond Fund will be taxable
as ordinary income or, in certain circumstances, as long-term capital gains to
the shareholders.
Each of the Bond Funds' and the International Bond Fund's obligations
(or rights) under a swap agreement will generally be equal only to the net
amount to be paid or received under the agreement based on the relative values
of the positions held by each party to the agreement (the "net amount"). Each of
the Bond Funds' and the International Bond Fund's obligations under a swap
agreement will be accrued daily (offset against any amounts owed to the Fund).
Accrued but unpaid net amounts owed to a swap counterparty will be covered by
the maintenance of a segregated account consisting of cash, U.S. Government
securities or other high-grade debt securities, to avoid any potential
leveraging of each of the Bond Funds' and the International Bond Fund's
portfolio.
The Bond Funds and the International Bond Fund will not enter into any
interest rate swap transaction unless the credit quality of the unsecured senior
debt or the claims-paying ability of the other party to the transaction is rated
in one of the highest four rating categories by at least one
nationally-recognized statistical rating organization ("NRSRO") or is believed
by the Advisor to be equivalent to that rating. If the other party to a
transaction defaults, the Bond Funds and the International Bond Fund will have
contractual remedies pursuant to the agreements related to the transactions.
The use of interest rate swaps is a highly specialized activity that
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If the Advisor is incorrect in its
forecasts of market values, interest rates and other applicable factors, the
investment performance of each of the Bond Funds and the International Bond Fund
would be lower than it would have been if interest rate swaps were not used. The
swaps market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swaps market has
become relatively liquid in comparison with other similar instruments traded in
the interbank market. The swaps market is a relatively new market and is largely
unregulated. It is possible that developments in the swaps market, including
potential government regulation, could adversely affect the Bond Funds' and the
International Bond Fund's ability to terminate existing swap agreements or to
realize amounts to be received under such agreements.
Investment Company Securities. The Funds (other than the Short Term
Treasury Fund) 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 each Fund bears directly in
connection with its own operations. Each Fund currently intends to limit its
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 the 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 the Fund or by the Company, the
Trust or Framlington as a whole.
Lending of Portfolio Securities. To enhance the return on its
portfolio, each of the Funds may lend securities in its portfolio (subject to a
limit of 25% of total assets of each of the Funds (except the Money Market Fund)
and 33 1/3% of total assets of the Money Market Fund) to securities firms and
financial institutions, provided that each loan is secured continuously by
collateral in the form of cash, high quality money market instruments or
short-term U.S. Government securities adjusted daily to have a market value at
least equal to the current market value of the securities loaned. These loans
are terminable at any time, and the Funds will receive any interest or dividends
paid on the loaned securities. In addition, it is anticipated that a 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 the Funds will lend
securities, the Advisor (Sub-Advisor with respect to the Framlington Funds) will
consider all relevant facts and circumstances. The Funds will only enter into
loan arrangements with broker-dealers, banks or other institutions which the
Advisor (Sub-Advisor with respect to the Framlington Funds) has determined are
creditworthy under guidelines established by the Boards of Trustees/Directors.
Lower-Rated Debt Securities. It is expected that each Fund (other than
Index 500 Fund and Growth & Income Fund) will invest not more than 5% of its
total assets in securities that are rated below investment grade by Standard &
Poor's or Moody's. The Growth & Income Fund may invest up to 20% of the value of
its total assets in such securities. Such securities are also known as junk
bonds. The yields on lower-rated debt and comparable unrated securities
generally are higher than the yields available on higher-rated securities.
However, investments in lower-rated debt and comparable unrated securities
generally involve greater volatility of price and risk of loss of income and
principal, including the possibility of default by or bankruptcy of the issuers
of such securities. Lower-rated debt and comparable unrated securities (a) will
likely have some quality and protective characteristics that, in the judgment of
the rating organization, are outweighed by large uncertainties or major risk
exposures to adverse conditions and (b) are predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. Accordingly, it is possible that
these types of factors could, in certain instances, reduce the value of
securities held in each Fund's portfolio, with a commensurate effect on the
value of each of the Fund's shares. Therefore, an investment in the Funds should
not be considered as a complete investment program and may not be appropriate
for all investors.
While the market values of lower-rated debt and comparable unrated
securities tend to react more to fluctuations in interest rate levels than the
market values of higher-rated securities, the market values of certain lower
rated debt and comparable unrated securities also tend to be more sensitive to
individual corporate developments and changes in economic conditions than
higher-rated securities. In addition, lower-rated debt securities and comparable
unrated securities generally present a higher degree of credit risk. Issuers of
lower-rated debt and comparable unrated securities often are highly leveraged
and may not have more traditional methods of financing available to them so that
their ability to service their debt obligations during an economic downturn or
during sustained periods of rising interest rates may be impaired. The risk of
loss due to default by such issuers is significantly greater because lower-rated
debt and comparable unrated securities generally are unsecured and frequently
are subordinated to the prior payment of senior indebtedness. The Funds may
incur additional expenses to the extent that they are required to seek recovery
upon a default in the payment of principal or interest on their portfolio
holdings. The existence of limited markets for lower-rated debt and comparable
unrated securities may diminish each of the Fund's ability to (a) obtain
accurate market quotations for purposes of valuing such securities and
calculating its net asset value and (b) sell the securities at fair value either
to meet redemption requests or to respond to changes in the economy or in
financial markets.
Lower-rated debt securities and comparable unrated securities may have
call or buy-back features that permit their issuers to call or repurchase the
securities from their holders. If an issuer exercises these rights during
periods of declining interest rates, the Funds may have to replace the security
with a lower yielding security, thus resulting in a decreased return to the
Funds.
Money Market Instruments. As described in their Prospectuses, the
Equity Funds; the Balanced Fund; the Bond Funds; the International Bond Fund;
the Tax-Free Bond Funds; and the Money Market Funds may invest from time to time
in "money market instruments," a term that includes, among other things, bank
obligations, commercial paper, variable amount master demand notes and corporate
bonds with remaining maturities of 397 days or less.
Bank obligations include bankers' acceptances, negotiable certificates
of deposit and non-negotiable time deposits, including U.S. dollar-denominated
instruments issued or supported by the credit of U.S. or foreign banks or
savings institutions. Although the Funds will invest in obligations of foreign
banks or foreign branches of U.S. banks only where the Advisor (Sub-Advisor with
respect to the Framlington Funds) deems the instrument to present minimal credit
risks, such investments may nevertheless entail risks that are different from
those of investments in domestic obligations of U.S. banks due to differences in
political, regulatory and economic systems and conditions. All investments in
bank obligations are limited to the obligations of financial institutions having
more than $1 billion in total assets at the time of purchase.
Investments by a Fund in commercial paper will consist of issues rated
at the time A-1 and/or P-1 by Standard & Poor's Rating Service, a division of
McGraw-Hill Companies, Inc. ("S&P"), or Moody's Investor Services, Inc.
("Moody's"). In addition, the Funds may acquire unrated commercial paper and
corporate bonds that are determined by the Advisor (Sub-Advisor with respect to
the Framlington Funds) at the time of purchase to be of comparable quality to
rated instruments that may be acquired by such Fund as previously described.
The Funds may also purchase variable amount master demand notes which
are unsecured instruments that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate. Although the notes are
not normally traded and there may be no secondary market in the notes, a Fund
may demand payment of the principal of the instrument at any time. The notes are
not typically rated by credit rating agencies, but issuers of variable amount
master demand notes must satisfy the same criteria as set forth above for
issuers of commercial paper. If an issuer of a variable amount master demand
note defaulted on its payment obligation, a Fund might be unable to dispose of
the note because of the absence of a secondary market and might, for this or
other reasons, suffer a loss to the extent of the default. The Funds invest in
variable amount master notes only when the Advisor deems the investment to
involve minimal credit risk.
Mortgage-Related Securities. There are a number of important
differences among the agencies and instrumentalities of the U.S. Government that
issue mortgage-related securities and among the securities that they issue.
Mortgage-related securities guaranteed by the Government National Mortgage
Association ("GNMA") include GNMA Mortgage Pass-Through Certificates (also known
as "Ginnie Maes") which are guaranteed as to the timely payment of principal and
interest by GNMA and such guarantee is backed by the full faith and credit of
the United States. GNMA is a wholly-owned U.S. Government corporation within the
Department of Housing and Urban Development. GNMA certificates also are
supported by the authority of GNMA to borrow funds from the U.S. Treasury to
make payments under its guarantee. Mortgage-related securities issued by the
Federal National Mortgage Association ("FNMA") include FNMA Guaranteed Mortgage
Pass-Through Certificates (also known as "Fannie Maes") which are solely the
obligations of the FNMA and are not backed by or entitled to the full faith and
credit of the United States, but are supported by the right of the issuer to
borrow from the Treasury. FNMA is a government-sponsored organization owned
entirely by private stockholders. Fannie Maes are guaranteed as to timely
payment of the principal and interest by FNMA. Mortgage-related securities
issued by the Federal Home Loan Mortgage Corporation ("FHLMC") include FHLMC
Mortgage Participation Certificates (also known as "Freddie Macs" or "PCs").
FHLMC is a corporate instrumentality of the United States, created pursuant to
an Act of Congress, which is owned entirely by Federal Home Loan Banks. Freddie
Macs are not guaranteed by the United States or by any Federal Home Loan Banks
and do not constitute a debt or obligation of the United States or of any
Federal Home Loan Bank. Freddie Macs entitle the holder to timely payment of
interest, which is guaranteed by the FHLMC. FHLMC guarantees either ultimate
collection or timely payment of all principal payments on the underlying
mortgage loans. When FHLMC does not guarantee timely payment of principal, FHLMC
may remit the amount due on account of its guarantee of ultimate payment of
principal at any time after default on an underlying mortgage, but in no event
later than one year after it becomes payable.
Municipal Obligations. Opinions relating to the validity of municipal
obligations and to the exemption of interest thereon from regular Federal income
tax are rendered by bond counsel or counsel to the respective issuers at the
time of issuance. Neither the Trust nor the Advisor will review the proceedings
relating to the issuance of municipal obligations or the bases for such
opinions.
An issuer's obligations under its municipal obligations are subject to
the provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by Federal or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
enforcement of such obligations or upon the ability of municipalities to levy
taxes. The power or ability of an issuer to meet its obligations for the payment
of interest on and principal of its municipal obligations may be materially
adversely affected by litigation or other conditions.
From time to time proposals have been introduced before Congress for
the purpose of restricting or eliminating the Federal income tax exemption for
interest on municipal obligations. For example, under the Tax Reform Act of 1986
interest on certain private activity bonds must be included in an investor's
Federal alternative minimum taxable income, and corporate investors must include
all tax-exempt interest in their Federal alternative minimum taxable income. The
Trust cannot predict what legislation, if any, may be proposed in Congress in
the future as regards the Federal income tax status of interest on municipal
obligations in general, or which proposals, if any, might be enacted. Such
proposals, if enacted, might materially adversely affect the availability of
municipal obligations for investment by the Tax-Free Bond Funds and the Tax-Free
Money Market Fund) and the liquidity and value of such Funds. In such an event
the Board of Trustees would reevaluate the Fund's investment objective and
policies and consider changes in its structure or possible dissolution.
The Cash Investment Fund and the Money Market Fund each may, when
deemed appropriate by the Advisor in light of the Fund's investment objective,
invest in high quality municipal obligations issued by state and local
governmental issuers, the interest on which may be taxable or tax-exempt for
Federal income tax purposes, provided that such obligations carry yields that
are competitive with those of other types of money market instruments of
comparable quality. The Cash Investment Fund and the Money Market Fund each do
not expect to invest more than 5% of its net assets in such municipal
obligations during the current fiscal year.
Non-Domestic Bank Obligations. Non-domestic bank obligations include
Eurodollar Certificates of Deposit ("ECDs"), which are U.S. dollar-denominated
certificates of deposit issued by offices of foreign and domestic banks located
outside the United States; Eurodollar Time Deposits ("ETDs"), which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank; Canadian Time Deposits ("CTDs"), which are essentially the same as ETDs
except they are issued by Canadian offices of major Canadian banks; Schedule Bs
which are obligations issued by Canadian branches of foreign or domestic banks;
Yankee Certificates of Deposit ("Yankee CDs"), which are U.S. dollar-denominated
certificates of deposit issued by a U.S. branch of a foreign bank and held in
the United States; and Yankee Bankers' Acceptances ("Yankee BAs"), which are
U.S. dollar-denominated bankers' acceptances issued by a U.S. branch of a
foreign bank and held in the United States.
Options. The Equity Funds, Balanced Fund, Bond Funds, International
Bond Fund and Tax-Free Bond Funds (other than Tax-Free Intermediate Bond Fund)
may write covered call options, buy put options, buy call options and write
secured put options. 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. For risks associated
with options on foreign currencies, see Appendix B to this Statement of
Additional Information.
A call option for a particular security gives the purchaser of the
option the right to buy, and a writer the obligation to sell, the underlying
security at the stated exercise price at any time prior to the expiration of the
option, regardless of the market price of the security. The premium paid to the
writer is in consideration for undertaking the obligations under the option
contract. A put option for a particular security gives the purchaser the right
to sell the underlying security at the stated exercise price at any time prior
to the expiration date of the option, regardless of the market price of the
security.
The writer of an option that wished to terminate its obligation may
effect a "closing purchase transaction." This is accomplished by buying an
option of the same series as the option previously written. The effect of the
purchase is that the writer's position will be canceled by the clearing
corporation. However, a writer may not effect a closing purchase transaction
after being notified of the exercise of an option. Likewise, an investor who is
the holder of an option may liquidate its position by effecting a "closing sale
transaction." The cost of such a closing purchase plus transaction costs may be
greater than the premium received upon the original option, in which event each
Fund will have incurred a loss in the transaction. 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 Funds 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 Funds 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 a 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.
The Equity Funds, Balanced Fund, Bond Funds, Tax-Free Bond Funds (other
than the Tax-Free Intermediate Bond Fund) and International Bond Fund may write
options in connection with buy-and-write transactions; that is, the Funds may
purchase a security and then write a call option against that security. The
exercise price of the call the Funds determine 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
maximum gain to the relevant Fund 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.
In the case of a call option on a security, the option is "covered" if
a Fund 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 a Fund maintains with its custodian cash or cash
equivalents equal to the contract value. A call option is also covered if a 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 of the Funds will
limit its investment in uncovered call options purchased or written by the Fund
to 33 1/3% of the Fund's total assets. The Funds will write put options only if
they are "secured" by cash or cash equivalents maintained in a segregated
account by the Funds' 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 relevant 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 of the Funds may purchase put options to hedge against a decline
in the value of its portfolio. By using put options in this way, each 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
of the Funds 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 Funds upon exercise of the option, and, unless the price of the
underlying security rises sufficiently, the option may expire worthless to the
Fund.
When a Fund purchases an option, the premium paid by it is recorded as
an asset of the Fund. When the 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 the Fund expires unexercised the Fund realizes
a loss equal to the premium paid. If the 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
the Fund expires on the stipulated expiration date or if the 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 the Fund is exercised, the proceeds of the sale will be
increased by the net premium originally received and the Fund will realize a
gain or loss.
There are several risks associated with transactions in options on
securities and indices. For example, there are significant differences between
the securities and options markets that could result in an imperfect correlation
between these markets, causing a given transaction not to achieve its
objectives. An option writer, unable to effect a closing purchase transaction,
will not be able to sell the underlying security (in the case of a covered call
option) or liquidate the segregated account (in the case of a secured put
option) until the option expires or the optioned security is delivered upon
exercise with the result that the writer in such circumstances will be subject
to the risk of market decline or appreciation in the security during such
period.
There is no assurance that a Fund will be able to close an unlisted
option position. Furthermore, unlisted options are not subject to the
protections afforded purchasers of listed options by the Options Clearing
Corporation, which performs the obligations of its members who fail to do so in
connection with the purchase or sale of options.
In addition, a liquid secondary market for particular options, whether
traded over-the-counter or on a national securities exchange ("Exchange") may be
absent for reasons which include the following: there may be insufficient
trading interest in certain options; restrictions may be imposed by an Exchange
on opening transactions or closing transactions or both; trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options or underlying securities; unusual or unforeseen
circumstances may interrupt normal operations on an Exchange; the facilities of
an Exchange or the Options Clearing Corporation may not at all times be adequate
to handle current trading value; or one or more Exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that Exchange (or in that class or series of options)
would cease to exist, although outstanding options that had been issued by the
Options Clearing Corporation as a result of trades on that Exchange would
continue to be exercisable in accordance with their terms.
Currency transactions, including options on currencies and currency
futures, are subject to risks different from those of other portfolio
transactions. Because currency control is of great importance to the issuing
governments and influences economic planning and policy, purchases and sales of
currency and related instruments can be negatively affected by government
exchange controls, blockages, and manipulations or exchange restrictions imposed
by governments. These can result in losses to 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 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.
Real Estate Securities. The Real Estate Fund may invest without limit
in shares of real estate investment trusts ("REITs"). REITs pool investors'
funds for investment primarily in income producing real estate or real estate
loans or interests. A REIT is not taxed on income distributed to shareholders if
it complies with several requirements relating to its organization, ownership,
assets, and income and a requirement that it distribute to its shareholders at
least 95% of it taxable income (other than net capital gains) for each taxable
year. REITs can generally be classified as Equity REITs, Mortgage REITs and
Hybrid REITs. Equity REITs, which invest the majority of their assets directly
in real property, derive their income primarily from rents. Equity REITs can
also realize capital gains by selling properties that have appreciated in value.
Mortgage REITs, which invest the majority of their assets in real estate
mortgages, derive their income primarily from interest payments. Hybrid REITs
combine the characteristics of both Equity REITs and Mortgage REITs. The Fund
will not invest in real estate directly, but only in securities issued by real
estate companies. However, the Real Estate Fund may be subject to risks similar
to those associated with the direct ownership of real estate (in addition to
securities markets risks) because of its policy of concentration in the
securities of companies in the real estate industry. These include declines in
the value of real estate, risks related to general and local economic
conditions, dependency on management skill, heavy cash flow dependency, possible
lack of availability of mortgage funds, overbuilding, extended vacancies of
properties, increased competition, increases in property taxes and operating
expenses, changes in zoning laws, losses due to costs resulting from the
clean-up of environmental problems, liability to third parties for damages
resulting from environmental problems, casualty or condemnation losses,
limitations on rents, changes in neighborhood values and the appeal of
properties to tenants and changes in interest rates.
In addition to these risks, Equity REITs may be affected by changes in
the value of the underlying property owned by the trusts, while Mortgage REITs
may be affected by the quality of any credit extended. Further, Equity and
Mortgage REITs are dependent upon management skills and generally may not be
diversified. Equity and Mortgage REITs are also subject to heavy cash flow
dependency, defaults by borrowers and self-liquidation. In addition, Equity and
Mortgage REITs could possibly fail to qualify for the beneficial tax treatment
available to real estate investment trusts under the Internal Revenue Code of
1986, as amended (the "Code"), or to maintain their exemptions from registration
under the 1940 Act. The above factors may also adversely affect a borrower's or
a lessee's ability to meet its obligations to the REIT. In the event of a
default by a borrower or lessee, the REIT may experience delays in enforcing its
rights as a mortgagee or lessor and may incur substantial costs associated with
protecting investments.
Repurchase Agreements. The Funds may agree to purchase securities from
financial institutions such as member banks of the Federal Reserve System, any
foreign bank or any domestic or foreign broker/dealer that is recognized as a
reporting government securities dealer, subject to the seller's agreement to
repurchase them at an agreed-upon time and price ("repurchase agreements"). The
Short Term Treasury Fund will only invest in repurchase agreements fully
collateralized by U.S. Treasury securities. The Advisor (Sub-Advisor with
respect to the Framlington Funds) 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. With
respect to the Money Market Funds, the securities held subject to a repurchase
agreement may have stated maturities exceeding thirteen months, provided the
repurchase agreement itself matures in 397 days.
The repurchase price under the repurchase agreements described in each
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, Framlington's or the Company's custodian (or sub-custodian) in the
Federal Reserve/Treasury book-entry system or by another authorized securities
depositary. Repurchase agreements are considered to be loans by a Fund under the
1940 Act.
Reverse Repurchase Agreements. Each Fund (except the Money Market Fund,
Tax-Free Money Market Fund and Tax-Free Bond Funds) 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, a Fund will maintain in a segregated
account, cash, U.S. Government securities or other liquid high-grade debt
securities of an amount at least equal to the market value of the securities,
plus accrued interest, subject to the agreement.
Rights and Warrants. As stated in their Prospectuses, the Equity Funds
and the Balanced 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.
Stand-by Commitments. The Balanced Fund, the Cash Investment Fund, the
Tax-Free Bond Funds and the Tax-Free Money Market Fund may each enter into
stand-by commitments with respect to municipal obligations held by it. Under a
stand-by commitment, a dealer agrees to purchase at the Fund's option a
specified municipal obligation at its amortized cost value to the Fund plus
accrued interest, if any. Stand-by commitments may be exercisable by a Fund at
any time before the maturity of the underlying municipal obligations and may be
sold, transferred or assigned only with the instruments involved.
The Trust expects that stand-by commitments will generally be available
without the payment of any direct or indirect consideration. However, if
necessary or advisable, a Fund may pay for a stand-by commitment either
separately in cash or by paying a higher price for municipal obligations which
are acquired subject to the commitment (thus reducing the yield to maturity
otherwise available for the same securities). The total amount paid in either
manner for outstanding stand-by commitments held by a Fund will not exceed 1/2
of 1% of the value of such Fund's total assets calculated immediately after each
stand-by commitment is acquired.
The Tax-Free Bond Funds and the Tax-Free Money Market Fund intend to
enter into stand-by commitments only with dealers, banks and broker/dealers
which, in the Advisor's opinion, present minimal credit risks. The Tax-Free Bond
Funds and the Tax-Free Money Market Fund will acquire stand-by commitments
solely to facilitate portfolio liquidity and do not intend to exercise their
rights thereunder for trading purposes. The acquisition of a stand-by commitment
will not affect the valuation of the underlying municipal obligation. The actual
stand-by commitment will be valued at zero in determining net asset value.
Accordingly, where a Fund pays directly or indirectly for a stand-by commitment,
its cost will be reflected as an unrealized loss for the period during which the
commitment is held by such Fund and will be reflected in realized gain or loss
when the commitment is exercised or expires.
Stock Index Futures, Options on Stock and Bond Indices and Options on
Stock and Bond Index Futures Contracts. The Equity Funds, the Balanced Fund, the
Bond Funds and Tax-Free Bond Funds (other than the Tax-Free Intermediate Bond
Fund) may purchase and sell stock index futures, options on stock and bond
indices and options on stock index futures contracts as a hedge against
movements in the equity and bond markets. The Tax-Free Intermediate Bond Fund
may purchase and sell bond index futures contracts. The International Bond Fund
may purchase and sell options on bond index futures contracts as a hedge against
movements in the bond markets.
A stock index futures contract is an agreement in which one party
agrees to deliver to the other an amount of cash equal to a specific dollar
amount times the difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at which the
agreement is made. No physical delivery of securities is made.
Options on stock and bond indices are similar to options on specific
securities, described above, except that, rather than the right to take or make
delivery of the specific security at a specific price, an option on a stock or
bond index gives the holder the right to receive, upon exercise of the option,
an amount of cash if the closing level of that stock or bond index is greater
than, in the case of a call option, or less than, in the case of a put option,
the exercise price of the option. This amount of cash is equal to such
difference between the closing price of the index and the exercise price of the
option expressed in dollars times a specified multiple. The writer of the option
is obligated, in return for the premium received, to make delivery of this
amount. Unlike options on specific securities, all settlements of options on
stock or bond indices are in cash, and gain or loss depends on general movements
in the stocks included in the index rather than price movements in particular
stocks.
If the Advisor (Sub-Advisor with respect to the Framlington Funds)
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 the futures contract or index option resulting from the
increase in the index. If, on the other hand, the Advisor (Sub-Advisor with
respect to the Framlington Funds) 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 Funds' 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.
The Equity Funds, the Balanced Fund, the Bond Funds and the Tax-Free
Bond Funds (other than Tax-Free Intermediate Bond Fund) may purchase and write
call and put options on stock index futures contracts and each such Fund and the
International Bond Fund may purchase and write call and put options on bond
index futures contracts. Each such 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, such Funds may purchase put
options or write call options on stock and bond index futures (only bond index
futures in the case of the International Bond Fund), rather than selling futures
contracts, in anticipation of a decline in general stock or bond market prices
or purchase call options or write put options on stock or bond index futures,
rather than purchasing such futures, to hedge against possible increases in the
price of securities which such Funds intend 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, such Funds
will be required to deposit as "initial margin" an amount of cash and short-term
U.S. Government securities equal to between 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. No such Fund may 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.
Stripped Securities. The Balanced Fund, the Bond Funds, International
Bond Fund and the Money Market Funds may acquire U.S. Government obligations and
their unmatured interest coupons that have been separated ("stripped") by their
holder, typically a custodian bank or investment brokerage firm. Having
separated the interest coupons from the underlying principal of the U.S.
