<PAGE>
As filed with the Securities and Exchange Commission
on October 27, 1998
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. 6 [ X ]
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 7 [ 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: (248) 647-9200
Cynthia Surprise
Vice President and Associate Counsel
State Street Bank and Trust Company
1776 Heritage Drive, AFB2
North Quincy, MA 02171
(Name and Address of Agent for Service)
Copies to:
Lisa Anne Rosen, Esq. Paul R. Roye, Esq.
Munder Capital Management Dechert Price & Rhoads
480 Pierce Street 1775 Eye Street, NW
Birmingham, Michigan 48009 Washington, DC 20006
[X] It is proposed that this filing will become effective October 27, 1998 upon
filing pursuant to paragraph (b) of Rule 485
<PAGE>
THE MUNDER FRAMLINGTON FUNDS TRUST
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Class A, B and C Shares)
<TABLE>
<CAPTION>
Part A
- ---------
Item Heading
---- -------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial Information
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Fund Highlights; Fund Choices;
Structure and Management of Funds
5. Management of the Fund Structure and Management of Funds; Fund
Choices; Dividends, Distributions and
Taxes; Performance
6. Capital Stock and Other Securities Structure and Management of Funds;
Purchases and Exchanges of Shares;
Redemption 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
</TABLE>
<PAGE>
THE MUNDER FRAMLINGTON FUNDS TRUST
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Class K Shares)
<TABLE>
<CAPTION>
Part A
- ------
Item Heading
---- -------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial Information
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Fund Highlights; Fund Choices;
Structure and Management of Funds
5. Management of the Fund Structure and Management of Funds; Fund
Choices; Dividends, Distributions and
Taxes; Performance
6. Capital Stock and Other Securities Structure and Management of Funds;
Purchases and Exchanges of Shares;
Redemption 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
</TABLE>
<PAGE>
THE MUNDER FRAMLINGTON FUNDS TRUST
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for The Munder Funds
(Class Y Shares)
<TABLE>
<CAPTION>
Part A
- ------
Item Heading
---- -------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Fund Highlights; Financial Information
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Fund Highlights; Fund Choices;
Structure and Management of Funds
5. Management of the Fund Structure and Management of Funds; Fund
Choices; Dividends, Distributions and
Taxes; Performance
6. Capital Stock and Other Securities Structure and Management of Funds;
Purchases and Exchanges of Shares;
Redemption 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
</TABLE>
<PAGE>
THE MUNDER FRAMLINGTON FUNDS TRUST
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Statement of Additional Information
(The Munder Funds)
<TABLE>
<CAPTION>
Part B
- ------
<S> <C> <C>
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 Services and Other
Service Arrangements; See Prospectus
--"Structure and Management of the Funds"
17. Brokerage Allocation and Other Portfolio Transactions
Practices
18. Capital Stock and Other Securities See Prospectus --"Structure and Management of
the Funds;" Additional Information Concerning
Shares
19. Purchase, Redemption and Pricing of Additional Purchase and Redemption
Securities Being Offered Information; Net Asset Value; Additional
Information Concerning Shares
20. Tax Status Taxes
21. Underwriters Investment Advisory and Other Service
Arrangements
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
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 bring the
financial statements and other information up to date under Section 10(a)(3) of
the Securities Act of 1933, as amended.
<PAGE>
CLASS A, B & C SHARES
[Munder Logo]
Prospectus
OCTOBER 27, 1998
THE MUNDER EQUITY FUNDS
Balanced
Growth & Income
Growth Opportunities
International Equity
Micro-Cap Equity
Multi-Season Growth
NetNet
Real Estate Equity Investment
Small-Cap Value
Small Company Growth
Value
THE MUNDER FRAMLINGTON FUNDS
Framlington Emerging Markets
Framlington Global Financial Services
Framlington Healthcare
Framlington International Growth
Prospectus begins on next page
<PAGE>
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 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"):
Munder Balanced Fund
Munder Growth & Income Fund
Munder Growth Opportunities Fund
Munder International Equity Fund
Munder Micro-Cap Equity Fund
Munder Multi-Season Growth Fund
Munder NetNet 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 Global Financial Services Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
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.
SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Highlights
What are the key facts regarding the Funds?.............................. 3
Financial Information...................................................... 6
Fund Choices
What Funds are offered?.................................................. 33
Who may want to invest in the Funds?..................................... 40
What are the Funds' investments and investment practices?................ 40
What are the risks of investing in the Funds?............................ 46
Performance
How is the Funds' performance calculated?................................ 47
Where can I obtain performance data?..................................... 48
Purchases and Exchanges of Shares
What share class should I choose for my investment?...................... 48
What price do I pay for shares?.......................................... 49
When can I purchase shares?.............................................. 51
What is the minimum required investment?................................. 51
How can I purchase shares?............................................... 51
How can I exchange shares?............................................... 52
Redemptions of Shares
What price do I receive for redeemed shares?............................. 53
When can I redeem shares?................................................ 54
How can I redeem shares?................................................. 54
When will I receive redemption amounts?.................................. 55
Structure and Management of the Funds
How are the Funds structured?............................................ 55
Who manages and services the Funds?...................................... 55
What are my rights as a shareholder?..................................... 59
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?........................ 59
How will distributions be made?.......................................... 59
Are there tax implications of my investments in the Funds?............... 59
Additional Information..................................................... 60
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUNDS?
Q: What are the Funds' goals?
A:
. The Framlington Emerging Markets Fund, Framlington Global Financial
Services Fund, Framlington Healthcare Fund, Framlington International
Growth Fund, Growth Opportunities Fund, International Equity Fund, Micro-
Cap Equity Fund, Multi-Season Growth Fund, NetNet Fund, Small-Cap Value
Fund, Small Company Growth Fund and Value Fund primarily seek to provide
long-term capital appreciation.
. 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: The following table summarizes the primary risks of investing in the Funds:
<TABLE>
<CAPTION>
FUND RISK
- ------------------------------------------------------------------------------
<C> <S>
All Funds Potential loss of investment due to
changes in the stock market in
general, changes in the stock prices
of particular companies and
perceptions about particular
industries.
- ------------------------------------------------------------------------------
International Equity Fund, Because of large investments in
Framlington foreign securities, the Funds are
Emerging Markets Fund, Framlington riskier than domestic funds due to
Global Financial Services Fund and factors such as freezes on
Framlington convertibility of currency, changes in
International Growth Fund exchange rates, political instability
and differences in accounting and
reporting standards.
- ------------------------------------------------------------------------------
Growth Opportunities Fund, Because of large investments in mid-
Micro-Cap Equity Fund, capitalization, small-capitalization
NetNet Fund, and/or emerging growth companies, the
Small-Cap Value Fund and Funds are riskier than large-
Small Company Growth Fund capitalization funds since such
companies typically have greater
earnings fluctuations and greater
reliance on a few key customers than
larger companies.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
FUND RISK
- -----------------------------------------------------------------------------
<C> <S>
NetNet Fund, These Funds concentrate their
Real Estate Equity Investment Fund, investments in single industries and
Framlington Global Financial Services could experience larger price
Fund and Framlington Healthcare Fund fluctuations than funds invested in a
broader range of industries.
</TABLE>
Q: What are the options for investment in the Funds?
A: Each Fund, other than the NetNet Fund, offers five different investment
options, or classes: Class A, B, C, K and Y. The NetNet Fund offers four
different investment options, or classes: Class A, B, C and Y. Class K and Y
shares, which are only offered to institutional and other qualified investors,
are offered in other prospectuses.
<TABLE>
<CAPTION>
MAXIMUM FRONT
CLASS RULE 12B-1 FEES* END SALES LOAD** MAXIMUM CDSC***
----- ---------------- ---------------- ---------------
<S> <C> <C> <C>
Class A 0.25% 5.5% None+
Class B 1% None 5%
Class C 1% None 1%, if redeemed within
1 year of purchase
</TABLE>
- --------
*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.
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. (the "Transfer Agent"), by mailing the attached Account
Application Form with a check to the Transfer Agent. You must invest at least
$250 ($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.
Q: What shareholder privileges do the Funds offer?
A:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------
<S> <C> <C>
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>
4
<PAGE>
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses. Dividends paid at least annually: Framlington
Emerging Markets Fund, Framlington Global Financial Services Fund, Framlington
Healthcare Fund, Framlington International Growth Fund, Growth Opportunities
Fund, International Equity Fund, Micro-Cap Equity Fund, Multi-Season Growth
Fund, NetNet Fund, Small-Cap Value Fund and Value Fund.
Dividends paid at least quarterly (if income is available): Balanced Fund,
Growth & Income Fund and Small Company Growth Fund.
Dividends paid monthly: Real Estate Equity Investment Fund.
The Funds distribute capital gains, if any, 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 services for the Framlington Funds. Framlington Overseas Investment
Management Limited (the "Sub-Advisor") is responsible for all purchases and
sales of securities held by the Framlington Emerging Markets Fund, Framlington
Healthcare Fund and Framlington International Growth Fund. The Advisor is
responsible for purchases and sales of domestic securities and the Sub-Advisor
is responsible for purchases and sales of foreign securities for the
Framlington Global Financial Services Fund.
5
<PAGE>
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.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Maximum Sales Charge on Purchase (as a % of Offering
Price)................................................ 5.5%(2) None None
Sales Charge Imposed on Reinvested Dividends........... None None None
Maximum Deferred Sales Charge.......................... None(3) 5%(4) None(5)
Redemption Fees(6)..................................... None None None
Exchange Fees.......................................... None None None
</TABLE>
- --------
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) 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.
(4) The CDSC payable upon redemption of Class B Shares declines over time.
(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.
6
<PAGE>
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 for the current fiscal year. Such expenses include payments to
Trustees, Directors, auditors, legal counsel and service providers (such as
the Advisor), registration fees and distribution fees. The expenses shown
below are based on expenses for the Funds' past fiscal year, except (i) the
expenses for the Growth Opportunities Fund and the Framlington Global
Financial Services Fund are based on estimated operating expenses for the
current fiscal year, (ii) the expenses for the NetNet Fund have been restated
to reflect the discontinuation of the voluntary 12b-1 fee waiver for Class A
Shares and (iii) the expenses for the Framlington Emerging Markets Fund and
Framlington International Growth Fund have been restated to reflect
anticipated voluntary expense reimbursements for the current fiscal year. The
Advisor and/or Distributor may discontinue such voluntary waivers or expense
reimbursements at any time in their sole discretion. 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>
GROWTH
ANNUAL FUND BALANCED FUND GROWTH & INCOME FUND OPPORTUNITIES FUND
OPERATING EXPENSES ------------------------- ------------------------- -------------------------
(AS A % OF AVERAGE NET CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- ---------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees........... .65% .65% .65% .75% .75% .75% .75% .75% .75%
12b-1 Fees.............. .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses+......... .27% .27% .27% .19% .19% .19% .40%++ .40%++ .40%++
----- ----- ----- ----- ----- ----- ----- ----- -----
Total Fund Operating
Expenses+.............. 1.17% 1.92% 1.92% 1.19% 1.94% 1.94% 1.40%++ 2.15%++ 2.15%++
===== ===== ===== ===== ===== ===== ===== ===== =====
<CAPTION>
INTERNATIONAL MICRO-CAP MULTI-SEASON
ANNUAL FUND EQUITY FUND EQUITY FUND GROWTH FUND
OPERATING EXPENSES ------------------------- ------------------------- -------------------------
(AS A % OF AVERAGE NET CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- ---------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees........... .75% .75% .75% 1.00% 1.00% 1.00% .75%* .75%* .75%*
12b-1 Fees.............. .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses+......... .25% .25% .25% .28%++ .28%++ .28%++ .21% .21% .21%
----- ----- ----- ----- ----- ----- ----- ----- -----
Total Fund Operating
Expenses+.............. 1.25% 2.00% 2.00% 1.53%++ 2.28%++ 2.28%++ 1.21%* 1.96%* 1.96%*
===== ===== ===== ===== ===== ===== ===== ===== =====
<CAPTION>
NETNET REAL ESTATE EQUITY SMALL-CAP
ANNUAL FUND FUND INVESTMENT FUND VALUE FUND
OPERATING EXPENSES ------------------------- ------------------------- -------------------------
(AS A % OF AVERAGE NET CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- ---------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees........... 1.00% 1.00% 1.00% .74% .74% .74% .75% .75% .75%
12b-1 Fees.............. .05%** 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses.......... .31%** .31%** .31%** .29% .29% .29% .27% .27% .27%
----- ----- ----- ----- ----- ----- ----- ----- -----
Total Fund Operating
Expenses............... 1.36%** 2.31%** 2.31%** 1.28% 2.03% 2.03% 1.27% 2.02% 2.02%
===== ===== ===== ===== ===== ===== ===== ===== =====
<CAPTION>
SMALL COMPANY
ANNUAL FUND GROWTH FUND VALUE FUND
OPERATING EXPENSES ------------------------- -------------------------
(AS A % OF AVERAGE NET CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES
- ---------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees........... .75% .75% .75% .74% .74% .74%
12b-1 Fees.............. .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses.......... .20% .20% .20% .25% .25% .25%
----- ----- ----- ----- ----- -----
Total Fund Operating
Expenses............... 1.20% 1.95% 1.95% 1.24% 1.99% 1.99%
===== ===== ===== ===== ===== =====
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON EMERGING FRAMLINGTON GLOBAL FRAMLINGTON
MARKETS FUND FINANCIAL SERVICES FUND HEALTHCARE FUND
------------------------- ------------------------- -------------------------
ANNUAL FUND
OPERATING EXPENSES
(AS A % OF AVERAGE NET CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- ---------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees........... 1.25% 1.25% 1.25% .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+......... .32%++ .32%++ .32%++ .40%++ .40%++ .40%++ .33%++ .33%++ .33%++
----- ----- ----- ----- ----- ----- ----- ----- -----
Total Fund Operating
Expenses+.............. 1.82%++ 2.57%++ 2.57%++ 1.40%++ 2.15%++ 2.15%++ 1.58%++ 2.33%++ 2.33%++
===== ===== ===== ===== ===== ===== ===== ===== =====
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES FRAMLINGTON
(AS A % OF AVERAGE NET INTERNATIONAL GROWTH
ASSETS) FUND
- ---------------------- -------------------------
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees........... 1.00% 1.00% 1.00%
12b-1 Fees.............. .25% 1.00% 1.00%
Other Expenses+......... .33%++ .33%++ .33%++
----- ----- -----
Total Fund Operating
Expenses+.............. 1.58%++ 2.33%++ 2.33%++
===== ===== =====
</TABLE>
- --------
*The Advisor expects to voluntarily waive a portion of its advisory fees for
the current fiscal year. Without waivers, the ratio of advisory fees to
average net assets would be 0.93% and total fund operating expenses would
be 1.39%--Class A Shares; 2.14%--Class B Shares; and 2.14%--Class C Shares.
**The Distributor has voluntarily waived a portion of the 12b-1 fees and the
Advisor has voluntarily reimbursed the Fund for certain operating expenses.
Without the waiver and reimbursements, the ratio of 12b-1 fees to average
net assets would be .25%--Class A Shares, 1.00%--Class B Shares and 1.00%--
Class C Shares, and total fund operating expenses would be 2.12%--Class A
Shares, 2.60%--Class B Shares and 2.60%--Class C Shares.
+After expense reimbursements, if any.
++The Advisor expects to voluntarily reimburse the Funds for certain operating
expenses. In the absence of such expense reimbursements, the total fund
operating expenses would be: Micro-Cap Equity Fund: 1.78%--Class A, 2.53%--
Class B, 2.53%--Class C, Framlington Emerging Markets Fund: 2.14%--Class A,
2.89%--Class B, 2.89%--Class C, Framlington Healthcare Fund: 2.40%--Class
A, 3.15%--Class B, 3.15%--Class C and Framlington International Growth
Fund: 1.82%--Class A Shares, 2.57%--Class B and 2.57%--Class C; and it is
estimated that total fund operating expenses would be: Framlington Global
Financial Services Fund: 1.57%--Class A, 2.32%-- Class B, 2.32%--Class C
and Growth Opportunities Fund: 1.41%--Class A, 2.16%--Class B, 2.16%--Class
C.
8
<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 periods (including the deduction
of the deferred sales charge, if any) and (3) no 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>
GROWTH
BALANCED FUND GROWTH & INCOME FUND OPPORTUNITIES FUND
----------------------- ----------------------- -----------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption........... $ 66 $ 71 $ 30 $ 67 $ 71 $ 30 $ 69 $ 73 $ 32
. No Redemption........ $ 66 $ 20 $ 20 $ 67 $ 20 $ 20 $ 69 $ 22 $ 22
3 Years
. Redemption........... $ 90 $ 93 $ 60 $ 91 $ 94 $ 61 $ 97 $100 $ 67
. No Redemption........ $ 90 $ 60 $ 60 $ 91 $ 61 $ 61 $ 97 $ 67 $ 67
5 Years
. Redemption........... $116 $127 $104 $117 $128 $105 -- -- --
. No Redemption........ $116 $104 $104 $117 $105 $105 -- -- --
10 Years
. Redemption........... $190 $225 $225 $192 $227 $227 -- -- --
. No Redemption........ $190 $225 $225 $192 $227 $227 -- -- --
<CAPTION>
INTERNATIONAL MULTI-SEASON
EQUITY FUND MICRO-CAP EQUITY FUND GROWTH FUND
----------------------- ----------------------- -----------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption........... $ 67 $ 72 $ 30 $ 70 $ 75 $ 33 $ 67 $ 71 $ 30
. No Redemption........ $ 67 $ 20 $ 20 $ 70 $ 23 $ 23 $ 67 $ 20 $ 20
3 Years
. Redemption........... $ 93 $ 96 $ 63 $101 $104 $ 71 $ 91 $ 95 $ 62
. No Redemption........ $ 93 $ 63 $ 63 $101 $ 71 $ 71 $ 91 $ 62 $ 62
5 Years
. Redemption........... $120 $131 $108 $134 $145 $122 $118 $129 $106
. No Redemption........ $120 $108 $108 $134 $122 $122 $118 $106 $106
10 Years
. Redemption........... $198 $234 $234 $228 $262 $262 $194 $229 $229
. No Redemption........ $198 $234 $234 $228 $262 $262 $194 $229 $229
<CAPTION>
REAL ESTATE EQUITY
NETNET FUND INVESTMENT FUND SMALL-CAP VALUE FUND
----------------------- ----------------------- -----------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption........... $ 68 $ 75 $ 34 $ 67 $ 72 $ 31 $ 67 $ 72 $ 31
. No Redemption........ $ 68 $ 24 $ 24 $ 67 $ 21 $ 21 $ 67 $ 21 $ 21
3 Years
. Redemption........... $ 96 $105 $ 72 $ 93 $ 97 $ 64 $ 93 $ 96 $ 63
. No Redemption........ $ 96 $ 72 $ 72 $ 93 $ 64 $ 64 $ 93 $ 63 $ 63
5 Years
. Redemption........... $126 $147 $124 $122 $133 $110 $121 $132 $109
. No Redemption........ $126 $124 $124 $122 $110 $110 $121 $109 $109
10 Years
. Redemption........... $210 $266 $266 $202 $237 $237 $201 $236 $236
. No Redemption........ $210 $266 $266 $202 $237 $237 $201 $236 $236
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY FRAMLINGTON EMERGING
GROWTH FUND VALUE FUND MARKETS FUND
----------------------- ----------------------- -----------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption........... $ 67 $ 71 $ 30 $ 67 $ 72 $ 31 $ 73 $ 77 $ 36
. No Redemption........ $ 67 $ 20 $ 20 $ 67 $ 21 $ 21 $ 73 $ 26 $ 26
3 Years
. Redemption........... $ 91 $ 94 $ 61 $ 92 $ 95 $ 63 $109 $112 $ 80
. No Redemption........ $ 91 $ 61 $ 61 $ 92 $ 63 $ 63 $109 $ 80 $ 80
5 Years
. Redemption........... $118 $129 $105 $120 $129 $107 $148 $160 $137
. No Redemption........ $118 $105 $105 $120 $107 $107 $148 $137 $137
10 Years
. Redemption........... $193 $228 $228 $197 $232 $232 $258 $292 $292
. No Redemption........ $193 $228 $228 $197 $232 $232 $258 $292 $292
<CAPTION>
FRAMLINGTON
FRAMLINGTON GLOBAL FRAMLINGTON INTERNATIONAL GROWTH
FINANCIAL SERVICES FUND HEALTHCARE FUND FUND
----------------------- ----------------------- -----------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption........... $ 69 $ 73 $ 32 $ 71 $ 75 $ 34 $ 71 $ 75 $ 34
. No Redemption........ $ 69 $ 22 $ 22 $ 71 $ 24 $ 24 $ 71 $ 24 $ 24
3 Years
. Redemption........... $ 98 $101 $ 68 $103 $106 $ 74 $103 $106 $ 74
. No Redemption........ $ 98 $ 68 $ 68 $103 $ 74 $ 74 $103 $ 74 $ 74
5 Years
. Redemption........... -- -- -- $137 $149 $126 $137 $149 $126
. No Redemption........ -- -- -- $137 $126 $126 $137 $126 $126
10 Years
. Redemption........... -- -- -- $234 $269 $269 $234 $269 $269
. No Redemption........ -- -- -- $234 $269 $269 $234 $269 $269
</TABLE>
10
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
11
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors, except that for periods ended prior to June 30, 1995 for
the Multi-Season Growth Fund, such financial highlights were audited by
another independent auditor. Class B Shares of the Company's Funds were not
offered prior to March 1, 1994. The Growth Opportunities Fund Class A, Class B
and Class C Shares, the Framlington Global Financial Services Fund Class A,
Class B and Class C Shares and the NetNet Fund Class C Shares had not yet
commenced operations on June 30, 1998. 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>
BALANCED FUND (A)
------------------------------------------------------
YEAR PERIOD
ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E)
CLASS A CLASS A CLASS A CLASS A CLASS A
------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $13.01 $12.35 $10.77 $ 9.95 $10.35
------ ------ ------ ------ ------
Net investment income.... 0.30 0.29 0.27 0.09 0.19
Net realized and
unrealized gain/(loss)
on investments.......... 1.66 1.30 1.55 0.85 (0.41)
------ ------ ------ ------ ------
Total from investment
operations............. 1.96 1.59 1.82 0.94 (0.22)
------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income...... (0.32) (0.27) (0.24) (0.12) (0.18)
Distributions from net
realized gains......... (1.17) (0.66) -- -- --
------ ------ ------ ------ ------
Total distributions..... (1.49) (0.93) (0.24) (0.12) (0.18)
------ ------ ------ ------ ------
Net asset value, end of
period.................. $13.48 $13.01 $12.35 $10.77 $ 9.95
====== ====== ====== ====== ======
Total return (b)........ 15.93% 13.63% 17.06% 9.44% (2.07)%
====== ====== ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)...... $ 844 $ 382 $ 375 $ 314 $ 286
Ratio of operating
expenses to average net
assets................. 1.17% 1.22% 1.15% 1.16%(c) 1.22%
Ratio of net investment
income to average net
assets................. 2.41% 2.30% 2.29% 2.51%(c) 1.89%
Portfolio turnover rate. 79% 125% 197% 52% 116%
Ratio of operating
expenses to average net
assets without waivers. 1.17% 1.22% 1.26% 1.51%(c) 1.57%
</TABLE>
- --------
(a) The Munder 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 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.