Government obligations, the holder will resell the stripped securities in
custodial receipt programs with a number of different names, including "Treasury
Income Growth Receipts" ("TIGRs") and "Certificate of Accrual on Treasury
Securities" ("CATS"). The stripped coupons are sold separately from the
underlying principal, which is usually sold at a deep discount because the buyer
receives only the right to receive a future fixed payment on the security and
does not receive any rights to periodic interest (cash) payments. The underlying
U.S. Treasury bonds and notes themselves are held in book-entry form at the
Federal Reserve Bank or, in the case of bearer securities (i.e., unregistered
securities which are ostensibly owned by the bearer or holder), in trust on
behalf of the owners. Counsel to the underwriters of these certificates or other
evidences of ownership of U.S. Treasury securities have stated that, in their
opinion, purchasers of the stripped securities most likely will be deemed the
beneficial holders of the underlying U.S. Government obligations for federal tax
and securities purposes. The Trust is not aware of any binding legislative,
judicial or administrative authority on this issue.
Only instruments which are stripped by the issuing agency will be
considered U.S. Government obligations. Securities such as CATS and TIGRs which
are stripped by their holder do not qualify as U.S. Government obligations.
Within the past several years the Treasury Department has facilitated
transfers of ownership of zero coupon securities by accounting separately for
the beneficial ownership of particular interest coupon and principal payments or
Treasury securities through the Federal Reserve book-entry record-keeping
system. The Federal Reserve program as established by the Treasury Department is
known as "STRIPS" or "Separate Trading of Registered Interest and Principal of
Securities." Under the STRIPS program, a Fund is able to have its beneficial
ownership of zero coupon securities recorded directly in the book-entry
record-keeping system in lieu of having to hold certificates or other evidences
of ownership of the underlying U.S. Treasury securities.
In addition, the Bond Fund, Intermediate Bond Fund, International Bond
Fund and U.S. Government Income Fund may invest in stripped mortgage-backed
securities ("SMBS"), which represent beneficial ownership interests in the
principal distributions and/or the interest distributions on mortgage assets.
SMBS are usually structured with two classes that receive different proportions
of the interest and principal distributions on a pool of mortgage assets. One
type of SMBS will have one class receiving some of the interest and most of the
principal from the mortgage assets, while the other class will receive most of
the interest and the remainder of the principal. In the most common case, one
class of SMBS will receive all of the interest (the interest-only or "IO"
class), while the other class will receive all of the principal (the
principal-only or "PO" class). SMBS may be issued by FNMA or FHLMC.
The original principal amount, if any, of each SMBS class represents
the amount payable to the holder thereof over the life of such SMBS class from
principal distributions of the underlying mortgage assets, which will be zero in
the case of an IO class. Interest distributions allocable to a class of SMBS, if
any, consist of interest at a specified rate on its principal amount, if any, or
its notional principal amount in the case of an IO class. The notional principal
amount is used solely for purposes of the determination of interest
distributions and certain other rights of holders of such IO class and does not
represent an interest in principal distributions of the mortgage assets.
Yields on SMBS will be extremely sensitive to the prepayment experience
on the underlying mortgage loans, and there are other associated risks. For IO
classes of SMBS and SMBS that were purchased at prices exceeding their principal
amounts there is a risk that a Fund may not fully recover its initial
investment.
The determination of whether a particular government-issued IO or PO
backed by fixed-rate mortgages is liquid may be made under guidelines and
standards established by the Board of Directors/Trustees. Such securities may be
deemed liquid if they can be disposed of promptly in the ordinary course of
business at a value reasonably close to that used in the calculation of a Fund's
net asset value per share.
Supranational Bank Obligations. Supranational banks are international
banking institutions designed or supported by national governments to promote
economic reconstruction, development or trade between nations (e.g., The World
Bank). Obligations of supranational banks may be supported by appropriated but
unpaid commitments of their member countries and there is no assurance these
commitments will be undertaken or met in the future.
U.S. Government Obligations. The Funds may purchase obligations issued
or guaranteed by the U.S. Government and, except in the case of the U.S.
Treasury Money Market Fund, 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 the Funds include 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.
Variable and Floating Rate Instruments. Debt instruments may be
structured to have variable or floating interest rates. Variable and floating
rate obligations purchased by a Fund may have stated maturities in excess of a
Fund's maturity limitation if the Fund can demand payment of the principal of
the instrument at least once during such period on not more than thirty days'
notice (this demand feature is not required if the instrument is guaranteed by
the U.S. Government or an agency thereof). These instruments may include
variable amount master demand notes that permit the indebtedness to vary in
addition to providing for periodic adjustments in the interest rates. The
Advisor will consider the earning power, cash flows and other liquidity ratios
of the issuers and guarantors of such instruments and, if the instrument is
subject to a demand feature, will continuously monitor their financial ability
to meet payment on demand. Where necessary to ensure that a variable or floating
rate instrument is equivalent to the quality standards applicable to a Fund, the
issuer's obligation to pay the principal of the instrument will be backed by an
unconditional bank letter or line of credit, guarantee or commitment to lend.
The Money Market Funds will invest in variable and floating rate instruments
only when the Advisor deems the investment to involve minimal credit risk.
In determining average weighted portfolio maturity of the Funds, an
instrument will usually be deemed to have a maturity equal to the longer of the
period remaining until the next interest rate adjustment or the time the Fund
involved can recover payment of principal as specified in the instrument.
Variable rate U.S. Government obligations held by the Funds, however, will be
deemed to have maturities equal to the period remaining until the next interest
rate adjustment.
The absence of an active secondary market for certain variable and
floating rate notes could make it difficult to dispose of the instruments, and a
Fund could suffer a loss if the issuer defaulted or during periods that a Fund
is not entitled to exercise its demand rights.
Variable and floating rate instruments held by a Fund will be subject
to the Fund's limitation on illiquid investments when the Fund may not demand
payment of the principal amount within seven days absent a reliable trading
market.
Guaranteed Investment Contracts. The Bond Funds, the International Bond
Fund, the Cash Investment Fund and the Money Market Fund may make limited
investments in guaranteed investment contracts ("GICs") issued by U.S. insurance
companies. Pursuant to such contracts, a Fund makes cash contributions to a
deposit fund of the insurance company's general account. The insurance company
then credits to the Fund on a monthly basis interest which is based on an index
(in most cases this index is expected to be the Salomon Brothers CD Index), but
is guaranteed not to be less than a certain minimum rate. A GIC is normally a
general obligation of the issuing insurance company and not funded by a separate
account. The purchase price paid for a GIC becomes part of the general assets of
the insurance company, and the contract is paid from the company's general
assets. A Fund will only purchase GICs from insurance companies which, at the
time of purchase, have assets of $1 billion or more and meet quality and credit
standards established by the Advisor pursuant to guidelines approved by the
Board of Directors/Trustees. Generally, GICs are not assignable or transferable
without the permission of the issuing insurance companies, and an active
secondary market in GICs does not currently exist. Therefore, GICs will normally
be considered illiquid investments, and will be acquired subject to the
limitation on illiquid investments.
When-Issued Purchases and Forward Commitments (Delayed-Delivery
Transactions). When-issued purchases and forward commitments (delayed-delivery
transactions) are commitments by a Fund to purchase or sell particular
securities with payment and delivery to occur at a future date (perhaps one or
two months later). These transactions permit the Fund to lock-in a price or
yield on a security, regardless of future changes in interest rates.
When a Fund agrees to purchase securities on a when-issued or forward
commitment basis, the Custodian will set aside cash or liquid portfolio
securities equal to the amount of the commitment in a separate account.
Normally, the Custodian will set aside portfolio securities to satisfy a
purchase commitment, and in such a case the Fund may be required subsequently to
place additional assets in the separate account in order to ensure that the
value of the account remains equal to the amount of the Fund's commitments. It
may be expected that the market value of the Fund's net assets will fluctuate to
a greater degree when it sets aside portfolio securities to cover such purchase
commitments than when it sets aside cash. Because a Fund's liquidity and ability
to manage its portfolio might be affected when it sets aside cash or portfolio
securities to cover such purchase commitments, the Advisor expects that its
commitments to purchase when-issued securities and forward commitments will not
exceed 25% of the value of a Fund's total assets absent unusual market
conditions.
A Fund will purchase securities on a when-issued or forward commitment
basis only with the intention of completing the transaction and actually
purchasing the securities. If deemed advisable as a matter of investment
strategy, however, a Fund may dispose of or renegotiate a commitment after it is
entered into, and may sell securities it has committed to purchase before those
securities are delivered to the Fund on the settlement date.
In these cases the Fund may realize a taxable capital gain or loss.
When a Fund engages in when-issued and forward commitment transactions,
it relies on the other party to consummate the trade. Failure of such party to
do so may result in the Fund's incurring a loss or missing an opportunity to
obtain a price considered to be advantageous.
The market value of the securities underlying a when-issued purchase or
a forward commitment to purchase securities, and any subsequent fluctuations in
their market value, are taken into account when determining the market value of
a Fund starting on the day the Fund agrees to purchase the securities. The Fund
does not earn interest on the securities it has committed to purchase until they
are paid for and delivered on the settlement date.
Yields and Ratings. The yields on certain obligations, including the
money market instruments in which each Fund may invest (such as commercial paper
and bank obligations), are dependent on a variety of factors, including general
money market conditions, conditions in the particular market for the obligation,
the financial condition of the issuer, the size of the offering, the maturity of
the obligation and the ratings of the issue. The ratings of S&P, Moody's, Duff &
Phelps Credit Rating Co., Thomson Bank Watch, Inc., and other nationally
recognized statistical NRSROs represent their respective opinions as to the
quality of the obligations they undertake to rate. Ratings, however, are general
and are not absolute standards of quality. Consequently, obligations with the
same rating, maturity and interest rate may have different market prices.
With respect to each of the Money Market Funds, securities (other than
U.S. Government securities) must be rated (generally, by at least two NRSROs)
within the two highest rating categories assigned to short-term debt securities.
In addition, each of the Cash Investment Fund and the Money Market Fund (a) will
not invest more than 5% of its total assets in securities rated in the second
highest rating category by such NRSROs and will not invest more than 1% of its
total assets in such securities of any one issuer, and (b) intends to limit
investments in the securities of any single issuer (other than securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities) to not
more than 5% of the Fund's total assets at the time of purchase, provided that
the Fund may invest up to 25% of its total assets in the securities of any one
issuer for a period of up to three business days. Unrated and certain single
rated securities (other than U.S. Government securities) may be purchased by the
Money Market Funds, but are subject to a determination by the Advisor, in
accordance with procedures established by the Boards of Trustees and Directors,
that the unrated and single rated securities are of comparable quality to the
appropriate rated securities.
Other. Subsequent to its purchase by a Fund, a rated security may cease
to be rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. The Boards of Trustees and Directors or the Advisor
(Sub-Advisor with respect to the Framlington Funds), pursuant to guidelines
established by the Boards, will consider such an event in determining whether
the Fund involved should continue to hold the security in accordance with the
interests of the Fund and applicable regulations of the SEC.
It is possible that unregistered securities purchased by a Fund in
reliance upon Rule 144A under the Securities Act of 1933, as amended, could have
the effect of increasing the level of the Fund's illiquidity to the extent that
qualified institutional buyers become, for a period, uninterested in purchasing
these securities.
RISK FACTORS AND SPECIAL CONSIDERATIONS -- INDEX 500 FUND
Traditional methods of fund investment management typically involve
relatively frequent changes in a portfolio of securities on the basis of
economic, financial and market analysis. Index funds such as the Index 500 Fund
are not managed in this manner. Instead, with the aid of a computer program, the
Advisor purchases and sells securities for the Fund in an attempt to produce
investment results that substantially duplicate the performance of the common
stocks included in the S&P 500 Index ("S&P 500"), taking into account
redemptions, sales of additional Fund shares, and other adjustments as described
below.
The Fund does not expect to hold at any particular time all of the
stocks included in the S&P 500. The Advisor believes, however, that through the
application of capitalization weighing and sector balancing techniques it will
be able to construct and maintain the Fund's investment portfolio so that it
reasonably tracks the performance of the S&P 500. The Advisor will compare the
industry sector diversification of the stocks the Fund would acquire solely on
the basis of their weighted capitalizations with the industry sector
diversification of all issuers included in the S&P 500. This comparison is made
because the Advisor believes that, unless the Fund holds all stocks included in
the S&P 500, the selection of stocks for purchase by the Fund solely on the
basis of their weighted market capitalizations would tend to place heavier
concentration in certain industry sectors that are dominated by the larger
corporations, such as communications, automobile, oil and energy. As a result,
events disproportionately affecting such industries could affect the performance
of the Fund differently than the performance of the S&P 500. Conversely, if
smaller companies were not purchased by the Fund, the representation of
industries included in the S&P 500 that are not dominated by the most heavily
market-capitalized companies would be reduced or eliminated.
For these reasons, the Advisor will identify the sectors which are (or,
except for sector balancing, would be) most underrepresented in the Fund's
portfolio and will purchase balancing securities in these sectors until the
portfolio's sector weightings closely match those of the S&P 500. This process
continues until the portfolio is fully invested (except for cash holdings).
Redemptions of a substantial number of shares of the Fund could reduce
the number of issuers represented in the Fund's investment portfolio, which
could, in turn, adversely affect the accuracy with which the Fund tracks the
performance of the S&P 500.
If an issuer drops in ranking, or is eliminated entirely from the S&P
500, the Advisor may be required to sell some or all of the common stock of such
issuer then held by the Fund. Sales of portfolio securities may be made at times
when, if the Advisor were not required to effect purchases and sales of
portfolio securities in accordance with the S&P 500, such securities might not
be sold. Such sales may result in lower prices for such securities than may been
realized or in losses that may not have been incurred if the Advisor were not
required to effect the purchases and sales. The failure of an issuer to declare
or pay dividends, the institution against an issuer of potentially materially
adverse legal proceedings, the existence or threat of defaults materially and
adversely affecting an issuer's future declaration and payment of dividends, or
the existence of other materially adverse credit factors will not necessarily be
the basis for the disposition of portfolio securities, unless such event causes
the issuer to be eliminated entirely from the S&P 500. However, although the
Advisor does not intend to screen securities for investment by the Fund by
traditional methods of financial and market analysis, the Advisor will monitor
the Fund's investment with a view towards removing stocks of companies which
exhibit extreme financial distress or which may impair for any reason the Fund's
ability to achieve its investment objective.
The Fund will invest primarily in the common stocks that constitute the
S&P 500 in accordance with their relative capitalization and sector weightings
as described above. It is possible, however, that the Fund will from time to
time receive, as part of a "spin-off" or other corporate reorganization of an
issuer included in the S&P 500, securities that are themselves outside the S&P
500. Such securities will be disposed of by the Fund in due course consistent
with the Fund's investment objective.
In addition, the Index 500 Fund may invest in Standard & Poor's
Depository Receipts ("SPDRs"). SPDRs are securities that represent ownership in
the SPDR Trust, a long-term unit investment trust which is intended to provide
investment results that generally correspond to the price and yield performance
of the S&P 500. SPDR holders are paid a "Dividend Equivalent Amount" that
corresponds to the amount of cash dividends accruing to the securities in the
SPDR Trust, net of certain fees and expenses charged to the Trust. Because of
these fees and expenses, the dividend yield for SPDRs may be less than that of
the S&P 500. SPDRs are traded on the American Stock Exchange.
The Fund may also purchase put and call options on the S&P 500 and S&P
100 stock indices, which are traded on national securities exchanges. In
addition, the Fund may enter into transactions involving futures contracts (and
futures options) on these two stock indices and may purchase securities of other
investment companies that are structured to seek a similar correlation to the
S&P 500. These transactions are effected in an effort to have fuller exposure to
price movements in the S&P 500 pending investment of purchase orders or while
maintaining liquidity to meet potential shareholder redemptions. Transactions in
option and stock index futures contracts may be desirable to hedge against a
price movement in the S&P 500 at times when the Fund is not fully invested in
stocks that are included in the S&P 500. For example, by purchasing a futures
contract, the Fund may be able to reduce the potential that cash inflows will
disrupt its ability to track the S&P 500, since the futures contracts may serve
as a temporary substitute for stocks which may then be purchased in an orderly
fashion. Similarly, because futures contracts only require a small initial
margin deposit, the Fund may be able, as an effective matter, to be fully
invested in the S&P 500 while keeping a cash reserve to meet potential
redemptions. See Appendix B to this Statement of Additional Information.
RISK FACTORS AND SPECIAL CONSIDERATIONS -- MICHIGAN BOND FUND AND TAX-FREE
INTERMEDIATE BOND FUND
The information set forth below is derived in substantial part from the
official statements prepared in connection with the issuance of Michigan
municipal bonds and similar obligations and other sources that are generally
available to investors. The information is provided as general information
intended to give a recent historical description and is not intended to indicate
future or continuing trends in the financial or other positions of the State of
Michigan (the "State"). The Company has not independently verified this
information.
The State's Constitution limits the amount of total State revenues
raised from taxes and other sources. State revenues (excluding federal aid and
revenues for payment of principal and interest on general obligation bonds) in
any fiscal year are limited to a specified percentage of State personal income
in the prior calendar year or average of the prior three calendar years,
whichever is greater. The percentage is based upon the ratio of the 1978-79
fiscal year revenues to total 1977 State personal income. If any fiscal year
revenues exceed the revenue limitation by 1%, the entire amount exceeding the
limitation must be rebated in the following fiscal year's personal income tax or
single business tax. Annual excesses of less than 1% may be transferred into the
State's Budget Stabilization Fund. The State may raise taxes in excess of the
limit in emergency situations.
The State Constitution limits the purposes for which State general
obligation debt may be issued. Such debt is limited to short-term debt for State
operating purposes, short and long-term debt for the purpose of making loans to
school districts and long-term debt for voter approved purposes. The State's
Constitution also directs or restricts the use of certain revenues.
The State finances its operations through the State's General Fund and
special revenue funds. The General Fund receives revenues of the State that are
not specifically required to be included in the special revenue funds. General
Fund revenues are obtained approximately 59% from the payment of State taxes and
41% from federal and non-tax revenue sources. Tax revenues credited to the
General Fund include the personal income tax, the single business tax and
approximately 15% of the sales tax collections.
Expenditures are not permitted by the State Constitution to exceed
available revenues. The State Constitution requires that the Governor, with the
approval of the appropriating committees of the State House and Senate, reduce
expenditures whenever it appears that the actual revenues will be less than the
originally projected revenues upon which the budget was based.
In 1994, a ballot proposal ("Proposal A") to implement extensive
property tax and school finance reform measures was subject to voter approval
and in fact approved on March 15, 1994. Under Proposal A as approved, effective
May 1, 1994, the State sales and use tax increased from 4% to 6%, the State
income tax decreased from 4.6% to 4.4%, the cigarette tax increased from $.25 to
$.75 per pack, and an additional tax of 16% of the wholesale price is imposed on
certain other tobacco products. As of January 1, 1995, a 0.75% real estate
transfer tax also became effective. In 1994, a State education property tax of 6
mills was imposed on all real property and personal property currently subject
to the general property tax. In addition, all school boards can now, with voter
approval, levy up to the lesser of 18 mills or the number of mills levied in
1993 for school operating purposes, on non-homestead property. Proposal A
contained additional provisions regarding the ability of local school districts
to levy taxes as well as a limit on assessment increases for each parcel of
property, beginning in 1995 to the lesser of 5% or the rate of inflation. When
property is subsequently sold, its assessed value is adjusted equal to 50% of
true cash value. Under Proposal A, much of the additional revenue generated by
these taxes is dedicated to the State School Aid Fund.
Proposal A shifts significant portions of the cost of local school
operations from local school districts to the State and raises additional State
revenues to fund these additional State expenses. These additional revenues will
be included within the State's constitutional revenue limitations and may impact
the State's ability to raise additional revenues in the future.
The State is a party to various legal proceedings seeking damages or
injunctive or other relief. In addition to routine litigation, certain of these
proceedings could, if unfavorably resolved from the point of view of the State,
substantially affect State programs or finances. These lawsuits involve programs
generally in the areas of corrections, highway maintenance, social services, tax
collection, commerce and budgetary reductions to school districts and
governmental units and court funding.
The principal sectors of Michigan's diversified economy are
manufacturing of durable goods (including automobiles and components and office
equipment), tourism and agriculture. The health of the State's economy, and in
particular its durable goods manufacturing industry, is susceptible to a
long-term increase in the cost of energy and energy related products. As
reflected in historical employment figures, the State's economy has lessened its
dependence upon durable goods manufacturing. In 1960, employment in such
industry accounted for 33% of the State's work force. By 1994, this figure had
fallen to 17%. However, manufacturing (including auto-related manufacturing)
continues to be an important part of the State's economy. The particular
industries are highly cyclical and in the period 1996-1997 are expected to
operate at somewhat less than full capacity, but at higher levels than in the
immediate prior years. This factor can usually adversely affect the revenue
streams of the State and its political subdivisions because it adversely impacts
tax sources, particularly sales, income taxes and single business taxes.
As of the date of this Statement of Additional Information, the State's
general obligation bonds are rated "AA" by Moody's and "AA" by Fitch. To the
extent that either the Michigan Bond Fund or the Tax-Free Intermediate Bond Fund
is comprised of revenue or general obligations of local governments or
authorities, rather than general obligations of the State of Michigan itself,
ratings on such Michigan obligations will be different from those given to the
State of Michigan and their value may be independently affected by economic
matters not directly impacting the State.
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 such Fund's outstanding shares (as defined under
"Miscellaneous - Shareholder Approvals").
No Fund of the Trust may:
1. Purchase securities of any one issuer (other than securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities or
certificates of deposit for any such securities) if more than 5% of the
value of the Fund's total assets (taken at current value) would be invested
in the securities of such issuer, or more than 10% of the issuer's
outstanding voting securities would be owned by the Fund or the Trust,
except that (a) with respect to each Fund, other than the Michigan Bond
Fund and the Tax-Free Intermediate Bond Fund, up to 25% of the value of the
Fund's total assets (taken at current value) may be invested without regard
to these limitations and (b) with respect to the Michigan Bond Fund and the
Tax-Free Intermediate Bond Fund, up to 50% of the value of the Fund's total
assets may be invested without regard to these limitations so long as no
more than 25% of the value of the Fund's total assets are invested in the
securities of any one issuer. For purposes of this limitation, a security
is considered to be issued by the entity (or entities) whose assets and
revenues back the security. A guarantee of a security is not deemed to be a
security issued by the guarantor when the value of all securities issued
and guaranteed by the guarantor, and owned by the Fund, does not exceed 10%
of the value of the Fund's total assets.
2. Borrow money or issue senior securities except that each Fund may
borrow from banks and enter into reverse repurchase agreements for
temporary purposes in amounts up to one-third of the value of its total
assets at the time of such borrowing; or mortgage, pledge or hypothecate
any assets, except in connection with any such borrowing and then in
amounts not in excess of one-third of the value of the Fund's total assets
at the time of such borrowing. No Fund will purchase securities while its
aggregate borrowings (including reverse repurchase agreements and borrowing
from banks) in excess of 5% of its total assets are outstanding. Securities
held in escrow or separate accounts in connection with a Fund's investment
practices are not deemed to be pledged for purposes of this limitation.
3. Purchase any securities which would cause 25% or more of the value
of the Fund's total assets at the time of purchase to be invested in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that (a) there is no limitation
with respect to (i) instruments that are issued (as defined in Investment
Limitation No. 1 above) or guaranteed by the United States, any state,
territory or possession of the United States, the District of Columbia or
any of their authorities, agencies, instrumentalities or political
subdivisions, (ii) with respect to the Money Market Funds only, instruments
issued by domestic branches of U.S. banks and (iii) repurchase agreements
secured by the instruments described in clauses (i) and, with respect to
the Money Market Funds, (ii); (b) wholly-owned finance companies will be
considered to be in the industries of their parents if their activities are
primarily related to financing the activities of the parents; and (c)
utilities will be divided according to their services, for example, gas,
gas transmission, electric and gas, electric and telephone will each be
considered a separate industry.
4. Purchase or sell real estate, except that each Fund may
purchase securities of issuers which deal in real estate and
may purchase securities which are secured by interests in real
estate.
5. Acquire any other investment company or investment company
security except in connection with a merger, consolidation,
reorganization or acquisition of assets or where otherwise
permitted by the 1940 Act.
6. Act as an underwriter of securities within the meaning of the
Securities Act of 1933, as amended, except to the extent that
the purchase of obligations directly from the issuer thereof,
or the disposition of securities, in accordance with the
Fund's investment objective, policies and limitations may be
deemed to be underwriting.
7. Write or sell put options, call options, straddles, spreads,
or any combination thereof except for transactions in options
on securities, securities indices, futures contracts, options
on futures contracts and transactions in securities on a
when-issued or forward commitment basis, and except that each
Equity and Bond Fund may enter into forward currency contracts
in accordance with its investment objectives and policies.
Notwithstanding the above, the Tax-Free Intermediate Bond Fund
may not write or purchase options, including puts, calls,
straddles, spreads, or any combination thereof.
8. Purchase securities of companies for the purpose of exercising
control.
9. Purchase securities on margin, make short sales of securities
or maintain a short position, except that (a) this investment
limitation shall not apply to a Fund's transactions in futures
contracts and related options, a Fund's sale of securities
short against the box or a Fund's transactions in securities
on a when-issued or forward commitment basis, and (b) a Fund
may obtain short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities.
10. Purchase or sell commodity contracts, or invest in oil, gas or
mineral exploration or development programs, except that each
Fund may, to the extent appropriate to its investment
policies, purchase publicly traded securities of companies
engaging in whole or in part in such activities, may enter
into futures contracts and related options, and may engage in
transactions in securities on a when-issued or forward
commitment basis, and except that each Equity and Bond Fund
may enter into forward currency contracts in accordance with
its investment objectives and policies.
11. Make loans, except that each Fund may purchase and hold debt
instruments (whether such instruments are part of a public
offering or privately negotiated), may enter into repurchase
agreements and may lend portfolio securities in accordance
with its investment objective and policies.
In addition, the Tax-Free Intermediate Bond Fund may not:
1. Purchase or retain securities of any issuer if the officers or
Trustees of the Trust or its Advisor own beneficially more
than one-half of 1% of the securities of such issuer together
own beneficially more than 5% of such securities.
2. Invest more than 10% of its total assets in the securities of
issuers which together with any predecessors have a record of
less than three years continuous operation.
3. Participate on a joint or joint and several basis in any securities
trading account.
No Fund of Framlington may:
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 requests, 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 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
of 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 or 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 of Framlington
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.
No Fund of the Company may:
1. Invest more than 25% of its total assets in any one industry
(securities issued or guaranteed by the United States
Government, its agencies or instrumentalities are not
considered to represent industries) (except that the Real
Estate Fund will invest more than 25% of its assets in
securities of issuers in the real estate industry);
2. (For each Fund except the International Bond Fund) with
respect to 75% of the Fund's assets, invest more than 5% of
the Fund's assets (taken at a market value at the time of
purchase) in the outstanding securities of any single issuer
or own more than 10% of the outstanding voting securities of
any one issuer, in each case other than securities issued or
guaranteed by the United States Government, its agencies or
instrumentalities;
3. (For each Fund except Short Term Treasury Fund) borrow money
or issue senior securities (as defined in the 1940 Act) except
that the Funds may borrow (i) for temporary purposes in
amounts not exceeding 5% of its total assets and (ii) to meet
redemption requests, 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
a Fund's total assets and 33 1/3% of the Money Market Fund's
total assets; provided the Funds 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 a Fund
may be deemed an underwriter under the Securities Act of 1933, as amended,
in selling portfolio securities;
7. (For each Fund except the Real Estate Fund) 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. The
Real Estate Fund may not buy or sell real estate; however, this prohibition
does not apply to the purchase or sale of (i) securities which are secured
by real estate, (ii) securities representing interests in real estate,
(iii) securities of companies operating in the real estate industry
including real estate investment trusts, and (iv) the holding and sale of
real estate acquired as a result of the ownership of securities.
8. Purchase securities on margin, or make short sales of
securities, except for the use of short-term credit necessary
for the clearance of purchases and sales of portfolio
securities, but the Funds (with the exception of the Money
Market Fund and Short Term Treasury Fund) may make margin
deposits in connection with transactions in options, futures
and options on futures;
9. Make investments for the purpose of exercising control or
management; or
10. Invest in commodities or commodity futures contracts, provided
that this limitation shall not prohibit the purchase or sale
by the Mid-Cap, Multi-Season, Real Estate, Value and
International Bond Funds of forward foreign currency exchange
contracts, financial futures contracts and options on
financial futures contracts, and options on securities and on
securities, foreign currencies and on securities indices, as
permitted by each Fund's prospectus.
In addition, the Short Term Treasury Fund may not:
1. 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 exceeding 5% of its total assets and (ii) borrow money
for the purpose of meeting redemption requests, in amounts
(when aggregated with amounts borrowed under clause (i)) not
exceeding 33 1/3% of its total assets; or
2. Issue any senior securities (as such term is defined in
Section 18(f) of the 1940 Act) except to the extent the
activities permitted by other enumerated Investment
Limitations for the Company above may be deemed to give rise
to a senior security.
Additional investment restrictions adopted by each Fund of the Company,
which may be changed by the Board of Directors, provide that a Fund may not:
1. Invest more than 15% of its net assets (10% of net assets for
the Money Market Fund) (taken at market value at the time of
purchase) in securities which cannot be readily resold because
of legal or contractual restrictions and (in the case of
International Bond Fund and Short Term Treasury Fund only)
which are not otherwise marketable;
2. (For each Fund except the International Bond Fund and Short
Term Treasury Fund) own more than 10% (taken at market value
at the time of purchase) of the outstanding voting securities
of any single issuer;
3. (For each Fund except Short Term Treasury Fund) purchase or sell
interests in oil, gas or other mineral exploration or development plans or
leases);
4. Invest in other investment companies except as permitted under the
1940 Act.
In addition, the International Bond Fund may not with respect to 50% of
the Fund's assets, invest more than 5% of the Fund's assets (taken at a market
value at the time of purchase) in the outstanding securities of any single
issuer or own more than 10% of the outstanding voting securities of any one
issuer, in each case other than securities issued or guaranteed by the United
States Government, its agencies or instrumentalities, at the close of each
quarter of its taxable year.
<PAGE>
30
shares/bankgrp/munder/sai/1997/1097SAI2.DOC
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 a Fund's investments will not constitute a violation of such
limitation, except that any borrowing by a 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, a
Fund may continue to hold a security even though it causes the Fund to exceed a
percentage limitation because of fluctuation in the value of the Fund's assets.
TRUSTEES, DIRECTORS AND OFFICERS
The trustees, directors and executive officers of the Trust,
Framlington and the Company, and their business addresses and principal
occupations during the past five years, are:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Positions Principal Occupation
Name, Address and Age With Trust and Company During Past Five Years
Charles W. Elliott1 Chairman of the Board of Senior Advisor to the President - Western
3338 Bronson Boulevard Trustees and Directors Michigan University since July 1995;
Kalamazoo, MI 49008 Executive Vice President - Administration
Age: 64 & 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/Director and Vice Chairman, Walbridge Aldinger
1876 Rathmor Chairman of the Boards of Company (construction company).
Bloomfield Hills, MI 48304 Trustees and Directors
Age: 49
Thomas B. Bender Trustee/Director Investment Advisor, Financial &
7 Wood Ridge Road Investment Management Group
Glen Arbor, MI 49636 (since April, 1991); Vice President
Age: 63 Institutional Sales, Kidder, Peabody & Co.
(Retired April, 1991).
David J. Brophy Trustee/Director Professor, University of Michigan;
1025 Martin Place Director, River Place Financial Corp.;
Ann Arbor, MI 48104 Trustee, Renaissance Assets Trust
Age: 60
Dr. Joseph E. Champagne Trustee/Director Corporate and Executive Consultant since
319 Snell Road September 1995; prior to that Chancellor,
Rochester, MI 48306 Lamar University from September 1994 until
Age: 58 September 1995; before that Consultant to
Management, Lamar University; President
and Chief Executive Officer, Crittenton
Corporation, (holding company that owns
healthcare facilities) and 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.
Positions Principal Occupation
Name, Address and Age With Trust and Company During Past Five Years
Thomas D. Eckert Trustee/Director President and COO, Mid-Atlantic
10726 Falls Pointe Drive Group of Pulte Home Corporation
Great Falls, VA 22066 (developer of residential land and
Age: 49 construction of housing units).
Lee P. Munder President President and CEO of the Advisor; Chief
480 Pierce Street Executive Officer and President of Old
Suite 300 MCM; Chief Executive Officer of World
Birmingham, MI 48009 Asset Management; and Director, LPM
Age: 59 Investment Services, Inc. ("LPM").
Terry H. Gardner Vice President, Vice President and Chief Financial
480 Pierce Street Chief Financial Officer Officer of the Advisor,
Suite 300 and Treasurer Vice President and Chief
Birmingham, MI 48009 Financial Officer of Old MCM (February
Age: 36 1993 to present); Manager of Arthur Andersen &
Co. (1991 to February 1993); Secretary of LPM.
Paul Tobias Vice President Executive Vice President and Chief
480 Pierce Street Operating Officer of the
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 Chief
480 Pierce Street Investment Officer/Equities of the
Suite 300 Advisor (since April 1995);
Birmingham, MI 48009 Managing Director (1991-1995),
Age: 44 Director (1992-1995) and Vice President
(1984-1991) of Loomis, Sayles and Company,
L.P.
Elyse G. Essick Vice President Vice President and Director of
480 Pierce Street Marketing for the Advisor;
Suite 300 Vice President and Director of
Birmingham, MI 48009 Client Services of Old MCM
Age: 38 (August 1988 to December 1994).
James C. Robinson Vice President Vice President and Chief Investment
480 Pierce Street Officer/Fixed Income for the Advisor;
Suite 300 Vice President and Director of Fixed
Birmingham, MI 48009 Income of Old MCM (1987-1994).
Age: 35
Positions Principal Occupation
Name, Address and Age With Trust and Company During Past Five Years
Leonard J. Barr, II Vice President Vice President and Director of Core
480 Pierce Street Equity Research of the Advisor;
Suite 300 Director and Senior Vice President
Birmingham, MI 48009 of Old MCM (since 1988);
Age: 52 Director of LPM.
Ann F. Putallaz Vice President Vice President and Director of
480 Pierce Street Fiduciary Services of the Advisor
Suite 300 (since January 1995); Director of
Birmingham, MI 48009 Client and Marketing Services of
Age: 51 Woodbridge.
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
8th Floor Company Advisors, Inc. since
Boston, MA 02109 November 1989.
Age: 41
Lisa A. Rosen Secretary, Assistant General Counsel of the Advisor since
480 Pierce Street Treasurer May, 1996; Formerly, Counsel, First Data
Suite 300 Investor Services Group, Inc.; Assistant
Birmingham, MI 48009 Vice President and Counsel with The
Age: 30 Boston Company Advisors, Inc.; Associate
with Hutchins, Wheeler & Dittmar.
Teresa M.R. Hamlin Assistant Secretary Counsel, First Data Investor Services
First Data Investor Services Group, Inc. (since 1995). Formerly
Group, Inc. Paralegal Manager, The Boston Company
One Exchange Place Advisors, Inc.
8th Floor
Boston, MA 02109
Age: 34
Julie A. Tedesco Assistant Secretary Counsel, First Data Investor Services
First Data Investor Services Group, Inc. (since May, 1994); Formerly
Group, Inc. Assistant Vice President and Counsel
One Exchange Place of The Boston Company Advisors, Inc.
8th Floor (since July, 1992).
Boston, MA 02109
Age: 40
</TABLE>
Trustees of the Trust and Framlington and Directors of the Company
receive an aggregate fee from the Trust, Framlington the Company and St.
Clair Funds, Inc. ("St. Clair") for service on those organizations
respective Boards comprised of an annual retainer fee of $20,000, and a fee
of $1,500 for each Board meeting attended; and are reimbursed for all
out-of-pocket expenses relating to attendance at meetings.
The following table summarizes the compensation paid by the Trust,
Framlington, the Company and St. Clair to their respective Trustees/Directors
for the year ended June 30, 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Aggregate Com-
pensation from Pension Estimated
the Trust, the Retirement Annual
Company, Benefits Accrued Benefits Total
Name of Person Framlington as Part of upon from the
Position and St. Clair Fund Expenses Retirement Fund Complex
Charles W. Elliott $20,000 None None $20,000
Chairman
John Rakolta, Jr. $18,500 None None $18,500
Vice Chairman
Thomas B. Bender $20,000 None None $20,000
Trustee and Director
David J. Brophy $20,000 None None $20,000
Trustee and Director
Dr. Joseph E. Champagne $20,000 None None $20,000
Trustee and Director
Thomas D. Eckert $20,000 None None $20,000
Trustee and Director
</TABLE>
No officer, director or employee of the Advisor, Sub-Advisor, Comerica
Incorporated ("Comerica"), the Sub-Custodian, the Distributor, the Administrator
or the Transfer Agent currently receives any compensation from the Trust,
Framlington or the Company. [As of October 1, 1997, the Trustees and officers of
the Trust and Framlington, each as a group, owned [less than 1%] of all classes
of outstanding shares of the Funds of the Trust and Framlington, and the
Directors and officers of the Company, as a group, owned [less than 1%] of all
classes of outstanding shares of the Funds of the Company.]
[As of October 1, 1997, the Directors and officers of the Company, as a
group, owned ______ Class Y Shares of Multi-Season Growth Fund, ______ Class Y
Shares of Value Fund, ______ Class Y Shares of Tax-Free Money Market Fund,
______ Class Y Shares of Money Market Fund, ______ Class Y Shares of
International Equity Fund, ______ Class Y Shares of Real Estate Equity
Investment Fund, ______ Class Y Shares of Small Company Growth Fund, ______
Class Y Shares of Accelerating Growth Fund and ______ Class Y Shares of Mid-Cap
Growth Fund, which represented less than 1% of the outstanding Class Y Shares of
those Funds.]
[Lee P. Munder and Terry H. Gardner are administrators of a pension
plan for employees of Munder Capital Management, which as of October 1, 1997
owned ______ Class Y Shares of Multi-Season Growth Fund and ______ Class Y
Shares of Money Market Fund, which represented less than 1% of the outstanding
Class Y Shares of each of those Funds. As of the same date, such pension plan
owned ______ Class A Shares of Value Fund, ______ Class A Shares of
International Equity Fund, ______ Class Y Shares of Real Estate Equity
Investment Fund, ______ Class A Shares of Bond Fund, ______ Class A Shares of
Small Company Growth Fund, ______ Class A Shares of Accelerating Growth Fund,
______ Class A Shares of Mid-Cap Growth Fund and ______ Class Y Shares of Bond
Fund, which represented ______%, ______%, ______%, ______%, ______%, ______%,
______% and ______%, respectively, of the outstanding Class Y and Class A
Shares, as applicable, of those Funds.]
[Munder Capital Management and affiliates of Munder Capital Management,
through common ownership, owned beneficially ______ Class Y Shares of the
Multi-Season Growth Fund, ______ Class Y Shares of the Money Market Fund and
______ Class Y Shares of Small Company Growth Fund, which represented ______%,
______% and ______% of the outstanding Class Y Shares of those Funds,
respectively. [Ownership by Sub-Advisor to be determined]]
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, the
Trust's and the Framlington Trust's Declaration of Trust, as amended, each
provide that shareholders shall not be subject to any personal liability in
connection with the assets of the Trust or the Framlington Trust for the acts or
obligations of the Trust or the Framlington Trust, and that every note, bond,
contract, order or other undertaking made by the Trust or the Framlington Trust
shall contain a provision to the effect that the shareholders are not personally
liable thereunder. Each 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. Each Declaration
of Trust, as amended, also provides that the Trust and the Framlington Trust
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Trust or the Framlington 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 or the Framlington Trust itself would be unable to meet its
obligations.
Each Declaration of Trust, as amended, further provides that all
persons having any claim against the Trustees, the Trust or the Framlington
Trust shall look solely to the trust property for payment; that no Trustee of
the Trust or the Framlington 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 or the Framlington 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,
each 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 and the Framlington Trust to the same extent that
Trustees are entitled to indemnification.
INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS
Investment Advisor. The Advisor of each Fund is Munder Capital
Management, a Delaware general partnership. The Advisor replaced Woodbridge
Capital Management, Inc. ("Woodbridge") as investment advisor to the investment
portfolios of the Trust and replaced Munder Capital Management, Inc. as
investment advisor to the investment portfolios of the Company on January 31,
1995, upon the closing of an agreement (the "Joint Venture Agreement") among Old
MCM, Inc., Comerica, Woodbridge and WAM, pursuant to which Old MCM, Inc.
contributed its investment advisory business and Comerica contributed the
investment advisory businesses of its indirect subsidiaries, Woodbridge and
World Asset Management, to the Advisor. 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.
New Investment Advisory Agreements ("Advisory Agreements") between the
Advisor and the Trust on behalf of each investment portfolio of the Trust were
approved by the Board of Trustees of the Trust on November 23, 1994 and by the
shareholders of those funds at a meeting on March 29, 1995. Advisory Agreements
between the Advisor and the Company on behalf of the Multi-Season Fund, Real
Estate Fund and Money Market Fund were approved by the Board of Directors of the
Company on November 9, 1994 and by the shareholders of those Funds at a meeting
on February 24, 1995. The Advisory Agreements for the Mid-Cap Growth and Value
Funds were approved by the Board of Directors on July 31, 1995 and by
shareholders on August 14, 1995. The Advisory Agreement for the International
Bond Fund was approved by the Board of Directors on May 6, 1996 and by the
shareholders on October 1, 1996. The Advisory Agreements for the Equity
Selection Fund, Micro-Cap Fund and Small-Cap Value Fund were approved by the
Board of Directors on August 6, 1996 and by shareholders on _____________. The
Advisory Agreement for the Short Term Treasury Fund was approved by the Board of
Directors on November 7, 1996 and by the shareholders on ____________, 1996.
Under the terms of the Advisory Agreements, the Advisor furnishes continuing
investment supervision to the Funds and is responsible for the management of the
Funds' portfolios. The responsibility for making decisions to buy, sell or hold
a particular security rests with the Advisor, subject to review by the Trust's
and the Company's Boards of Trustees and Directors.
The Advisory Agreements between the Advisor and Framlington on behalf
of each investment portfolio of Framlington were approved by the Board of
Trustees of Framlington on November 7, 1996 and by shareholders on __________,
199_. Under the terms of the Advisory Agreements, the Advisor furnishes overall
investment management for the International Growth Fund, the Emerging Markets
Fund and the Healthcare Fund, provides research and credit analysis, oversees
the purchase and sale 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.
The Company's and Framlington's Advisory Agreements will continue in
effect for a period of two years from their effective dates. The Trust's
Advisory Agreement was approved for an initial period from January 1, 1995 to
July 31, 1995. On July 31, 1995, the continuance of the Trust's Advisory
Agreement was approved and an amendment to the Trust's Advisory Agreement was
approved whereby the Advisor reduced the annual investment advisory fees payable
by certain portfolios of the Trust effective October 28, 1995. If not sooner
terminated, each 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/Directors 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) the vote of a majority of the outstanding voting
securities of the affected Fund, or (ii) the vote of a majority of the Board of
Trustees/Directors. Each Advisory Agreement is terminable with respect to a Fund
by vote of the Board of Trustees/Directors, or by the holders of a majority of
the outstanding voting securities of the Fund, at any time without penalty, on
60 days' written notice to the Advisor. The Advisor may also terminate its
advisory relationship with respect to a Fund without penalty on 90 days' written
notice to the Trust, Framlington or the Company, as applicable. Each Advisory
Agreement terminates automatically in the event of its assignment (as defined in
the 1940 Act).
The Sub-Advisor is a subsidiary of Framlington Group Limited, which is
incorporated in England and Wales and, through its subsidiaries, provides a wide
range of investment services. Framlington Group Limited 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 International Growth, Emerging
Markets and Healthcare 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.
Framlington'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 Framlington. The Sub-Advisory
Agreement terminates automatically in the event of its assignment (as defined in
the 1940 Act).
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
the rates set forth below:
1.25% of average daily net assets
oEmerging Markets Fund
1.00% of the first $500 million of average daily net assets and .75%
of net assets in excess of $500 million oMulti-Season Fund*
1.00% of the first $250 million of average daily net assets and .75%
of net assets in excess of $250 million oInternational Growth
Fund oHealthcare Fund
1.00% of average daily net assets
oMicro-Cap Fund
.75% of average daily net assets oAccelerating Growth Fund oEquity
Selection Fund oGrowth & Income Fund oInternational Equity
Fund oSmall-Cap Fund oSmall Company Fund
.74% of average daily net assets
oMid-Cap Fund
oReal Estate Fund
oValue Fund
.65% of average daily net assets
oBalanced Fund
.50% of average daily net assets
oBond Fund
oIntermediate Bond Fund
oInternational Bond Fund
oU.S. Income Fund
oMichigan Bond Fund
oTax-Free Bond Fund
oTax-Free Intermediate Bond Fund
.40% of average daily net assets
oMoney Market Fund
.35% of average daily net assets
oCash Investment Fund
oTax-Free Money Fund
oU.S. Treasury Fund
.25% of average daily net assets
oShort Term Treasury Fund
.20% of the first $250 million of average daily net assets;
0.12 of the next $250 million of net assets and
.07% of net assets in excess of $500 million
oIndex 500 Fund
- -------------------------------
* The Advisor expects to receive, after waivers, an advisory fee at the
annual rate of .75% of average daily net assets of Multi-Season Fund
and .07% of average daily net assets of the Index 500 Fund during the
current fiscal year.
[** The Advisor expects to voluntarily reimburse expenses during the
current fiscal year with respect to the Index 500 Fund, Mid-Cap Fund,
Micro-Cap Fund, Small-Cap Value Fund, Small Company Growth Fund, Real
Estate Fund, Short Term Treasury Fund, Value Fund, International Bond
Fund, Emerging Markets Fund, Healthcare Fund and International Growth
Fund.]
The Advisor may discontinue such fee waivers and/or expense
reimbursements at any time, in its sole discretion.
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 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.
For the period February 1, 1995 through February 28, 1995, the Advisor
received fees, after waivers, of: $144,906 - Accelerating Growth Fund, $22,937 -
Balanced Fund, $0 - Growth & Income Fund, $5,407 - Index 500 Fund, $75,502 -
International Equity Fund, $68,046 - Small Company Growth Fund, $67,126 - Bond
Fund, $172,014 Intermediate Bond Fund, $67,252 - U.S. Government Income Fund, $0
- - Michigan Bond Fund, $96,599 - Tax-Free Bond Fund, $137,594 - Tax-Free
Intermediate Bond Fund, $246,455 - Cash Investment Fund, $62,910 - Tax-Free
Money Market Fund and $83,125 - U.S. Treasury Money Market Fund.
Net fees accrued to Old MCM, Inc., the Company's former investment
advisor, for services provided pursuant to the former advisory agreements (which
provided for the same fee rates as the Advisory Agreements) for the year ended
December 31, 1994 (and for the Real Estate Fund for the period from commencement
of operations to December 31, 1994) were $555,273 for the Multi-Season Fund,
$3,166 for the Real Estate Fund and $620,204 for the Money Market Fund. For such
periods, the Advisor voluntarily reimbursed expenses for the Multi-Season, Real
Estate and Money Market Funds in the following amounts of $285,571, $68,336 and
$218,109, respectively.
For the period March 1, 1995 through June 30, 1995, the Advisor
received fees after waivers of: $659,256 Accelerating Growth Fund, $103,145 -
Balanced Fund, $243,681 - Growth & Income Fund, $27,024 - Index 500 Fund,
$357,460 - International Equity Fund, $316,025 - Small Company Growth Fund,
$300,222 - Bond Fund, $767,122 Intermediate Bond Fund, $304,666 - U.S.
Government Income Fund, $0 - Michigan Bond Fund, $410,093 - Tax-Free Bond Fund,
$593,601 - Tax-Free Intermediate Bond Fund, $1,144,037 - Cash Investment Fund,
$273,285 - Tax-Free Money Market Fund and $373,285 - U.S. Treasury Money Market
Fund.
For the period from January 1, 1995 through June 30, 1995, the Advisor
received fees after waivers of $272,521 for the Multi-Season Fund, $0 for the
Real Estate Fund and $431,213 for the Money Market Fund. For such period, the
Advisor voluntarily reimbursed expenses for the Multi-Season and Real Estate
Funds, in the following amounts of $34,525 and $141,161, respectively.
For the period from July 1, 1995 through October 27, 1995, the Advisor
received fees after waivers of $709,799 for the Accelerating Growth Fund,
$107,536 for the Balanced Fund, $364,938 for the Growth & Income Fund, $31,087
for the Index 500 Fund, $379,355 for the International Equity Fund, $17,380 for
the Mid-Cap Fund, $358,622 for the Small Company Growth Fund, $31,762 for the
Value Fund, $300,502 for the Bond Fund, $771,815 for the Intermediate Bond Fund,
$290,956 for the U.S. Government Fund, $0 for the Michigan Bond Fund, $367,467
for the Tax-Free Bond Fund, $572,916 for the Tax-Free Intermediate Fund,
$1,159,247 for the Cash Investment Fund, $266,552 for the Tax-Free Money Market
Fund and $341,421 for the U.S. Treasury Money Market Fund.