12
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND(A)
- --------------------------------------------------------------------------------------------------
YEAR YEAR PERIOD PERIOD YEAR YEAR PERIOD
ENDED ENDED YEAR ENDED YEAR ENDED ENDED ENDED ENDED ENDED ENDED
2/28/94 6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E) 6/30/98 6/30/97(F) 6/30/96(F)
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B CLASS C CLASS C CLASS C
- ------- ------- ---------- ---------- ---------- ---------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$9.86 $12.97 $12.33 $10.76 $ 9.93 $9.56 $12.99 $12.35 $11.67
- ------ ------ ------ ------ ------ ----- ------ ------ ------
0.14 0.21 0.19 0.18 0.06 0.07 0.22 0.18 0.05
0.47 1.64 1.30 1.56 0.84 0.37 1.62 1.32 0.67
- ------ ------ ------ ------ ------ ----- ------ ------ ------
0.61 1.85 1.49 1.74 0.90 0.44 1.84 1.50 0.72
- ------ ------ ------ ------ ------ ----- ------ ------ ------
(0.12) (0.21) (0.19) (0.17) (0.07) (0.07) (0.21) (0.20) (0.04)
-- (1.17) (0.66) -- -- -- (1.17) (0.66) --
- ------ ------ ------ ------ ------ ----- ------ ------ ------
(0.12) (1.38) (0.85) (0.17) (0.07) (0.07) (1.38) (0.86) (0.04)
- ------ ------ ------ ------ ------ ----- ------ ------ ------
$10.35 $13.44 $12.97 $12.33 $10.76 $9.93 $13.45 $12.99 $12.35
====== ====== ====== ====== ====== ===== ====== ====== ======
6.20% 15.11% 12.73% 16.24% 9.11% 4.65% 15.00% 12.84% 6.20%
====== ====== ====== ====== ====== ===== ====== ====== ======
$ 321 $ 647 $ 199 $ 75 $ 15 $ 19 $ 115 $ 73 $ 3
1.02%(c) 1.92% 1.97% 1.90% 1.91%(c) 1.85%(c) 1.92% 1.97% 1.90%(c)
1.67%(c) 1.66% 1.55% 1.54% 1.76%(c) 1.26%(c) 1.66% 1.55% 1.54%(c)
50% 79% 125% 197% 52% 116% 79% 125% 197%
1.27%(c) 1.92% 1.97% 2.01% 2.26%(c) 2.20%(c) 1.92% 1.97% 2.01%(c)
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND(A)
-----------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
6/30/98 6/30/97(G) 6/30/96(G) 6/30/95(D) 2/28/95(G)
CLASS A CLASS A CLASS A CLASS A CLASS A
---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $15.21 $13.04 $11.14 $10.42 $10.10
------ ------ ------ ------ ------
Income from investment
operations:
Net investment income.. 0.29 0.31 0.32 0.10 0.23
Net realized and
unrealized gain on
investments........... 2.96 3.14 1.98 0.80 0.24
------ ------ ------ ------ ------
Total from investment
operations............ 3.25 3.45 2.30 0.90 0.47
------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income..... (0.28) (0.32) (0.31) (0.18) (0.15)
Distributions from net
realized gains........ (2.56) (0.96) (0.09) -- (0.00)(f)
------ ------ ------ ------ ------
Total distributions.... (2.84) (1.28) (0.40) (0.18) (0.15)
====== ====== ====== ====== ======
Net asset value, end of
period................. $15.62 $15.21 $13.04 $11.14 $10.42
====== ====== ====== ====== ======
Total return (b)....... 23.03% 28.10% 20.90% 8.69% 4.79%
====== ====== ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $9,545 $3,662 $1,025 $ 226 $ 128
Ratio of operating
expenses to average
net assets............ 1.19% 1.20% 1.21% 1.09%(c) 0.53%(c)
Ratio of net investment
income to average net
assets................ 1.78% 2.28% 2.56% 3.33%(c) 4.72%(c)
Portfolio turnover
rate.................. 73% 62% 37% 13% 12%
Ratio of operating
expenses to average
net assets without
waivers............... 1.19% 1.20% 1.28% 15.51%(c) 1.53%(c)
</TABLE>
- --------
(a) The Munder 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 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) Amount represents less than $0.01 per share.
(g) Per share numbers have been calculated using the average shares method.
14
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND(A)
- ----------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEARENDED PERIOD ENDED PERIOD ENDED YEAR ENDED YEARENDED YEAR ENDED
6/30/98 6/30/97(G) 6/30/96(G) 6/30/95(D) 2/28/95(E) 6/30/98 6/30/97(G) 6/30/96(G)
CLASS B CLASS B CLASS B CLASS B CLASS B CLASS C CLASS C CLASS C
- ---------- ---------- ---------- ------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$15.17 $13.02 $11.13 $10.41 $10.10 $15.16 $13.01 $12.60
------ ------ ------ ------ ------ ------ ------ ------
0.17 0.21 0.23 0.09 0.19 0.16 0.19 0.14
2.95 3.13 1.99 0.77 0.25 2.95 3.15 0.55
------ ------ ------ ------ ------ ------ ------ ------
3.12 3.34 2.22 0.86 0.44 3.11 3.34 0.69
------ ------ ------ ------ ------ ------ ------ ------
(0.16) (0.23) (0.24) (0.14) (0.13) (0.16) (0.23) (0.19)
(2.56) (0.96) (0.09) -- (0.00)(f) (2.56) (0.96) (0.09)
------ ------ ------ ------ ------ ------ ------ ------
(2.72) (1.19) (0.33) (0.14) (1.13) (2.72) (1.19) (0.28)
====== ====== ====== ====== ====== ====== ====== ======
$15.57 $15.17 $13.02 $11.13 $10.41 $15.55 $15.16 $13.01
====== ====== ====== ====== ====== ====== ====== ======
22.09% 27.16% 20.09% 8.30% 4.47% 22.05% 27.17% 5.57%
====== ====== ====== ====== ====== ====== ====== ======
$1,694 $ 641 $ 228 $ 57 $ 51 $1,776 $ 766 $ 31
1.94% 1.95% 1.96% 1.84%(c) 1.27%(c) 1.94% 1.95% 1.96%(c)
1.03% 1.53% 1.81% 2.58%(c) 3.96%(c) 1.03% 1.53% 1.81%(c)
73% 62% 37% 13% 12% 73% 62% 37%
1.94% 1.95% 2.03% 2.26%(c) 2.27%(c) 1.94% 1.95% 2.03%(c)
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND(A)
----------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/97 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E,F) 2/28/94
CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A
------- ---------- ---------- ---------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $15.73 $15.09 $13.42 $12.29 $13.68 $10.64
------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income.. 0.15 0.14 0.15 0.12 0.17 0.19
Net realized and
unrealized gain on
investments........... 0.34 2.30 1.64 1.01 (1.48) 2.85
------ ------ ------ ------ ------ ------
Total from investment
operations............ 0.49 2.44 1.79 1.13 (1.31) 3.04
------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income..... (0.19) (0.21) (0.12) -- (0.02) --
Distributions from net
realized gains........ (1.00) (1.59) -- -- -- --
Distributions from
capital............... -- -- -- -- (0.06) --
------ ------ ------ ------ ------ ------
Total distributions.... (1.19) (1.80) (0.12) -- (0.08) --
====== ====== ====== ====== ====== ======
Net asset value, end of
period................. $15.03 $15.73 $15.09 $13.42 $12.29 $13.68
====== ====== ====== ====== ====== ======
Total return (b)....... 4.30% 17.98% 13.37% 9.28% (9.67)% 28.57%
====== ====== ====== ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $6,264 $6,710 $4,767 $1,400 $1,339 $1,450
Ratio of operating
expenses to average
net assets............ 1.25% 1.26% 1.26% 1.21%(c) 1.18% 1.13%
Ratio of net investment
income to average net
assets................ 1.03% 0.98% 1.07% 2.57%(c) 1.31% 0.80%
Portfolio turnover
rate.................. 41% 46% 75% 14% 20% 15%
Ratio of operating
expenses to average
net assets without
waivers............... 1.25% 1.26% 1.33% 1.46%(c) 1.43% 1.38%
</TABLE>
- --------
(a) The Munder 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 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.
16
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND(A)
------------------------------------------------------------------------------------------------------
PERIOD YEAR YEAR YEAR PERIOD PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/93 6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E,F) 6/30/98 6/30/97(F) 6/30/96(F)
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B CLASS C CLASS C CLASS C
------- ------- ---------- ---------- ---------- ------------ ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.60 $15.57 $14.91 $13.35 $12.26 $13.45 $15.68 $15.02 $14.13
------ ------ ------ ------ ------ ------ ------ ------ ------
0.01 0.05 0.03 0.05 0.08 0.08 0.04 0.03 0.04
0.16 0.32 2.28 1.62 1.01 (1.21) 0.34 2.30 0.95
------ ------ ------ ------ ------ ------ ------ ------ ------
0.17 0.37 2.31 1.67 1.09 (1.13) 0.38 2.33 0.99
------ ------ ------ ------ ------ ------ ------ ------ ------
(0.11) (0.11) (0.06) (0.11) -- (0.00)(g) (0.11) (0.08) (0.10)
(0.02) (1.00) (1.59) -- -- -- (1.00) (1.59) --
-- -- -- -- -- (0.06) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
(0.13) (1.11) (1.65) (0.11) -- (0.06) (1.11) (1.67) (0.10)
====== ====== ====== ====== ====== ====== ====== ====== ======
$10.64 $14.83 $15.57 $14.91 $13.35 $12.26 $14.95 $15.68 $15.02
====== ====== ====== ====== ====== ====== ====== ====== ======
1.60% 3.54% 17.18% 12.53% 8.89% (8.38)% 3.50% 17.18% 7.06%
====== ====== ====== ====== ====== ====== ====== ====== ======
$ 42 $1,121 $1,151 $ 957 $ 128 $ 118 $1,911 $2,259 $1,584
1.03%(c) 2.00% 2.01% 2.01% 1.96%(c) 1.88%(c) 2.00% 2.01% 2.01%(c)
0.42%(c) 0.28% 0.23% 0.32% 1.82%(c) 0.61%(c) 0.28% 0.23% 0.32%(c)
1% 41% 46% 75% 14% 20% 41% 46% 75%
1.28%(c) 2.00% 2.01% 2.08% 2.21%(c) 2.13%(c) 2.00% 2.01% 2.08%(c)
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
MICRO-CAP EQUITY FUND(A)
-----------------------------------------------------------------------
PERIOD YEAR PERIOD PERIOD
YEAR ENDED ENDED ENDED ENDED YEAR ENDED ENDED
6/30/98 (F) 6/30/97(F) 6/30/98 6/30/97(F) 6/30/98(F) 6/30/97(F)
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
----------- ---------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 12.81 $10.00 $ 12.79 $11.00 $12.79 $10.13
------- ------ ------- ------ ------ ------
Income from investment
operations:
Net investment
income/(loss).......... (0.17) (0.05) (0.29) (0.05) (0.29) (0.03)
Net realized and
unrealized gain/(loss)
on investments......... 5.00 2.86 4.97 1.84 4.98 2.69
------- ------ ------- ------ ------ ------
Total from investment
operations............. 4.83 2.81 4.68 1.79 4.69 2.66
------- ------ ------- ------ ------ ------
Less distributions:
Dividends from net
investment income...... -- -- -- -- -- --
Distributions from net
realized gains......... (0.64) -- (0.64) -- (0.64) --
------- ------ ------- ------ ------ ------
Total distributions..... (0.64) -- (0.64) -- (0.64) --
======= ====== ======= ====== ====== ======
Net asset value, end of
period.................. $ 17.00 $12.81 $ 16.83 $12.79 $16.84 $12.79
======= ====== ======= ====== ====== ======
Total return (b)........ 38.01% 28.10% 36.87% 16.27% 36.95% 26.26%
======= ====== ======= ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)...... $10,821 $ 184 $15,965 $ 442 $7,441 $ 111
Ratio of operating
expenses to average net
assets................. 1.53% 1.50%(c) 2.28% 2.25%(c) 2.28% 2.25%(c)
Ratio of net investment
income/(loss) to
average net assets..... (0.97)% (0.88)%(c) (1.72)% (1.63)%(c) (1.72)% (1.63)%(c)
Portfolio turnover rate. 172% 68% 172% 68% 172% 68%
Ratio of operating
expenses to average net
assets without waivers
and/or expenses
reimbursed............. 1.78% 7.90%(c) 2.53% 8.65%(c) 2.53% 8.65%(c)
</TABLE>
- --------
(a) The Munder 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 Munder 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, 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 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.
(f) Per share numbers have been calculated using the average shares method.
(g) Amount represents less than 0.01 per share.
(h) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
18
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(A)
- --------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98(F) 6/30/97(F) 6/30/96(F) 6/30/95(D,E,H) 12/31/94 12/31/93
CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A
- ---------- ---------- ---------- -------------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 18.02 $ 14.83 $12.02 $10.38 $10.68 $10.16
------- ------- ------ ------ ------ ------
0.00(g) 0.04 0.06 0.01 0.01 (0.01)
4.37 3.90 3.20 1.63 (0.27) 0.53
------- ------- ------ ------ ------ ------
4.37 3.94 3.26 1.64 (0.26) 0.52
------- ------- ------ ------ ------ ------
(0.01) -- (0.05) -- -- --
(0.92) (0.75) (0.40) -- (0.04) --
------- ------- ------ ------ ------ ------
(0.93) (0.75) (0.45) -- (0.04) --
------- ------- ------ ------ ------ ------
$ 21.46 $ 18.02 $14.83 $12.02 $10.38 $10.68
======= ======= ====== ====== ====== ======
25.02% 27.57% 27.56% 15.80% (2.45)% 5.12%
======= ======= ====== ====== ====== ======
$32,311 $16,693 $9,544 $9,409 $2,829 $2,104
1.21% 1.25% 1.26% 1.65%(c) 1.75% 1.75%(c)
0.00% 0.25% 0.44% 0.28%(c) 0.04% (0.18)%(c)
34% 33% 54% 27% 48% 238%
1.39% 1.50% 1.51% 1.97%(c) 3.05% 3.32%(c)
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(A)
------------------------------------------------------------------------
YEAR PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED ENDED ENDED
6/30/98(F) 6/30/97(F) 6/30/96(F) 6/30/95(D,E,H) 12/31/94 12/31/93
CLASS B CLASS B CLASS B CLASS B CLASS B CLASS B
---------- ---------- ---------- -------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 17.54 $ 14.56 $ 11.85 $ 10.27 $ 10.65 $ 10.00
-------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income/(loss)......... (0.14) (0.08) (0.04) (0.03) (0.07) (0.04)
Net realized and
unrealized gain/(loss)
on investments........ 4.22 3.81 3.15 1.61 (0.27) 0.69
-------- ------- ------- ------- ------- -------
Total from investment
operations............ 4.08 3.73 3.11 1.58 (0.34) 0.65
-------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income..... -- -- -- -- -- --
Distributions from net
realized gains........ (0.92) (0.75) (0.40) -- (0.04) --
-------- ------- ------- ------- ------- -------
Total distributions.... (0.92) (0.75) (0.40) -- (0.04) --
======== ======= ======= ======= ======= =======
Net asset value, end of
period................. $ 20.70 $ 17.54 $ 14.56 $ 11.85 $ 10.27 $ 10.65
======== ======= ======= ======= ======= =======
Total return (b)....... 24.12% 26.61% 26.66% 15.38% (3.21)% 6.50%
======== ======= ======= ======= ======= =======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $102,700 $84,865 $66,630 $54,349 $46,549 $46,860
Ratio of operating
expenses to average
net assets............ 1.96% 2.00% 2.01% 2.40%(c) 2.50% 2.50%(c)
Ratio of net investment
income to average net
assets................ (0.75)% (0.50)% (0.31)% (0.47)%(c) (0.71)% (0.69)%(c)
Portfolio turnover
rate.................. 34% 33% 54% 27% 48% 238%
Ratio of operating
expenses to average
net assets without
waivers............... 2.14% 2.25% 2.26% 2.72%(c) 2.89% 2.94%(c)
</TABLE>
- --------
(a) The Munder 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, 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 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.
(f) Per share numbers have been calculated using the average shares method.
(g) Amount represents less than 0.01 per share.
(h) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
20
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH (A)
- --------------------------------------------------------------------------
YEAR YEAR PERIOD
ENDED YEAR ENDED YEAR ENDED PERIOD ENDED ENDED ENDED
6/30/98(F) 6/30/97(F) 6/30/96(F) 6/30/95(D,E,H) 12/31/94 12/31/93
CLASS C CLASS C CLASS C CLASS C CLASS C CLASS C
---------- ---------- ---------- -------------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 17.56 $14.57 $11.86 $10.28 $10.66 $10.19
------------- ------ ------ ------ ------ ------
(0.14) (0.08) (0.04) (0.02) (0.07) (0.01)
4.23 3.82 3.15 1.60 (0.27) 0.48
------------- ------ ------ ------ ------ ------
4.09 3.74 3.11 1.58 (0.34) 0.47
------------- ------ ------ ------ ------ ------
-- -- -- -- -- --
(0.92) (0.75) (0.40) -- (0.04) --
------------- ------ ------ ------ ------ ------
(0.92) (0.75) (0.40) -- (0.04) --
============= ====== ====== ====== ====== ======
$ 20.73 $17.56 $14.57 $11.86 $10.28 $10.66
============= ====== ====== ====== ====== ======
24.09% 26.66% 26.64% 15.37% (3.21)% 4.61%
============= ====== ====== ====== ====== ======
$ 14,411 $9,253 $5,605 $3,207 $2,071 $ 249
1.96% 2.00% 2.01% 2.40%(c) 2.50% 2.50%(c)
(0.75)% (0.50)% (0.31)% (0.47)%(c) (0.65)% (0.99)%(c)
34% 33% 54% 27% 48% 238%
2.14% 2.25% 2.26% 2.72%(c) 4.57% 15.47%(c)
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
NETNET FUND(A)
------------------------------
YEAR PERIOD PERIOD
ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98
CLASS A CLASS A CLASS B
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period......... $ 12.79 $10.00 $17.07
------- ------ ------
Income from investment operations:
Net investment income/(loss)................ (0.04) (0.04) (0.01)
Net realized and unrealized gain on
investments................................ 10.13 3.15 3.62
------- ------ ------
Total from investment operations............ 10.09 3.11 3.61
------- ------ ------
Less distributions:
Dividends from net investment income........ -- -- --
Distributions in excess of net investment
income..................................... -- -- --
------- ------ ------
Distributions from net realized gains....... (2.20) (0.32) --
Distiributions from paid-in capital......... -- -- --
------- ------ ------
Total distributions......................... (2.20) (0.32) --
======= ====== ======
Net asset value, end of period............... $ 20.68 $12.79 $20.68
======= ====== ======
Total return (b)............................ 87.23% 31.14% 20.91%
======= ====== ======
Ratio to average net assets/supplemental
data:
Net assets, end of period (in 000's)........ $17,147 $1,459 $6,443
Ratio of operating expenses to average net
assets..................................... 1.35% 1.48%(c) 2.29%(c)
Ratio of net investment income/(loss) to
average net assets......................... (0.60)% (0.48%)(c) (1.27)%(c)
Portfolio turnover rate..................... 165% 195% 165%
Ratio of operating expenses to average net
assets without waivers and/or expenses
reimbursed................................. 2.12% 4.57%(c) 2.60%(c)
</TABLE>
- --------
(a) The Munder NetNet Fund Class A Shares and Class B Shares commenced
operations on August 19, 1996 and June 1,1998, respectively. The Munder
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.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) 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.
(e) Per share numbers have been calculated using the average shares method.
22
<PAGE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY INVESTMENT FUND(A)
- ----------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98(E) 6/30/97 6/30/96(E) 6/30/95(D) 6/30/98(E) 6/30/97
CLASS A CLASS A CLASS A CLASS A CLASS B CLASS B
- ---------- ------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
$ 14.40 $ 11.22 $ 10.09 $ 10.00 $ 14.40 $ 11.22
------- ------- ------- ------- ------- -------
0.64 0.44 0.45 0.36 0.53 0.36
0.66 3.26 1.12 0.07 0.65 3.24
------- ------- ------- ------- ------- -------
1.30 3.70 1.57 0.43 1.18 3.60
------- ------- ------- ------- ------- -------
(0.62) (0.48) (0.44) (0.34) (0.51) (0.38)
-- (0.01) -- -- -- (0.01)
------- ------- ------- ------- ------- -------
(0.14) -- -- -- (0.14) --
-- (0.03) -- -- -- (0.03)
------- ------- ------- ------- ------- -------
(0.76) (0.52) (0.44) (0.34) (0.65) (0.42)
======= ======= ======= ======= ======= =======
$ 14.94 $ 14.40 $ 11.22 $ 10.09 $ 14.93 $ 14.40
======= ======= ======= ======= ======= =======
8.93% 33.51% 15.92% 4.45% 8.12% 33.52%
======= ======= ======= ======= ======= =======
$ 4,099 $ 1,426 $ 267 $ 223 $ 6,956 $ 4,606
1.28% 1.35% 1.25% 1.50%(c) 2.03% 2.10%
4.15% 3.80% 4.25% 5.03%(c) 3.40% 3.05%
15% 15% 17% 3% 15% 15%
1.28% 1.38% 1.52% 7.23%(c) 2.03% 2.13%
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY INVESTMENT FUND (A)
------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/96(E) 6/30/95(D) 6/30/98(E) 6/30/97 6/30/96(E)
CLASS B CLASS B CLASS C CLASS C CLASS C
---------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $10.09 $10.00 $14.44 $11.25 $10.76
------ ------ ------ ------ ------
Income from investment
operations:
Net investment
income/(loss).......... 0.38 0.30 0.53 0.36 0.18
Net realized and
unrealized gain on
investments............ 1.11 0.07 0.66 3.26 0.47
------ ------ ------ ------ ------
Total from investment
operations............. 1.49 0.37 1.19 3.62 0.65
====== ====== ====== ====== ======
Less distributions:
Dividends from net
investment income...... (0.36) (0.28) (0.51) (0.39) (0.16)
Distributions in excess
of net investment
income................. -- -- -- (0.01) --
Distributions from net
realized gains......... -- -- (0.14) -- --
Distributions from paid-
in capital............. -- -- -- (0.03) --
------ ------ ------ ------ ------
Total distributions..... (0.36) (0.28) (0.65) (0.43) (0.16)
====== ====== ====== ====== ======
Net asset value, end of
period.................. $11.22 $10.09 $14.98 $14.44 $11.25
====== ====== ====== ====== ======
Total return (b)........ 15.05% 3.87% 8.17% 32.57% 6.08%
====== ====== ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)...... $1,707 $1,496 $1,513 $ 537 $ 4
Ratio of operating
expenses to average net
assets................. 2.00% 2.25%(c) 2.03% 2.10% 2.00%
Ratio of net investment
income/(loss) to
average net assets..... 3.50% 4.28%(c) 3.40% 3.05% 3.50%
Portfolio turnover rate. 17% 3% 15% 15% 17%
Ratio of operating
expenses to average net
assets without waivers. 2.27% 7.98%(c) 2.03% 2.13% 2.27%
</TABLE>
- --------
(a) The Munder Real Estate Equity Investment Fund Class B Shares and Class C
Shares commenced operations on October 3, 1994 and January 5, 1996,
respectively. The Munder Small-Cap Value Fund Class A Shares, Class B
Shares and Class C Shares commenced operations on January 10, 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 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.
(e) Per share numbers have been calculated using the average shares method.
24
<PAGE>
<TABLE>
<CAPTION>
SMALL-CAP VALUE FUND (A)
- -------------------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98(E) 6/30/97(E) 6/30/98(E) 6/30/97(E) 6/30/98(E) 6/30/96(E)
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$12.04 $10.22 $12.03 $10.76 $12.02 $10.22
------ ------ ------ ------ ------ ------
0.08 0.09 (0.03) 0.05 (0.03) 0.05
2.82 1.77 2.83 1.24 2.83 1.78
------ ------ ------ ------ ------ ------
2.90 1.86 2.80 1.29 2.80 1.83
====== ====== ====== ====== ====== ======
(0.06) (0.04) -- (0.02) -- (0.03)
-- -- -- -- -- --
(0.64) -- (0.64) -- (0.64) --
-- -- -- -- -- --
------ ------ ------ ------ ------ ------
(0.70) (0.04) (0.64) (0.02) (0.64) (0.03)
====== ====== ====== ====== ====== ======
$14.24 $12.04 $14.19 $12.03 $14.18 $12.02
====== ====== ====== ====== ====== ======
24.36% 18.20% 23.58% 12.03% 23.60% 17.92%
====== ====== ====== ====== ====== ======
$6,474 $1,164 $3,237 $ 373 $1,932 $ 197
1.27% 1.38%(c) 2.02% 2.13%(c) 2.02% 2.13%
0.56% 1.93%(c) (0.19)% 1.18%(c) (0.19)% 1.18%
53% 73% 53% 73% 53% 73%
1.27% 1.51%(c) 2.02% 2.26%(c) 2.02% 2.26%
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND (A)
-------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98(F) 6/30/97(F) 6/30/96(F) 6/30/95(E) 2/28/95(D) 2/28/94
CLASS A CLASS A CLASS A CLASS A CLASS A CLASS A
---------- ---------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 21.61 $ 21.08 $15.28 $13.89 $14.37 $12.72
------- ------- ------ ------ ------ ------
Income from investment
operations:
Net investment income.. (0.13) (0.12) (0.12) (0.02) (0.07) (0.05)
Net realized and
unrealized gain/(loss)
on investments........ 2.59 3.64 7.16 1.41 (0.39) 1.97
------- ------- ------ ------ ------ ------
Total from investment
operations............ 2.46 3.52 7.04 1.39 (0.46) 1.92
------- ------- ------ ------ ------ ------
Less distributions:
Distributions from net
realized capital
gains................. (4.11) (2.99) (1.24) -- (0.02) (0.27)
------- ------- ------ ------ ------ ------
Total distributions.... (4.11) (2.99) (1.24) -- (0.02) (0.27)
======= ======= ====== ====== ====== ======
Net asset value, end of
period................. $ 19.96 $ 21.61 $21.08 $15.28 $13.89 $14.37
======= ======= ====== ====== ====== ======
Total return (b)....... 12.41% 18.88% 48.28% 10.01% (3.21)% 15.11%
======= ======= ====== ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $20,909 $11,646 $4,832 $2,871 $2,697 $3,269
Ratio of operating
expenses to average
net assets............ 1.20% 1.22% 1.21% 1.21%(c) 1.23% 1.01%
Ratio of net investment
loss to average net
assets................ (0.57)% (0.62)% (0.66)% (0.41)%(c) (0.40)% (0.36)%
Portfolio turnover
rate.................. 123% 98% 98% 39% 45% 47%
Ratio of operating
expenses to average
net assets without
waivers............... 1.20% 1.22% 1.28% 1.46%(c) 1.48% 1.26%
</TABLE>
- --------
(a) The Munder 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 end 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.
26
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND(A)
- ------------------------------------------------------------------------------------------------------------
PERIOD YEAR YEAR YEAR PERIOD PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/93(E) 6/30/98(F) 6/30/97(F) 6/30/96(F) 6/30/95(E) 2/28/95(D) 6/30/98(F) 6/30/97(F) 6/30/96(F)
CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B CLASS C CLASS C CLASS C
- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$12.32 $ 21.05 $20.74 $15.15 $13.81 $13.54 $21.32 $20.93 $17.05
------ ------- ------ ------ ------ ------ ------ ------ ------
(0.01) (0.28) (0.25) (0.26) (0.05) (0.05) (0.28) (0.25) (0.21)
0.41 2.50 3.55 7.09 1.39 0.34 2.53 3.63 5.33
------ ------- ------ ------ ------ ------ ------ ------ ------
0.40 2.22 3.30 6.83 1.34 0.29 2.25 3.38 5.12
------ ------- ------ ------ ------ ------ ------ ------ ------
-- (4.11) (2.99) (1.24) -- (0.02) (4.11) (2.99) (1.24)
------ ------- ------ ------ ------ ------ ------ ------ ------
-- (4.11) (2.99) (1.24) -- (0.02) (4.11) (2.99) (1.24)
====== ======= ====== ====== ====== ====== ====== ====== ======
$12.72 $ 19.16 $21.05 $20.74 $15.15 $13.81 $19.46 $21.32 $20.93
====== ======= ====== ====== ====== ====== ====== ====== ======
3.25% 11.51% 18.06% 47.26% 9.70% 2.13% 11.50% 18.26% 31.97%
====== ======= ====== ====== ====== ====== ====== ====== ======
$ 742 $14,013 $5,735 $ 990 $ 46 $ 39 $6,319 $2,271 $ 76
0.96%(c) 1.95% 1.97% 1.96% 1.96%(c) 1.85%(c) 1.95% 1.97% 1.96%(c)
(0.29)%(c) (1.32)% (1.37)% (1.41)% (1.16)%(c) (1.02)%(c) (1.32)% (1.37)% (1.41)%(c)
46% 123% 98% 98% 39% 45% 123% 98% 98%
1.21%(c) 1.95% 1.97% 2.03% 2.21%(c) 2.10%(c) 1.95% 1.97% 2.03%(c)
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND (A)
-------------------------------------------------------------------
PERIOD PERIOD
YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED ENDED
6/30/98(D) 6/30/97(D) 6/30/96(D) 6/30/98(D) 6/30/97(D) 6/30/96(D)
CLASS A CLASS A CLASS A CLASS B CLASS B CLASS B
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $13.98 $11.57 $10.38 $13.93 $11.55 $10.41
------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment
income/(loss)......... 0.10 0.08 0.05 (0.02) (0.01) (0.01)
Net realized and
unrealized gain on
investments........... 3.35 3.64 1.19 3.36 3.61 1.16
------ ------ ------ ------ ------ ------
Total from investment
operations............ 3.45 3.72 1.24 3.34 3.60 1.15
------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income..... (0.09) (0.09) (0.05) (0.01) -- (0.01)
Distributions from net
realized gains........ (1.15) (1.22) -- (1.15) (1.22) --
------ ------ ------ ------ ------ ------
Total distributions.... (1.24) (1.31) (0.05) (1.16) (1.22) (0.01)
====== ====== ====== ====== ====== ======
Net asset value, end of
period................. $16.19 $13.98 $11.57 $16.11 $13.93 $11.55
====== ====== ====== ====== ====== ======
Total return (b)....... 25.53% 34.38% 11.95% 24.93% 33.24% 11.09%
====== ====== ====== ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $5,763 $1,587 $ 424 $2,309 $ 935 $ 103
Ratio of operating
expenses to average
net assets............ 1.24% 1.27% 1.20%(c) 1.99% 2.02% 1.95%(c)
Ratio of net investment
income/(loss) to
average net assets.... 0.61% 0.70% 0.64%(c) (0.14)% (0.05)% (0.11)%(c)
Portfolio turnover
rate.................. 92% 139% 223% 92% 139% 223%
Ratio of operating
expenses to average
net assets without
waivers............... 1.24% 1.31% 1.30%(c) 1.99% 2.06% 2.05%(c)
</TABLE>
- --------
(a) The Munder 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) Per share numbers have been calculated using the average shares method.
28
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND (A)
- ------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
6/30/98(D) 6/30/97(D) 6/30/96(D)
CLASS C CLASS C CLASS C
- ---------- ---------- ----------
<S> <C> <C>
$13.93 $11.54 $11.35
------ ------ ------
(0.02) (0.01) (0.01)
3.34 3.62 0.23
------ ------ ------
3.32 3.61 0.22
------ ------ ------
(0.01) -- (0.03)
(1.15) (1.22) --
------ ------ ------
(1.16) (1.22) (0.03)
====== ====== ======
$16.09 $13.93 $11.54
====== ====== ======
24.78% 33.36% 1.90%
====== ====== ======
$1,179 $ 527 $ 348
1.99% 2.02% 1.95%(c)
(0.14)% (0.05)% (0.11)%(c)
92% 139% 223%
1.99% 2.06% 2.05%(c)
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON EMERGING MARKETS FUND(A)
-------------------------------------------------------------------------
PERIOD PERIOD PERIOD
YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED
6/30/98(D) 6/30/97(D) 6/30/98(D) 6/30/97(D) 6/30/98(D) 6/30/97(D)
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $12.92 $10.18 $12.91 $11.13 $12.92 $10.95
------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income.. 0.11 0.05 0.02 0.01 0.02 0.01
Net realized and
unrealized gain/(loss)
on investments........ (3.73) 2.71 (3.71) 1.79 (3.71) 1.96
------ ------ ------ ------ ------ ------
Total from investment
operations............ (3.62) 2.76 (3.69) 1.80 (3.69) 1.97
------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income..... (0.04) (0.02) (0.00)(e) (0.02) (0.00)(e) (0.00)(e)
Distributions from net
realized gains........ (0.05) -- (0.05) -- (0.05) --
Distributions in excess
of net realized gains. (0.22) -- (0.22) -- (0.22) --
------ ------ ------ ------ ------ ------
Total distributions.... (0.31) (0.02) (0.27) (0.02) (0.27) (0.00)(e)
====== ====== ====== ====== ====== ======
Net asset value, end of
period................. $ 8.99 $12.92 $ 8.95 $12.91 $ 8.96 $12.92
====== ====== ====== ====== ====== ======
Total return (b)....... (28.34)% 27.16% (28.90)% 16.21% (28.88)% 18.03%
====== ====== ====== ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $ 632 $ 532 $ 511 $ 134 $ 132 $ 24
Ratio of operating
expenses to average
net assets............ 1.89% 1.79%(c) 2.64% 2.54%(c) 2.64% 2.54%(c)
Ratio of net investment
income/(loss) to
average net assets.... 0.93% 1.14%(c) 0.18% 0.39%(c) 0.18% 0.39%(c)
Portfolio turnover
rate.................. 94% 46% 94% 46% 94% 46%
Ratio of operating
expenses to average
net assets without
expenses reimbursed... 2.14% 5.43%(c) 2.89% 6.18%(c) 2.89% 6.18%(c)
</TABLE>
- --------
(a) The Munder Framlington Emerging Markets Fund Class A Shares, Class B Shares
and Class C Shares commenced operations on January 14, 1997, February 25,
1997 and March 3, 1997, respectively. The Munder Framlington Healthcare
Fund Class A Shares, Class B Shares and Class C Shares commenced operations
on February 14, 1997, January 31, 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) Per share numbers have been calculated using the average shares method.
(e) Amount represents less than $0.01 per share.
30
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON HEALTHCARE FUND(A)
- ------------------------------------------------------------------------
YEAR PERIOD PERIOD PERIOD
ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED
6/30/98(D) 6/30/97 6/30/98(D) 6/30/97 6/30/98(D) 6/30/97
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C>
$ 10.89 $11.30 $10.85 $11.02 $10.86 $10.40
------------ ------ ------ ------ ------ ------
(0.15) (0.01) (0.23) (0.02) (0.23) (0.01)
1.08 (0.40) 1.07 (0.15) 1.06 0.47
------------ ------ ------ ------ ------ ------
0.93 (0.41 0.84 (0.17) 0.83 0.46
------------ ------ ------ ------ ------ ------
-- -- -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
------------ ------ ------ ------ ------ ------
-- -- -- -- -- --
============ ====== ====== ====== ====== ======
$ 11.82 $10.89 $11.69 $10.85 $11.69 $10.86
============ ====== ====== ====== ====== ======
8.54% (3.63)% 7.83% (1.54)% 7.73% 4.42%
============ ====== ====== ====== ====== ======
$ 4,984 $ 664 $8,664 $1,063 $3,378 $ 164
1.62% 1.55%(c) 2.37% 2.30%(c) 2.37% 2.30%(c)
(1.20)% (0.95)%(c) (1.95)% (1.70)%(c) (1.95)% (1.70)%(c)
47% 14% 47% 14% 47% 14%
2.40% 7.33%(c) 3.15% 8.08%(c) 3.15% 8.08%(c)
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON INTERNATIONAL GROWTH FUND (A)
---------------------------------------------------------------------
PERIOD PERIOD PERIOD
YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED
6/30/98(D) 6/30/97(D) 6/30/98(D) 6/30/97(D) 6/30/98(D) 6/30/97(D)
CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $11.35 $10.10 $11.32 $ 9.85 $11.33 $10.03
------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment
income/(loss)......... 0.02 0.05 (0.06) 0.01 (0.06) 0.01
Net realized and
unrealized gain on
investments........... 0.61 1.20 0.61 1.46 0.63 1.29
------ ------ ------ ------ ------ ------
Total from investment
operations............ 0.63 1.25 0.55 1.47 0.57 1.30
------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income..... (0.02) -- -- -- -- --
Distributions from net
realized gains........ (0.03) -- (0.03) -- (0.03) --
Distributions in excess
of net realized gains (0.01) -- (0.01) -- (0.01) --
------ ------ ------ ------ ------ ------
Total distributions.... (0.06) -- (0.04) -- (0.04) --
====== ====== ====== ====== ====== ======
Net asset value, end of
period................. $11.92 $11.35 $11.83 $11.32 $11.86 $11.33
====== ====== ====== ====== ====== ======
Total return (b)....... 5.60% 12.38% 4.88% 14.92% 5.05% 12.96%
====== ====== ====== ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $1,601 $1,103 $ 591 $ 128 $ 196 $ 62
Ratio of operating
expenses to average
net assets............ 1.62% 1.55%(c) 2.37% 2.30%(c) 2.37% 2.30%(c)
Ratio of net investment
income/(loss) to
average net assets.... 0.21% 1.01%(c) (0.54)% 0.26%(c) (0.54)% 0.26%(c)
Portfolio turnover
rate.................. 38% 15% 38% 15% 38% 15%
Ratio of operating
expenses to average
net assets without
expenses reimbursed... 1.82% 2.56%(c) 2.57% 3.31%(c) 2.58% 3.31%(c)
</TABLE>
- --------
(a) The Munder Framlington International Growth Fund Class A Shares, Class B
Shares and Class C Shares commenced operations on February 20, 1997, March
19, 1997 and February 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) Per share numbers have been calculated using the average shares method.