For the period from October 28, 1995 through June 30, 1996, the Advisor
received fees after waivers of $1,411,737 for the Accelerating Growth Fund,
$246,967 for the Balanced Fund, $970,328 for the Growth & Income Fund, $72,265
for the Index 500 Fund, $946,880 for the International Equity Fund, $920,847 for
the Small Company Growth Fund, $537,663 for the Bond Fund, $1,809,598 for the
Intermediate Bond Fund, $661,896 for the U.S. Government Fund, $0.00 for the
Michigan Bond Fund, $709,274 for the Tax-Free Bond Fund, $1,185,441 for the
Tax-Free Intermediate Fund, $2,478,073 for the Cash Investment Fund, $660,687
for the Money Market Fund, $610,215 for the Tax-Free Money Market Fund and
$823,717 for the U.S. Treasury Money Market Fund.
For the fiscal year ended June 30, 1996 (and for the period from
commencement of operations to June 30, 1996 for the Mid-Cap and Value Funds) the
Advisor received fees after waivers, if any, of $2,275,469 for the Multi-Season
Fund, $114,330 for the Real Estate Fund, $1,025,924 for the Money Market Fund,
$113,145 for the Mid-Cap Fund and $189,909 for the Value Fund.
For the fiscal year ended June 30, 1997 (and for the period from
commencement of operations to June 30, 1997 for the International Growth,
Emerging Markets, Healthcare, Micro-Cap, Small-Cap Value, Short Term Treasury
and International Bond Funds), the Advisor received fees after waivers, if any,
of $2,040,543 for the Accelerating Growth Fund, $445,259 for the Balanced Fund,
$1,650,704 for the Growth & Income Fund, $249,764 for the Index 500 Fund,
$1,720,496 for the International Equity Fund, $1,884,242 for the Small Company
Growth Fund, $751,954 for the Bond Fund, $2,554,647 for the Intermediate Bond
Fund, $1,175,733 for the U.S. Government Fund, $184,266 for the Michigan Bond
Fund, $1,006,688 for the Tax-Free Bond Fund, $1,584,769 for the Tax-Free
Intermediate Fund, $3,454,159 for the Cash Investment Fund, $879,155 for the
Tax-Free Money Market Fund, $1,101,183 for the U.S. Treasury Money Market Fund,
$4,252,990 for the Multi-Season Fund, $259,015 for the Real Estate Fund,
$599,286 for the Money Market Fund, $180,531 for the Mid-Cap Fund, $401,505 for
the Value Fund, $71,843 for the International Growth Fund, $25,210 for the
Emerging Markets Fund, $11,440 for the Healthcare Fund, $6,479 for the Micro-Cap
Equity Fund, $95,022 for the Small-Cap Value Fund $51,885 for the Short Term
Treasury Fund and $143,476 for the International Bond Fund.
The Sub-Advisor is entitled to an advisory fee equal to up to one-half
of the fee paid to the Advisor by each of the Framlington Funds as compensation
for its services as Sub-Advisor. The Advisor pays fees to the Sub-Advisor and
the Framlington Funds pay no fees directly to the Sub-Advisor.
For the fiscal year ended June 30, 1997 the Advisor voluntarily waived
advisory fees and/or reimbursed expenses in the amounts of $1,063,247 for the
Multi-Season Fund, $10,143 for the Real Estate Fund, $52,965 for the Mid-Cap
Fund, $17,688 for the Value Fund, $360,721 for the Index 500 Fund and $51,815
for the Michigan Bond Fund.
For the period ended June 30, 1997, the Advisor voluntarily reimbursed
expenses in the amounts of $41,485 for the Micro-Cap Fund, $16,708 for the
Small-Cap Value Fund, $72,552 for the International Growth Fund, $73,369 for the
Emerging Markets Fund, and $66,145 for the Healthcare Fund, $9,944 for the
International Bond Fund and $5,153 for Short Term Treasury Fund.
The Equity Selection Fund was not available for purchase as of the date
of this Statement of Additional Information.
Distribution Agreements. The Trust, Framlington and the Company have
entered into distribution agreements, 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 each
Fund, 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 the Funds (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 - Class A, Class B and Class C
Shares. Each Fund has adopted a Service and Distribution 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 and
Distribution Plans for Class A Shares, the Distributor is paid an annual service
fee at the rate of up to 0.25% of the value of average daily net assets of the
Class A Shares of each Fund. Each Fund has also adopted a Service and
Distribution Plan with respect to its Class B and Class C Shares, pursuant to
which it uses its assets to finance activities relating to the distribution of
its shares to investors and provision of certain shareholder services. Under the
Service and Distribution Plans for Class B and Class C Shares, the Distributor
is paid an annual service fee of up to 0.25% of the value of average daily net
assets of the Class B and Class C Shares of each Fund and an annual distribution
fee at the rate of up to 0.75% of the value of average daily net assets of the
Class B and Class C Shares of each Fund.
Under the terms of the 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/Directors, including a
majority of the Board of Trustees/Directors who are not interested persons of
the Trust, the Framlington Trust or the Company, as applicable, and who have no
direct or indirect financial interest in the operation of that Plan (the
"Non-Interested Plan Directors"). 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/Directors 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 Directors or by a vote of a majority of the outstanding
voting securities of the relevant class of the respective Fund (as defined in
the 1940 Act) on not more than 30 days' written notice to any other party to the
Plan. Pursuant to each Plan, the Distributor will provide the Boards of Trustees
and Directors periodic reports of amounts expended under the Plan and the
purpose for which such expenditures were made.
The Trustees/Directors have determined that the Plans will benefit the
Trust, Framlington, the Company and their respective 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 a
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 by 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 Funds' shares to support their sales efforts.
Fees paid to the Distributor Pursuant to Class A Service Plans
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- -------------------------------------------- ----------------- ---------------- ----------------- ----------------
FISCAL YEAR FISCAL YEAR FISCAL
ENDED PERIOD ENDED ENDED YEAR
2/28/95 6/30/95 6/30/96 ENDED
6/30/97
- -------------------------------------------- ----------------- ---------------- ----------------- ----------------
Accelerating Growth Fund $1,339.97 $51.86 $1916.29 $______
Balanced Fund $116.01 $0.17 $136.95 $______
Growth & Income Fund $0.00 $76.92 $268.00 $______
Index 500 Fund $176.46 $203.84 $23,640.46 $______
International Equity Fund $617.32 $1.38 $1,946.82 $______
Small Company Growth Fund $794.65 $10.80 $1,158.43 $______
Bond Fund $17.48 $15.24 $29.40 $______
Intermediate Bond Fund $230.93 $0.51 $345.66 $______
Michigan Triple Tax-Free Bond Fund $663.53 $0.00 $23.32 $______
Tax-Free Bond Fund $0.00 $0.00 $0.03 $______
Tax-Free Intermediate Bond Fund $6.17 $10.80 $85.26 $______
- -------------------------------------------- ----------------- ---------------- ----------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
----------------- ---------------- -----------------
FISCAL YEAR FISCAL
PERIOD ENDED ENDED YEAR
6/30/95 6/30/96 ENDED
6/30/97
- -------------------------------------------- ----------------- ---------------- -----------------
Multi-Season Growth Fund $427.88 $1,945.49 $______
Real Estate Fund $422.10 $179.10 $______
Mid-Cap Growth Fund N/A $51.87 $______
Value Fund N/A $41.77 $______
Money Market Fund $___ N/A $_____*
Micro-Cap Fund N/A N/A $_____*
Small-Cap Value Fund N/A N/A $_____*
International Bond Fund N/A N/A $_____*
- -------------------------------------------- ----------------- ---------------- -----------------
<FN>
- -----------------------------------
*Figures reflect period from commencement of operations to June 30, 1997.
</FN>
</TABLE>
-----------------
FISCAL
PERIOD ENDED
6/30/97
- -------------------------------------------- -----------------
International Growth Fund $____
Emerging Markets Fund $____
Healthcare Fund $____
- -------------------------------------------- -----------------
Fees paid to the Distributor Pursuant to Class B Service and Distribution Plans
for the fiscal year ended June 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C>
--------------------- ------------------ -------------------
DISTRIBUTION SERVICER FEES CDSC's
FEES
- --------------------------------------------
--------------------- ------------------ -------------------
Accelerating Growth Fund $______ $______ $______
Balanced Fund $______ $______ $______
Growth & Income Fund $______ $______ $______
Index 500 Fund $______ $______ $______
International Growth Fund* $______ $______ $______
Emerging Markets Fund* $______ $______ $______
Healthcare Fund* $______ $______ $______
International Equity Fund $______ $______ $______
Micro-Cap Fund* $______ $______ $______
Mid-Cap Fund $______ $______ $______
Multi-Season Fund $______ $______ $______
Real Estate Fund $______ $______ $______
Small-Cap Value Fund* $______ $______ $______
Small Company Growth Fund $______ $______ $______
Value Fund $______ $______ $______
Bond Fund $______ $______ $______
International Bond Fund* $______ $______ $______
Intermediate Bond Fund $______ $______ $______
Short Term Treasury Fund* $______ $______ $______
U.S. Government Income Fund $______ $______ $______
Michigan Bond Fund $______ $______ $______
Tax-Free Bond Fund $______ $______ $______
Tax-Free Intermediate Bond Fund $______ $______ $______
Money Market Fund $______ $______ $______
- -------------------------------------------- --------------------- ------------------ -------------------
<FN>
- -------------------------------
*Figures reflect period from commencement of operations to June 30, 1997.
</FN>
</TABLE>
<PAGE>
Fees paid to the Distributor Pursuant to Class B Service and Distribution Plans
for the fiscal year ended June 30, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C>
--------------------- ------------------ -------------------
DISTRIBUTION SERVICER FEES CDSC's
FEES
- --------------------------------------------
--------------------- ------------------ -------------------
Accelerating Growth Fund $1,268.42 $422.83 $238.16
Balanced Fund $400.45 $133.48 $199.11
Growth & Income Fund $1,147.15 $382.37 $300.00
Index 500 Fund $15,750.66 $4,500.20 $1,207.75
International Equity Fund $3,131.06 $1,043.68 $1.008.01
Mid-Cap Growth Fund $88.71 $29.54 $0.00
Multi-Season Fund $454,197.35 $151,399.12 $155,014.33
Real Estate Fund $12,014.27 $4,004.75 $4,278.33
Small Company Growth Fund $2,247.94 $749.31 $100.00
Value Fund $424.07 $141.36 $181.56
Bond Fund $590.01 $196.67 $861.49
Intermediate Bond Fund $206.34 $68.79 $0.00
U.S. Government Income Fund $3,656.37 $1,218.79 $199.27
Michigan Bond Fund $1,923.70 $641.24 $405.63
Tax-Free Bond Fund $131.90 $43.96 $979.34
Tax-Free Intermediate Bond Fund $298.44 $99.48 $0.53
Money Market Fund $1,496.13 $498.72 $0.00
- -------------------------------------------- --------------------- ------------------ -------------------
</TABLE>
Fees paid to the Distributor Pursuant to Class B Service and Distribution Plans
for the period ended June 30, 1995*
<TABLE>
<CAPTION>
<S> <C> <C> <C>
--------------------- ----------------- -------------------
DISTRIBUTION SERVICER FEES CDSC's
FEES
- --------------------------------------------
--------------------- ----------------- -------------------
Accelerating Growth Fund $137.64 $45.26 $350.16
Balanced Fund $44.96 $15.16 $200.96
Growth & Income Fund $135.37 $44.52 $0.00
International Equity Fund $311.35 $103.16 $0.00
Multi-Season Fund** $187,381.57 $62,460.53 $101,519.47
Real Estate Fund** $4,532.31 $1,510.77 $430.62
Small Company Growth Fund $107.62 $35.70 $0.00
Intermediate Bond Fund $19.61 $6.50 $0.00
Michigan Triple Tax Free Fund $631.87 $208.93 $361.42
Tax-Free Bond Fund $2.85 $0.95 $0.00
Money Market Fund** $1,774.98 $591.66 $0.00
- -------------------------------------------- --------------------- ----------------- -------------------
<FN>
* As of June 30, 1995, the following funds had not commenced selling Class B Shares: Bond Fund, Index 500
Fund, U.S. Government Income Fund, Tax Free Intermediate Bond Fund.
** Figures reflect the period 01/01/95 - 06/30/95. All other funds reflect the period 03/01/95 - 06/30/95.
</FN>
</TABLE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Fees paid to the Distributor Pursuant to Class B Service and Distribution Plans
for the fiscal year ended February 28, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
---------------------- ----------------- -----------------
DISTRIBUTION SERVICER FEES CDSC's
FEES
- -------------------------------------------- ---------------------- ----------------- -----------------
Accelerating Growth Fund $113.37 $15.95 $0.00
Balanced Fund $66.05 $7.42 $0.00
Growth & Income Fund $117.51 $20.45 $0.00
International Equity Fund $315.98 $49.15 $0.00
Multi-Season Growth Fund* $481,834.00 $0.00 $159,185.00
Real Estate Fund** $1,064.00 $0.00 $0.00
Small Company Growth Fund $72.07 $14.30 $0.00
Intermediate Bond Fund $16.61 $2.96 $0.00
Michigan Triple Tax Free Fund $515.28 $91.47 $0.00
Tax-Free Bond Fund $0.12 $0.04 $0.00
Money Market Fund** $1,799 $0.00 $0.00
- -------------------------------------------- ---------------------- ----------------- -----------------
<FN>
* Figures reflect period from 01/01/94 - 12/31/94. Such amounts were paid to a previous distributor.
** Figures reflect period from commencement of operations to 12/31/94. Such amounts were paid to a previous
distributor.
</FN>
</TABLE>
Fees paid to the Distributor Pursuant to Class C Service and Distribution Plans
for the fiscal year ended June 30, 1997*
<TABLE>
<CAPTION>
<S> <C> <C> <C>
--------------------- ----------------- ----------------
DISTRIBUTION SERVICER FEES CDSC's
FEES
- --------------------------------------------
--------------------- ----------------- ----------------
Accelerating Growth Fund $______ $______ $______
Balanced Fund $______ $______ $______
Growth & Income Fund $______ $______ $______
International Growth Fund** $______ $______ $______
Emerging Markets Fund** $______ $______ $______
Healthcare Fund** $______ $______ $______
International Equity Fund $______ $______ $______
Mid-Cap Fund $______ $______ $______
Multi-Season Fund $______ $______ $______
Real Estate Fund $______ $______ $______
Micro-Cap Fund** $______ $______ $______
Small-Cap Value Fund** $______ $______ $______
Small Company Growth Fund $______ $______ $______
Value Fund $______ $______ $______
Bond Fund $______ $______ $______
Intermediate Bond Fund $______ $______ $______
U.S. Government Income Fund $______ $______ $______
Michigan Bond Fund $______ $______ $______
Tax-Free Intermediate Bond Fund $______ $______ $______
Money Market Fund $______ $______ $______
- -------------------------------------------- --------------------- ----------------- ---------------- -----------------
<FN>
- ---------------------------------
* As of June 30, 1997, the following funds had not commenced selling Class C Shares: Tax-Free Bond Fund,
Tax-Free Intermediate Bond Fund, International Bond Fund and Short Term Treasury Fund.
** Figures reflect period from commencement of operations to June 30, 1997.
</FN>
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Fees paid to the Distributor Pursuant to Class C Service and Distribution Plans
for the fiscal year ended June 30, 1996*
<TABLE>
<CAPTION>
<S> <C> <C> <C>
--------------------- ----------------- ----------------
DISTRIBUTION SERVICER FEES CDSC's
FEES
- --------------------------------------------
--------------------- ----------------- ----------------
Accelerating Growth Fund $263.46 $87.82 $188.66
Balanced Fund $3.69 $1.21 $100.01
Growth & Income Fund $89.74 $29.90 $0.00
International Equity Fund $3,585.39 $1,195.13 $293.87
Mid-Cap Growth Fund $129.03 $43.00 $2.18
Multi-Season Growth Fund $32,127.47 $10,709.17 $798.25
Real Estate Fund $13.33 $4.43 $7.50
Small Company Growth Fund $171.21 $57.06 $149.87
Value Fund $855.88 $285.29 $0.00
Bond Fund $92.46 $30.80 $0.00
Intermediate Bond Fund $73.80 $24.58 $0.00
- -------------------------------------------- --------------------- ----------------- ----------------
<FN>
* As of June 30, 1996, the following funds had not commenced selling Class C Shares: Index 500 Fund, U.S.
Government Income Fund, Michigan Bond Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund and Money
Market Fund.
</FN>
</TABLE>
Fees paid to the Distributor Pursuant to Class C Service and Distribution Plan
for the fiscal period ended June 30, 1995*
<TABLE>
<CAPTION>
<S> <C> <C> <C>
--------------------- ----------------- ----------------
DISTRIBUTION SERVICER FEES CDSC's
FEES
- -------------------------------------------- --------------------- ----------------- ----------------
Multi-Season Growth Fund** $9,464.61 $3,154.86 $256.15
Real Estate Fund** $1.28 $0.43 $0.00
- -------------------------------------------- --------------------- ----------------- ----------------
<FN>
* As of June 30, 1995, the Funds of the Trust had not commenced selling Class C Shares.
** Figures reflect period 01/01/95-06/30/95.
</FN>
</TABLE>
The following amounts were paid by each Fund under its Class B Service
and Distribution Plans during the fiscal year ended June 30, 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Printing and
Mailing of Interest,
Prospectuses Carrying or
to other than other
Current Compensation to Compensation Compensation Financing
Advertising Shareholders Underwriters to Dealers to Personnel Changes
Accelerating Growth Fund $ $ $ $ $ $
Balanced Fund $ $ $ $ $ $
Index 500 Fund $ $ $ $ $ $
International Growth Fund* $ $ $ $ $ $
Emerging Markets Fund* $ $ $ $ $ $
Healthcare Fund* $ $ $ $ $ $
Growth & Income Fund $ $ $ $ $ $
International Equity Fund $ $ $ $ $ $
Micro-Cap Equity Fund* $ $ $ $ $ $
Mid-Cap Growth Fund $ $ $ $ $ $
Multi-Season Fund $ $ $ $ $ $
Real Estate Fund $ $ $ $ $ $
Short Term Treasury Fund* $ $ $ $ $ $
Small-Cap Value Fund* $ $ $ $ $ $
Small Company Growth Fund $ $ $ $ $ $
Value Fund $ $ $ $ $ $
Bond Fund $ $ $ $ $ $`
Intermediate Bond Fund $ $ $ $ $ $
International Bond Fund $ $ $ $ $ $
U.S. Government Fund $ $ $ $ $ $
Michigan Bond Fund $ $ $ $ $ $
Tax-Free Bond Fund $ $ $ $ $ $
Tax-Free Intermediate Bond $ $ $ $ $ $
Fund
Money Market Fund $ $ $ $ $ $
<FN>
- ----------------------------
*Figures reflect period from commencement of operations to June 30, 1997.
</FN>
</TABLE>
The following amounts were paid by each Fund under its Class C Service
and Distribution Plans during the fiscal year ended June 30, 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Printing and
Mailing of Interest,
Prospectuses Carrying or
to other than Compensation other
Current to Underwriters Compensation to Compensation Financing
Advertising Shareholders Dealers to Personnel Changes
Accelerating Growth Fund $ $ $ $ $ $
Balanced Fund $ $ $ $ $ $
Index 500 Fund $ $ $ $ $ $
International Growth Fund* $ $ $ $ $ $
Emerging Markets Fund* $ $ $ $ $ $
Healthcare Fund* $ $ $ $ $ $
Growth & Income Fund $ $ $ $ $ $
International Equity Fund $ $ $ $ $ $
Micro-Cap Equity Fund* $ $ $ $ $ $
Mid-Cap Growth Fund $ $ $ $ $ $
Multi-Season Fund $ $ $ $ $ $
Real Estate Fund $ $ $ $ $ $
Short Term Treasury Fund* $ $ $ $ $ $
Small-Cap Value Fund* $ $ $ $ $ $
Small Company Growth Fund $ $ $ $ $ $
Value Fund $ $ $ $ $ $
Bond Fund $ $ $ $ $ $`
Intermediate Bond Fund $ $ $ $ $ $
International Bond Fund $ $ $ $ $ $
U.S. Government Fund $ $ $ $ $ $
Michigan Bond Fund $ $ $ $ $ $
Tax-Free Bond Fund $ $ $ $ $ $
Tax-Free Intermediate Bond $ $ $ $ $ $
Fund
Money Market Fund $ $ $ $ $ $
<FN>
- ------------------------------------
*Figures reflect fiscal period from commencement of operations to June 30, 1997.
</FN>
</TABLE>
Shareholder Servicing Arrangements - Class K Shares. As stated in each
Fund's Prospectus, Class K Shares are sold to investors through institutions
which enter into Shareholder Servicing Agreements with the Trust, Framlington or
the Company to provide support services to their Customers who beneficially own
Class K Shares in consideration of the Funds' payment of not more than .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, the Framlington Trust
or the Company (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 or Framlington's or the Company's arrangements
with institutions; and (x) providing such other similar services as the Trust,
Framlington or the Company may reasonably request to the extent the institutions
are permitted to do so under applicable statutes, rules and regulations.
Pursuant to the Trust's, Framlington's and the Company's agreements
with such institutions, the Boards of Trustees and Directors will review, at
least quarterly, a written report of the amounts expended under Trust's, the
Framlington's and the Company'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 Boards of Trustees
and Directors, including a majority of the Trustees/Directors who are not
"interested persons" as defined in the 1940 Act, and have no direct or indirect
financial interest in such arrangements.
The Boards of Trustees and Directors have approved the arrangements
with Institutions based on information provided by the service contractors that
there is a reasonable likelihood that the arrangements will benefit the Funds
and their shareholders by affording the Funds greater flexibility in connection
with the servicing of the accounts of the beneficial owners of their shares in
an efficient manner.
Administration Agreement. State Street Bank and Trust Company ("State
Street"), whose principal business address is 225 Franklin Street, Boston,
Massachusetts, 02110, serves as administrator for the Trust, Framlington and the
Company pursuant to administration agreements (each, an "Administration
Agreement"). State Street has agreed to maintain office facilities for the
Trust, Framlington and the Company; provide accounting and bookkeeping services
for the Funds, oversee the computation of each Fund's net asset value, net
income and realized capital gains, if any; furnish statistical and research
data, clerical services, and stationery and office supplies; prepare and file
various reports with the appropriate regulatory agencies; and prepare various
materials required by the SEC or any state securities commission having
jurisdiction over the Trust, Framlington or the Company. State Street may enter
into an agreement with one or more third parties pursuant to which such third
parties will provide administrative services on behalf of the Funds.
Each Administration Agreement provides that the Administrator
performing services thereunder shall not be liable under the Agreement except
for its bad faith, negligence or willful misconduct in the performance of its
duties and obligations thereunder.
Prior to November 1, 1997, First Data Investor Services Group, Inc.
("Investor Services Group") located at 53 State Street, Boston, Massachusetts
02109 served as administrator to the Funds.
For the period ended February 28, 1995, the administration fees of
Investor Services Group accrued as follows: Accelerating Growth Fund - $198,140;
Balanced Fund - $34,625; Growth & Income Fund - $41,047; Index 500 Fund -
$69,871; International Equity Fund - $94,485; Small Company Growth Fund -
$83,027; Bond Fund - $133,388; Intermediate Bond Fund - $335,642; U.S.
Government Income Fund - $142,297; Michigan Bond Fund - $17,168; Tax-Free Bond
Fund - $217,868; Tax-Free Intermediate Bond Fund - $272,285; Cash Investment
Fund - $669,287; Tax-Free Money Market Fund $179,189; and U.S. Treasury Money
Market Fund - $212,383.
For the period ended June 30, 1995 and the fiscal years ended June 30,
1996 and June 30, 1997, the administration fees of Investor Services Group
accrued as follows: Accelerating Growth Fund - $101,130, $322,120 and $307,521
Balanced Fund - $18,258, $62,095 and $77,364; Growth & Income Fund - $48,503,
$202,655 and $248,644; Index 500 Fund - $44,411, $188,416 and $405,016;
International Equity Fund - $54,832, $201,299 and $259,162; Small Company Growth
Fund - $48,480, $194,176 and $283,755; Bond Fund - $69,084, 190,967 and
$169,932; Intermediate Bond Fund - $176,525, $587,790 and $577,425; U.S.
Government Income Fund - $70,106, $216,970 and $265,637; Michigan Bond Fund -
$10,784, $31,899 and $41,620; Tax-Free Bond Fund - $94,378, $245,271 and
$227,508; Tax-Free Intermediate Bond Fund - $136,609, $400,485 and $358,214;
Cash Investment Fund - $376,101, $1,183,419 and $1,115,110; Tax-Free Money
Market Fund - $89,841 $285,214 and $283,803; and U.S. Treasury Money Market Fund
- - $122,730, $378,955 and $355,592, respectively.
For the period May 1, 1995 through June 30, 1995, administration fees
of Investor Services Group accrued were $17,266, $1,150 and $48,129, for the
Multi-Season Fund, Real Estate Fund and Money Market Fund, respectively.
For the fiscal year ended June 30, 1996, administration fees of
Investor Services Group accrued were: $345,388 - Multi-Season Fund, $19,100 -
Real Estate Fund and $292,172 - Money Market Fund. For the period ended June 30,
1996, administration fees of the Administrator accrued were: $18,006 - Mid-Cap
Fund and $29,705 - Value Fund.