32
<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 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?"
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. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
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 Standard & Poor's
500 Composite Stock Price Index ("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.
33
<PAGE>
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 Old MCM, Inc.
("MCM"), the predecessor to the Advisor, since January 1987.
GROWTH OPPORTUNITIES 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 the
Equity Securities of companies with market capitalizations between $500
million and $10 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 MidCap 400 Index.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
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
American Depositary Receipts ("ADRs"). At least once a quarter, the Advisor
creates a list of Foreign Securities and ADRs (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 (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 100% 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
$250 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).
34
<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.
MULTI-SEASON GROWTH FUND
GOAL AND PRINCIPAL INVESTMENTS. 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 of companies 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. Leonard J. Barr II is the Fund's portfolio manager, a
position he has held since the Fund's inception in April 1993. Mr. Barr is the
Senior Vice President and Director of Research of the Advisor. From April 1988
to April 1993 he held similar positions with MCM.
NETNET FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. Under normal conditions, the Fund will invest at least
65% of its assets in Equity Securities.
In choosing which companies' stock the Fund should purchase, the Advisor
invests in those companies listed on a U.S. securities exchange or NASDAQ
which are engaged in the research, design, development or manufacturing, or
engaged to a significant extent in the business of distributing products,
processes or services for use with Internet or Intranet related businesses.
The Internet is a world-wide network of computers designed to permit users to
share information and transfer data quickly and easily. The World Wide Web
("WWW"), which is a means of graphically interfacing with the Internet, is a
hyper-text based publishing medium containing
35
<PAGE>
text, graphics, interactive feedback mechanisms and links within WWW documents
and to other WWW documents. An Intranet is the application of WWW tools and
concepts to a company's internal documents and databases.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
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 and Robert E. Crosby jointly manage
the Fund. Mr. Hoglund has managed the Fund since October 1996. Mr. Hoglund
formerly was the primary analyst of the Fund (October 1994 to October 1996).
Mr. Crosby has managed the Fund since March 1998. Mr. Crosby formerly was the
primary analyst of the Fund (October 1996 to March 1998). Mr. Crosby has been
with the Advisor since 1993, and also serves as portfolio manager for
separately managed institutional accounts.
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
$1 billion, which is less than the market capitalization of S&P 500
companies.
36
<PAGE>
The Advisor will concentrate on companies that it believes are undervalued.
A company's Equity Securities may be undervalued because the company 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, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive 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 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. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge Capital Management, Inc. ("Woodbridge") (1994-1995) and an
Assistant Vice President in Equity Research for Merrill Lynch, Pierce Fenner &
Smith in New York (1992-1994).
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 $1 billion, 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. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
37
<PAGE>
VALUE FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide long-
term capital appreciation, its secondary goal is to provide income. 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 the company 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, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive 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 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. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge (1994-1995) and an Assistant Vice President in Equity Research for
Merrill Lynch, Pierce Fenner & Smith in New York (1992-1994).
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. A committee of professional portfolio managers
employed by the Sub-Advisor makes investment decisions for the Fund. William
Calvert heads the committee.
38
<PAGE>
FRAMLINGTON GLOBAL FINANCIAL SERVICES FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. Under normal market conditions, the Fund invests at
least 65% of its assets in Equity Securities of U.S. and foreign companies
which are principally engaged in the financial services industry and companies
providing services primarily within the financial services industry. The Fund
focuses specifically on companies which are likely to benefit from growth or
consolidation in the financial services industry.
Examples of companies in the financial services industry are:
. commercial, industrial and investment banks
. savings and loan associations
. brokerage companies
. consumer and industrial finance companies
. real estate and leasing companies
. insurance companies
. holding companies for each of the above.
A company is "principally engaged" in the financial services industry if at
least 50% of its gross income, net sales or net profits comes from activities
in the financial services industry or if the company dedicates more than 50%
of its assets to the production of revenues from the financial services
industry.
Under normal market conditions, the Fund invests at least 65% of its assets
in at least three different countries, including the United States.
The Sub-Advisor allocates assets among countries based on its analysis of
the trends in the financial services industry in particular regions, the
relative valuation of financial services companies in different regions and
its assessment of the prospects for a particular equity market and its
currency.
PORTFOLIO MANAGEMENT. A committee of professional managers employed by the
Advisor or the Sub-Advisor makes decisions for the Fund.
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 these 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.
39
<PAGE>
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.
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 invests in EQUITY SECURITIES, which include 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.
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 ADRS, EUROPEAN DEPOSITARY RECEIPTS ("EDRS") and
GLOBAL DEPOSITARY 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.
40
<PAGE>
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.
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 can be changed only by shareholders.
All of the Funds, 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 a single 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.
41
<PAGE>
Investment Chart
The following 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>
MULTI-
GROWTH & GROWTH INTERNATIONAL MICRO-CAP SEASON
INVESTMENTS AND BALANCED INCOME OPPORTUNITIES EQUITY EQUITY GROWTH
INVESTMENT PRACTICES FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES. 25% 25% 25% Y 25% 25%
Includes securities
issued by non-U.S.
companies. Present more
risks than U.S.
securities.
- ------------------------------------------------------------------------------------------
LOWER-RATED DEBT Y 20% Y Y Y Y
SECURITIES. Fixed
Income Securities which
are rated below
investment grade by
Standard & Poor's
Ratings Service,
Moody's Investors
Service, Inc. or other
nationally recognized
rating agency.
Considered riskier than
investment grade
securities.
- ------------------------------------------------------------------------------------------
INVESTMENT-GRADE ASSET Y N N N N N
BACKED SECURITIES.
Includes debt
securities backed by
mortgages, installment
sales contracts and
credit card
receivables.
- ------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Y N N N N N
Includes participations
in trusts that hold
U.S. Treasury and
agency securities which
represent either the
interest payments or
principal payments on
the securities or
combination of both.
- ------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY Y Y Y Y Y Y
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 a currency
value, but also limits
gains from currency
changes.
- ------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES Y Y Y Y Y Y
AND FORWARD
COMMITMENTS. Agreement
by a Fund to purchase
securities at a set
price, with delivery
and 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 Y Y Y Y Y Y
FUTURES. (1) Contracts
in which a Fund has the
right or the
obligation, at
maturity, to make
delivery of or receive
securities, the cash
value of an index, or
foreign currency. Used
for hedging purposes or
to maintain liquidity.
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON
REAL ESTATE FRAMLINGTON GLOBAL
EQUITY SMALL EMERGING FINANCIAL FRAMLINGTON FRAMLINGTON
NETNET INVESTMENT SMALL-CAP COMPANY MARKETS SERVICES HEALTHCARE INTERNATIONAL
FUND FUND VALUE FUND GROWTH FUND VALUE FUND FUND FUND FUND GROWTH FUND
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Y N 25% 25% 25% Y Y Y Y
- ---------------------------------------------------------------------------------------------------------
N 5% Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------
N N N N N N Y N N
- ---------------------------------------------------------------------------------------------------------
N N N N N N Y N N
- ---------------------------------------------------------------------------------------------------------
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 Y Y
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
MULTI-
GROWTH & GROWTH INTERNATIONAL MICRO-CAP SEASON
INVESTMENTS AND BALANCED INCOME OPPORTUNITIES EQUITY EQUITY GROWTH
INVESTMENT PRACTICES FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPTIONS. A Fund may buy Y Y Y Y Y Y
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
securities indices,
individual securities,
foreign currencies or
futures contracts. See
the SAI for more
details and additional
limitations.
- -----------------------------------------------------------------------------------------
REVERSE REPURCHASE Y Y Y Y Y Y
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.
- -----------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT Y Y Y Y Y Y
TRUSTS. Companies,
usually traded
publicly, that manage
a portfolio of real
estate. Risks involved
in such investments
include vulnerability
to decline in real
estate prices and new
construction rates.
- -----------------------------------------------------------------------------------------
SHORT SALES. A N N N N N N
transaction in which
the Fund sells a
security it does not
own in anticipation
that the market price
of that security will
decline. It must
borrow the security
sold short and deliver
it to the broker-
dealer through which
it made the short sale
as collateral for its
obligation to deliver
the security upon
conclusion of the
sale. May also sell
securities that it
owns or has the right
to acquire at no
additional cost but
does not intend to
deliver to the buyer,
a practice known as
selling short "against
the box."
- -----------------------------------------------------------------------------------------
ILLIQUID SECURITIES. 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
Typically there is no
ready market for these
securities, which
inhibits the ability
to sell them for full
market value, or there
are legal restrictions
on their resale by the
Fund.
- -----------------------------------------------------------------------------------------
LENDING SECURITIES. A 25% 25% 25% 25% 25% 25%
Fund may lend
securities to
financial institutions
which pay for the use
of the securities. May
increase return.
Slight risk of
borrower failing
financially.
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON
REAL ESTATE FRAMLINGTON GLOBAL
EQUITY SMALL EMERGING FINANCIAL FRAMLINGTON FRAMLINGTON
NETNET INVESTMENT SMALL-CAP COMPANY MARKETS SERVICES HEALTHCARE INTERNATIONAL
FUND FUND VALUE FUND GROWTH FUND VALUE FUND FUND FUND FUND GROWTH FUND
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Y Y Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------
N N N N N N Y N N
- ---------------------------------------------------------------------------------------------------------
15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
- ---------------------------------------------------------------------------------------------------------
25% 25% 25% 25% 25% 25% 25% 25% 25%
</TABLE>
Key:
Y=Investment allowed without restriction
N=Investment not allowed
(1)The limitation on margins and premiums for futures and options on futures is
5% of a Fund's assets.
(2)Based on net assets.
45
<PAGE>
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 is 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); (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; and (7)
inability to close out certain hedged positions to avoid adverse tax
consequences.
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. A
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.
Growth Opportunities Fund, Micro-Cap Equity Fund, NetNet Fund, Small-Cap
Value 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 Global Financial Services
Fund, Framlington International Growth Fund and International Equity Fund
Investing in any of these Funds, with their 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
46
<PAGE>
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 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.
Framlington Global Financial Services Fund
Financial services companies are subject to extensive governmental
regulation which may limit both the amount and types of loans and other
financial commitments they can make, and the interest rates and fees they can
charge. Profitability is largely dependent on the availability and cost of
capital funds, and can fluctuate significantly when interest rates change.
Credit losses resulting from financial difficulties of borrowers can
negatively impact the industry. Insurance companies may be subject to severe
price competition. Legislation is currently being considered which would
reduce the separation between commercial and investment banking businesses. If
enacted, this could significantly impact the industry and the Fund. The Fund
may be riskier than a fund investing in a broader range of industries.
Although securities of large and well-established companies in the financial
services industry will be held in the Fund's portfolio, the Fund also will
invest in medium, small and/or newly-public companies which may be subject to
greater share price fluctuations and declining growth, particularly in the
event of rapid changes in the industry and/or increased competition.
Securities of those smaller and/or less seasoned companies may, therefore,
expose shareholders of the Fund to above-average risk.
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.
NetNet Fund
The Fund will invest primarily in companies engaged in Internet and Intranet
related activities. The value of such companies is particularly vulnerable to
rapidly changing technology, extensive government regulation and relatively
high risks of obsolescence caused by scientific and technological advances.
The value of the Fund's shares may fluctuate more than shares of a fund
investing in a broader range of industries.
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.
PERFORMANCE
HOW IS THE FUND'S 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
47
<PAGE>
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 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>
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C>
. Front end sales charge. . No front end sales charge. . No front end sales charge
There are several ways to All your money goes to work or CDSC, except for a CDSC
reduce these sale charges. for you right away. for redemptions made within
the first year after in-
vesting. All your money
goes to work for you right
away.
. Lower annual expenses than . Higher annual expenses . Shares do not convert to
Class B and Class C Shares. than Class A Shares. another class.
. A CDSC on shares you sell . Higher annual expenses
within six years of pur- than Class A Shares.
chase.
. Automatic conversion to
Class A Shares approxi-
mately six years after is-
suance, thus
reducing future annual
expenses.
. CDSC is waived for certain
redemptions.
</TABLE>
48
<PAGE>
Each Fund other than the NetNet Fund issues Class K and Class Y Shares,
which have different sales charges, expense levels and performance. The NetNet
Fund offer only Class Y Shares. 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?
The purchase price for Class A Shares is the net asset value ("NAV") next
determined after we receive your order in proper form PLUS any applicable
sales charge. The purchase price for Class B and Class C Shares is the NAV
next determined after we receive your order in proper form. 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 NAV on
each day the New York Stock Exchange ("NYSE") is open for trading (a "Business
Day") at the close of such trading on the NYSE (normally 4:00 p.m. Eastern
time). Each Fund calculates NAV separately for each class of shares. 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>
SALES CHARGE
AS A PERCENTAGE OF
-------------------- DEALER REALLOWANCE AS
YOUR NET ASSET A PERCENTAGE
INVESTMENT VALUE OF THE OFFERING PRICE
---------- --------- ---------------------
<S> <C> <C> <C>
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)**
</TABLE>
- --------
*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.
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' service providers 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);
49
<PAGE>
(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 (including customers of such banks and other
financial institutions, and the immediate family members of such
customers);
(8) fee-based 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");
(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";
and
(11) with respect to subsequent purchases of shares of the NetNet Fund,
individuals who were shareholders of the NetNet Fund prior to June 1,
1998.
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) or
Section 403(b) of the Code (each, a "Qualified Employee Benefit Plan") and
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"), UPI Plans and Merrill Lynch
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 Plans for employees participating in an employer-sponsored or
administered retirement program operating under Section 408A of the Code and
(ii) the CDSC of 1% imposed on certain redemptions within one year of purchase
for these accounts. 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
50
<PAGE>
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.
. 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.
. RIGHT OF ACCUMULATION. You may add the value of any shares of non-money
market funds of the Trust, the Company or Framlington you already own to
the amount of your next Class A Share 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.
WHAT IS THE MINIMUM REQUIRED INVESTMENT?
The minimum initial investment for Class A, Class B and Class C Shares of a
Fund is $250 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.
. 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.
. BY MAIL. You may open an account by completing, signing and mailing the
attached Account Application Form and a check or other negotiable bank
draft (payable to The Munder Funds) for $250 or more to: THE MUNDER
FUNDS, C/O FIRST DATA INVESTOR SERVICES GROUP, P.O. BOX 5130,
WESTBOROUGH, MASSACHUSETTS 01581-5130. 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.
. 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
51
<PAGE>
number to the Transfer Agent 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.
. 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.
. 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.
We do not issue share certificates. 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 funds 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.
. 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.
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<PAGE>
. EXCHANGES BY MAIL. You may send exchange orders to your broker or to the
Transfer Agent at The Munder Funds c/o First Data 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 NAV next determined after we receive the
redemption request in proper form. 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.
These time periods include the time you held Class B or Class C Shares which
you may have exchanged for Class B or Class C Shares of the Fund.
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.
CLASS B SHARES
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE CDSC
- -------------------- ----
<S> <C>
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.
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<PAGE>
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
. redemptions limited to 10% per year of an account's NAV. For example, if
you maintain an annual balance of $10,000 you can redeem up to $1,000
annually free of charge.
Consult the SAI for Class B Share CDSC waivers which apply when you redeem
shares acquired in an exchange of shares of another Fund of the Company or the
Trust that were 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 Fund cannot sell its assets or accurately
determine the value of its assets or if the SEC orders the Fund to suspend
redemptions.
HOW CAN I REDEEM SHARES?
You may redeem shares of the Funds in several ways:
. BY MAIL. You may mail your redemption request to: THE MUNDER FUNDS, C/O
FIRST DATA 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 share
certificate has been issued to you, you must endorse the share
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.
. 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.
54
<PAGE>
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 CDSC's when you redeem shares.
. INVOLUNTARY REDEMPTION. We may redeem your account if its value falls
below $250 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 AND SUB-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, WAM Holdings, Inc. ("WAM") and WAM
Holdings II, Inc. ("WAM II"). MCM was founded in April, 1985 as a Delaware
corporation and was a registered investment advisor. WAM and WAM II are
Delaware corporations and are indirect, wholly-owned subsidiaries of Comerica
Incorporated, a Michigan banking corporation, which owns or controls
approximately 88% of the partnership interests in the Advisor. As of June 30,
1998, the Advisor and its affiliates had approximately $48.2 billion in assets
under management, of which $25.4 billion were invested in equity securities,
$8.1 billion were invested in money market or other short-term instruments,
$9.2 billion were invested in other fixed income securities and $5.5 billion
in non-discretionary assets.
The Advisor provides overall investment management and research and credit
analysis for each Fund and is responsible for all purchases and sales of
portfolio securities for each Fund other than the Framlington Funds.
55
<PAGE>
Framlington Overseas Investment Management Limited is the sub-advisor of the
Framlington Funds. The Sub-Advisor 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.
The Sub-Advisor provides research and credit analysis for each of the
Framlington Funds and is responsible for all purchase and sales of portfolio
securities for each of the Framlington Funds other than the Framlington Global
Financial Services Fund. Each of the Advisor and Sub-Advisor manages a portion
of the assets of the Framlington Global Financial Services Fund. The Advisor
is responsible for all purchases and sales of domestic securities held by the
Fund. The Sub-Advisor is responsible for the allocation of the Fund's assets
among countries and for all purchases and sales of foreign securities held by
the Fund.
During the fiscal year ended June 30, 1998, 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>
<S> <C>
Balanced Fund...................... 0.65%
Framlington Emerging Markets Fund.. 1.25%
Framlington Global Financial Serv-
ices Fund......................... 0.75%
Framlington Healthcare Fund........ 1.00%
Framlington International Growth
Fund.............................. 1.00%
Growth & Income Fund............... 0.75%
Growth Opportunities Fund.......... 0.75%
International Equity Fund.......... 0.75%
</TABLE>
<TABLE>
<S> <C>
Micro-Cap Equity Fund.............. 1.00%
Multi-Season Growth Fund........... 0.75%
NetNet Fund........................ 1.00%
Small Company Growth Fund.......... 0.75%
Real Estate Equity Investment Fund. 0.74%
Small-Cap Value Fund............... 0.75%
Value Fund......................... 0.74%
</TABLE>
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 and
.75% of the Fund's average daily net assets over $500 million. During the past
fiscal year, the Advisor waived advisory fees for the Multi- Season Growth
Fund.
During the fiscal year ended June 30, 1998, the Sub-Advisor received 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 or Sub-Advisor, in the case of the Framlington Funds, selects
broker-dealers to execute portfolio transactions for the Funds based on best
price and execution terms. The Advisor or Sub-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 Standard & Poor's 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
56
<PAGE>
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, as amended
(the "1940 Act") and requirements of the Internal Revenue Code of 1986, as
amended, to qualify as a regulated investment company.
<TABLE>
<CAPTION>
UK S&P HEALTHCARE
PERIOD ENDED HEALTH COMPOSITE INDEX
DECEMBER 31, 1996 PORTFOLIO CAPITAL CHANGE
- ----------------- --------- ---------------
<S> <C> <C>
1 Year................................................ 10.75% 18.48%
3 Years............................................... 96.93% 100.49%
5 Years............................................... 99.43% 45.60%
Inception on April 30, 1987........................... 411.08% 239.64%
</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: Standard & Poor's 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>
CANADIAN
EMERGING MSCI EMERGING
PERIOD ENDED MARKETS MARKETS FREE
DECEMBER 31, 1996 ACCOUNT TOTAL RETURN
- ----------------- -------- -------------
<S> <C> <C>
1 Year................................................... 5.16 % 6.03 %
Inception on November 1, 1994............................ (3.68)% (12.37)%
</TABLE>
MSCI Emerging Markets Free 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 United States only.
The MSCI Emerging Markets Free Index is maintained by Morgan Stanley Capital
International and covers 26 countries and represents the investment
opportunities in emerging markets available to foreign investors. 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. The Transfer Agent is a wholly owned subsidiary of First Data
Corporation and is located at 4400 Computer Drive, Westborough, Massachusetts,
01581-5120.
ADMINISTRATOR. State Street Bank and Trust Company ("State Street" or
"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 its administration
and operations including
57
<PAGE>
overseeing the maintenance of financial records and fund accounting. As
compensation for its services for the Company, the Trust and Framlington,
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 annual rate of 0.113% on the first $2.8 billion of net assets,
plus 0.103% on the next $2.2 billion of net assets, plus 0.101% on the next
$2.5 billion of net assets, plus 0.095% on the next $2.5 billion of net
assets, plus 0.080% on the next $2.5 billion of net assets, plus 0.070% on all
net assets in excess of $12.5 billion (with a $75,000 minimum fee per annum in
the aggregate for all portfolios with respect to the Administrator). If the
assets of the Framlington Funds do not exceed $120 million, the ultimate rate
charged the Framlington Funds will be reduced by their pro-rata portion of the
total fees if calculated at the rates of 0.062% of the first $2.8 billion of
net assets, plus 0.052% of the next $2.2 billion of net assets, plus 0.050% of
all net assets in excess of $5 billion.
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 AND SUB-CUSTODIAN. Comerica Bank ("Comerica" or the "Custodian"),
whose principal business address is One Detroit Center, 500 Woodward Avenue,
Detroit, Michigan 48226, is the Funds' custodian. No compensation is paid to
the Custodian for its custodial services. Comerica receives a fee of 0.01% of
the aggregate average daily net assets of the Funds beneficially owned by
Comerica and its customers for certain shareholder services provided by
Comerica to the Funds. State Street serves as the Funds' sub-custodian.
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.
YEAR 2000. The Funds' operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to
as the "Year 2000 Issue," could adversely affect the handling of securities
trades, pricing and account servicing for the Funds. The Funds have been
informed that their major service providers have made compliance with the Year
2000 Issue a high priority and are taking steps that they believe are
reasonably designed to address the Year 2000 Issue with respect to their
computer systems. There can be, however, no assurance that these steps will be
successful, or that interaction with other non-complying computer systems will
not impair their services at that time.
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.
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<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 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 Balanced Fund, Growth &
Income Fund, Index 500 Fund and Small Company Growth Fund pay dividends
quarterly. The Framlington Emerging Markets Fund, Framlington Healthcare Fund,
Framlington International Growth Fund, Framlington Global Financial Services
Fund, International Equity Fund, Growth Opportunities Fund, Micro-Cap Equity
Fund, Multi-Season Growth Fund, NetNet Fund, Small-Cap Value Fund and Value
Fund pay dividends annually. The Real Estate Equity Investment Fund pays
dividends monthly. 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 about the tax treatment of
distributions from the Funds and about other potential tax liabilities,
including backup withholding for certain taxpayers, and about tax aspects of
dispositions of shares of the Funds, 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.
In general, as long as each Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. Each Fund intends to
qualify annually as a RIC. Even if it qualifies as a RIC, a Fund may still be
liable for any excise tax on income that is not distributed in accordance with
a calendar year requirement; the Funds intend to avoid the excise tax by
making timely distributions.
59
<PAGE>
Generally, you will owe tax on the amounts distributed to you, regardless of
whether you receive these amounts in cash or reinvest them in additional Fund
shares. Shareholders not subject to tax on their income generally will not be
required to pay any tax on amounts distributed to them. Federal income tax on
distributions to an IRA or to a qualified retirement plan will generally be
deferred.
Capital gains derived from sales of portfolio securities held by a Fund will
generally be designated as long-term or short-term. Distributions from a
Fund's long-term capital gains are generally taxed at the long-term capital
gains rate regardless of how long you have owned shares in the Fund. Dividends
from other sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from each Fund in which
you are a shareholder a statement of the amount and nature of the
distributions made to you during the year.
If you redeem, transfer or exchange Fund shares, you may have taxable gain
or a loss. If you hold Fund shares for six months or less, and during that
time you receive a capital gain dividend, any loss you realize on the sale of
these Fund shares will be treated as a long-term loss to the extent of the
earlier distribution.
Dividends and certain interest income earned from foreign securities by a
Fund may be subject to foreign withholding or other taxes. A Fund may be
permitted to pass on to its shareholders the right to a credit or deduction
for income or other tax credits earned from foreign investments and it intends
to do so if possible. These deductions or credits may be subject to tax law
limitations.
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 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 of the
QEF, regardless of whether received, and such amounts will be subject to the
various distribution requirements described above. The Funds may also elect to
mitigate the tax effects of owning PFIC stock by making an annual mark-to-
market election with respect to PFIC shares.
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.
60
<PAGE>
Application [THE MUNDER FUNDS LOGO]
FOR NEW ACCOUNTS
PLEASE MAIL YOUR COMPLETE APPLICATION (printed or typed) ALONG WITH YOUR CHECK
TO:
The Munder Funds
c/o First Data Investor Services Group, Inc.
P.O. Box 5130
Westborough, MA 01581-5130
If you have questions regarding this application, please telephone the Transfer
Agent at 1.800.438.5789
1. ACCOUNT REGISTRATION
- --------------------------------------------------------------------------------
Name Social Security Number
- --------------------------------------------------------------------------------
Joint Owner (if any) (If Joint Tenancy, use Social Security
Number 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
-------------
<PAGE>
3. INITIAL INVESTMENT
With as little as $250* 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.
<TABLE>
<CAPTION>
NAME OF FUND CLASS A CLASS B CLASS C INVESTMENT AMOUNT
<S> <C> <C> <C> <C>
[_] Munder All-Season Aggressive Fund [_] [_] N/A $________________
[_] Munder All-Season Moderate Fund [_] [_] N/A $________________
[_] Munder All-Season Conservative Fund [_] [_] N/A $________________
[_] Munder Balanced Fund [_] [_] [_] $________________
[_] Munder Growth & Income Fund [_] [_] [_] $________________
[_] Munder Growth Opportunities Fund [_] [_] [_] $________________
[_] Munder Index 500 Fund [_] [_] N/A $________________
[_] Munder International Equity Fund [_] [_] [_] $________________
[_] Munder Micro-Cap Equity Fund [_] [_] [_] $________________
[_] Munder Multi-Season Growth Fund [_] [_] [_] $________________
[_] Munder NetNet 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 Global Financial Services Fund [_] [_] [_] $________________
[_] Munder Framlington Healthcare Fund [_] [_] [_] $________________
[_] Munder Framlington International Growth Fund [_] [_] [_] $________________
[_] Munder Bond Fund [_] [_] [_] $________________
[_] Munder Intermediate Bond Fund [_] [_] [_] $________________
[_] Munder International Bond Fund [_] [_] [_] $________________
[_] Munder Michigan 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 N/A $________________
[_] Munder Tax-Free Money Market Fund [_] N/A N/A $________________
[_] Munder U.S. Treasury Money Market Fund [_] N/A N/A $________________
[_] Other Munder Fund _______________________________ [_] [_] [_] $________________
Total Amount Invested $________________
</TABLE>
[_] 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).
+ Available through exchange from other Munder Funds only
<PAGE>
4. DISTRIBUTION OPTION (check one. If none, "A" will be assigned)
[_] 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.
Fill out banking information in Section 10
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 basis (please choose either the [_] 5th
or the [_] 20th of the month) 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)
Fill out banking information in Section 10
6. CHECKWRITING PRIVILEGES (optional)
Income & Money Market Class A shares only
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)
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:
-------------------------------
<PAGE>
7. AUTOMATIC WITHDRAWAL PLAN (optional)
<TABLE>
<CAPTION>
<S> <C>
The minimum account balance must be $2,500 or more.
Fill out banking information in Section 10
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 Payment ($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:
_______________________________________________________________________________ [_] Checking OR [_] Savings Account
Name (if bank indicate account number)
_______________________________________________________________________________________________________________________
Address
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)
8. REDUCED SALES CHARGE (optional)
[_] 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.
_______________________________________________________________________________________________________________________
Name of Fund Account Number
_______________________________________________________________________________________________________________________
Name of Fund Account Number
_______________________________________________________________________________________________________________________
Name of Fund Account Number
[_] Letters 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 least" (check one):
[_] $25,000 [_] $50,000 [_] $100,000
[_] $250,000 [_] $500,000 [_] $1,000,000
</TABLE>
<PAGE>
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
10. BANKING INFORMATION
To be completed with Section 4 (Distribution Option)
I(We) authorize The Munder Funds to deposit distributions into the following
[ ] Checking [ ] Savings account:
________________________________________________________________________________
Bank Name Address
________________________________________________________________________________
ABA Number (Bank Routing Number) Account Number Bank Account Registration
________________________________________________________________________________
Wiring Instructions
To be completed with Section 5 (Automatic Investment Plan)
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
To be completed with Section 7 (Automatic Withdrawal Plan)
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 the 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
<PAGE>
11. 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.)
The Internal Revenue Service requires that all taxpayers provide their Taxpayer
Identification Numbers (Social Security Numbers) and sign in the space provided
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).
- --------------------------------------------------------------------------------
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 used 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 distributions 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 Name
- --------------------------------------------------------------------------------
Signature of Owner Date Name
<PAGE>
================================================================================
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
================================================================================
<PAGE>
================================================================================
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. F078
APPABC98
<PAGE>
CLASS K SHARES
Prospectus
OCTOBER 27, 1998
THE MUNDER EQUITY FUNDS
Balanced
Growth & Income
Growth Opportunities
Index 500
International Equity
Micro-Cap Equity
Multi-Season Growth
Real Estate Equity Investment
Small-Cap Value
Small Company Growth
Value
THE MUNDER FRAMLINGTON FUNDS
Framlington Emerging Markets
Framlington Global Financial Services
Framlington Healthcare
Framlington International Growth
THE MUNDER INCOME FUNDS
Bond
Intermediate Bond
International Bond
U.S. Government Income
Michigan Tax-Free Bond
Tax-Free Bond
Tax-Free Intermediate Bond
THE MUNDER MONEY MARKET FUNDS
Cash Investment
Tax-Free Money Market
U.S. Treasury Money Market
Prospectus begins on next page
<PAGE>
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"):
Munder Balanced Fund Munder Framlington Healthcare Fund
Munder Growth & Income Fund Munder Framlington International
Munder Growth Opportunities Fund Growth Fund
Munder Index 500 Fund Munder Bond Fund
Munder International Equity Fund Munder Intermediate Bond Fund
Munder Micro-Cap Equity Fund Munder International Bond Fund
Munder Multi-Season Growth Fund Munder U.S. Government Income Fund
Munder Michigan Tax-Free Bond Fund*
Munder Real Estate Equity Investment Fund
Munder Small-Cap Value Fund
Munder Small Company Growth Fund Munder Tax-Free Bond Fund
Munder Value Fund Munder Tax-Free Intermediate Bond Fund
Munder Framlington Emerging Markets FundMunder Cash Investment Fund
Munder Tax-Free Money Market Fund
Munder Framlington Global Financial Services Fund
Munder U.S. Treasury Money Market Fund
- --------
*The Michigan Tax-Free Bond Fund (formerly known as the Michigan Triple Tax-
Free Bond Fund) is offered only in the State of Michigan.
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 SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES:
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Highlights
What are the key facts regarding the Funds?.............................. 3
Financial Information...................................................... 7
Fund Choices
What Funds are offered?.................................................. 30
Who may want to invest in the Funds?..................................... 40
What are the Funds' investments and investment practices?................ 41
What are the risks of investing in the Funds?............................ 52
Performance
How is the Funds' performance calculated?................................ 54
Where can I obtain performance data?..................................... 55
Purchases of Shares
What price do I pay for shares?.......................................... 55
When can I purchase shares?.............................................. 55
How can I purchase shares?............................................... 55
Redemptions of Shares
What price do I receive for redeemed shares?............................. 56
When can I redeem shares?................................................ 56
How can I redeem shares?................................................. 56
When will I receive redemption amounts?.................................. 56
Structure and Management of the Funds
How are the Funds structured?............................................ 56
Who manages and services the Funds?...................................... 56
What are my rights as a shareholder?..................................... 62
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?........................ 62
How will distributions be made?.......................................... 62
Are there tax implications of my investments in the Funds?............... 63
Additional Information..................................................... 63
Appendix A................................................................. A-1
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUNDS?
Q: What are the Funds' goals?
A:
. The Framlington Emerging Markets Fund, Framlington Global Financial
Services Fund, Framlington Healthcare Fund, Framlington International
Growth Fund, Growth Opportunities Fund, International Equity Fund, Micro-
Cap Equity Fund, Multi-Season Growth Fund, Small-Cap Value Fund, Small
Company Growth Fund and Value Fund primarily seek to provide long-term
capital appreciation.
. 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").
. The Balanced Fund, Growth & Income Fund and Real Estate Equity Investment
Fund seek to provide capital appreciation and current income.
. The Bond Fund seeks to provide a high level of current income with capital
appreciation as a secondary consideration.
. 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.
. The International Bond Fund seeks to provide a competitive total return
through a combination of current income and capital appreciation.
. The U.S. Government Income Fund seeks to provide high current income.
. The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund seek to provide
current interest income exempt from Federal income taxes.
. The Michigan Tax-Free Bond Fund seeks to provide as high a level of
current interest income exempt from regular Federal income taxes and
Michigan state income tax as is consistent with prudent investment
management and preservation of capital.
. 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.
. 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: BALANCED FUND
. 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.
FRAMLINGTON EMERGING MARKETS FUND, FRAMLINGTON GLOBAL FINANCIAL SERVICES FUND,
FRAMLINGTON HEALTHCARE FUND, FRAMLINGTON INTERNATIONAL GROWTH FUND, GROWTH &
INCOME FUND, GROWTH OPPORTUNITIES FUND, INDEX 500 FUND, INTERNATIONAL EQUITY
FUND, MICRO-CAP EQUITY FUND, MULTI-SEASON GROWTH FUND, REAL ESTATE EQUITY
INVESTMENT FUND, SMALL-CAP VALUE FUND, SMALL COMPANY GROWTH FUND AND VALUE
FUND (THE "EQUITY FUNDS")
. These Funds invest primarily in Equity Securities.
3
<PAGE>
INDEX 500 FUND
. 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")
. These Funds, other than the U.S. Government Income Fund, invest primarily
in Fixed Income Securities.
. The U.S. Government Income Fund invests primarily in obligations of the
U.S. government and its agencies and instrumentalities.
MICHIGAN TAX-FREE BOND FUND, TAX-FREE BOND FUND AND TAX-FREE INTERMEDIATE BOND
FUND (THE "TAX-FREE FUNDS")
. 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.
. The Michigan 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 and Michigan state
income tax.
CASH INVESTMENT FUND, TAX-FREE MONEY MARKET FUND AND U.S. TREASURY MONEY
MARKET FUND (THE "MONEY MARKET FUNDS")
. These 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: The following table summarizes the primary risks of investing in the Funds:
<TABLE>
<CAPTION>
FUND RISK
----------------------------------------------------------------------------
<C> <S>
Balanced Fund and Equity Funds Potential loss of investment due
to changes in the stock market in
general, changes in the stock
prices of particular companies and
perceptions about particular
industries.
----------------------------------------------------------------------------
Bond Funds and Tax-Free Funds Potential loss of investment due
to changes in the bond market in
general, in the prices of debt
securities of particular companies
and in interest rates.
----------------------------------------------------------------------------
Money Market Funds Potential failure to maintain a
$1.00 net asset value.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
FUND RISK
----------------------------------------------------------------------------
<C> <S>
International Bond Fund, Because of large investments in
International Equity Fund, foreign securities, the Funds are
Framlington Emerging Markets Fund, riskier than domestic funds due to
Framlington Global Financial Services factors such as freezes on
Fund and convertibility of currency,
Framlington International Growth Fund changes in exchange rates,
political instability and
differences in accounting and
reporting standards.
----------------------------------------------------------------------------
Growth Opportunities Fund, Because of large investments in
Micro-Cap Equity Fund, mid-capitalization, small-
Small-Cap Value Fund and capitalization and/or emerging
Small Company Growth Fund growth companies, the Funds are
riskier than large-capitalization
funds since such companies
typically have greater earnings
fluctuations and greater reliance
on a few key customers than larger
companies.
----------------------------------------------------------------------------
Real Estate Equity Investment Fund, These Funds concentrate their
Framlington Global Financial Services investments in single industries
Fund and and could experience larger price
Framlington Healthcare Fund fluctuations than funds invested
in a broader range of industries.
----------------------------------------------------------------------------
International Bond Fund, These "non-diversified" Funds
Michigan Tax-Free Bond Fund and concentrate their investments in
Tax-Free Intermediate Bond Fund fewer issuers than diversified
funds, and could experience larger
price fluctuations than
diversified funds.
</TABLE>
Q: What are the options for investment in the Funds?
A: Each Equity, Bond and Tax-Free 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 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: .Free Checkwriting (certain Funds only--See "Redemption of Shares").
5
<PAGE>
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses. Dividends paid at least annually: Framlington
Emerging Markets Fund, Framlington Global Financial Services Fund, Framlington
Healthcare Fund, Framlington International Growth Fund, Growth Opportunities
Fund, International Equity Fund, Micro-Cap Equity Fund, Multi-Season Growth
Fund, Small-Cap Value Fund and Value Fund.
Dividends paid at least quarterly (if income is available): Balanced Fund,
Growth & Income Fund, Index 500 Fund, Small Company Growth Fund and
International Bond Fund.
Dividends paid monthly: Real Estate Equity Investment Fund, Bond Fund,
Intermediate Bond Fund, U.S. Government Income Fund, Michigan Tax-Free Bond
Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund.
Dividends declared daily and paid monthly: Cash Investment Fund, Tax-Free
Money Market Fund, and U.S. Treasury Money Market Fund.
The Funds distribute capital gains, if any, 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 services for the Framlington Funds. Framlington Overseas Investment
Management Limited (the "Sub-Advisor") is responsible for all purchases and
sales of securities held by the Framlington Emerging Markets Fund, Framlington
Healthcare Fund and Framlington International Growth Fund. The Advisor is
responsible for purchases and sales of domestic securities and the Sub-Advisor
is responsible for purchases and sales of foreign securities for Framlington
Global Financial Services Fund.
6
<PAGE>
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.
<TABLE>
<S> <C>
Maximum Sales Charge on Purchase (as a % of Offering Price)................ None
Sales Charges Imposed on Reinvested Dividends.............................. None
Maximum Deferred Sales Charge.............................................. None
Redemption Fees (2)........................................................ None
Exchange Fees.............................................................. None
</TABLE>
- --------
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.
7
<PAGE>
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 for the current fiscal year. Such expenses include payments to
Trustees, Directors, auditors, legal counsel and service providers (such as
the Advisor) and registration fees. The expenses shown below are based on
expenses for the Funds' past fiscal year, except (i) the expenses for the
Growth Opportunities Fund and the Framlington Global Financial Services Fund
are based on estimated operating expenses for the current fiscal year; and
(ii) the expenses for the Framlington Emerging Markets Fund and the
Framlington International Growth Fund have been restated to reflect
anticipated voluntary expense reimbursements for the current fiscal year.
<TABLE>
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES GROWTH & GROWTH
(AS A % OF AVERAGE NET INCOME OPPORTUNITIES INDEX 500
ASSETS) BALANCED FUND FUND FUND FUND
- ---------------------- ------------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Advisory Fees........... .65% .75% .75% .07%*
Shareholder Servicing
Fees................... .25% .25% .25% .25%
Other Expenses+......... .27% .19% .40%++ .22%
----- ----- ----- -----
Total Fund Operating
Expenses+.............. 1.17% 1.19% 1.40%++ .54%*
===== ===== ===== =====
<CAPTION>
ANNUAL FUND MICRO- REAL ESTATE
OPERATING EXPENSES CAP EQUITY
(AS A % OF AVERAGE NET INTERNATIONAL EQUITY MULTI-SEASON INVESTMENT SMALL-CAP
ASSETS) EQUITY FUND FUND GROWTH FUND FUND VALUE FUND
- ---------------------- ------------- -------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Advisory Fees........... .75% 1.00% .75%* .74% .75%
Shareholder Servicing
Fees................... .25% .25% .25% .25% .25%
Other Expenses+......... .25% .28%++ .21% .29% .27%
----- ----- ----- ----- -----
Total Fund Operating
Expenses+.............. 1.25% 1.53%++ 1.21%* 1.28% 1.27%
===== ===== ===== ===== =====
<CAPTION>
ANNUAL FUND FRAMLINGTON
OPERATING EXPENSES FRAMLINGTON GLOBAL FRAMLINGTON
(AS A % OF AVERAGE NET SMALL COMPANY VALUE EMERGING FINANCIAL HEALTHCARE
ASSETS) GROWTH FUND FUND MARKETS FUND SERVICES FUND FUND
- ---------------------- ------------- -------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Advisory Fees........... .75% .74% 1.25% .75% 1.00%
Shareholder Servicing
Fees................... .25% .25% .25% .25% .25%
Other Expenses+......... .20% .25% .32%++ .40%++ .33%++
----- ----- ----- ----- -----
Total Fund Operating
Expenses+.............. 1.20% 1.24% 1.82%++ 1.40%++ 1.58%++
===== ===== ===== ===== =====
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES FRAMLINGTON U.S.