For the fiscal year ended June 30, 1997, administration fees of
Investor Services Group accrued were $480,310-Multi-Season Fund; $39,493-Real
Estate Fund, $27,562-Mid-Cap Growth Fund; $169,405-Money Market Fund and
$61,224-Value Fund.
For the period ended June 30, 1997, administration fees of Investor
Services Group accrued were $730-Micro-Cap Fund; $14,,220-Small-Cap Value Fund;
$32,343-International Bond Fund and $23,349-Short Term Treasury Fund.
For the period ended June 30, 1997, administration fees of Investor
Services Group accrued were $9,644- Emerging Markets Fund; $9,644-Healthcare
Fund and $9,644-International Growth Fund.
Custodian, Sub-Custodian and Transfer Agency Agreements. Comerica Bank,
whose principal business address is One Detroit Center, 500 Woodward Avenue,
Detroit, MI 48226, maintains custody of the Funds' assets pursuant to custodian
agreements (each, a "Custody Agreement") with each of the Trust, Framlington and
the Company. Under each Custody Agreement, the Custodian (i) maintains a
separate account in the name of each Fund, (ii) holds and transfers portfolio
securities on account of each Fund, (iii) accepts receipts and makes
disbursements of money on behalf of each Fund, (iv) collects and receives all
income and other payments and distributions on account of each Fund's securities
and (v) makes periodic reports to the Boards of Trustees and Directors
concerning each Fund's operations. For the period ended June 30, 1997, the
Custodian earned $_______ for its services to the Funds of the Company, $_______
for its services to the Funds of the Trust and $_______ for its services to the
Funds of Framlington. Effective ____________, 1997, no compensation will be paid
to the Custodian for its services. The Custodian has entered into a Sub-Custody
Agreement with State Street pursuant to which State Street will serve as
Sub-Custodian to the Funds. As compensation for its services, State Street 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 Sub-Custodian provides services, computed daily and payable
monthly at an annual rate of .01% of average daily net assets. The Sub-Custodian
also receives certain transaction based fees.
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 Trust,
Framlington or the Company. In addition, the Trust, Framlington and the Company
and the Custodian have entered into respective sub-custody agreements with
Morgan Stanley Trust Company ("Morgan Stanley") relating to the custody of
foreign securities held by certain Funds of the Trust and each Fund of
Framlington and the Company (except the Real Estate Fund), 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. As of ____________, 1997, State Street will replace Morgan Stanley
as Sub-Custodian relating to the custody of foreign securities held by the
Funds.
Investor Services Group serves as the transfer and dividend disbursing
agent for the Funds pursuant to transfer agency agreements (the "Transfer Agency
Agreement") with each of the Trust, Framlington and the Company, under which
Investor Services Group (i) issues and redeems shares of each Fund, (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 Boards of Trustees and Directors concerning the
operations of each Fund.
Comerica. As stated in the Funds' Class K Shares Prospectus, Class K
Shares of the Funds 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 Company, the Trust and
Framlington 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, Framlington and the Company contemplated by their respective
agreements with each of them without violation of applicable banking laws and
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 certain services for the Funds.
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, Framlington or the Company, the Trust,
Framlington or the Company might be required to alter materially or discontinue
the arrangements with the institutions and change the method of operations. 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 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 Fund, the
Trust, Framlington or the Company might be required to alter materially or
discontinue the arrangements with the institutions and change the 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.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board Members, the Advisor or
the Sub-Advisor, as the case may be, 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.
For the period from March 1, 1995 to June 30, 1995, the Accelerating
Growth Fund, Balanced Fund, Growth & Income Fund, Index 500 Fund, International
Equity Fund and Small Company Growth Fund paid in brokerage commissions
$123,045, $13,238, $62,706, $5,047, $127,871 and $65,661, respectively. The
other Funds of the Trust did not pay brokerage commissions for the period from
March 1, 1995 to June 30, 1995.
For the period from January 1, 1995 to June 30, 1995, the Multi-Season
Fund and the Real Estate Fund paid $62,889 and $14,627, respectively, in
brokerage commissions. The other Funds of the Company did not pay brokerage
commissions for the period from January 1, 1995 to June 30, 1995.
For the fiscal year ended June 30, 1996, the Funds paid brokerage
commissions as follows: $474,252 Accelerating Growth Fund, $52,376-Balanced
Fund, $202,292 - Growth & Income Fund, $41,009 - Index 500 Fund, $428,699 -
International Equity Fund, $424,580 - Multi-Season Fund, $40,182 - Real Estate
Fund and $203,936 - Small Company Growth Fund. The other Funds did not pay
brokerage commissions during the fiscal year ended June 30, 1996.
For the period ended June 30, 1996, the Mid-Cap Fund and the Value Fund
paid brokerage commissions of $83,397 and $169,335, respectively.
For the fiscal year ended June 30, 1997, the Funds paid brokerage
commissions as follows: $506,861-Accelerating Growth Fund, $54,221-Balanced
Fund, $336,161-Growth & Income Fund, $61,393 - Index 500 Fund,
$155,081-International Equity Fund, $366,346-Multi-Season Fund, $50,137-Mid-Cap
Fund, $66,879-Real Estate Fund and $355,997-Small Company Growth Fund. The other
Funds did not pay brokerage commissions during the fiscal year ended June 30,
1997.
For the period ended June 30, 1997, Funds paid brokerage commissions as
follows: $2,045-Micro-Cap Fund, $82,304-Small-Cap Value Fund, $228,545-Value
Fund, $0-International Bond Fund, $0-Short Term Treasury Fund., $43,256-Emerging
Markets Fund, $87,694-International Growth Fund and $3,325-Healthcare Fund.
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 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 Advisor or
Sub-Advisor, as the case may be, believes such practice to be in the Funds'
interests.
Since the Money Market Funds will invest only in short-term debt
instruments, their annual portfolio turnover rates will be relatively high, but
brokerage commissions are normally not paid on money market instruments, and
portfolio turnover is not expected to have a material effect on the net
investment income of a Money Market Fund. The portfolio turnover rate of a Fund
is calculated by dividing the lesser of a Fund's annual sales or purchases of
portfolio securities (exclusive of purchases or sales of securities whose
maturities at the time of acquisition were thirteen months or less for the Money
Market Funds or one year or less for the Equity and Bond Funds) by the monthly
average value of the securities held by the Fund during the year. The Equity and
Bond Funds may engage in short-term trading to achieve their investment
objectives. Portfolio turnover may vary greatly from year to year as well as
within a particular year.
Each Fund's portfolio turnover rate is included in the prospectuses
under "Financial Highlights." For the fiscal year ended June 30, 1997, the
portfolio turnover rate for the Bond Fund and the Intermediate Bond Fund was:
279% and 325%, respectively. The portfolio turnover of the Bond Fund and the
Intermediate Bond Fund was affected by fluctuating interest rate conditions
which at times required increased dispositions and acquisitions of securities to
maintain each Fund's maturity structure.
In its Advisory Agreements, the Advisor (and, in the case of the Funds
of Framlington, the Sub-Advisor pursuant to the Sub-Advisory Agreement) agrees
to select broker-dealers in accordance with guidelines established by the Boards
of Trustees and Directors from time to time and in accordance with applicable
law. In assessing the terms available for any transaction, the Advisor or
Sub-Advisor, as the case may be, 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 Advisory and Sub-Advisory Agreements
authorize the Advisor or Sub-Advisor, as the case may be, subject to the prior
approval of the Boards of Trustees and Directors, to cause the Funds 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 or Sub-Advisor, as the
case may be, 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. 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 Advisor or Sub-Advisor,
as the case may be, and does not reduce the advisory fees payable to the Advisor
or Sub-Advisor by the Funds. 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, 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 each Fund 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 a Fund. To the extent permitted by law, the Advisor or
Sub-Advisor, as the case may be, may aggregate the securities to be sold or
purchased for a Fund with those to be sold or purchased for other investment
companies or accounts in executing transactions.
A Fund will not purchase securities during the existence of any
underwriting or selling group relating to such securities of which the Advisor,
Sub-Advisor or any affiliated person (as defined in the 1940 Act) thereof is a
member except pursuant to procedures adopted by the Trust's or Framlington Board
of Trustees and the Company's Board of Directors in accordance with Rule 10f-3
under the 1940 Act.
The Trust and the Company are required to identify the securities of
their regular brokers or dealers (as defined in Rule 10b-1 under the 1940) Act
or their parents held by them as of the close of their most recent fiscal year.
As of June 30, 1997: _____________________________.
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 their services and the Funds bear the expenses incurred in
their operations. These expenses include, but are not limited to, fees paid to
the Advisor, Sub-Advisor, Administrator, Custodian, Sub-Custodian and Transfer
Agent; fees and expenses of officers and Board of Trustees/Directors; taxes;
interest; legal and auditing fees; certain fees and expenses in registering and
qualifying the Fund 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
directors' 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, Framlington or the Company
that are not readily identifiable as belonging to a particular investment
portfolio of the Trust, Framlington or the Company are allocated among all
investment portfolios of the Trust, Framlington or the Company by or under the
direction of the Boards of Trustees and Directors in a manner that the Boards of
Trustees and Directors determine to be fair and equitable. The Advisor,
Sub-Advisor, Administrator, Custodian, Sub-Custodian and Transfer Agent may
voluntarily waive all or a portion of their respective fees from time to time.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Purchases and redemptions are discussed in the Funds' Prospectuses and
such information is incorporated herein by reference.
Purchases. As described in the Prospectuses, shares of the Funds may be
purchased in a number of different ways. Such alternative sales arrangements
permit an investor to choose the method of purchasing shares that is more
beneficial depending on the amount of the purchase, the length of time the
investor expects to hold shares and other relevant circumstances. An investor
may place orders directly through the Transfer Agent or the Distributor or
through arrangements with his/her authorized broker.
Retirement Plans. Shares of any of the Funds may be purchased in
connection with various types of tax deferred retirement plans, including
individual retirement accounts ("IRAs"), qualified plans, deferred compensation
for public schools and charitable organizations (403(b) plans) and simplified
employee pension IRAs. An individual or organization considering the
establishment of a retirement plan should consult with an attorney and/or an
accountant with respect to the terms and tax aspects of the plan. A $10.00
annual custodial fee is also charged on IRAs. This custodial fee is due by
December 15 of each year and may be paid by check or shares liquidated from a
shareholder's account.
Redemptions. As described in the Fund's Prospectuses, shares of the
Funds may be redeemed in a number of different ways:
o By Mail
o By Telephone
o Automatic Withdrawal Plan
The redemption price for Fund shares is the net asset value next determined
after receipt of the redemption request in proper order. The redemption proceeds
will be reduced by the amount of any applicable contingent deferred sales charge
("CDSC").
Contingent Deferred Sales Charge - Class B Shares. Class B Shares
redeemed within six years of purchase are subject to a CDSC. The CDSC is based
on the original net asset value at the time of investment or the net asset value
at the time of redemption, whichever is lower.
The CDSC Schedule for Class B Shares of the Trust Funds purchased
before June 27, 1995 is set forth below. The Prospectuses describe the CDSC
Schedule for Class B Shares of Funds of the Trust, the Company and Framlington
purchased after June 27, 1995.
Class B Shares of the Trust Funds
Purchased on or before June 27, 1995
Redemption During CDSC
----------------- ----
1st Year Since Purchase ................................ 4.00%
2nd Year Since Purchase ............................... 4.00%
3rd Year Since Purchase 3.00%
4th Year Since Purchase 3.00%
5th Year Since Purchase 2.00%
6th Year Since Purchase 1.00%
CDSC Waivers - Class B Shares of the Trust Funds Purchased on or before
June 27, 1995. The CDSC will be waived with respect to Class B Shares of the
Trust Funds purchased on or before June 27, 1995 in the following circumstances:
(1) total or partial redemptions made within one year following the
death or disability 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 59 1/2; and
(3) redemptions pursuant to a Fund's right to liquidate a shareholder's
account involuntarily.
CDSC Waivers - Class B Shares of the Company Funds Purchased on or
before June 27, 1995. The CDSC will be waived on the following types of
redemptions with respect to Class B Shares of the Company Funds purchased on or
before June 27, 1995:
(1) redemptions by investors who have invested a lump sum amount of $1
million or more in the Fund;
(2) redemptions by the officers, directors, and employees
of the Advisor or the Distributor and such persons'
immediate families;
(3) dealers or brokers who have a sales agreement with the Distributor, for
their own accounts, or for retirement plans for their employees or sold
to registered representatives or 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) involuntary redemptions effected pursuant to the Fund's right to
liquidate shareholder accounts having an aggregate net asset value of
less than $500; and
(5) redemptions the proceeds of which are reinvested in the Fund within
90 days of the redemption.
Contingent Deferred Sales Charge - Class A and Class C Shares. The
Prospectuses describe the CDSC for Class A or C Shares of the Funds of the
Trust, the Company and Framlington purchased after June 27, 1995.
Class A Shares of the Trust Funds purchased on or before June 27, 1995
without a sales charge by reason of a purchase of $500,000 or more are subject
to a CDSC of 1.00% of the lower of the original purchase price or the net asset
value at the time of redemption if such shares are redeemed within two years of
the date of purchase. Class A Shares of the Trust Funds purchased on or before
June 27, 1995 that are redeemed will not be subject to the CDSC to the extent
that the value of such shares represents: (1) reinvestment of dividends or other
distributions; (2) Class A Shares redeemed more than two years after their
purchase; (3) a minimum required distribution made in connection with IRA or
other retirement plans following attainment of age 59 1/2; or (4) total or
partial redemptions made within one year following the death or disability of a
shareholder or registered joint owner.
No CDSC is imposed to the extent that the current market 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 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 Fund, as the case may be) and the Company Funds and the non-money market
funds of the Trust will be calculated from the date that the Class A or Class C
Shares of the Fund were initially purchased.
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.
Other Information. 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.
The Funds reserve the right to suspend or postpone redemptions during
any period when: (i) trading on the New York Stock Exchange is restricted, as
determined by the SEC, or the New York Stock Exchange is closed for other than
customary weekend and holiday closings; (ii) the SEC has by order permitted such
suspension or postponement for the protection of shareholders; or (iii) an
emergency, as determined by the SEC, exists, making disposal of portfolio
securities or valuation of net assets of a Fund not reasonably practicable.
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. 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 Funds' Prospectuses, a shareholder exchanging at least $1,000 of shares (for
which certificates have not 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 Funds, 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 Funds 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
Money Market Funds. The value of the portfolio securities of the Money
Market Funds is calculated using the amortized cost method of valuation. Under
this method the market value of an instrument is approximated by amortizing the
difference between the acquisition cost and value at maturity of the instrument
on a straight-line basis over the remaining life of the instrument. The effect
of changes in the market value of a security as a result of fluctuating interest
rates is not taken into account. The market value of debt securities usually
reflects yields generally available on securities of similar quality. When such
yields decline, market values can be expected to increase, and when yields
increase, market values can be expected to decline.
As indicated, the amortized cost method of valuation may result in the
value of a security being higher or lower than its market price, the price a
Fund would receive if the security were sold prior to maturity. The Boards of
Trustees and Directors have established procedures reasonably designed, taking
into account current market conditions and the Funds' investment objectives, for
the purpose of maintaining a stable net asset value of $1.00 per share for each
Fund for purposes of sales and redemptions. These procedures include a review by
the Board of Trustees and Directors, at such intervals as they deem appropriate,
of the extent of any deviation of net asset value per share, based on available
market quotations, from the $1.00 amortized cost per share. Should that
deviation exceed 1/2 of 1% for a Fund, the Boards of Trustees and Directors will
promptly consider whether any and, if any, what action should be initiated. If
the Board of Trustees or Directors believes that the extent of any deviation
from a Fund's $1.00 amortized cost price per share may result in material
dilution of other unfair results to new or existing investors, it will take such
steps as it considers appropriate to eliminate or reduce any such dilution or
unfair results to the extent reasonably practicable. Such action may include
redeeming shares in kind, selling portfolio securities prior to maturity,
reducing or withholding dividends, shortening the average portfolio maturity,
reducing the number of outstanding shares without monetary consideration, and
utilizing a net asset value per share as determined by using available market
quotations.
Pursuant to Rule 2a-7, each of the Money Market Funds will maintain a
dollar-weighted average portfolio maturity appropriate to its objective of
maintaining a stable net asset value per share, provided that such Funds will
not purchase any security with a remaining maturity (within the meaning of Rule
2a-7 under the 1940 Act) greater than 397 days (securities subject to repurchase
agreements, variable and floating rate securities, and certain other securities
may bear longer maturities), nor maintain a dollar-weighted average portfolio
maturity which exceeds 90 days. In addition, the Funds may acquire only U.S.
dollar-denominated obligations that present minimal credit risks and that are
"First Tier Securities" at the time of investment. First Tier Securities are
those that are rated in the highest rating category by at least two nationally
recognized security rating organizations NRSROs or by one if it is the only
NRSRO rating such obligation or, if unrated, determined to be of comparable
quality. A security is deemed to be rated if the issuer has any security
outstanding of comparable priority and security which has received a short-term
rating by an NRSRO. The Advisor will determine that an obligation presents
minimal credit risks or that unrated investments are of comparable quality, in
accordance with guidelines established by the Board of Directors or Trustees.
There can be no assurance that a constant net asset value will be maintained for
each Money Market Fund.
All Funds. In determining the approximate market value of portfolio
investments, the Trust, Framlington or the Company may employ outside
organizations, which may use matrix or formula methods that take into
consideration market indices, matrices, yield curves and other specific
adjustments. This may result in the securities being valued at a price different
from the price that would have been determined had the matrix or formula methods
not been used. All cash, receivables and current payables are carried on the
Trust's, Framlington's or the Company'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 Members.
In-Kind Purchases
With the exception of the Real Estate Fund, payment for shares may, in
the discretion of the Advisor, be made in the form of securities that are
permissible investments for the Funds as described in the Prospectuses. Shares
of the Real Estate Fund will not be issued for consideration other than cash.
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 (a) meet the investment objectives and
policies of the Funds; (b) are acquired for investment and not for resale; (c)
are liquid securities that are not restricted as to transfer either by law or
liquidity of markets; (d) have a value that is readily ascertainable by a
listing on a nationally recognized securities exchange; and (e) are valued on
the day of purchase in accordance with the pricing methods used by the Fund and
that the Fund receive satisfactory assurances that (i) it will have good and
marketable title to the securities received by it; (ii) that the securities are
in proper form for transfer to the Fund; and (iii) adequate information will be
provided concerning the basis and other tax matters relating to the securities.
PERFORMANCE INFORMATION
Yield of the Money Market Funds
The Money Market Funds' current and effective yields are computed using
standardized methods required by the SEC. The annualized yield is computed by:
(a) determining the net change in the value of a hypothetical account having a
balance of one share at the beginning of a seven-calendar day period; (b)
dividing the net change by the value of the account at the beginning of the
period to obtain the base period return; and (c) annualizing the results (i.e.,
multiplying the base period return by 365/7). The net change in the value of the
account reflects the value of additional shares purchased with dividends
declared and all dividends declared on both the original share and such
additional shares, but does not include realized gains and losses or unrealized
appreciation and depreciation. Compound effective yields are computed by adding
1 to the base period return (calculated as described above), raising the sum to
a power equal to 365/7 and subtracting 1. Based on the foregoing computations,
the annualized yields for all share classes of the Cash Investment, Money
Market, Tax-Free Money Market and U.S. Treasury Money Market Funds for the
seven-day period ended June 30, 1997 were: 5.19% (Class Y) and 5.04% (Class K)
and 4.94% (Class A) for the Cash Investment Fund; 4.80% (Class A), 4.04% (Class
B), and 5.05% (Class Y) for the Money Market Fund; 3.60% (Class Y), 3.45% (Class
K) and 3.35% (Class A) for the Tax-Free Money Market Fund; and 4.96% (Class Y),
4.81% (Class K) and 4.82% (Class A) for the U.S. Treasury Money Market Fund.
The effective yields for all share classes of the Money Market, Cash
Investment, Tax-Free Money Market and U.S. Treasury Money Market Funds for
the seven-day period ended June 30, 1997 were: 4.91% (Class A), 4.12%
(Class B) and 5.18% (Class Y) for the Money Market Fund; 5.32% (Class Y),
5.17% (Class K) and 5.06% (Class A) for the Cash Investment Fund; 3.66%
(Class Y), 3.51% (Class K) and 3.41% (Class A) for the Tax-Free Money
Market Fund; and 5.08% (Class Y), 4.93% (Class K) and 4.71% (Class A) for
the U.S. Treasury Money Market Fund.
In addition, a standardized "tax-equivalent yield" may be quoted for
the Tax-Free Money Market Fund, which is computed by: (a) dividing the portion
of the Fund's yield (as calculated above) that is exempt from Federal income tax
by one minus a stated Federal income tax rate; and (b) adding the figure
resulting from (a) above to that portion, if any, of the yield that is not
exempt from Federal income tax. For the seven-day period ended June 30, 1997,
the tax-equivalent yield for Class Y, Class K and Class A Shares of the Tax-Free
Money Market Fund was 5.22% (Class Y), 5.00% (Class K) and 4.94% (Class A)
calculated for all share classes based on a stated tax rate of 31%. The fees
which may be imposed by institutions on their Customers are not reflected in the
calculations of yields for the Funds.
Yield may fluctuate daily and does not provide a basis for determining
future yields. Because the yields of each Fund will fluctuate, they cannot be
compared with yields on savings accounts or other investment alternatives that
provide an agreed to or guaranteed fixed yield for a stated period of time.
However, yield information may be useful to an investor considering temporary
investments in money market instruments. In comparing the yield of one money
market fund to another, consideration should be given to each Fund's investment
policies including the types of investments made, lengths of maturities of the
portfolio securities, and whether there are any special account charges which
may reduce the effective yield.
Yield and Performance of the Non-Money Market Funds
The Bond Funds', International Bond Fund's and Short Term Treasury
Fund's 30-day (or one month) standard yield described in the applicable
Prospectus is calculated for each Fund in accordance with the method prescribed
by the SEC for mutual funds:
......... a - b
......... YIELD = 2[(------+1)6 - 1]
......... cd
Where: a = dividends and interest earned by a Fund during the period;
b = expenses accrued for the period (net of reimbursements and
waivers);
c = average daily number of shares outstanding during the period
entitled to receive dividends;
d = maximum offering price per share on the last day of the period.
For the purpose of determining interest earned on debt obligations
purchased by a Fund at a discount or premium (variable "a" in the formula), each
Fund computes the yield to maturity of such instrument based on the market value
of the obligation (including actual accrued interest) at the close of business
on the last business day of each month, or, with respect to obligations
purchased during the month, the purchase price (plus actual accrued interest).
Such yield is then divided by 360 and the quotient is multiplied by the market
value of the obligation (including actual accrued interest) in order to
determine the interest income on the obligation for each day of the subsequent
month that the obligation is in the portfolio. It is assumed in the above
calculation that each month contains 30 days. The maturity of a debt obligation
with a call provision is deemed to be the next call date on which the obligation
reasonably may be expected to be called or, if none, the maturity date. For the
purpose of computing yield on equity securities held by a Fund, dividend income
is recognized by accruing 1/360 of the stated dividend rate of the security for
each day that the security is held by the Fund.
Interest earned on tax-exempt obligations that are issued without
original issue discount and have a current market discount is calculated by
using the coupon rate of interest instead of the yield to maturity. In the case
of tax-exempt obligations that are issued with original issue discount but which
have discounts based on current market value that exceed the then-remaining
portion of the original issue discount (market discount), the yield to maturity
is the imputed rate based on the original issue discount calculation. On the
other hand, in the case of tax-exempt obligations that are issued with original
issue discount but which have the discounts based on current market value that
are less than the then-remaining portion of the original issue discount (market
premium), the yield to maturity is based on the market value.
With respect to mortgage or other receivables-backed debt obligations
purchased at a discount or premium, the formula generally calls for amortization
of the discount or premium. The amortization schedule will be adjusted monthly
to reflect changes in the market value of such debt obligations. Expenses
accrued for the period (variable "b" in the formula) include all recurring fees
charged by a Fund to all shareholder accounts in proportion to the length of the
base period and the Fund's mean (or median) account size. Undeclared earned
income will be subtracted from the offering price per share (variable "d" in the
formula). A Fund's maximum offering price per share for purposes of the formula
includes the maximum sales charge imposed -- currently 5.50% of the per share
offering price for Class A Shares of the Equity Funds (with the exception of the
Index 500 Fund) and the Balanced Fund and 4.00% of the per share offering price
for Class A Shares of the Bond Fund, International Bond Fund, Short Term
Treasury Fund and Tax-Free Bond Funds. Effective September 20, 1995, the maximum
sales charge imposed by Class A Shares of the Index 500 Fund was reduced from
5.50% to 2.50% of the per share offering price of such shares. The
tax-equivalent yield for each Fund below is based on a stated federal tax rate
of 31% and, with respect to Michigan Bond Fund, a Michigan state tax rate of 4%.