(AS A % OF AVERAGE NET INTERNATIONAL BOND INTERMEDIATE INTERNATIONAL GOVERNMENT
ASSETS) GROWTH FUND FUND BOND FUND BOND FUND INCOME FUND
- ---------------------- ------------- -------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Advisory Fees........... 1.00% .50% .50% .50% .50%
Shareholder Servicing
Fees................... .25% .25% .25% .25% .25%
Other Expenses+......... .33%++ .21% .18% .36% .19%
----- ----- ----- ----- -----
Total Fund Operating
Expenses+.............. 1.58%++ .96% .93% 1.11% .94%
===== ===== ===== ===== =====
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES MICHIGAN TAX- TAX-FREE TAX-FREE CASH TAX-FREE
(AS A % OF AVERAGE NET FREE BOND BOND INTERMEDIATE INVESTMENT MONEY
ASSETS) FUND FUND BOND FUND FUND MARKET FUND
- ---------------------- ------------- -------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Advisory Fees........... .50% .50% .50% .35% .35%
Shareholder Servicing
Fees................... .25% .25% .25% .15% .15%
Other Expenses.......... .23% .18% .19% .16% .19%
----- ----- ----- ----- -----
Total Fund Operating
Expenses............... .98% .93% .94% .66% .69%
===== ===== ===== ===== =====
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES U.S. TREASURY MONEY
(AS A % OF AVERAGE NET ASSETS) MARKET FUND
- ------------------------------ -------------------
<S> <C>
Advisory Fees............................................... .35%
Shareholder Servicing Fees.................................. .15%
Other Expenses.............................................. .22%
----
Total Fund Operating Expenses............................... .72%
====
</TABLE>
- --------
* The Advisor expects to voluntarily waive a portion of its advisory fees for
the current fiscal year. Without waiver, the ratio of advisory fees to
average net assets would be .93% for the Multi-Season Growth Fund and .13%
for the Index 500 Fund and total fund operating expenses would be 1.39% for
the Multi-Season Growth Fund and .60% for the Index 500 Fund. The Advisor
may discontinue such voluntary waivers at any time in its sole discretion.
+ After expense reimbursements, if any.
++ The Advisor expects to voluntarily reimburse the Funds for certain
operating expenses. In the absence of such expense reimbursements, the
total fund operating expenses would be as follows: 2.14% for Framlington
Emerging Markets Fund, 2.40% for the Framlington Healthcare Fund, 1.82% for
Framlington International Growth Fund and 1.78% for the Micro-Cap Equity
Fund; and it is estimated the total fund operating expenses would be 1.41%
for the Growth Opportunities Fund and 1.57% for the Framlington Global
Financial Services Fund. The Advisor may discontinue such voluntary expense
reimbursements at any time in its sole discretion.
9
<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
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>
1 YEAR 3 YEAR 5 YEAR 10 YEARS
------ ------ ------ --------
<S> <C> <C> <C> <C>
Balanced Fund..................................... $12 $37 $65 $146
Growth & Income Fund.............................. $12 $38 $66 $143
Growth Opportunities Fund......................... $14 $44 -- --
Index 500 Fund.................................... $ 6 $17 $30 $ 68
International Equity Fund......................... $13 $40 $69 $153
Micro-Cap Equity Fund............................. $16 $48 $84 $183
Multi-Season Growth Fund.......................... $12 $38 $67 $147
Real Estate Equity Investment Fund................ $13 $41 $70 $155
Small-Cap Value Fund.............................. $13 $40 $70 $154
Small Company Growth Fund......................... $12 $38 $66 $146
Value Fund........................................ $13 $39 $68 $151
Framlington Emerging Markets Fund................. $19 $57 $99 $214
Framlington Global Financial Services Fund........ $14 $44 -- --
Framlington Healthcare Fund....................... $16 $50 $86 $188
Framlington International Growth Fund............. $16 $50 $86 $188
Bond Fund......................................... $10 $31 $53 $118
Intermediate Bond Fund............................ $10 $30 $52 $115
International Bond Fund........................... $11 $35 $61 $136
U.S. Government Income Fund....................... $10 $30 $52 $116
Michigan Tax-Free Bond Fund....................... $10 $31 $54 $121
Tax-Free Bond Fund................................ $10 $30 $52 $115
Tax-Free Intermediate Bond Fund................... $10 $30 $52 $116
Cash Investment Fund.............................. $ 7 $21 $37 $ 83
Tax-Free Money Market Fund........................ $ 7 $22 $39 $ 86
U.S. Treasury Money Market Fund................... $ 7 $23 $40 $ 90
</TABLE>
10
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors, except that, for periods ended prior to June 30, 1995
for the Multi-Season Growth Fund, such financial highlights were audited by
another independent auditor. The Growth Opportunities Fund Class K Shares and
the Framlington Global Financial Services Fund Class K Shares had not yet
commenced operations on June 30, 1998. 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>
BALANCED FUND(A)
--------------------------------------------------------------
YEAR YEAR PERIOD PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E) 2/28/94
------- ---------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 13.03 $ 12.37 $ 10.78 $ 9.97 $10.35 $ 9.97
------- ------- ------- ------ ------ ------
Income from investment
operations:
Net investment income.. 0.31 0.29 0.27 0.07 0.21 0.16
Net realized and
unrealized gain/(loss)
on investments........ 1.64 1.30 1.57 0.86 (0.42) 0.34
------- ------- ------- ------ ------ ------
Total from investment
operations............ 1.95 1.59 1.84 0.93 (0.21) 0.50
------- ------- ------- ------ ------ ------
Less distributions:
Dividends from net
investment income..... (0.32) (0.27) (0.25) (0.12) (0.17) (0.12)
Distributions from net
realized gains........ (1.17) (0.66) -- -- -- --
------- ------- ------- ------ ------ ------
Total distributions.... (1.49) (0.93) (0.25) (0.12) (0.17) (0.12)
------- ------- ------- ------ ------ ------
Net asset value, end of
period................. $ 13.49 $ 13.03 $ 12.37 $10.78 $ 9.97 $10.35
======= ======= ======= ====== ====== ======
Total return(b)........ 15.86% 13.64% 17.17% 9.33% (1.95)% 5.03%
======= ======= ======= ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $31,748 $ 6,588 $ 1,718 $ 168 $ 151 $ 102
Ratio of operating
expenses to average
net assets............ 1.17% 1.22% 1.15% 1.16%(c) 1.22% 1.00%
Ratio of net investment
income to average net
assets................ 2.41% 2.30% 2.29% 2.51%(c) 1.89% 1.68%
Portfolio turnover
rate.................. 79% 125% 197% 52% 116% 50%
Ratio of operating
expenses to average
net assets without
waivers............... 1.17% 1.26% 1.22% 1.51%(c) 1.57% 1.25%
</TABLE>
- --------
(a) The Munder Balanced Fund Class K Shares commenced operations on April 16,
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
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.
11
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND (A)
-------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E)
-------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 15.23 $ 13.05 $ 11.14 $ 10.43 $ 10.00
-------- -------- -------- -------- --------
Income from investment
operations:
Net investment income.. 0.28 0.32 0.32 0.11 0.22
Net realized and
unrealized gain on
investments........... 2.97 3.14 1.99 0.78 0.36
-------- -------- -------- -------- --------
Total from investment
operations............ 3.25 3.46 2.31 0.89 0.58
-------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income..... (0.28) (0.32) (0.31) (0.18) (0.15)
Distributions from net
realized gains........ (2.56) (0.96) (0.09) -- (0.00)(g)
-------- -------- -------- -------- --------
Total distributions.... (2.84) (1.28) (0.40) (0.18) (0.15)
-------- -------- -------- -------- --------
Net asset value, end of
period................. $ 15.64 $ 15.23 $ 13.05 $ 11.14 $ 10.43
======== ======== ======== ======== ========
Total return (b)....... 23.00% 28.12% 20.97% 8.57% 5.94%
======== ======== ======== ======== ========
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $216,387 $212,415 $192,592 $132,583 $105,629
Ratio of operating
expenses to average
net assets............ 1.19% 1.20% 1.21% 1.09%(c) 0.53%(c)
Ratio of net investment
income to average net
assets................ 1.78% 2.28% 2.56% 3.33%(c) 4.72%(c)
Portfolio turnover
rate.................. 73% 62% 37% 13% 12%
Ratio of operating
expenses to average
net assets without
waivers............... 1.19% 1.20% 1.28% 15.51%(c) 1.53%(c)
</TABLE>
- --------
(a) The Munder Growth & 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.
(g) Amount represents less than $0.01 per share.
12
<PAGE>
<TABLE>
<CAPTION>
INDEX 500 FUND(A)
------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96(D) 6/30/95(E) 2/28/95(D,F) 2/28/94 2/28/93
-------- ------- ---------- ---------- ------------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 20.94 $ 16.16 $ 13.80 $12.40 $12.06 $11.47 $11.60
-------- ------- ------- ------ ------ ------ ------
Income from investment
operations:
Net investment income.. 0.28 0.31 0.33 0.10 0.30 0.30 0.06
Net realized and
unrealized gain on
investments........... 5.48 5.04 3.07 1.44 0.50 0.59 0.21
-------- ------- ------- ------ ------ ------ ------
Total from investment
operations............ 5.76 5.35 3.40 1.54 0.80 0.89 0.27
-------- ------- ------- ------ ------ ------ ------
Less distributions:
Dividends from net
investment income..... (0.27) (0.30) (0.32) (0.14) (0.29) (0.30) (0.07)
Distributions from net
realized gains........ (1.99) (0.27) (0.72) -- (0.17) -- (0.33)
-------- ------- ------- ------ ------ ------ ------
Total distributions.... (2.26) (0.57) (1.04) (0.14) (0.46) (0.30) (0.40)
-------- ------- ------- ------ ------ ------ ------
Net asset value, end of
period................. $ 24.44 $ 20.94 $ 16.16 $13.80 $12.40 $12.06 $11.47
======== ======= ======= ====== ====== ====== ======
Total return (b)....... 29.42% 33.79% 25.37% 12.49% 6.90% 7.89% 2.43%
======== ======= ======= ====== ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $168,639 $61,254 $17,068 $2,778 $1,746 $ 922 $ 96
Ratio of operating
expenses to average
net assets............ 0.53% 0.54% 0.51% 0.50%(c) 0.50% 0.33% 0.25%(c)
Ratio of net investment
income to average net
assets................ 1.23% 1.76% 2.13% 2.41%(c) 2.49% 2.51% 2.74%(c)
Portfolio turnover
rate.................. 8% 11% 8% 6% 7% 1% 22%
Ratio of operating
expenses to average
net assets without
waivers............... 0.60% 0.64% 0.69% 0.63%(c) 0.64% 0.50% 0.38%(c)
</TABLE>
- --------
(a) The Munder Index 500 Fund Class K Shares commenced operations on December
7, 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.
(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.
13
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND(A)
---------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(D) 6/30/96(D) 6/30/95(E) 2/28/95(D,F) 2/28/94 2/28/93
-------- ---------- ---------- ---------- ------------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 15.74 $ 15.08 $ 13.42 $ 12.28 $ 13.68 $ 10.64 $10.46
-------- -------- -------- ------- ------- ------- ------
Income from investment
operations:
Net investment income.. 0.16 0.14 0.15 0.11 0.17 0.19 0.01
Net realized and
unrealized
gain/(loss)on
investments........... 0.32 2.31 1.63 1.03 (1.48) 2.85 0.30
-------- -------- -------- ------- ------- ------- ------
Total from investment
operations............ 0.48 2.45 1.78 1.14 (1.31) 3.04 0.31
-------- -------- -------- ------- ------- ------- ------
Less distributions:
Dividends from net
investment income..... (0.19) (0.20) (0.12) -- (0.03) -- (0.11)
Distributions from net
realized gains........ (1.00) (1.59) -- -- -- -- (0.02)
Distributions from
capital............... -- -- -- -- (0.06) -- --
-------- -------- -------- ------- ------- ------- ------
Total distributions.... (1.19) (1.79) (0.12) -- (0.09) -- (0.13)
-------- -------- -------- ------- ------- ------- ------
Net asset value, end of
period................. $ 15.03 $ 15.74 $ 15.08 $ 13.42 $ 12.28 $ 13.68 $10.64
======== ======== ======== ======= ======= ======= ======
Total return (b)....... 4.24% 18.09% 13.29% 9.28% (9.68)% 28.57% 2.96%
======== ======== ======== ======= ======= ======= ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $105,916 $135,593 $116,053 $73,168 $63,159 $37,536 $3,939
Ratio of operating
expenses to average
net assets............ 1.25% 1.26% 1.26% 1.21%(c) 1.18% 1.11% 1.03%(c)
Ratio of net investment
income to average net
assets................ 1.03% 0.98% 1.07% 2.57%(c) 1.31% 1.18% 0.39%(c)
Portfolio turnover
rate.................. 41% 46% 75% 14% 20% 15% 1%
Ratio of operating
expenses to average
net assets without
waivers............... 1.25% 1.26% 1.33% 1.46%(c) 1.43% 1.36% 1.28%(c)
</TABLE>
- --------
(a) The Munder International Equity 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.
(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.
14
<PAGE>
<TABLE>
<CAPTION>
MICRO-CAP
EQUITY FUND(A) MULTI-SEASON GROWTH FUND(A)
--------------------- -----------------------------------------------
YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98(E) 6/30/97(E) 6/30/98(E) 6/30/97(E) 6/30/96(E) 6/30/95(D,F)
---------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $12.82 $10.12 $ 18.00 $ 14.83 $ 12.02 $ 12.20
------ ------ -------- -------- -------- --------
Income from investment
operation:
Net investment
income/(loss)......... (0.17) (0.05) 0.00(g) 0.04 0.06 0.00(g)
Net realized and
unrealized gain/(loss)
on investments........ 4.99 2.75 4.35 3.89 3.20 (0.18)
------ ------ -------- -------- -------- --------
Total from investment
operations............ 4.82 2.70 4.35 3.93 3.26 (0.18)
------ ------ -------- -------- -------- --------
Less distributions:
Dividends from net
investment income..... -- -- (0.01) (0.01) (0.05) --
Distributions from net
realized gains........ (0.64) -- (0.92) (0.75) (0.40) --
------ ------ -------- -------- -------- --------
Total distributions.... (0.64) -- (0.93) (0.76) (0.45) --
------ ------ -------- -------- -------- --------
Net asset value, end of
period................. $17.00 $12.82 $ 21.42 $ 18.00 $ 14.83 $ 12.02
====== ====== ======== ======== ======== ========
Total return(b)........ 37.90% 26.68% 25.05% 27.55% 27.56% (1.48)%
====== ====== ======== ======== ======== ========
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $3,050 $ 199 $275,378 $237,330 $140,833 $104,767
Ratio of operating
expenses to average
net assets............ 1.53% 1.50%(c) 1.21% 1.25% 1.26% 1.20%(c)
Ratio of net investment
income/(loss) to
average net assets.... (0.98)% (0.88)%(c) 0.00% 0.25% 0.44% 0.28%(c)
Portfolio turnover
rate.................. 172% 68% 34% 33% 54% 27%
Ratio of operating
expenses to average
net assets without
waivers and/or
expenses reimbursed... 1.78% 7.90%(c) 1.39% 1.50% 1.51% 1.58%(c)
</TABLE>
- --------
(a) The Munder Micro-Cap Equity Fund Class K Shares commenced operations on
December 31, 1996. The Munder 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 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.
(e) Per share numbers have been calculated using the average shares method.
(f) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(g) Amount represents less than $0.01 per share.
15
<PAGE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY SMALL-CAP
INVESTMENT FUND(A) VALUE FUND(A)
------------------ --------------------
YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/98(D) 6/30/97 6/30/98(D) 6/30/97(D)
---------- ------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period.......................... $14.40 $12.07 $ 12.04 $ 10.08
------ ------ ------- -------
Income from investment
operations:
Net investment income........... 0.69 0.40 0.08 0.09
Net realized and unrealized gain
on investments................. 0.61 2.38 2.83 1.91
------ ------ ------- -------
Total from investment
operations..................... 1.30 2.78 2.91 2.00
------ ------ ------- -------
Less distributions:
Dividends from net investment
income......................... (0.62) (0.41) (0.06) (0.04)
Distributions in excess of net
investment income.............. -- (0.01) -- --
Distributions from net realized
gains.......................... (0.14) -- (0.64) --
Distributions from paid-in
capital........................ -- (0.03) -- --
------ ------ ------- -------
Total distributions............. (0.76) (0.45) (0.70) (0.04)
------ ------ ------- -------
Net asset value, end of period... $14.94 $14.40 $ 14.25 $ 12.04
====== ====== ======= =======
Total return(b)................. 8.92% 23.11% 24.53% 19.85%
====== ====== ======= =======
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)......................... $2,145 $1,481 $84,699 $50,769
Ratio of operating expenses to
average net assets............. 1.28% 1.35%(c) 1.27% 1.38%(c)
Ratio of net investment income
to average net assets.......... 4.15% 3.80%(c) 0.56% 1.93%(c)
Portfolio turnover rate......... 15% 15% 53% 73%
Ratio of operating expenses to
average net assets without
waivers and/or expenses
reimbursed..................... 1.28% 1.38%(c) 1.27% 1.51%(c)
</TABLE>
- --------
(a) The Munder Real Estate Equity Investment Fund Class K Shares commenced
operations on October 3, 1996. The Munder 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) Per share numbers have been calculated using the average shares method.
16
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND(A)
------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98(F) 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
---------- --------- --------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 21.62 $ 21.08 $ 15.28 $ 13.89 $ 14.37 $ 12.72 $12.32
-------- -------- -------- ------- ------- ------- ------
Income from investment
operations:
Net investment loss.... (0.13) (0.12) (0.12) (0.02) (0.04) (0.05) (0.01)
Net realized and
unrealized gain/(loss)
on investments........ 2.58 3.65 7.16 1.41 (0.42) 1.97 0.41
-------- -------- -------- ------- ------- ------- ------
Total from investment
operations............ 2.45 3.53 7.04 1.39 (0.46) 1.92 0.40
-------- -------- -------- ------- ------- ------- ------
Less distributions:
Distributions from net
realized gains........ (4.11) (2.99) (1.24) -- (0.02) (0.27) --
Total distributions.... (4.11) (2.99) (1.24) -- (0.02) (0.27) --
-------- -------- -------- ------- ------- ------- ------
Net asset value, end of
period................. $ 19.96 $ 21.62 $ 21.08 $ 15.28 $ 13.89 $ 14.37 $12.72
======== ======== ======== ======= ======= ======= ======
Total return (b)....... 12.36% 18.93% 48.28% 10.01% (3.21)% 15.11% 3.25%
======== ======== ======== ======= ======= ======= ======
Ratio to average net
assets/supplemental
data:
Net assets, end of
period (000's)........ $159,837 $152,766 $111,669 $52,077 $45,080 $32,431 $4,298
Ratio of operating
expenses to average
net assets............ 1.20% 1.22% 1.21% 1.21%(c) 1.23% 1.02% 0.95%(c)
Ratio of net investment
loss to average net
assets................ (0.57)% (0.62)% (0.66)% (0.41)%(c) (0.40)% (0.38)% (0.28)%(c)
Portfolio turnover
rate.................. 123% 98% 98% 39% 45% 47% 46%
Ratio of operating
expenses to average
net assets without
waivers............... 1.20% 1.22% 1.28% 1.46%(c) 1.48% 1.27% 1.20%(c)
</TABLE>
- --------
(a) The Munder 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 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.
17
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND(A)
-------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
6/30/98(D) 6/30/97(D) 6/30/96(D)
---------- --------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period......... $ 13.98 $11.57 $10.83
------- ------ ------
Income from investment operations:
Net investment income....................... 0.09 0.08 0.05
Net realized and unrealized gain on
investments................................ 3.38 3.64 0.74
------- ------ ------
Total from investment operations............ 3.47 3.72 0.79
------- ------ ------
Less distributions:
Dividends from net investment income........ (0.09) (0.09) (0.05)
Distributions from net realized gains....... (1.15) (1.22) --
------- ------ ------
Total distributions......................... (1.24) (1.31) (0.05)
------- ------ ------
Net asset value, end of period............... $ 16.21 $13.98 $11.57
======= ====== ======
Total return (b)............................ 25.84% 34.37% 7.33%
======= ====== ======
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)........ $14,754 $7,940 $1,018
Ratio of operating expenses to average net
assets..................................... 1.24% 1.27% 1.20%(c)
Ratio of net investment income to average
net assets................................. 0.61% 0.70% 0.64%(c)
Portfolio turnover rate..................... 92% 139% 223%
Ratio of operating expenses to average net
assets without waivers and/or expenses
reimbursed................................. 1.24% 1.31% 1.30%(c)
</TABLE>
- --------
(a) The Munder 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) Per share numbers have been calculated using the average shares method.