Class A Shares
The standard yields and/or tax-equivalent yields of the Class A Shares
of the following Funds for the 30-day period ended June 30, 1997 were:
<TABLE>
<CAPTION>
<S> <C> <C>
30-Day Tax-Equivalent
Yield 30-Day Yield
Bond Fund 5.45% N/A
Intermediate Bond Fund 5.47% N/A
U.S. Government Income Fund 5.77% N/A
International Bond Fund 3.46% N/A
Short Term Treasury Fund N/A N/A
Michigan Bond Fund* 4.24% 4.42%
Tax-Free Bond Fund 4.27% 6.19%
Tax-Free Intermediate Bond Fund 3.63% 5.26%
Class B Shares
The standard yields and/or tax-equivalent yields of the Class B Shares
of the following Funds for the 30-day period ended June 30, 1997 were:
30-Day Tax-Equivalent
Yield 30-Day Yield
Bond Fund 4.93% N/A
Intermediate Bond Fund 4.96% N/A
U.S. Government Income Fund 5.25% N/A
International Bond Fund N/A N/A
Short Term Treasury Fund 4.46% N/A
Michigan Bond Fund** 3.67% 3.82%
Tax-Free Bond Fund 3.68% 5.33%
Tax-Free Intermediate Bond Fund 3.03% 4.39%
Class C Shares
The standard yields and/or tax-equivalent yields of the Class C Shares
of the following Funds for the 30-day period ended June 30, 1997 were:
30-Day Tax-Equivalent
Yield 30-Day Yield
Bond Fund 4.92% N/A
Intermediate Bond Fund 4.93% N/A
U.S. Government Income Fund 5.24% N/A
International Bond Fund N/A N/A
Short Term Treasury Fund N/A N/A
Michigan Bond Fund 3.67% 3.82%
Tax-Free Bond Fund N/A N/A
Tax-Free Intermediate Bond Fund N/A N/A
Class K Shares
The standard yields and/or tax-equivalent yields of the Class K Shares
of the following Funds for the 30-day period ended June 30, 1997 were:
30-Day Tax-Equivalent
Yield 30-Day Yield
Bond Fund 5.69% N/A
Intermediate Bond Fund 5.71% N/A
U.S. Government Income Fund 6.01% N/A
International Bond Fund 3.61% N/A
Short Term Treasury Fund 5.22% N/A
Michigan Bond Fund** 4.42% 4.60%
Tax-Free Bond Fund 4.44% 6.43%
Tax-Free Intermediate Bond Fund 3.78% 5.48%
Class Y Shares
The standard yields and/or tax-equivalent yields of the Class Y Shares
of the following Funds for the 30-day period ended June 30, 1997 were:
30-Day Tax-Equivalent
Yield 30-Day Yield
Bond Fund 5.94% N/A
Intermediate Bond Fund 5.96% N/A
U.S. Government Income Fund 6.26% N/A
Short Term Treasury Fund 5.47% N/A
International Bond Fund 3.86% N/A
Michigan Bond Fund*** 4.67% 4.86%
Tax-Free Bond Fund 4.70% 6.81%
Tax-Free Intermediate Bond Fund 4.02% 5.83%
</TABLE>
Each Fund that advertises its "average annual total return" computes
such return by determining the average annual compounded rate of return during
specified periods that equates the initial amount invested to the ending
redeemable value of such investment according to the following formula:
T = (ERV)1/n -1
P
Where: T = average annual total return
ERV = ending redeemable value of a
hypothetical $1,000 payment made at
the beginning of the 1, 5 or 10 year
(or other) periods at the end of the
applicable period (or a fractional
portion thereof)
P = hypothetical initial payment of $1,000
n = period covered by the computation,
expressed in years.
Each Fund that advertises its "aggregate total return" computes such
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. The Funds' 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 Funds' load adjusted average annual total return and load
adjusted aggregate total return quotations for Class B Shares will reflect any
applicable CDSC; provided that the Funds 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.
Based on the foregoing calculation, set forth below are the average
annual total return figures for the Class A, B, C, K and Y Shares of each of the
following Funds for the 12 month and 5 year periods ended June 30, 1997 and
since commencement of operations.
<PAGE>
<TABLE>
<CAPTION>
Fund-Inception Date
<S> <C> <C> <C> <C> <C> <C>
12 Month 5 Year Inception 12 Month 5 Year Inception
Accelerating Period Ended Period Ended through Period Ended Period Ended through
Growth Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- ----------- -------- -------- -------- --------- --------- ---------
Class A - 11/23/92 4.83% N/A 12.69% (.93)% N/A 11.32%
Class B - 4/25/94 4.15% N/A 13.08% (.55)% N/A 12.36%
Class C - 9/26/95 3.89% N/A 8.00% 2.95% N/A 8.00%
Class K - 11/23/92 4.83% N/A 12.69% 4.83% N/A 12.69%
Class Y - 12/1/91 5.07% 14.91% 13.88% 5.09% 14.91% 13.88%
12 Month 5 Year Inception 12 Month 5 Year Inception
Period Ended Period Ended through Period Ended Period Ended through
Balanced Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- ------------- -------- -------- -------- --------- --------- ---------
Class A - 4/30/93 13.63% N/A 10.46% 7.38% N/A 8.97%
Class B - 6/21/94 12.73% N/A 14.25% 7.73% N/A 13.49%
Class C - 1/24/96 12.84% N/A 13.43% 11.84% N/A 13.43%
Class K-4/16/93 13.64% N/A 10.11% 13.64% N/A 10.11%
Class Y - 4/13/93 13.91% N/A 10.20% 13.91% N/A 10.20%
12 Month 5 Year Inception 12 Month 5 Year Inception
Growth & Period Ended Period Ended through Period Ended Period Ended through
Income Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- ----------- -------- -------- -------- --------- --------- ---------
Class A - 8/8/94 28.10% N/A 21.65% 21.05% N/A 19.30%
Class B - 8/9/94 27.16% N/A 20.81% 22.16% N/A 20.08%
Class C - 12/5/95 27.17% N/A 20.64% 26.17% N/A 20.64%
Class K - 7/5/94 28.12% N/A 21.36% 28.12% N/A 21.36%
Class Y - 7/5/94 28.43% N/A 21.63% 28.43% N/A 21.63%
12 Month 5 Year Inception 12 Month 5 Year Inception
Index 500 Period Ended Period Ended through Period Ended Period Ended through
Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- ---- -------- -------- -------- --------- --------- ---------
Class A - 12/9/92 20.24% N/A 19.26% 30.62% N/A 18.60%
Class B - 10/31/95 20.06% N/A 30.39% 30.57% N/A 29.13%
Class K - 12/7/92 20.16% N/A 19.20% 33.79% N/A 19.20%
Class Y - 12/1/91 20.32% 19.40% 19.27% 34.19% 19.40% 19.27%
12 Month 5 Year Inception 12 Month 5 Year Inception
International Period Ended Period Ended through Period Ended Period Ended through
Equity Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- ----------- -------- -------- -------- --------- --------- ---------
Class A - 11/30/92 17.98% N/A 12.63% 11.49% N/A 11.25%
Class B - 3/9/94 17.18% N/A 8.64% 12.18% N/A 7.88%
Class C - 9/29/95 17.18% N/A 13.81% 16.18% N/A 13.81%
Class K - 11/23/92 18.09% N/A 12.92% 18.09% N/A 12.92%
Class Y - 12/1/91 18.35% 11.42% 11.64% 18.35% 11.42% 11.64%
12 Month 5 Year Inception 12 Month 5 Year Inception
International Growth Period Ended Period Ended through Period Ended Period Ended through
Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97 6/30/97** 6/30/97**
Class A- 2/20/97 N/A N/A 12.38%++ N/A N/A 6.20%++
Class B - 3/19/97 N/A N/A 14.92%++ N/A N/A 9.92%++
Class C - 2/13/97 N/A N/A 12.96%++ N/A N/A 11.96%++
Class K - 1/10/97 N/A N/A 14.99%++ N/A N/A 14.99%++
Class Y - 12/31/96 N/A N/A 13.50%++ N/A N/A 13.50%++
12 Month 5 Year Inception 12 Month 5 Year Inception
Emerging Period Ended Period Ended through Period Ended Period Ended through
Markets Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- ------------ -------- -------- -------- --------- --------- ---------
Class A - 1/14/97 N/A N/A 27.16%++ N/A N/A 20.16%++
Class B - 2/25/97 N/A N/A 16.21%++ N/A N/A 11.21%++
Class C - 3/3/97 N/A N/A 18.03%++ N/A N/A 17.03%++
Class K - 1/10/97 N/A N/A 28.69%++ N/A N/A 28.69%++
Class Y - 12/31/96 N/A N/A 29.51%++ N/A N/A 29.51%++
12 Month 5 Year Inception 12 Month 5 Year Inception
Period Ended Period Ended through Period Ended Period Ended through
Healthcare Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- --------------- -------- -------- -------- --------- --------- ---------
Class A - 2/14/97 N/A N/A (3.63)%++ N/A N/A (8.93)%++
Class B - 1/31/97 N/A N/A (1.54)%++ N/A N/A (6.47)%++
Class C - 1/13/97 N/A N/A 4.42%++ N/A N/A 3.42%++
Class K - 4/1/97 N/A N/A 15.24%++ N/A N/A 15.24%++
Class Y - 12/31/96 N/A N/A 8.90%++ N/A N/A 8.90%++
12 Month 5 Year Inception 12 Month 5 Year Inception
Period Ended Period Ended through Period Ended Period Ended through
Micro-Cap Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- -------------- -------- -------- -------- --------- --------- ---------
Class A - 12/26/96 N/A N/A 28.10%++ N/A N/A 21.05%++
Class B - 2/24/97 N/A N/A 16.27%++ N/A N/A 11.27%++
Class C - 3/31/97 N/A N/A 26.26%++ N/A N/A 25.26%++
Class K - 12//31/96 N/A N/A 26.68%++ N/A N/A 26.68%++
Class Y - 12/26/96 N/A N/A 28.30%++ N/A N/A 28.30%++
12 Month 5 Year Inception 12 Month 5 Year Inception
Period Ended Period Ended through Period Ended Period Ended through
Small-Cap Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- -------------- -------- -------- -------- --------- --------- ---------
Class A - 1/10/97 N/A N/A 18.20%++ N/A N/A 11.70%++
Class B - 2/11/97 N/A N/A 12.03%++ N/A N/.A 7.03%++
Class C - 1/13/97 N/A N/A 17.92%++ N/A N/A 16.92%++
Class K - 12/31/96 N/A N/A 19.85%++ N/.A N/A 19.85%++
Class Y - 12/26/96 N/A N/A 20.86%++ N/A N/A 20.86%++
12 Month 5 Year Inception 12 Month 5 Year Inception
Period Ended Period Ended through Period Ended Period Ended through
Mid-Cap Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- ------------ -------- -------- -------- --------- --------- ---------
Class A - 12/22/95 .90% N/A 6.81% (4.65)% N/A 2.92%
Class B - 1/26/96 .07% N/A 6.32% (4.42)% N/A 3.64%
Class C - 11/9/95 .17% N/A 6.48% (.73)% N/A 6.48%
Class K -10/2/95 .90% N/A 6.04% .90% N/A 6.04%
Class Y - 8/14/95 1.07% N/A 8.73% 1.07% N/A 8.73%
12 Month 5 Year Inception 12 Month 5 Year Inception
International Period Ended Period Ended through Period Ended Period Ended through
-
Bond Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- --------- -------- -------- -------- --------- --------- ---------
Class A - 10/17/96 N/A N/A (.84)%++ N/A N/A (4.81)%
Class B - 6/9/97 N/A N/A (.20)%++ N/A N/A (5.19)%++
Class K - 3/24/97 N/A N/A 3.04%++ N/A N/A 3.04%++
Class Y - 10/2/96 N/A N/A (.90)%++ N/A N/A (.90)%++
12 Month 5 Year Inception 12 Month 5 Year Inception
Period Ended Period Ended through Period Ended Period Ended through
Multi-Season Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
Class A - 8/4/93 27.57% N/A 18.37% 20.55% N/A 16.67%
Class B - 4/29/93 26.61% N/A 16.75% 21.61% N/A 16.46%
Class C - 9/20/93 26.66% N/A 18.04% 25.66% N/A 18.09%
Class K - 6/23/95 27.55% N/A 26.32% 27.55% N/A 26.32%
Class Y - 8/16/93 27.96% N/A 18.78% 27.96% N/A 18.78%
12 Month 5 Year Inception 12 Month 5 Year Inception
Period Ended Period Ended through Period Ended Period Ended through
Real Estate Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- ---------------- -------- -------- -------- --------- --------- ---------
Class A - 9/30/94 33.51% N/A 19.08% 26.17% N/A 16.66%
Class B - 10/3/94 32.52% N/A 18.25% 27.52% N/A 17.43%
Class C - 1/5/96 32.57% N/A 25.78% 31.57% N/A 28.78%
Class K - 10/3/96 N/A N/A 23.11%++ N/A N/A 23.11%++
Class Y - 10/3/94 33.74% N/A 19.92% 33.79% N/A 19.42%
12 Month 5 Year Inception 12 Month 5 Year Inception
Small Company Period Ended Period Ended through Period Ended Period Ended through
Growth Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- ----------- -------- -------- -------- --------- --------- ---------
Class A - 11/23/92 18.88% N/A 19.04% 12.34% N/A 17.59%
Class B - 4/28/94 18.06% N/A 23.39% 13.06% N/A 22.79%
Class C - 9/26/95 18.26% N/A 28.76% 17.26% N/A 28.76%
Class K - 11/23/92 18.93% N/A 19.05% 18.93% N/A 19.05%
Class Y - 12/1/91 19.26% 21.94% 20.16% 19.26% 21.94% 20.16%
12 Month 5 Year Inception 12 Month 5 Year Inception
Period Ended Period Ended through Period Ended Period Ended through
Value Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- ---------- -------- -------- -------- --------- --------- ---------
Class A - 9/14/95 34.38% N/A 25.55% 26.99% N/A 21.66%
Class B - 9/19/95 33.24% N/A 24.63% 28.24% N/A 22.73%
Class C - 2/9/96 33.36% N/A 24.67% 32.36% N/A 24.67%
Class K - 11/30/95 34.37% N/A 26.02% 34.37% N/A 26.02%
Class Y - 8/18/95 34.66% N/A 27.26% 34.66% N/A 27.26%
12 Month 5 Year Inception 12 Month 5 Year Inception
Period Ended Period Ended through Period Ended Period Ended through
Bond Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- --------- -------- -------- -------- --------- --------- ---------
Class A - 12/9/92 6.84% N/A 6.32% 2.56% N/A 5.37%
Class B - 3/13/96 5.97% N/A 4.74% .97% N/A 1.73%
Class C - 3/25/96 6.19% N/A 4.45% 5.19% N/A 4.45%
Class K - 11/23/92 6.72% N/A 6.29% 6.72% N/A 6.24%
Class Y - 12/1/91 6.99% 5.40% 6.05% 6.99% 5.40% 6.05%
12 Month 5 Year Inception 12 Month 5 Year Inception
Intermediate Period Ended Period Ended through Period Ended Period Ended through
Bond Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- --------- -------- -------- -------- --------- --------- ---------
Class A - 11/24/92 6.34% N/A 5.19% 2.08% N/A 4.26%
Class B - 10/25/94 5.60% N/A 6.37% .60% N/A 5.35%
Class C - 4/19/96 5.77% N/A 5.14% 4.77% N/A 5.14%
Class K - 11/20/92 6.34% N/A 5.18% 6.34% N/A 5.18%
Class Y - 12/1/91 6.60% 5.54% 5.86% 6.60% N/A 5.86%
12 Month 5 Year Inception 12 Month 5 Year Inception
U.S. Government Period Ended Period Ended through Period Ended Period Ended through
Income Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
Class A - 7/28/94 7.50% N/A 7.51% 3.20% N/A 6.02%
Class B - 9/6/95 6.77% N/A 5.04% 1.77% N/A 2.96%
Class C - 8/12/96 N/A N/A 4.87%++ N/A N/A 3.88%++
Class K - 7/5/94 7.49% N/A 7.43% 7.49% N/A 7.43%
Class Y - 7/5/94 7.75% N/A 7.70% 7.75% N/A 7.70%
12 Month 5 Year Inception 12 Month 5 Year Inception
Short Term Treasury Period Ended Period Ended through Period Ended Period Ended through
Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
Class B - 4/4/97 N/A N/A 1.44%++ N/A N/A (3.56)%++
Class K - 4/2/97 N/A N/A 1.78%++ N/A N/A 1.78%++
Class Y - 1/29/97 N/A N/A 2.30%++ N/A N/A 2.30%++
12 Month 5 Year Inception 12 Month 5 Year Inception
Michigan Period Ended Period Ended through Period Ended Period Ended through
Bond Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- --------- -------- -------- -------- --------- --------- ---------
Class A - 2/15/94 7.88% N/A 4.03% 3.57% N/A 2.78%
Class B - 7/5/94 7.09% N/A 6.04% 2.09% N/A 5.13%
Class C - 10/4/96 N/A N/A 3.57%++ N/A N/A 2.57%++
Class K - 1/3/94 8.00% N/A 3.75% 8.00% N/A 3.75%
Class Y - 1/3/94 8.26% N/A 4.02% 8.26% N/A 4.02%
12 Month 5 Year Inception 12 Month 5 Year Inception
Period Ended Period Ended through Period Ended Period Ended through
Tax-Free Bond Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- ------------------ -------- -------- -------- --------- --------- ---------
Class A - 10/9/95 7.13% N/A 5.20% 2.85% N/A 2.74%
Class B - 12/6/94 6.43% N/A 7.47% 1.43% N/A 6.42%
Class K - 7/5/94 7.13% N/A 6.73% 7.13% N/A 6.73%
Class Y - 7/21/94 7.40% N/A 6.85% 7.40% N/A 6.85%
Tax-Free 12 Month 5 Year Inception 12 Month 5 Year Inception
Intermediate Period Ended Period Ended through Period Ended Period Ended through
Bond Fund 6/30/97* 6/30/97* 6/30/97* 6/30/97** 6/30/97** 6/30/97**
- --------- -------- -------- -------- --------- --------- ---------
Class A - 11/30/92 5.04% N/A 4.52% .84% N/A 3.60%
Class B - 5/16/96 4.24% N/A 4.13% (.76)% N/A .58%
Class K - 2/9/87+++ 5.04% 4.83% 5.58% 5.04% N/A 5.58%
Class Y - 12/17/92 5.40% N/A 4.74% 5.40% N/A 4.74%
<FN>
* Figures do not include the effect of the sales charge.
** Figures include the effect of the applicable sales charge.
++ Aggregate total return.
+++ For the 10 year period ended June 30, 1997, the average annual total return for Class K Shares was 5.27%.
</FN>
</TABLE>
As of June 30, 1997, the following Classes had not commenced
operations: Class A Shares of Short Term Treasury Fund, Class B Shares of
International Bond Fund, Class C Shares of each of Tax-Free Bond, Intermediate
Bond Fund, Short Term Treasury Fund and Tax-Free Intermediate Bond Fund.
The Equity Selection Fund was not available for purchase as of the date
of this Statement of Additional Information.
All Funds. 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, a
Fund's yields or total returns may be quoted and compared to those of other
mutual funds with similar investment objectives and to stock or other relevant
indices. For example, a Fund's yield may be compared to the IBC/Donoghue's Money
Fund Average, which is an average compiled by Donoghue's MONEY FUND REPORT of
Holliston, MA 01746, a widely recognized independent publication that monitors
the performance of money market funds, or to the data prepared by Lipper
Analytical Services, Inc., a widely recognized independent service that monitors
the performance of mutual funds. In addition, as stated in the Funds'
Prospectuses, the tax-equivalent yield (and hypothetical examples illustrating
the effect of tax-equivalent yields) of a Fund may be quoted in advertisements
or reports to shareholders. Hypothetical examples showing the difference between
a taxable and a tax-free investment may also be provided to shareholders.
The foregoing performance data reflects the imposition of the maximum
sales load on Class A Shares but does not reflect payments under the Trust's
Class K Plan or Class A Plan, which were not imposed before December 31, 1993.
TAXES
The following summarizes certain additional tax considerations
generally affecting the Funds and their shareholders that are not described in
the Funds' Prospectuses. No attempt is made to present a detailed explanation of
the tax treatment of the Funds or their shareholders, and the discussion here
and in the applicable 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 intends to elect and qualify to be taxed separately
as a regulated investment company under the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, each 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
Test"). Interest (including original issue discount and "accrued market
discount") received by a 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 a
Fund has not invested more than 5% of the value of its total assets in
securities of such issuer and as to which a Fund does not hold more than 10% of
the outstanding voting securities of such issuer) and no more than 25% of the
value of each 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 such Fund controls and
which are engaged in the same or similar trades or businesses.
Distributions of net investment income received by a Fund from
investments in debt securities (other than interest on tax-exempt municipal
obligations held by the Tax-Free Bond Funds and Tax-Free Money Market Fund) and
any net realized short-term capital gains distributed by a 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. Capital gains dividends are not eligible for the
dividends received deduction for corporations.
In the case of corporate shareholders, distributions of a Fund for any
taxable year generally qualify for the dividends received deduction to the
extent of the gross amount of "qualifying dividends" received by such 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.
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 any Fund does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to shareholders. In such
event, all distributions (whether or not derived from exempt-interest income)
would be taxable as ordinary income and would be eligible for the dividends
received deduction in the case of corporate shareholders to the extent of such
Fund's current and accumulated earnings and profits.
Shareholders will be advised annually as to the Federal income tax
consequences of distributions made by the Funds 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, the Framlington Trust and the Company will be required in
certain cases to withhold and remit to the United States Treasury 31% of taxable
distributions, including gross proceeds realized upon sale or other dispositions
paid to any shareholder (i) who has provided 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 that he is not
subject to backup withholding or that he is an "exempt recipient."
Disposition of Shares. Upon a redemption, sale or exchange of his or
her shares, a shareholder will realize a taxable gain or loss depending upon his
or her basis in the shares. Such gain or loss will be treated as capital gain or
loss if the shares are capital assets in the shareholder's hands and will be
long-term or short-term, generally, depending upon the shareholder's holding
period for the shares. Any loss realized on a redemption, sale or exchange will
be disallowed to the extent the shares disposed of are replaced (including
through reinvestment of dividends) within a period of 61 days beginning 30 days
before and ending 30 days after the shares are disposed of. In such a case, the
basis of the shares acquired will be adjusted to reflect the disallowed loss.
Any loss realized by a shareholder on the sale of Fund shares held by the
shareholder for six months or less will be treated as a long-term capital loss
to the extent of any distributions of net capital gains received or treated as
having been received by the shareholder with respect to such shares.
Furthermore, a loss realized by a shareholder on the redemption, sale or
exchange of shares of a Fund with respect to which exempt-interest dividends
have been paid will, to the extent of such exempt-interest dividends have been
paid will, to the extent of such exempt-interest dividends, be disallowed if
such shares have been held by the shareholder for less than six months.
In some cases, shareholders will not be permitted to take sales charges
into account for purposes of determining the amount of gain or loss realized on
the disposition of their stock. This prohibition generally applies where (1) the
shareholder incurs a sales charge in acquiring the stock of a Fund, (2) the
stock is disposed of before the 91st day after the date on which it was
acquired, and (3) the shareholder subsequently acquires the stock of the same or
another fund and the otherwise applicable sales charge is reduced under a
"reinvestment right" received upon the initial purchase of regulated investment
company shares. The term "reinvestment right" means any right to acquire stock
of one or more funds without the payment of a sales charge or with the payment
of a reduced sales charge. Sales charges affected by this rule are treated as if
they were incurred with respect to the stock acquired under the reinvestment
right. This provision may be applied to successive acquisitions of Fund shares.
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.
Tax-Free Bond Funds and Tax-Free Money Market Fund. The Michigan Bond
Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund, and Tax-Free Money
Market Fund are designed to provide investors with current tax-exempt interest
income. Shares of the Funds would not be suitable for tax-exempt institutions
and may not be suitable for retirement plans qualified under Section 401 of the
Code, H.R. 10 plans and individual retirement accounts since such plans and
accounts are generally tax-exempt and, therefore, not only would not gain any
additional benefit from the Funds' dividends being tax-exempt but also such
dividends would be taxable when distributed to the beneficiary. In addition, the
Funds may not be an appropriate investment for entities which are "substantial
users" of facilities financed by private activity bonds or "related persons"
thereof. "Substantial user" is defined under U.S. Treasury Regulations to
include a non-exempt person who regularly uses a part of such facilities in his
trade or business and (a) whose gross revenues derived with respect to the
facilities financed by the issuance of bonds are more than 5% of the total
revenues derived by all users of such facilities, (b) who occupies more than 5%
of the entire usable area of such facilities, or (c) for whom such facilities or
a part thereof were specifically constructed, reconstructed or acquired.
"Related persons" include certain related natural persons, affiliated
corporations, a partnership and its partners and an S corporation and its
shareholders.