18
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON FRAMLINGTON
FRAMLINGTON EMERGING HEALTHCARE INTERNATIONAL GROWTH
MARKETS FUND(A) FUND(A) FUND(A)
---------------------- ------------------ ---------------------
PERIOD PERIOD PERIOD
YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED
6/30/98(D) 6/30/97(D) 6/30/98(D) 6/30/97 6/30/98(D) 6/30/97(D)
---------- ---------- ---------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 12.92 $10.06 $10.89 $ 9.45 $11.35 $ 9.87
------- ------ ------ ------ ------ ------
Income from investment
operations:
Net investment
income/(loss)......... 0.10 0.05 (0.14) (0.02) 0.02 0.05
Net realized and
unrealized gain on
investments........... (3.72) 2.84 1.05 1.46 0.61 1.43
------- ------ ------ ------ ------ ------
Total from investment
operations............ (3.62) 2.89 0.91 1.44 0.63 1.48
------- ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income..... (0.04) (0.03) -- -- (0.02) --
Distributions from net
realized gains........ (0.05) -- -- -- (0.03) --
Distributions in excess
of net realized gains. (0.22) -- -- -- (0.01) --
------- ------ ------ ------ ------ ------
Total distributions.... (0.31) (0.03) -- -- (0.06) --
------- ------ ------ ------ ------ ------
Net asset value, end of
period................. $ 8.99 $12.92 $11.80 $10.89 $11.92 $11.35
======= ====== ====== ====== ====== ======
Total return(b)........ (28.34)% 28.69% 8.45% 15.24% 5.60% 14.99%
======= ====== ====== ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $31,790 $4,419 $ 163 $ 119 $2,271 $1,089
Ratio of operating
expenses to average
net assets............ 1.89% 1.79%(c) 1.62% 1.55%(c) 1.62% 1.55%(c)
Ratio of net investment
income/(loss) to
average net assets.... 0.93% 1.14%(c) (1.21)% (0.95)%(c) 0.21% 1.01%(c)
Portfolio turnover
rate.................. 94% 46% 47% 14% 38% 15%
Ratio of operating
expenses to average
net assets without
expenses reimbursed... 2.14% 5.43%(c) 2.40% 7.33%(c) 1.82% 2.56%(c)
</TABLE>
- --------
(a) The Munder Framlington Emerging Markets Fund Class K Shares commenced
operations on January 10, 1997. The Munder Framlington Healthcare Fund
Class K Shares commenced operations on April 1, 1997. The Munder
Framlington International Growth Fund Class K Shares commenced operations
on January 10, 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.
19
<PAGE>
<TABLE>
<CAPTION>
BOND FUND(A)
-------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98(D) 6/30/97 6/30/96 6/30/95(E) 2/28/95(D,F) 2/28/94 2/28/93(E)
---------- ------- ------- --------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 9.57 $ 9.53 $ 9.69 $ 9.31 $ 9.91 $ 9.92 $ 9.66
------- ------- ------- ------- ------- ------- ------
Income from investment
operations:
Net investment income.. 0.59 0.61 0.61 0.21 0.62 0.56 0.12
Net realized and
unrealized gain/(loss)
on investments........ 0.40 0.01 (0.19) 0.37 (0.64) (0.01) 0.38
------- ------- ------- ------- ------- ------- ------
Total from investment
operations............ 0.99 0.62 0.42 0.58 (0.02) 0.55 0.50
------- ------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net
investment income..... (0.57) (0.58) (0.58) (0.20) (0.58) (0.56) (0.15)
Distributions from net
realized gains -- -- -- -- -- -- (0.09)
------- ------- ------- ------- ------- ------- ------
Total distributions.... (0.57) (0.58) (0.58) (0.20) (0.58) (0.56) (0.24)
------- ------- ------- ------- ------- ------- ------
Net asset value, end of
period................. $ 9.99 $ 9.57 $ 9.53 $ 9.69 $ 9.31 $ 9.91 $ 9.92
======= ======= ======= ======= ======= ======= ======
Total return(b)........ 10.57% 6.72% 4.35% 6.28% 0.44% 5.61% 5.24%
======= ======= ======= ======= ======= ======= ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $43,281 $34,999 $32,211 $36,718 $33,842 $26,458 $3,671
Ratio of operating
expenses to average
net assets............ 0.96% 0.96% 0.95% 0.95%(c) 0.92% 0.88% 0.80%(c)
Ratio of net investment
income to average net
assets................ 5.93% 6.34% 6.26% 6.47%(c) 6.57% 5.76% 5.32%(c)
Portfolio turnover
rate.................. 222% 279% 507% 99% 165% 128% 77%
Ratio of operating
expenses to average
net assets without
waivers............... 0.96% 0.96% 1.04% 1.19%(c) 1.16% 1.02% 0.94%(c)
</TABLE>
- --------
(a) The Munder 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.
(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.
20
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND(A)
--------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
-------- --------- -------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 9.33 $ 9.31 $ 9.51 $ 9.27 $ 9.91 $ 10.47 $ 10.26
-------- -------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income.. 0.55 0.55 0.58 0.22 0.56 0.59 0.17
Net realized and
unrealized gain/(loss)
on investments........ 0.15 0.02 (0.20) 0.24 (0.57) (0.20) 0.25
-------- -------- -------- -------- -------- -------- --------
Total from investment
operations............ 0.70 0.57 0.38 0.46 (0.01) 0.39 0.42
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income..... (0.53) (0.55) (0.58) (0.22) (0.62) (0.58) (0.12)
Distributions from net
realized gains........ -- -- -- -- (0.01) (0.37) (0.19)
-------- -------- -------- -------- -------- -------- --------
Total distributions.... (0.53) (0.55) (0.58) (0.22) (0.63) (0.95) (0.31)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period................. $ 9.50 $ 9.33 $ 9.31 $ 9.51 $ 9.27 $ 9.91 $ 10.47
======== ======== ======== ======== ======== ======== ========
Total return(b)........ 7.73% 6.34% 4.04% 5.04% 0.54% 3.77% 4.15%
======== ======== ======== ======== ======== ======== ========
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $355,840 $325,331 $370,493 $300,596 $285,493 $112,332 $132,273
Ratio of operating
expenses to average
net assets............ 0.93% 0.93% 0.94% 0.95%(c) 0.93% 0.84% 0.79%(c)
Ratio of net investment
income to average net
assets................ 5.77% 5.91% 6.08% 7.12%(c) 6.71% 5.55% 5.56%(c)
Portfolio turnover
rate.................. 194% 325% 494% 84% 80% 155% 104%
Ratio of operating
expenses to average
net assets without
waivers............... 0.93% 0.93% 1.02% 1.19%(c) 1.18% 0.98% 0.93%(c)
</TABLE>
- --------
(a) The Munder 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.
(f) Per share numbers have been calculated using the average shares method.
21
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL U.S. GOVERNMENT
BOND FUND(A) INCOME FUND(A)
---------------- ----------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED YEAR ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98 6/30/97 6/30/96(F) 6/30/95(D) 2/28/95(E)
------- ------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 9.83 $9.54 $ 10.09 $ 9.98 $ 10.30 $ 9.89 $ 10.00
------ ----- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment
income/(loss).......... 0.19 0.09 0.60 0.65 0.71 0.23 0.47
Net realized and
unrealized gain/(loss)
on investments......... (0.11) 0.20 0.36 0.07 (0.27) 0.41 (0.12)
------ ----- -------- -------- -------- -------- --------
Total from investment
operations............. 0.08 0.29 0.96 0.72 0.44 0.64 0.35
------ ----- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income...... (0.22) -- (0.61) (0.61) (0.68) (0.23) (0.46)
Distributions from net
realized gains......... (0.02) -- (0.06) (0.00)(g) (0.08) -- --
------ ----- -------- -------- -------- -------- --------
Total distributions..... (0.24) -- (0.67) (0.61) (0.76) (0.23) (0.46)
------ ----- -------- -------- -------- -------- --------
Net asset value, end of
period.................. $ 9.67 $9.83 $ 10.38 $ 10.09 $ 9.98 $ 10.30 $ 9.89
====== ===== ======== ======== ======== ======== ========
Total return(b)......... 0.80% 3.04% 9.70% 7.49% 4.32% 6.55% 3.68%
====== ===== ======== ======== ======== ======== ========
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)...... $ 77 $ 103 $219,724 $197,479 $158,948 $174,674 $165,298
Ratio of operating
expenses to average net
assets................. 1.11% 1.14%(c) 0.94% 0.96% 0.97% 0.97%(c) 0.95%(c)
Ratio of net investment
income/(loss) to
average net assets..... 3.53% 3.61%(c) 6.00% 6.51% 6.92% 6.96%(c) 7.02%(c)
Portfolio turnover rate. 81% 75% 85% 130% 133% 42% 143%
Ratio of operating
expenses to average net
assets without waivers. 1.11% 1.18%(c) 0.94% 0.96% 1.04% 1.21%(c) 1.19%(c)
</TABLE>
- --------
(a) The Munder International Bond Fund Class K Shares commenced operations on
March 25, 1997. The Munder 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.
(g) Amount represents less than $0.01 per share.
22
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN TAX-FREE BOND FUND(A)
------------------------------------------------------------------------
YEAR PERIOD
ENDED YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED ENDED
6/30/98 6/30/97(D) 6/30/96(D) 6/30/95(D,E) 2/28/95(D,F) 2/28/94
------- ---------- ---------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 9.64 $ 9.34 $ 9.34 $ 9.24 $ 9.73 $ 10.00
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income.. 0.42 0.43 0.48 0.16 0.44 0.05
Net realized and
unrealized gain/(loss)
on investments........ 0.44 0.30 (0.00)(g) 0.10 (0.50) (0.30)
------- ------- ------- ------- ------- -------
Total from investment
operations............ 0.86 0.73 0.48 0.26 (0.06) (0.25)
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income..... (0.42) (0.43) (0.48) (0.16) (0.43) (0.02)
Distributions from net
realized gains........ (0.02) (0.00)(g) -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions.... (0.44) (0.43) (0.48) (0.16) (0.43) (0.02)
------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 10.06 $ 9.64 $ 9.34 $ 9.34 $ 9.24 $ 9.73
======= ======= ======= ======= ======= =======
Total return(b)........ 9.02% 8.00% 5.14% 2.84% (0.16)% (2.48)%
======= ======= ======= ======= ======= =======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $57,574 $43,316 $29,476 $25,549 $27,731 $13,464
Ratio of operating
expenses to average
net assets............ 0.98% 0.88% 0.51% 0.52%(c) 0.56% 0.46%(c)
Ratio of net investment
income to average net
assets................ 4.29% 4.57% 5.01% 5.06%(c) 4.81% 3.48%(c)
Portfolio turnover
rate.................. 34% 19% 31% 8% 53% 0%
Ratio of operating
expenses to average
net assets without
waivers............... 0.98% 1.02% 1.09% 1.26%(c) 1.30% 1.20%(c)
</TABLE>
- --------
(a) The Munder Michigan Tax-Free Bond Fund (formerly known as the Munder
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) Per share numbers have been calculated using the average shares method.
(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.
(g) Amount represents less than $0.01 per share.
23
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE BOND FUND(A)
---------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D,F) 2/28/95(E)
-------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 10.52 $ 10.35 $ 10.30 $ 10.14 $ 10.00
-------- -------- -------- -------- --------
Income from investment
operations:
Net investment income.. 0.49 0.47 0.46 0.15 0.31
Net realized and
unrealized gain on
investments........... 0.38 0.25 0.07 0.16 0.14
-------- -------- -------- -------- --------
Total from investment
operations............ 0.87 0.72 0.53 0.31 0.45
-------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income..... (0.49) (0.47) (0.47) (0.15) (0.31)
Distributions from net
realized gains........ (0.16) (0.08) (0.01) -- --
-------- -------- -------- -------- --------
Total distributions.... (0.65) (0.55) (0.48) (0.15) (0.31)
-------- -------- -------- -------- --------
Net asset value, end of
period................. $ 10.74 $ 10.52 $ 10.35 $ 10.30 $ 10.14
======== ======== ======== ======== ========
Total return(b)........ 8.43% 7.13% 5.12% 3.09% 4.64%
======== ======== ======== ======== ========
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $194,077 $190,243 $196,645 $232,040 $251,636
Ratio of operating
expenses to average
net assets............ 0.93% 0.95% 0.98% 1.02%(c) 0.93%(c)
Ratio of net investment
income to average net
assets................ 4.60% 4.52% 4.42% 4.38%(c) 4.69%(c)
Portfolio turnover
rate.................. 61% 45% 15% 12% 50%
Ratio of operating
expenses to average
net assets without
waivers and/or
expenses reimbursed... 0.93% 0.95% 1.06% 1.26%(c) 1.17%(c)
</TABLE>
- --------
(a) The Munder 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.
24
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(A)
---------------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD
ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
-------- ---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 10.41 $ 10.34 $ 10.37 $ 10.17 $ 10.44 $ 10.69 $ 10.47
-------- -------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income.. 0.43 0.41 0.41 0.14 0.38 0.42 0.23
Net realized and
unrealized gain/(loss)
on investments........ 0.13 0.10 (0.03) 0.20 (0.21) (0.14) 0.24
-------- -------- -------- -------- -------- -------- --------
Total from investment
operations............ 0.56 0.51 0.38 0.34 0.17 0.28 0.47
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income..... (0.42) (0.41) (0.41) (0.14) (0.42) (0.42) (0.23)
Distributions from net
realized gains........ (0.09) (0.03) -- -- (0.02) (0.11) (0.02)
-------- -------- -------- -------- -------- -------- --------
Total distributions.... (0.51) (0.44) (0.41) (0.14) (0.44) (0.53) (0.25)
======== ======== ======== ======== ======== ======== ========
Net asset value, end of
period................. $ 10.46 $ 10.41 $ 10.34 $ 10.37 $ 10.17 $ 10.44 $ 10.69
======== ======== ======== ======== ======== ======== ========
Total return(b)........ 5.44% 5.04% 3.69% 3.35% 2.05% 2.62% 5.30%
======== ======== ======== ======== ======== ======== ========
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $295,601 $283,641 $333,768 $333,067 $345,658 $107,335 $113,189
Ratio of operating
expenses to average
net assets............ 0.94% 0.93% 0.96% 0.98%(c) 0.95% 0.84% 0.71%(c)
Ratio of net investment
income to average net
assets................ 4.07% 3.96% 3.91% 4.01%(c) 4.19% 3.93% 4.36%(c)
Portfolio turnover
rate.................. 27% 31% 20% 5% 52% 38% 57%
Ratio of operating
expenses to average
net assets without
waivers............... 0.94% 0.93% 1.04% 1.22%(c) 1.19% 0.98% 0.77%(c)
</TABLE>
- --------
(a) The Munder 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.
25
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(A)
---------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
7/31/92(G) 7/31/91(G) 7/31/90(G) 7/31/89(G) 7/31/88(G)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 10.04 $ 9.91 $ 9.93 $ 9.91 $ 9.99
-------- ------- ------- ------ ------
Income from investment
operations:
Net investment income.. 0.49 0.55 0.60 0.52 0.51
Net realized and
unrealized gain/(loss)
on investments........ 0.51 0.26 (0.02) 0.02 (0.08)
-------- ------- ------- ------ ------
Total from investment
operations............ 1.00 0.81 0.58 0.54 0.43
-------- ------- ------- ------ ------
Less distributions:
Dividends from net
investment income..... (0.49) (0.55) (0.60) (0.52) (0.51)
Distributions from net
realized gains........ (0.08) (0.13) -- -- --
-------- ------- ------- ------ ------
Total distributions.... (0.57) (0.68) (0.60) (0.52) (0.51)
-------- ------- ------- ------ ------
Net asset value, end of
period................. $ 10.47 $ 10.04 $ 9.91 $ 9.93 $ 9.91
======== ======= ======= ====== ======
Total return (b)....... 10.31 % 8.15 % 6.02 % 5.55 % 4.43 %
======== ======= ======= ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $110,825 $50,740 $12,282 $1,350 $1,219
Ratio of operating
expenses to average
net assets............ 0.69 % 0.61 % 0.25 % 0.54 % 0.60 %
Ratio of net investment
income to average net
assets................ 4.83 % 5.54 % 6.13 % 5.22 % 5.17 %
Portfolio turnover
rate.................. 200 % 327 % 119 % 37 % 28 %
Ratio of operating
expenses to average
net assets without
waiver................ 0.99 % 1.05 % 1.05 % 3.58 % 3.09 %
</TABLE>
- --------
(a) The Munder 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.
26
<PAGE>
<TABLE>
<CAPTION>
CASH INVESTMENT FUND(A)
---------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93(E)
-------- -------- -------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income.. 0.050 0.048 0.050 0.018 0.040 0.026 0.008
-------- -------- -------- -------- -------- -------- --------
Total from investment
operations............ 0.050 0.048 0.050 0.018 0.040 0.026 0.008
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income..... (0.050) (0.048) (0.050) (0.018) (0.040) (0.026) (0.008)
-------- -------- -------- -------- -------- -------- --------
Total distributions.... (0.050) (0.048) (0.050) (0.018) (0.040) (0.026) (0.008)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ========
Total return (b)....... 5.14% 4.90% 5.10% 1.81% 4.08% 2.68% 0.74%
======== ======== ======== ======== ======== ======== ========
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $672,842 $599,858 $547,523 $558,628 $559,212 $293,827 $248,382
Ratio of operating
expenses to average
net assets............ 0.66% 0.70% 0.68% 0.67%(c) 0.70% 0.56% 0.54%(c)
Ratio of net investment
income to average net
assets................ 5.02% 4.81% 4.98% 5.49%(c) 4.12% 2.65% 2.85%(c)
Ratio of operating
expenses to average
net assets without
waivers............... 0.66% 0.70% 0.68% 0.69%(c) 0.73% 0.61% 0.59%(c)
</TABLE>
- --------
(a) The Munder 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.
27
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND(A)
-------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED YEAR ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
-------- -------- -------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income.. 0.029 0.028 0.030 0.011 0.024 0.020 0.006
-------- -------- -------- -------- -------- -------- --------
Total from investment
operations............ 0.029 0.028 0.030 0.011 0.024 0.020 0.006
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income..... (0.029) (0.028) (0.030) (0.011) (0.024) (0.020) (0.006)
-------- -------- -------- -------- -------- -------- --------
Total distributions.... (0.029) (0.028) (0.030) (0.011) (0.024) (0.020) (0.006)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ========
Total return (b)....... 2.98% 2.90% 3.00% 1.12% 2.44% 1.99% 0.61%
======== ======== ======== ======== ======== ======== ========
Ratios to average net
assets/supplemental
data:
Net assets, end of
period
(in 000's)............ $205,600 $226,782 $192,591 $195,730 $195,926 $211,832 $105,609
Ratio of operating
expenses to average
net assets............ 0.69% 0.68% 0.68% 0.69%(c) 0.70% 0.57% 0.55%(c)
Ratio of net investment
income to average net
assets................ 2.93% 2.86% 2.99% 3.36%(c) 2.39% 1.96% 2.24%(c)
Ratio of operating
expenses to average
net assets without
waivers............... 0.69% 0.68% 0.70% 0.74%(c) 0.75% 0.62% 0.60%(c)
</TABLE>
- --------
(a) The Munder 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.
28
<PAGE>
<TABLE>
<CAPTION>
US TREASURY MONEY MARKET FUND(A)
--------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED YEAR ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
------- ------- ------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income.. 0.048 0.047 0.048 0.017 0.037 0.025 0.007
------- ------- ------- ------- ------- ------- -------
Total from investment
operations............ 0.048 0.047 0.048 0.017 0.037 0.025 0.007
------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income..... (0.048) (0.047) (0.048) (0.017) (0.037) (0.025) (0.007)
------- ------- ------- ------- ------- ------- -------
Total distributions.... (0.048) (0.047) (0.048) (0.017) (0.037) (0.025) (0.007)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= =======
Total return (b)....... 4.87% 4.73% 4.89% 1.76% 3.83% 2.57% 0.74%
======= ======= ======= ======= ======= ======= =======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $41,247 $41,877 $62,133 $74,210 $75,197 $72,433 $12,248
Ratio of operating
expenses to average
net assets............ 0.72% 0.69% 0.69% 0.70%(c) 0.70% 0.57% 0.53%(c)
Ratio of net investment
income to average net
assets................ 4.77% 4.64% 4.74% 5.23%(c) 3.73% 2.56% 2.60%(c)
Ratio of operating
expenses to average
net assets without
waivers............... 0.72% 0.69% 0.71% 0.75%(c) 0.75% 0.62% 0.58%(c)
</TABLE>
- --------
(a) The Munder 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.