In order for the Funds to pay exempt-interest dividends with respect to
any taxable year, at the close of each quarter of each Fund's taxable year at
least 50% of the value of the Fund's assets must consist of tax-exempt municipal
obligations. Exempt-interest dividends distributed to shareholders are not
included in the shareholder's gross income for regular Federal income tax
purposes. However, all shareholders required to file a Federal income tax return
are required to report the receipt of exempt-interest dividends and other
tax-exempt interest on their returns. Moreover, while such dividends and
interest are exempt from regular Federal income tax, they may be subject to
alternative minimum tax in two circumstances. First, exempt-interest dividends
derived from certain "private activity" bonds issued after August 7, 1986 will
generally constitute an item of tax preference for both corporate and
non-corporate taxpayers. Second, exempt-interest dividends derived from all
bonds, regardless of the date of issue, must be taken into account by corporate
taxpayers in determining the amount of certain adjustments for alternative
minimum tax purposes. Receipt of exempt-interest dividends may result in
collateral Federal income tax consequences to certain other taxpayers, including
financial institutions, property and casualty insurance companies, individual
recipients of Social Security or Railroad Retirement benefits, and foreign
corporations engaged in a trade or business in the United States. Prospective
investors should consult their own tax advisors as to such consequences.
The percentage of total dividends paid by the Fund with respect to any
taxable year which qualifies as Federal exempt-interest dividends will be the
same for all shareholders receiving dividends during such year. If a shareholder
receives an exempt-interest dividend with respect to any share and such share is
held for six months or less, any loss on the sale or exchange of such share will
be disallowed to the extent of the amount of such dividends.
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Funds generally is not deductible for Federal income tax purposes
if the Funds distribute exempt-interest dividends during the shareholder's
taxable year.
Investors may be subject to state and local taxes on income derived
from an investment in a Fund. In certain states, income derived from a Fund
which is attributable to interest on obligations of that state or any
municipality or political subdivision thereof may be exempt from taxation.
Shareholders are advised to consult their own tax advisers with respect
to the particular tax consequences to them of an investment in a Fund. Persons
who may be "substantial users" (or "related persons" of substantial users) of
facilities financed by industrial development bonds should consult their tax
advisers before investing in a Fund. The term "substantial user" generally
includes any "non-exempt person" who regularly uses in his or her trade or
business a part of a facility financed by industrial development bonds.
Generally, an individual will not be a "related person" of a substantial user
under the Code unless the person or his or her immediate family owns directly or
indirectly in the aggregate more than a 50% equity interest in the substantial
user.
Michigan Tax Considerations - Michigan Bond Fund and Tax-Free
Intermediate Bond Fund. As stated in the Michigan Bond Fund Prospectus and the
Tax-Free Intermediate Bond Fund Prospectus, dividends paid by the Fund that are
derived from interest attributable to tax-exempt Michigan Municipal Obligations
will be exempt from Michigan Income Tax, Michigan Intangibles Tax and Michigan
Single Business Tax. Conversely, to the extent that the Fund's dividends are
derived from interest on obligations other than Michigan Municipal Obligations,
such dividends will be subject to Michigan Income, Intangibles and Michigan
Single Business Taxes, even though the dividends may be exempt for Federal
Income Tax purposes.
In particular, gross interest income and dividends derived from
obligations or securities of the State of Michigan and its political
subdivisions, exempt from Federal Income Tax, are exempt from Michigan Income
Tax under Act No. 281, Public Acts of Michigan, 1967, as amended, and are exempt
from Michigan Single Business Tax under Act No. 228, Public Acts of Michigan,
1975, as amended. The Michigan Income Tax act levies a flat-rate income tax on
individuals, estates, and trusts. The Single Business Tax Act levies a tax upon
the "adjusted tax base" of most individuals, corporations, financial
organizations, partnerships, joint ventures, estates, and trusts with "business
activity" in Michigan.
Bonds or other similar obligations of the State of Michigan or of a
political subdivision of the State of Michigan are exempt from Michigan
Intangibles Tax under Act No. 301, Public Acts of Michigan, 1939, as amended. In
1986, the Michigan Department of Treasury issued a Bulletin stating that holders
of interests in investment companies who are subject to the Michigan intangibles
tax will be exempt from the tax to the extent that the investment portfolio
consists of items such as Michigan Municipal Obligations.
The transfer of obligations or securities of the State of Michigan and
its political subdivisions by the Fund, as well as the transfer of Fund shares
by a shareholder, is subject to Michigan taxes measured by gain on the sale,
payment, or other disposition thereof.
International Equity Fund, International Growth Fund, Emerging Markets
Fund and International Bond Fund. Income received by the International Equity
Fund, the International Growth Fund, the Emerging Markets Fund and the
International Bond Fund from sources within foreign countries may be subject to
withholding and other foreign taxes. The payment of such taxes will reduce the
amount of dividends and distributions paid to the Funds' shareholders. So long
as the Funds qualify as regulated investment companies, certain distribution
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 its shareholders, in writing, the amount per share of such
foreign tax that must be included in each shareholder's gross income and the
amount which will be available for deduction or credit. No deduction for foreign
taxes may be claimed by a shareholder who does not itemize deductions. Certain
limitations are imposed on the extent to which the credit (but not the
deduction) for foreign taxes may be claimed.
Shareholders who choose to utilize a credit (rather than a deduction)
for foreign taxes will be subject to the limitation that the credit may not
exceed the shareholder's United States tax (determined without regard to the
availability of the credit) attributable to his or her total foreign source
taxable income. For this purpose, the portion of dividends and distributions
paid by the Fund from its foreign source income will be treated as foreign
source income. The Fund's gains and losses from the sale of securities will
generally be treated as derived from United States sources and certain foreign
currency gains and losses likewise will be treated as derived from United States
sources. The limitation on the foreign tax credit is applied separately to
foreign source "passive income", such as the portion of dividends received from
the Fund which qualifies as foreign source income. In addition, only a portion
of the foreign tax credit will be allowed to offset any alternative minimum tax
imposed on corporations and individuals. Because of these limitations,
shareholders may be unable to claim a credit for the full amount of their
proportionate shares of the foreign income taxes paid by the Fund.
Taxation of Certain Financial Instruments. Special rules govern the
Federal income tax treatment of financial instruments that may be held by some
of the Funds. These rules may have a particular impact on the amount of income
or gain that the Funds 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-Short Test,
all described above.
Hedging Transactions. The taxation of equity options and
over-the-counter options on debt securities is governed by Code section 1234.
Pursuant to Code section 1234, the premium received by a Fund for selling a put
or call option is not included in income at the time of receipt. If the option
expires, the premium is short-term capital gain to the Fund. If the Fund enters
into a closing transaction, the difference between the amount paid to close out
its position and the premium received is short-term capital gain or loss. If a
call option written by a Fund is exercised, thereby requiring the Fund to sell
the underlying security, the premium will increase the amount realized upon the
sale of such security and any resulting gain or loss will be a capital gain or
loss, and will be long-term or short-term depending upon the holding period of
the security. With respect to a put or call option that is purchased by a Fund,
if the option is sold, any resulting gain or loss will be a capital gain or
loss, and will be long-term or short-term, depending upon the holding period of
the option. If the option expires, the resulting loss is a capital loss and is
long-term or short-term, depending upon the holding period of the option. If the
option is exercised, the cost of the option, in the case of a call option, is
added to the basis of the purchased security and, in the case of a put option,
reduces the amount realized on the underlying security in determining gain or
loss.
Certain options, futures and forward contracts in which a Fund may
invest may be "section 1256 contracts." Gains or losses on section 1256
contracts are generally considered 60% long-term and 40% short-term capital
gains or losses; however, foreign currency gains or losses arising from certain
section 1256 contracts may be treated as ordinary income or loss. Also, section,
1256 contracts held by a Fund at the end of each taxable year (and generally for
purposes of the 4% excise tax, on October 31 of each year) are
"marked-to-market" with the result that unrealized gains or losses are treated
as though they were realized.
Generally, hedging transactions, if any, undertaken by a Fund may
result in "straddles" for federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Funds. In addition,
losses realized by a Fund on positions that are part of a straddle may be
deferred under the straddle rules, rather than being taken into account in
calculating the taxable income for the taxable year in which such losses are
realized. Because only a few regulations implementing the straddle rules have
been promulgated, the tax consequences of hedging transactions to the Funds are
not entirely clear. The hedging transactions may increase the amount of
short-term capital gain realized by the Funds which is taxed as ordinary income
when distributed to shareholders.
The Funds may make one or more of the elections available under the
Code which are applicable to straddles. If a Fund makes any of the elections,
the amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because application of the straddle rules may affect the character of
gains or losses, defer losses and/or accelerate the recognition of gains or
losses from the affected straddle positions, the amount which must be
distributed to shareholders, and which will be taxed to shareholders as ordinary
income or long-term capital gain, may be increased or decreased substantially as
compared to a fund that did not engage in such hedging transactions.
The Short-Short Test and the diversification requirements applicable to
the Funds' assets may limit the extent to which the Funds will be able to engage
in transactions in options, futures or forward contracts.
Currency Fluctuations-"Section 988" Gains or Losses. Under the Code,
gains or losses attributable to fluctuations in exchange rates which occur
between the time a Fund accrues receivables or liabilities denominated in a
foreign currency and the time the Fund actually collects such receivables or
pays such liabilities generally are treated as ordinary income and loss.
Similarly, on disposition of debt securities denominated in a foreign currency
and on disposition of certain futures, forward contracts and options, gains or
losses attributable to fluctuations in the value of the foreign currency between
the date of acquisition of the security or contract and the date of disposition
also are treated as ordinary gain or loss. These gains or losses, referred to
under the Code as "Section 988" gains or losses, may increase or decrease the
amount of a Fund's investment company taxable income to be distributed to its
shareholders as ordinary income.
Discount. Certain of the bonds purchased by a Fund may be treated as
bonds that were originally issued at a discount., Original issue discount
represents interest for federal income tax purposes and can generally be defined
as the difference between the price at which a security was issued and its
stated redemption price at maturity. Original issue discount is treated for
federal income tax purposes as income earned by a Fund even though the Fund
doesn't actually receive any cash, and therefore is subject to the distribution
requirements of the Code. The amount of income earned by the Fund generally is
determined on the basis of a constant yield to maturity which takes into account
the semi-annual compounding of accrued interest.
If a Fund invests in certain high yield original issue discount
obligations issued by corporations, a portion of the original issue discount
accruing on the obligation may be eligible for the deduction for dividends
received by corporations. In such event, dividends of investment company taxable
income received from the Fund by its corporate shareholders, to the extent
attributable to such portion of accrued original issue discount, may be eligible
for this deduction for dividends received by corporations if so designated by
the Fund in a written notice to shareholders.
In addition, some of the bonds may be purchased by a Fund at a discount
which exceeds the original issue discount on such bonds, if any. This additional
discount represents market discount for federal income tax purposes. The gain
realized on the disposition of any bond having market discount will be treated
as ordinary income to the extent it does not exceed the accrued market discount
on such bond (unless the Fund elects for all its debt securities acquired after
the first day of the first taxable year to which the election applies having a
fixed maturity date of more than one year from the date of issue to include
market discount in income in tax years to which it is attributable). Generally,
market discount accrues on a daily basis for each day the bond is held by a Fund
at a constant rate over the time remaining to the bond's maturity.
Investment in Passive Foreign Investment Companies
Certain Funds may invest in shares of foreign corporations which may be
classified under the Code as passive foreign investment companies ("PFIC's"). In
general, a foreign corporation is classified as a PFIC if at least one-half of
its assets constitute investment-type assets, or 75% or more of its gross income
is investment-type income. If a Fund receives a so-called "excess distribution"
with respect to PFIC stock, the Fund itself may be subject to a tax on a portion
of the excess distribution, whether or not the corresponding income is
distributed by the Fund to shareholders. In general, under the PFIC rules, an
excess distribution is treated as having been realized ratably over the period
during which the Fund held the PFIC shares. The Fund itself will be subject to
tax on the portion, if any, of an excess distribution that is so allocated to
prior Fund taxable years and an interest factor will be added to the tax, as if
the tax had been payable in such prior taxable years. Certain distributions from
a PFIC as well as gain from the sale of PFIC shares are treated as excess
distributions. Excess distributions are characterized as ordinary income even
though, absent application of the PFIC rules, certain excess distributions might
have been classified as capital gain.
The Funds may be eligible to elect alternative tax treatment with
respect to PFIC shares. Under an election that currently is available in some
circumstances, a Fund generally would be required to include in its gross income
its share of the earnings of a PFIC on a current basis, regardless of whether
distributions are received from the PFIC in a given year. If this election were
made, the special rules, discussed above, relating to the taxation of excess
distributions, would not apply. In addition, other elections may become
available that would affect the tax treatment of PFIC shares held by the Funds.
Other Taxation
The foregoing discussion relates only to U.S. Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens and residents and domestic
corporations, partnerships, trusts and estates). Distributions by the Fund also
may be subject to state and local taxes, and their treatment under state and
local income tax laws may differ from the U.S. Federal income tax treatment.
Shareholders should consult their tax advisers with respect to particular
questions of U.S. Federal, state and local taxation. Shareholders who are not
U.S. persons should consult their tax advisers regarding U.S. and foreign tax
consequences of ownership of shares of the Fund, including the likelihood that
distributions to them would be subject to withholding of U.S. Federal income tax
at a rate of 30% (or at a lower rate under a tax treaty).
ADDITIONAL INFORMATION CONCERNING SHARES
The Trust and Framlington are Massachusetts business trusts. Under each
Declaration of Trust, the beneficial interest in the Trust or Framlington may be
divided into an unlimited number of full and fractional transferable shares. The
Company is a Maryland corporation. The Trust's and Framlington's Declaration of
Trust and the Company's Articles of Incorporation authorize the Boards of
Trustees and Directors to classify or reclassify any unissued shares of the
Trust, Framlington and the Company 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 the Accelerating Growth, Balanced, Growth & Income, Index 500,
International Equity, Small Company Growth, Bond, Intermediate Bond, U.S.
Government Income, Michigan Bond, Tax-Free Bond, Tax-Free Intermediate Bond,
Cash Investment, Tax-Free Money Market and U.S. Treasury Money Market Funds. The
shares of each Fund (other than the Cash Investment Fund, Tax-Free Money Market
Fund and U.S. Treasury Money Market Fund) are offered in five separate classes:
Class A, Class B, Class C, Class K and Class Y Shares. Class C Shares of the
Index 500 Fund are not currently available for purchase. The Cash Investment
Fund, Tax-Free Money Market Fund and U.S. Treasury Money Market Fund offer only
Class Y Shares, Class K Shares and Class A Shares. Pursuant to the authority of
Framlington's Declaration of Trust, the Trustees have authorized the issuance of
an unlimited number of shares of beneficial interest in Framlington representing
interests in the International Growth Fund, Emerging Markets Fund and 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. Pursuant to the authority of the
Company's Articles of Incorporation, the Directors have authorized the issuance
of shares of common stock representing interests in the Equity Selection Fund,
Micro-Cap Fund, Mid-Cap Fund, Multi-Season Fund, Real Estate Fund, Small-Cap
Value Fund, Value Fund, International Bond Fund, Money Market Fund, All-Season
Conservative Fund, All-Season Moderate Fund and All-Season Aggressive Fund,
Financial Services Fund and NetNet Fund, respectively. The shares of each Fund
(other than the Money Market Fund, All-Season Conservative Fund, All-Season
Moderate Fund and All-Season Aggressive Fund, Financial Services Fund and the
NetNet Fund) are offered in five separate classes: Class A, Class B, Class C,
Class K and Class Y Shares. The Money Market Fund offers only Class A, Class B
and Class C Shares (which may be acquired only through an exchange of shares
from the corresponding classes of other funds of the Trust, Framlington the
Company) and Class Y Shares. The All-Season Conservative Fund, All-Season
Moderate Fund and All-Season Aggressive Fund offer only Class A, Class B and
Class Y Shares. The NetNet Fund and Financial Services Fund each offer only one
class of shares.
At a meeting on April 25 and 26, 1995, the Boards of the Trust and the
Company, and at a meeting on November 7, 1996, the Board of Framlington Trust
adopted plans pursuant to Rule 18f-3 under the 1940 Act ("Multi-Class Plans") on
behalf of each Fund. At a meeting on February 4, 1997, the Trust, Framlington
and the Company adopted Amended and Restated Multi-Class Plans on behalf of each
Fund. Each Multi-Class Plan provides that shares of each class of a Fund are
identical, except for one or more expense variables, certain related rights,
exchange privileges, class designation and sales loads assessed due to differing
distribution methods.
In the event of a liquidation or dissolution of each of the Trust,
Framlington or the Company or an individual Fund, 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 values of the Trust's, Framlington Trust's or the Company's
respective Funds, of any general assets not belonging to any particular 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 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 a 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 a 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, Framlington or the Company,
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
and Directors. Rule 18f-2 under the 1940 Act provides that any matter required
to be submitted to the holders of the outstanding voting securities of an
investment company such as the Trust, Framlington or the Company 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, Framlington or the Company
voting together in the aggregate without regard to a particular Fund.
Shares of each of the Trust, Framlington and the Company have
noncumulative voting rights and, accordingly, the holders of more than 50% of
each of the Trust's, Framlington's and the Company's outstanding shares
(irrespective of class) may elect all of the trustees or directors. 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
applicable Prospectus, shares will be fully paid and non-assessable by each of
the Trust, Framlington and the Company.
Shareholder meetings to elect trustees or directors 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, Framlington or the Company
shall be called by the trustees or directors upon the written request of
shareholders owning at least 10% of the outstanding shares entitled to vote.
The Trust's and Framlington's Declaration of Trust, as amended,
authorizes the Board of Trustees, without shareholder approval (unless otherwise
required by applicable law), to: (i) sell and convey the assets belonging to a
class of shares to another management investment company for consideration which
may include securities issued by the purchaser and, in connection therewith, to
cause all outstanding shares of such class to be redeemed at a price which is
equal to their net asset value and which may be paid in cash or by distribution
of the securities or other consideration received from the sale and conveyance;
(ii) sell and convert the assets belonging to one or more classes of shares into
money and, in connection therewith, to cause all outstanding shares of such
class to be redeemed at their net asset value; or (iii) combine the assets
belonging to a class of shares with the assets belonging to one or more other
classes of shares if the Board of Trustees reasonably determines that such
combination will not have a material adverse effect on the shareholders of any
class participating in such combination and, in connection therewith, to cause
all outstanding shares of any such class to be redeemed or converted into shares
of another class of shares at their net asset value. However, the exercise of
such authority may be subject to certain restrictions under the 1940 Act. The
Trust's and Framlington's Board of Trustees may authorize the termination of 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, Framlington
and the Company.
Independent Auditors. Ernst & Young LLP, serves as the Trust's,
Framlington's and the Company's independent auditors. The financial statements
for the fiscal year or period ended June 30, 1997, incorporated by reference in
this Statement of Additional Information, have been audited by Ernst & Young
LLP, independent auditors. The information under the caption "Financial
Highlights" of the Funds for the period from commencement of operations through
June 30, 1997, appearing in the related Prospectuses dated October 28, 1997 has
been derived from the financial statements audited by Ernst & Young LLP except
for periods ended prior to June 30, 1995 for the Multi-Season Fund and Money
Market Fund, which have been derived from the financial statements audited by
other independent auditors. Such financial statements and financial highlights
are included or incorporated by reference herein in reliance upon their reports
given upon the authority of such firms as experts in accounting and auditing.
Control Persons and Principal Holders of Securities. As of October 1, 1997,
Comerica Bank, One Detroit Center, 500 Woodward Ave., Detroit, Michigan 48226,
held of record substantially all of the outstanding shares of the Funds as
agent, custodian or trustee for its customers. As of such date, the following
persons were beneficial owners of 5% or more of the outstanding shares of a Fund
because they possessed voting or investment power with respect to such shares:
<PAGE>
Percent of
Name of Name and Total Shares
Fund Address Outstanding
[As of October 1, 1997, Munder Capital Management, Inc., on behalf of
their clients owned % of the Accelerating Growth Fund Class Y Shares; % of the
Bond Fund Class A Shares; % of the Bond Fund Class Y Shares; % of the Growth &
Income Fund Class Y Shares; % of the Index 500 Fund Class Y Shares,; % of the
International Equity Fund Class Y Shares; % of the Intermediate Bond Fund Class
Y Shares; % of the Michigan Bond Fund Class Y Shares; % of the Multi-Season Fund
Class Y Shares; % of the Real Estate Fund Class A Shares; % of the Real Estate
Fund Class Y Shares; % of the Small Company Value Fund Class A Shares; % of the
Small Company Value Fund Class Y Shares; % of the U.S. Government Income Fund
Class Y Shares; % of the Value Fund Class K Shares; % of the Value Fund Class Y
Shares; % of the Money Market Fund Class Y Shares.]
[As of October 1, 1997, Funds Distributor Inc. on behalf of their
clients owned ___% of the outstanding Class __ Shares of the
_____________________________ Fund.]
[As of October 1, 1997, Merrill Lynch Pierce on behalf of their clients
owned approximately ___% of the outstanding Class __ Shares of the
___________________________ Fund.]
Shareholder Approvals. As used in this Statement of Additional
Information and in each Prospectus, a "majority of the outstanding shares" of a
Fund or investment portfolio means the lesser of (a) 67% of the shares of the
particular Fund or portfolio represented at a meeting at which the holders of
more than 50% of the outstanding shares of such Fund or portfolio are present in
person or by proxy, or (b) more than 50% of the outstanding shares of such Fund
or portfolio.
REGISTRATION STATEMENT
This Statement of Additional Information and each of the Fund's
Prospectuses do not contain all the information included in the Fund'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 each of the Fund's 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 Fund's registration
statement, each such statement being qualified in all respects by such
reference.
FINANCIAL STATEMENTS
The financial statements for the Trust, Framlington and the Company
including the notes thereto, dated June 30, 1997 have been audited by Ernst &
Young LLP and are incorporated by reference in this Statement of Additional
Information from the Annual Reports of the Trust, Framlington and the Company
dated as of June 30, 1997.
APPENDIX A
- Rated Investments -
Corporate Bonds
Excerpts from Moody's Investors Services, Inc. ("Moody's") description
of its bond ratings:
"Aaa": Bonds that are rated "Aaa" are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
"Aa": Bonds that are rated "Aa" are judged to be of high-quality by all
standards. Together with the "Aaa" group they comprise what are generally known
as "high-grade" bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in "Aaa"
securities.
"A": Bonds that are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
"Baa": Bonds that are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appears adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
"Ba": Bonds that are rated "Ba" are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
"B": Bonds that are rated "B" generally lack characteristics of
desirable investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may
be small.
"Caa": Bonds that are rated "Caa" are of poor standing. These issues
may be in default or present elements of danger may exist with respect to
principal or interest.
Moody's applies numerical modifiers (1, 2 and 3) with respect to bonds
rated "Aa" through "B". The modifier 1 indicates that the bond being rated ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the bond ranks in the lower
end of its generic rating category.
Excerpts from Standard & Poor's Corporation ("S&P") description of its
bond ratings:
"AAA": Debt rated "AAA" has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
"AA": Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differs from "AAA" issues by a small degree.
"A": Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher
rated categories.
"BBB": Bonds rated "BBB" are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated categories.
"BB", "B" and "CCC": Bonds rated "BB" and "B" are regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligations. "BB" represents a
lower degree of speculation than "B" and "CCC" the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
To provide more detailed indications of credit quality, the "AA" or "A"
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
Commercial Paper
The rating "Prime-1" is the highest commercial paper rating assigned by
Moody's. These issues (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issues rated "Prime-2" (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics of "Prime-1" rated issues, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions.
Ample alternate liquidity is maintained.
Commercial paper ratings of S&P are current assessments of the
likelihood of timely payment of debt having original maturities of no more than
365 days. Commercial paper rated "A-1" by S&P indicates that the degree of
safety regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are denoted
"A-1+." Commercial paper rated "A-2" by S&P indicates that capacity for timely
payment is strong. However, the relative degree of safety is not as high as for
issues designated "A-1."
APPENDIX A
- Rated Investments -
Commercial Paper
Rated commercial paper purchased by a Fund must have (at the time of
purchase) the highest quality rating assigned to short-term debt securities or,
if not rated, or rated by only one agency, are determined to be of comparative
quality pursuant to guidelines approved by a Fund's Boards of Trustees and
Directors. Highest quality ratings for commercial paper for Moody's and S&P are
as follows:
Moody's: The rating "Prime-1" is the highest commercial paper rating
category assigned by Moody's. These issues (or related supporting institutions)
are considered to have a superior capacity for repayment of short-term
promissory obligations.
S&P: Commercial paper ratings of S&P are current assessments of the
likelihood of timely payment of debts having original maturities of no more than
365 days. Commercial paper rated in the "A-1" category by S&P indicates that the
degree of safety regarding timely payment is either overwhelming or very strong.
Those issues determined to possess overwhelming safety characteristics are
denoted "A-1+".
APPENDIX B
As stated in the applicable Prospectuses, the Equity Funds, the
Balanced Fund and the Bond Funds may enter into certain futures transactions and
options for hedging purposes. Such transactions are described in this Appendix.
I. Interest Rate Futures Contracts
Use of Interest Rate Futures Contracts. Bond prices are established in
both the cash market and the futures market. In the cash market, bonds are
purchased and sold with payment for the full purchase price of the bond being
made in cash, generally within five business days after the trade. In the
futures market, only a contract is made to purchase or sell a bond in the future
for a set price on a certain date. Historically, the prices for bonds
established in the futures markets have tended to move generally in the
aggregate in concert with the cash market prices and have maintained fairly
predictable relationships. Accordingly, the Funds may use interest rate futures
contracts as a defense, or hedge, against anticipated interest rate changes and
not for speculation. As described below, this would include the use of futures
contract sales to protect against expected increases in interest rates and
futures contract purchases to offset the impact of interest rate declines.
The Funds presently could accomplish a similar result to that which it
hopes to achieve through the use of futures contracts by selling bonds with long
maturities and investing in bonds with short maturities when interest rates are
expected to increase, or conversely, selling short-term bonds and investing in
long-term bonds when interest rates are expected to decline. However, because of
the liquidity that is often available in the futures market, the protection is
more likely to be achieved, perhaps at a lower cost and without changing the
rate of interest being earned by the Funds, through using futures contracts.
Description of Interest Rate Futures Contracts. An interest rate
futures contract sale would create an obligation by a Fund, as seller, to
deliver the specific type of financial instrument called for in the contract at
a specific future time for a specified price. A futures contract purchase would
create an obligation by the Fund, as purchaser, to take delivery of the specific
type of financial instrument at a specific future time at a specific price. The
specific securities delivered or taken, respectively, at settlement date, would
not be determined until or at near that date. The determination would be in
accordance with the rules of the exchange on which the futures contract sale or
purchase was made.
Although interest rate futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed out
before the settlement date without making or taking of delivery of securities.
Closing out a futures contract sale is effected by the Fund's entering into a
futures contract purchase for the same aggregate amount of the specific type of
financial instrument and the same delivery date. If the price of the sale
exceeds the price of the offsetting purchase, the Fund is immediately paid the
difference and thus realizes a gain. If the offsetting purchase price exceeds
the sale price, the Fund pays the difference and realizes a loss. Similarly, the
closing out of a futures contract purchase is effected by the Fund entering into
a futures contract sale. If the offsetting sale price exceeds the purchase
price, the Fund realizes a gain, and if the purchase price exceeds the
offsetting sale price, the Fund realizes a loss.
Interest rate futures contracts are traded in an auction environment on
the floors of several exchanges -- principally, the Chicago Board of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange. The Funds would
deal only in standardized contracts on recognized exchanges. Each exchange
guarantees performance under contract provisions through a clearing corporation,
a nonprofit organization managed by the exchange membership.
A public market now exists in futures contracts covering various
financial instruments including long-term United States Treasury Bonds and
Notes, Government National Mortgage Association (GNMA) modified pass-through
mortgage backed securities, three-month United States Treasury Bills, and
ninety-day commercial paper. The Funds may trade in any interest rate futures
contracts for which there exists a public market, including, without limitation,
the foregoing instruments.
Example of Futures Contract Sale. The Funds would engage in an interest
rate futures contract sale to maintain the income advantage from continued
holding of a long-term bond while endeavoring to avoid part or all of the loss
in market value that would otherwise accompany a decline in long-term securities
prices. Assume that the market value of a certain security held by a particular
Fund tends to move in concert with the futures market prices of long-term United
States Treasury bonds ("Treasury Bonds"). The adviser wishes to fix the current
market value of the portfolio security until some point in the future. Assume
the portfolio security has a market value of 100, and the adviser believes that,
because of an anticipated rise in interest rates, the value will decline to 95.
The fund might enter into futures contract sales of Treasury bonds for an
equivalent of 98. If the market value of the portfolio security does indeed
decline from 100 to 95, the equivalent futures market price for the Treasury
bonds might also decline from 98 to 93.
In that case, the five point loss in the market value of the portfolio
security would be offset by the five point gain realized by closing out the
futures contract sale. Of course, the futures market price of Treasury bonds
might well decline to more than 93 or to less than 93 because of the imperfect
correlation between cash and futures prices mentioned below.
The adviser could be wrong in its forecast of interest rates and the
equivalent futures market price could rise above 98. In this case, the market
value of the portfolio securities, including the portfolio security being
protected, would increase. The benefit of this increase would be reduced by the
loss realized on closing out the futures contract sale.
If interest rate levels did not change, the Fund in the above example
might incur a loss of 2 points (which might be reduced by an offsetting
transaction prior to the settlement date). In each transaction, transaction
expenses would also be incurred.
Example of Futures Contract Purchase. The Funds would engage in an
interest rate futures contract purchase when they are not fully invested in
long-term bonds but wish to defer for a time the purchase of long-term bonds in
light of the availability of advantageous interim investments, e.g., shorter
term securities whose yields are greater than those available on long-term
bonds. A Fund's basic motivation would be to maintain for a time the income
advantage from investing in the short-term securities; the Fund would be
endeavoring at the same time to eliminate the effect of all or part of an
expected increase in market price of the long-term bonds that the Fund may
purchase.
For example, assume that the market price of a long-term bond that the
Fund may purchase, currently yielding 10% , tends to move in concert with
futures market prices of Treasury bonds. The adviser wishes to fix the current
market price (and thus 10% yield) of the long-term bond until the time (four
months away in this example) when it may purchase the bond. Assume the long-term
bond has a market price of 100, and the adviser believes that, because of an
anticipated fall in interest rates, the price will have risen to 105 (and the
yield will have dropped to about 91/2%) in four months. The Fund might enter
into futures contracts purchases of Treasury bonds for an equivalent price of
98. At the same time, the Fund would assign a pool of investments in short-term
securities that are either maturing in four months or earmarked for sale in four
months, for purchase of the long-term bond at an assumed market price of 100.
Assume these short-term securities are yielding 15%. If the market price of the
long-term bond does indeed rise from 100 to 105, the equivalent futures market
price for Treasury bonds might also rise from 98 to 103. In that case, the 5
point increase in the price that the Fund pays for the long-term bond would be
offset by the 5 point gain realized by closing out the futures contract
purchase.
The adviser could be wrong in its forecast of interest rates; long-term
interest rates might rise to above 10%; and the equivalent futures market price
could fall below 98. If short-term rates at the same time fall to 10% or below,
it is possible that the Fund would continue with its purchase program for
long-term bonds. The market price of available long-term bonds would have
decreased. The benefit of this price decrease, and thus yield increase, will be
reduced by the loss realized on closing out the futures contract purchase.
If, however, short-term rates remained above available long-term rated,
it is possible that the Fund would discontinue its purchase program for
long-term bonds. The yield on short-term securities in the portfolio, including
those originally in the pool assigned to the particular long-term bond, would
remain higher than yields on long-term bonds. The benefit of this continued
incremental income will be reduced by the loss realized on closing out the
futures contract purchase. In each transaction, expenses would also be incurred.
II. 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 indices,
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
indices, such as the Standard & Poor's 100 or indices based on an industry or
market segment, such as oil and gas stocks.
Futures contracts are traded on organized exchanges regulated by the
Commodity Futures Trading Commission. Transactions on such exchanges are cleared
through a clearing corporation, which guarantees the performance of the parties
to each contract.
A Fund will sell index futures contracts in order to offset a decrease
in market value of its portfolio securities that might otherwise result from a
market decline. A Fund will purchase index futures contracts in anticipation of
purchases of securities. In a substantial majority of these transactions, a Fund
will purchase such securities upon termination of the long futures position, but
a long futures position may be terminated without a corresponding purchase of
securities.
In addition, a Fund may utilize index futures contracts in anticipation
of changes in the composition of its portfolio holdings. For example, in the
event that a Fund expects to narrow the range of industry groups represented in
its holdings it may, prior to making purchases of the actual securities,
establish a long futures position based on a more restricted index, such as an
index comprised of securities of a particular industry group. A Fund may also
sell futures contracts in connection with this strategy, in order to protect
against the possibility that the value of the securities to be sold as part of
the restructuring of the portfolio will decline prior to the time of sale.
<PAGE>
Examples of Stock Index Futures Transactions. The following are
examples of transactions in stock index futures (net of commissions and
premiums, if any).
ANTICIPATORY PURCHASE HEDGE: Buy the Future
Hedge Objective: Protect Against Increasing Price
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Portfolio Futures
-Day Hedge is Placed-
Anticipate buying $62,500 in Equity Securities Buying 1 Index Futures at 125
Value of Futures = $62,500/Contract
-Day Hedge is Lifted-
Buy Equity Securities with Actual Cost = $65,000 Sell 1 Index Futures at 130
Increase in Purchase Price = $2,500 Value of Futures = $65,000/Contract
Gain on Futures = $2,500
HEDGING A STOCK PORTFOLIO: Sell the Future
Hedge Objective: Protect Against Declining
Value of the Portfolio
Factors:
Value of Stock Portfolio = $1,000,000
Value of Futures Contract - 125 X $500 =
$62,500 Portfolio Beta Relative to the Index = 1.0
Portfolio Futures
-Day Hedge is Placed-
Anticipate Selling $1,000,000 in Equity Securities Sell 16 Index Futures at 125
Value of Futures = $1,000,000
-Day Hedge is Lifted-
Equity Securities - Own Stock Buy 16 Index Futures at 120 with Value = $960,000
Value of Futures = $960,000
Loss in Portfolio Value = $40,000 Gain on Futures = $40,000
</TABLE>
III. 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 particular 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 the 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 Adviser or
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.
IV. Risks of Transactions in Futures Contracts
There are several risks in connection with the use of futures by the
Funds as hedging devices. One risk arises because of the imperfect correlation
between movements in the price of the futures and movements in the price of the
instruments which are the subject of the hedge. The price of the future may move
more than or less than the price of the instruments being hedged. If the price
of the futures moves less than the price of the instruments which are the
subject of the hedge, the hedge will not be fully effective but, if the price of
the instruments being hedged has moved in an unfavorable direction, the Fund
would be in a better position than if it had not hedged at all. If the price of
the instruments being hedged has moved in a favorable direction, this advantage
will be partially offset by the loss on the futures. If the price of the futures
moves more than the price of the hedged instruments, the Fund involved 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, the
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 Adviser or Sub-Advisor. Conversely, the Funds 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 Adviser or Sub-Advisor. It is also possible that, when the
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 Funds
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 the Funds,
an amount of cash and cash equivalents, equal to the market value of the futures
contracts, will be deposited in a segregated account with the Custodian and/or
in a margin account with a broker to collateralize the position and thereby
insure that the use of such futures is unleveraged.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the futures and the
instruments being hedged, the price of futures may not correlate perfectly with
movement in the cash market due to certain market distortions. Rather than
meeting additional margin deposit requirements, investors may close futures
contracts through off-setting transactions which could distort the normal
relationship between the cash and futures markets. Second, with respect to
financial futures contracts, the liquidity of the futures market depends on
participants entering into off-setting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced thus producing distortions. Third, from
the point of view of speculators, the deposit requirements in the futures market
are less onerous than margin requirements in the securities market. Therefore,
increased participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price distortion in the
futures market, and because of the imperfect correlation between the movements
in the cash market and movements in the price of futures, a correct forecast of
general market trends or interest rate movements by the Adviser or 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, the Funds would continue to be required to make daily cash payments
of variation margin. However, in the event futures contracts have been used to
hedge portfolio securities, such securities will not be sold until the futures
contract can be terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee that the price of
the securities will in fact correlate with the price movements in the futures
contract and thus provide an offset on a futures contract.
Further, it should be noted that the liquidity of a secondary market in
a futures contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation in a
futures contract price during a single trading day. Once the daily limit has
been reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions. The
trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal activity, which could at times make it difficult or
impossible to liquidate existing positions or to recover excess variation margin
payments.
Successful use of futures by the Funds is also subject to the Adviser's
or Sub-Advisor's ability to predict correctly movements in the direction of the
market. For example, if a particular 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 Funds
may have to sell securities at a time when they may be disadvantageous to do so.
V. Options on Futures Contracts
The Funds may purchase and write options on the futures contracts
described above. A futures option gives the holder, in return for the premium
paid, the right to buy (call) from or sell (put) to the writer of the option a
futures contract at a specified price at any time during the period of the
option. Upon exercise, the writer of, the option is obligated to pay the
difference between the cash value of the futures contract and the exercise
price. Like the buyer or seller of a futures contract, the holder, or writer, of
an option has the right to terminate its position prior to the scheduled
expiration of the option by selling, or purchasing an option of the same series,
at which time the person entering into the closing transaction will realize a
gain or loss. A Fund will be required to deposit initial margin and variation
margin with respect to put and call options on futures contracts written by it
pursuant to brokers' requirements similar to those described above. Net option
premiums received will be included as initial margin deposits.
Investments in futures options involve some of the same considerations
that are involved in connection with investments in future contracts (for
example, the existence of a liquid secondary market). In addition, the purchase
or sale of an option also entails the risk that changes in the value of the
underlying futures contract will not correspond to changes in the value of the
option purchased. Depending on the pricing of the option compared to either the
futures contract upon which it is based, or upon the price of the securities
being hedged, an option may or may not be less risky than ownership of the
futures contract or such securities. In general, the market prices of options
can be expected to be more volatile than the market prices on underlying futures
contract. Compared to the purchase or sale of futures contracts, however, the
purchase of call or put options on futures contracts may frequently involve less
potential risk to the 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.
VI. Currency Transactions
The Fund 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. The 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 from a NRSRO or are
determined to be of equivalent credit quality by the Advisor.
The 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 the Fund, which will generally
arise in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.
The 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.
The 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, the 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 Advisor or Sub-Advisor
considers that the Austrian schilling is correlated to the German mark (the
"D-mark"), the Fund holds securities denominated in shillings and the Advisor or
Sub-Advisor believes that the value of the schillings will decline against the
U.S. dollar, the Advisor or 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 the Fund if the currency being hedged
fluctuates in value to a degree or in a direction that is not anticipated.
Further, there is the risk that the perceived correlation between various
currencies may not be present or may not be present during the particular time
that the Fund is engaging in proxy hedging. If a Fund enters into a currency
hedging transaction, the Fund will comply with the asset segregation
requirements. Under such requirements, the Fund will segregate liquid, high
grade assets with the custodian to the extent the Fund's obligations are not
otherwise "covered" through ownership of the underlying currency.
Currency transactions are subject to risks different from those of
other portfolio transactions. Because currency control is of great importance to
the issuing governments and influences economic planning and policy, purchases
and sales of currency and related instruments can be negatively affected by
government exchange controls, blockages, and manipulations or exchange
restrictions imposed by governments. These can result in losses to the Fund if
it is unable to deliver or receive currency or funds in settlement of
obligations and could also cause hedges it has entered into to be rendered
useless, resulting in full currency exposure as well as incurring transaction
costs. Buyers and sellers of currency futures are subject to the same risks that
apply to the use of futures generally. Further, settlement of a currency futures
contract for the purchase of most currencies must occur at a bank based in the
issuing nation. Trading options on currency futures is relatively new, and the
ability to establish and close to 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.
VII. Other Matters
Accounting for futures contracts will be in accordance with generally
accepted accounting principles.
- --------
1Trustee/Director is an "interested person" of the Trust, Framlington or the
Company as defined in the 1940 Act.
* With waiver of fees by the Advisor, the standardized yields and tax
equivalent yields for the Michigan Bond Fund,
Class A Shares, were ___% and ____%, respectively.
** With waiver of fees by the Advisor, the standardized yields and
tax-equivalent yields for the Michigan Bond Fund, Class B Shares were _____%
and _____%, respectively and for Class K Shares, were ______% and _______%,
respectively.
*** With waiver of fees by the Advisor, the standardized yields and
tax-equivalent yields for the Michigan Bond Fund, Class Y Shares, were ______%
and _______%, respectively.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements
Included in Part A:
Financial Highlights to be filed by amendment.
Included in Part B:
Audited Financial Statements as of June 30, 1997 to be filed
by amendment.
Included in Part C:
Consent of Independent Accountants to be filed by amendment.
(b) Exhibits:
<TABLE>
<CAPTION>
<S> <C> <C>
(1) Declaration of Trust is incorporated herein by reference to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A filed with
the Commission on December 19, 1996.
(2) By-Laws are incorporated herein by reference to Pre-Effective Amendment No. 1
to Registrant's Registration Statement on Form N-1A filed with the Commission
on December 19, 1996.
(3) Not Applicable
(4) Not Applicable
(5) (a) Form of Investment Advisory Agreement is incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration Statement on Form
N-1A filed with the Commission on December 19, 1996.
(b) Form of Sub-Advisory Agreement is incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration Statement on Form
N-1A filed with the Commission on December 19, 1996.
(6) (a) Form of Distribution Agreement is incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration Statement on Form
N-1A filed with the Commission on December 19, 1996.
(7) Not Applicable
(8) (a) Form of Custody Agreement is incorporated herein by reference to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A filed with
the Commission on December 19, 1996.
(b) Form of Amendment to Custody Agreement is incorporated herein by reference to
Post-Effective Amendment No. 1 to Registrant's Registration Statement on Form
N-1A filed with the Commission on June 27, 1997.
(c) Form of Subcustodian Agreement is incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration Statement on Form
N-1A filed with the Commission on December 19, 1996.
(9) (a) Form of Transfer Agency and Registrar Agreement is incorporated herein by
reference to Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A filed with the Commission on December 19, 1996.
(b) Form of Administration Agreement is incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration Statement on Form
N-1A filed with the Commission on December 19, 1996.
(10) (a) Opinion and Consent of Counsel is incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration Statement on Form
N-1A filed with the Commission on December 19, 1996.
(11) (a) Consent of Independent Public Accountants.*
(b) Powers of Attorney are incorporated herein by reference to Post-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A filed with
the Commission on June 27, 1997.
(c) Certified Resolution of Board authorizing signature on behalf of Registrant
pursuant to power of attorney is incorporated herein by reference to
Post-Effective Amendment No. 1 to Registrant's Registration Statement on Form
N-1A filed with the Commission on June 27, 1997.
(12) Not Applicable
(13) Purchase Agreement is incorporated herein by reference to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A filed with
the Commission on December 19, 1996.
(14) Not Applicable
(15) (a) Service and Distribution Plan for The
Munder Framlington Funds Trust Class A, B
and C Shares is incorporated herein by
reference to Pre-Effective Amendment No. 1
to Registrant's Registration Statement on
Form N-1A filed with the Commission on
December 19, 1996.
(b) Service Plan for The Munder Framlington Funds Trust Class K Shares is
incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A filed with the Commission on
December 19, 1996.
(16) Schedule for Computation of Performance Quotations is incorporated herein by
reference to Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A filed with the Commission on December 19, 1996.
(17) Financial Data Schedules relating to the Framlington Emerging Markets Fund,
Framlington International Growth Fund and Framlington Healthcare Fund.*
(18) Form of Amended and Restated Multi-Class
Plan is incorporated herein by reference to
Post-Effective Amendment No. 1 to
Registrant's Registration Statement on Form
N-1A filed with the Commission on June 27,
1997.
- --------------------
*To be filed by amendment.
</TABLE>
Item 25. Persons Controlled by or Under Common Control with Registrant.
--------------------------------------------------
Not Applicable.
Item 26. Number of Holders of Securities.
-------------------------------
As of August 22, 1997, the number of shareholders of
record of each Class of shares of each Series of the Registrant was as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Class A Class B Class C Class K Class Y
- ---------------------------------------------------------------
Framlington International Growth Fund 22 3 5 1 29
Framlington Emerging Markets Fund 25 14 6 3 36
Framlington Healthcare Fund 45 102 10 1 32
</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 the office of a
Trustee or Officer; (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 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 a Trustee or
Officer 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 governed by the final adjudication of such
issues.
Item 28.Business and Other Connections of Investment Advisor and Sub-Advisor.
--------------------------------------------------------------------
Munder Capital Management
-------------------------
<TABLE>
<CAPTION>
<S> <C>
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
Clark Durant Vice President and Co-Director of The
Private Management Group
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
Richard R. Mullaney Vice President and Director of The
Private Management Group
Peter G. Root Vice President and Director of Government
Securities Trading
Lisa A. Rosen General Counsel and Director of Mutual
Fund Operations
Ann F. Putallaz Vice President and Director of Fiduciary
Services
James C. Robinson Executive 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
</TABLE>
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.
Framlington Overseas Investment Management Limited
<TABLE>
<CAPTION>
<S> <C> <C>
Position
Name with Sub-Advisor
Warren J. Colman Director
Gary C. Fitzgerald Director
Jean-Luc Schilling Director
Michael A. Vogel Director
Robert Jenkins Portfolio Manager
</TABLE>
For more information relating to the Sub-Advisor's officers, reference is made
to Form ADV filed under the Investment Advisers Act of 1940 by Framlington
Overseas Investment Management Limited, SEC File No. 801-42074.
Item 29. Principal Underwriters.
----------------------
(a) Funds Distributor, Inc. ("FDI"), located at 60 State Street, Boston,
Massachusetts 02109, is the principal underwriter of the Funds. FDI is an
indirectly wholly-owned subsidiary of Boston Institutional Group, Inc. a
holding company, all of whose outstanding shares are owned by key
employees. FDI is a broker dealer registered under the Securities Exchange
Act of 1934, as amended. FDI acts as principal underwriter of the following
investment companies other than the Registrant:
<TABLE>
<CAPTION>
<S> <C> <C>
Harris Insight Funds Trust The Skyline Funds
The Munder Funds Trust Fremont Mutual Funds, Inc.
St. Clair Funds, Inc. RCM Capital Funds, Inc.
The Munder Funds, Inc. Monetta Fund, Inc.
BJB Investment Funds Monetta Trust
The PanAgora Institutional Funds Burridge Funds
RCM Equity Funds, Inc. The JPM Series Trust
Waterhouse Investors Cash The JPM Series Trust II
Management Fund, Inc. HT Insight Funds, Inc.
LKCM Fund d/b/a Harris Insight Funds
The JPM Pierpont Funds The Brinson Funds
The JPM Institutional Funds WEBS Index Fund, Inc.
Orbitex Group of Funds The Montgomery Funds
The Montgomery Funds II
</TABLE>
(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.
<TABLE>
<CAPTION>
<S> <C> <C>
Director, President and Chief Executive Officer - Marie E. Connolly
Executive Vice President - Richard W. Ingram
Executive Vice President - Donald R. Roberson
Senior Vice President, General Counsel, - John E. Pelletier
Secretary and Clerk
Senior Vice President - Michael S. Petrucelli
Director, Senior Vice President, Treasurer and - Joseph F. Tower, III
Chief Financial Officer
Senior Vice President - Paula R. David
Senior Vice President - Bernard A. Whalen
Director - William J. Nutt
(c) Not Applicable
</TABLE>
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 East Brown
Street, Birmingham, Michigan 48009 (records relating to its
function as investment adviser)
(2) Framlington Overseas Investment Management Limited, 155
Bishopsgate, London, EC2M 3XJ (records relating to its function
as sub-adviser)
(3) 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)
(4) Funds Distributor, Inc., 60 State Street, Boston, Massachusetts
02109 (records relating to its function as distributor)
(5) 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) Not Applicable.
(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.
(d) Registrant undertakes to call a meeting of Shareholders for
the purpose of voting upon the question of removal of a
Trustee or Trustees when requested to do so by the holders of
at least 10% of the Registrant's outstanding shares of
beneficial interest and in connection with such meeting to
comply with the shareholders communications provisions of
Section 16(c) of the Investment Company Act of 1940.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the Registrant has
duly caused this Post-Effective Amendment No. 2 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Boston and the
Commonwealth of Massachusetts on this 29th day of August, 1997.
The Munder Framlington Funds Trust
By: *
Lee P. Munder
President
* By:
/s/ Teresa M.R. Hamlin
Teresa M.R. Hamlin
as Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Signatures Title Date
* President and Chief August 29, 1997
- ------------------------------
Lee P. Munder Executive Officer
* Trustee August 29, 1997
- ------------------------------
Charles W. Elliott
* Trustee August 29, 1997
- ------------------------------
Joseph E. Champagne
* Trustee August 29, 1997
- ------------------------------
Thomas B. Bender
* Trustee August 29, 1997
- ------------------------------
Thomas D. Eckert
* Trustee August 29, 1997
- ------------------------------
John Rakolta, Jr.
* Trustee August 29, 1997
- ------------------------------
David J. Brophy
* Vice President, August 29, 1997
- ------------------------------
Terry H. Gardner Treasurer and Chief
Financial Officer
</TABLE>
* By:
/s/ Teresa M.R. Hamlin
Teresa M.R. Hamlin
as Attorney-in-Fact
* The Powers of Attorney are incorporated herein by reference to Post-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A filed with
the Commission on June 27, 1997.