29
<PAGE>
FUND CHOICES
WHAT FUNDS ARE OFFERED?
This Prospectus offers Class K Shares of the 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?"
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. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
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.
30
<PAGE>
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 Old MCM, Inc.
("MCM"), the predecessor to the Advisor, since January 1987.
GROWTH OPPORTUNITIES 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 the
Equity Securities of companies with market capitalizations between $500
million and $10 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 MidCap 400 Index.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
INDEX 500 FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal 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).
31
<PAGE>
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
American Depositary Receipts ("ADRs"). At least once a quarter, the Advisor
creates a list of Foreign Securities and ADRs (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 (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 100% 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
$250 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.
MULTI-SEASON GROWTH FUND
GOAL AND PRINCIPAL INVESTMENTS. 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
32
<PAGE>
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 companies 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. Leonard J. Barr II is the Fund's portfolio manager, a
position he has held since the Fund's inception in April 1993. Mr. Barr is the
Senior Vice President and Director of Research of the Advisor. From April 1988
to April 1993 he held similar positions with MCM.
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 and Robert E. Crosby jointly manage
the Fund. Mr. Hoglund has managed the Fund since October 1996. Mr. Hoglund
formerly was the primary analyst of the Fund (October 1994 to October 1996).
Mr. Crosby has managed the Fund since March 1998. Mr. Crosby formerly was the
primary analyst of the Fund (October 1996-March 1998). Mr. Crosby has been
with the Advisor since 1993, and also serves as portfolio manager for
separately managed institutional accounts.
33
<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 $1 billion, 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 the company 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, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive 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 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. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge Capital Management, Inc. ("Woodbridge") (1994-1995) and an
Assistant Vice President in Equity Research for Merrill Lynch, Pierce Fenner &
Smith in New York (1992-1994).
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 $1 billion, which is less than the market
capitalization of S&P 500 companies.
34
<PAGE>
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. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
VALUE FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide long-
term capital appreciation, its secondary goal is to provide income. 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 the company 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, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive 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 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. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge (1994-1995) and an Assistant Vice President in Equity Research for
Merrill Lynch, Pierce Fenner & Smith in New York (1992-1994).
35
<PAGE>
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. A committee of professional portfolio managers employed
by the Sub-Advisor makes investment decisions for the Fund. William Calvert
heads the committee.
FRAMLINGTON GLOBAL FINANCIAL SERVICES FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. Under normal market conditions, the Fund invests at least
65% of its assets in Equity Securities of U.S. and foreign companies which are
principally engaged in the financial services industry and companies providing
services primarily within the financial services industry. The Fund focuses
specifically on companies which are likely to benefit from growth or
consolidation in the financial services industry.
Examples of companies in the financial services industry are:
. commercial, industrial and investment banks
. savings and loan associations
. brokerage companies
. consumer and industrial finance companies
. real estate and leasing companies
. insurance companies
. holding companies for each of the above.
A company is "principally engaged" in the financial services industry if at
least 50% of its gross income, net sales or net profits comes from activities
in the financial services industry or if the company dedicates more than 50% of
its assets to the production of revenues from the financial services industry.
Under normal market conditions, the Fund invests at least 65% of its assets
in at least three different countries, including the United States.
The Sub-Advisor allocates assets among countries based on its analysis of the
trends in the financial services industry in particular regions, the relative
valuation of financial services companies in different regions and its
assessment of the prospects for a particular equity market and its currency.
PORTFOLIO MANAGEMENT. A committee of professional managers employed by the
Advisor or the Sub-Advisor makes decisions for the Fund.
36
<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 these 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.
BOND FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide a high
level of current income, its secondary goal is 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.
37
<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.
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 fifteen 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.
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.
38
<PAGE>
MICHIGAN 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 and
Michigan state income tax as is consistent with prudent investment management
and preservation of capital.
. Except during temporary defensive periods, at least 80% 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 thirty 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 net 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 thirty
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 net 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.
39
<PAGE>
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).
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.
TAX-FREE MONEY MARKET FUND
. The Fund's goal is 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.
. 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.
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.
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 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.
Money Market Funds
These Funds are designed for investors who desire a high level of income and
liquidity and stability of principal.
40
<PAGE>
WHAT ARE THE FUNDS' INVESTMENTS AND INVESTMENT PRACTICES?
Each Equity Fund invests in EQUITY SECURITIES, which include 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 ADRS, EUROPEAN DEPOSITARY RECEIPTS ("EDRS")
and GLOBAL DEPOSITARY 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.
Under normal market conditions, the Equity 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 can be changed only by shareholders.
41
<PAGE>
All of the Funds, other than the International Bond Fund, the Michigan 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 a single
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 if they 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. These
Funds will acquire short-term instruments only if they (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 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
The following 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.
42
<PAGE>
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43
<PAGE>
EQUITY FUNDS
<TABLE>
<CAPTION>
GROWTH & GROWTH INDEX INTERNATIONAL MICRO-CAP
INVESTMENTS AND BALANCED INCOME OPPORTUNITIES 500 EQUITY EQUITY
INVESTMENT PRACTICES FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES. 25% 25% 25% 25% Y 25%
Includes securities
issued by non-U.S.
companies. Present more
risks than U.S.
securities.
- -----------------------------------------------------------------------------------------
LOWER-RATED DEBT Y 20% Y Y Y Y
SECURITIES. Fixed
Income Securities which
are rated below
investment grade by
Standard & Poor's
Ratings Service,
Moody's Investors
Service, Inc. or other
nationally recognized
rating agency.
Considered riskier than
investment grade
securities.
- -----------------------------------------------------------------------------------------
INVESTMENT-GRADE ASSET Y N N N N N
BACKED SECURITIES.
Includes debt
securities backed by
mortgages, installment
sales contracts and
credit card
receivables.
- -----------------------------------------------------------------------------------------
STRIPPED SECURITIES. Y N N N N N
Includes participations
in trusts that hold
U.S. Treasury and
agency securities which
represent either the
interest payments or
principal payments on
the securities or
combination of both.
- -----------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY Y Y Y Y Y Y
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 a currency
value, but also limits
gains from currency
changes.
- -----------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES Y Y Y Y Y Y
AND FORWARD
COMMITMENTS. Agreement
by a Fund to purchase
securities at a set
price, with delivery
and 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 Y Y Y Y Y Y
FUTURES. (1) Contracts
in which a Fund has the
right or the
obligation, at
maturity, to make
delivery of or receive
securities, the cash
value of an index, or
foreign currency. Used
for hedging purposes or
to maintain liquidity.
</TABLE>
44
<PAGE>
EQUITY FUNDS (CONTINUED)
<TABLE>
<CAPTION>
FRAMLINGTON
MULTI-SEASREALOESTATEN FRAMLINGTON GLOBAL
GROWTH EQUITY SMALL EMERGING FINANCIAL FRAMLINGTON FRAMLINGTON
FUND INVESTMENT SMALL-CAP COMPANY MARKETS SERVICES HEALTHCARE INTERNATIONAL
FUND VALUE FUND GROWTH FUND VALUE FUND FUND FUND FUND GROWTH FUND
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
25% N 25% 25% 25% Y Y Y Y
- ---------------------------------------------------------------------------------------------------------
Y 5% Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------
N N N N N N Y N N
- ---------------------------------------------------------------------------------------------------------
N N N N N N Y N N
- ---------------------------------------------------------------------------------------------------------
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 Y Y
</TABLE>
Key:
Y =Investment allowed without restriction
N =Investment not allowed
(1)The limitation on margins and premiums for futures and options on futures is
5% of a Fund's assets.
45
<PAGE>
EQUITY FUNDS (CONTINUED)
<TABLE>
<CAPTION>
GROWTH & GROWTH INDEX INTERNATIONAL MICRO-CAP
INVESTMENTS AND BALANCED INCOME OPPORTUNITIES 500 EQUITY EQUITY
INVESTMENT PRACTICES FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPTIONS. A Fund may buy Y Y Y Y Y Y
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
securities indices,
individual securities,
foreign currencies or
futures contracts. See
the SAI for more
details and additional
limitations.
- -----------------------------------------------------------------------------------------
REVERSE REPURCHASE Y Y Y Y Y Y
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.
- -----------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT Y Y Y Y Y Y
TRUSTS. Companies,
usually traded
publicly, that manage
a portfolio of real
estate. Risks involved
in such investments
include vulnerability
to decline in real
estate prices and new
construction rates.
- -----------------------------------------------------------------------------------------
SHORT SALES. A N N N N N N
transaction in which
the Fund sells a
security it does not
own in anticipation
that the market price
of that security will
decline. It must
borrow the security
sold short and deliver
it to the broker-
dealer through which
it made the short sale
as collateral for its
obligation to deliver
the security upon
conclusion of the
sale. May also sell
securities that it
owns or has the right
to acquire at no
additional cost but
does not intend to
deliver to the buyer,
a practice known as
selling short "against
the box."
- -----------------------------------------------------------------------------------------
ILLIQUID SECURITIES. 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
Typically there is no
ready market for these
securities, which
inhibits the ability
to sell them for full
market value, or there
are legal restrictions
on their resale by the
Fund.
- -----------------------------------------------------------------------------------------
LENDING SECURITIES. A 25% 25% 25% 25% 25% 25%
Fund may lend
securities to
financial institutions
which pay for the use
of the securities. May
increase return.
Slight risk of
borrower failing
financially.
</TABLE>
46
<PAGE>
EQUITY FUNDS (CONTINUED)
<TABLE>
<CAPTION>
FRAMLINGTON
MULTI-SEASREALOESTATEN FRAMLINGTON GLOBAL
GROWTH EQUITY SMALL EMERGING FINANCIAL FRAMLINGTON FRAMLINGTON
FUND INVESTMENT SMALL-CAP COMPANY MARKETS SERVICES HEALTHCARE INTERNATIONAL
FUND VALUE FUND GROWTH FUND VALUE FUND FUND FUND FUND GROWTH FUND
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Y Y Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------
N N N N N N N N N
- ---------------------------------------------------------------------------------------------------------
15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
- ---------------------------------------------------------------------------------------------------------
25% 25% 25% 25% 25% 25% 25% 25% 25%
</TABLE>
Key:
Y =Investment allowed without restriction
N =Investment not allowed
(1)The limitation on margins and premiums for futures and options on futures is
5% of a Fund's assets.
(2)Based on net assets.
47
<PAGE>
BOND FUNDS
<TABLE>
<CAPTION>
U.S.
BOND INTERMEDIATE INTERNATIONAL GOVERNMENT
INVESTMENTS AND INVESTMENT PRACTICES FUND BOND FUND BOND FUND INCOME FUND
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOREIGN SECURITIES. Securities issued by 25% 25% Y 25%
foreign governments and their agencies,
instrumentalities or political subdivisions,
supranational organizations, and foreign
corporations. Does not include Bank
obligations.
- ---------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Includes debt Y Y Y Y
securities backed by mortgages, installment
sales contracts and credit card receivables.
- ---------------------------------------------------------------------------------------------------
INTEREST RATE AND CURRENCY SWAPS. Agreement Y(1) Y(1) Y Y(1)
to exchange payments calculated on the basis
of relative interest or currency rates.
Derivative instruments used solely for
hedging.
- ---------------------------------------------------------------------------------------------------
INTEREST RATE CAPS AND FLOORS. Entitle N N Y N
purchaser to receive payments of interest to
the extent that a specified reference rate
exceeds or falls below a predetermined
level.
- ---------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS. Include Y Y Y Y
securities issued by, or guaranteed by, the
U.S. Government or its agencies or
instrumentalities.
- ---------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Include participations Y Y Y Y
in trusts that hold U.S. Treasury and agency
securities which represent either the
interest payments or principal payments on
the securities or combination of both.
- ---------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells Y Y Y Y
securities and agrees to buy them back later
at an agreed upon time and price. A method
to borrow money for temporary purposes.
- ---------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Y Y Y Y
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 a currency value, but also limits
gains from currency changes.
- ---------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar denominated Y Y Y Y
bank obligations, including certificates of
deposit, bankers' acceptances, bank notes
and time deposits, issued by U.S. or foreign
banks or savings institutions having total
assets in excess of $1 billion.
- ---------------------------------------------------------------------------------------------------
SUPRANATIONAL ORGANIZATION OBLIGATIONS. Fixed Y Y Y N
Income Securities issued or guaranteed by
supranational organizations such as the
World Bank.
- ---------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements Y Y Y Y
by a Fund to make payments to an insurance
company's general account in exchange for a
minimum level of interest based on an index.
</TABLE>
- --------------------------------------------------------------------------------
48
<PAGE>
BOND FUNDS (CONTINUED)
<TABLE>
<CAPTION>
U.S.
BOND INTERMEDIATE INTERNATIONAL GOVERNMENT
INVESTMENTS AND INVESTMENT PRACTICES FUND BOND FUND BOND FUND INCOME FUND
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WHEN-ISSUED PURCHASES AND FORWARD 25% 25% 25% 25%
COMMITMENTS. Agreements by a Fund to
purchase securities at a set price, with
delivery and 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.
- ---------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no 15%(2) 15%(2) 15%(2) 15%(2)
ready market for these securities, which
inhibits the ability to sell them for full
market value, or there are legal
restrictions on their resale by the Fund
- ---------------------------------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES. (3) Contracts Y Y Y Y
in which a Fund has the right or the
obligation, at maturity, to make delivery
of, or receive securities, the cash value of
an index, or foreign currency. Used for
hedging purposes or to maintain liquidity.
- ---------------------------------------------------------------------------------------------------
OPTIONS. A Fund may buy options giving it the Y Y Y Y
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
securities indices, individual securities,
foreign currencies or futures contracts. See
the SAI for more details and additional
limitations.
- ---------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend 25% 25% 25% 25%
securities to financial institutions which
pay for the use of the securities. May
increase return. Slight risk of borrower
failing financially.
</TABLE>
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 and options on futures
is 5% of a Fund's assets.
49
<PAGE>
TAX-FREE FUNDS
<TABLE>
<CAPTION>
MICHIGAN TAX-FREE
TAX-FREE TAX-FREE INTERMEDIATE
INVESTMENTS AND INVESTMENT PRACTICES BOND FUND BOND FUND BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL OBLIGATIONS. Payable from the Y Y Y
issuer's general revenue, the revenue of
a specific project, current revenues or
a reserve fund.
- -------------------------------------------------------------------------------
MICHIGAN MUNICIPAL OBLIGATIONS. Municipal Y Y Y
Obligations issued by the State of
Michigan and its political subdivisions.
- -------------------------------------------------------------------------------
FOREIGN SECURITIES. Securities issued by 10% 10% 10%
foreign governments and their agencies,
instrumentalities or political
subdivisions, supranational
organizations, and foreign corporations.
Does not include Bank Obligations.
- -------------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES. (1) Y Y Y
Contracts in which a Fund has the right
or the obligation, at maturity, to make
delivery of, or receive securities, the
cash value of an index, or foreign
currency. Used for hedging purposes or
to maintain liquidity.
- -------------------------------------------------------------------------------
OPTIONS. A Fund may buy options giving it Y Y N
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 securities indices, individual
securities, foreign currencies or
futures contracts. See the SAI for more
details and additional limitations.
- -------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD 25% 25% 25%
COMMITMENTS. Agreements by a Fund to
purchase securities at a set price, with
delivery and 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.
- -------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is 15%(2) 15%(2) 15%(2)
no ready market for these securities,
which inhibits the ability to sell them
for full market value, or there are
legal restrictions on their resale by
the Fund.
- -------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend 25% 25% 25%
securities to financial institutions
which pay for the use of the securities.
May increase return. Slight risk of
borrower failing financially.
- -------------------------------------------------------------------------------
U.S. TREASURY SECURITIES. Includes U.S. Y Y Y
Treasury bills, notes and bonds.
</TABLE>
Key:
Y = Investment allowed without restriction
N = Investment not allowed
(1) The limitation on margins and premiums for futures and options on futures
is 5% of a Fund's net assets.
(2) Based on net assets.
50
<PAGE>
MONEY MARKET FUNDS
<TABLE>
<CAPTION>
U.S.
TREASURY
CASH TAX-FREE MONEY
INVESTMENT MONEY MARKET
INVESTMENTS AND INVESTMENT PRACTICES FUND FUND FUND
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE OBLIGATIONS:
. Commercial paper (including paper of Y N N
Canadian companies, Canadian branches of
U.S. companies, and Europaper)
. Corporate bonds Y N N
. Other short-term obligations Y N N
. Variable master demand notes Y N N
. Bond debentures Y N N
. Notes. Y N N
- ------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Include debt Y N N
securities backed by mortgages, installment
sales contracts and credit card receivables.
- ------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS:
. Issued or guaranteed by U.S. Government Y N Y
. Issued or guaranteed by U.S. Government Y N N
Agencies and instrumentalities
- ------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar denominated Y N N
bank obligations, including certificates of
deposit, bankers' acceptances, bank notes,
time deposits issued by U.S. or foreign
banks or savings institutions having total
assets in excess of $1 billion.
- ------------------------------------------------------------------------------
STRIPPED SECURITIES:
. Participation in trusts that hold U.S. Y Y N
Treasury and agency securities
. U.S. Treasury-issued receipts Y Y 35%
. Non-U.S. Treasury receipts. Y Y N
- ------------------------------------------------------------------------------
MUNICIPAL REVENUE OBLIGATIONS. Obligations N Y N
the interest on which is paid solely from
the revenues of similar projects.
- ------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS. Payable from the 5% No more N
issuer's general revenue, the revenue of a than 25%
specific project, current revenues or a in any
reserve fund. one state
- ------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells Y N Y
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. Agreements Y N N
by 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 25% 25% 25%
COMMITMENTS. Agreements by a Fund to
purchase securities at a set price, with
delivery and 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.
- ------------------------------------------------------------------------------
FOREIGN SECURITIES. Debt obligations issued 25% N N
by foreign governments, and their agencies,
instrumentalities or political subdivisions,
supranational organizations and foreign
corporations. Does not include Bank
Obligations.
- ------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no 10%(1) 10%(1) 10%(1)
ready market for these securities, which
inhibits the ability to sell them for full
market value, or there are legal
restrictions on their resale by the Fund.
- ------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend 25% 25% 25%
securities to financial institutions which
pay for the use of the securities. May
increase return. Slight risk of borrower
failing financially.
</TABLE>
Key:
Y = Investment allowed without restriction
N = Investment not allowed
(1) Based on net assets.
51
<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 is 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); (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; and (7)
inability to close out certain hedged positions to avoid adverse tax
consequences.
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.
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 and Tax-Free Funds
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 these 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 diversity
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.
52
<PAGE>
Money Market Funds
Each Money Market Fund attempts to maintain a constant net asset value of
$1.00 per share. However, your investment in these 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 net
assets in municipal revenue obligations, the interest on which is paid solely
from revenues of similar projects, the Tax-Free 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.
Growth Opportunities Fund, Micro-Cap Equity Fund, Small-Cap Value 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 Global Financial Services
Fund, Framlington International Growth Fund, International Equity Fund and
International Bond Fund
Investing in any of these Funds, with their 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.
Framlington Global Financial Services Fund
Financial services companies are subject to extensive governmental
regulation which may limit both the amount and types of loans and other
financial commitments they can make, and the interest rates and fees they can
charge. Profitability is largely dependent on the availability and cost of
capital funds, and can fluctuate significantly when interest rates change.
Credit losses resulting from financial difficulties of borrowers can
negatively impact the industry. Insurance companies may be subject to severe
price competition. Legislation is currently being considered which would
reduce the separation between commercial and investment banking businesses. If
enacted, this could significantly impact the industry and the Fund. The Fund
may be riskier than a fund investing in a broader range of industries.
53
<PAGE>
Although securities of large and well-established companies in the financial
services industry will be held in the Fund's portfolio, the Fund also will
invest in medium, small and/or newly-public companies which may be subject to
greater share price fluctuations and declining growth, particularly in the
event of rapid changes in the industry and/or increased competition.
Securities of those smaller and/or less seasoned companies may, therefore,
expose shareholders of the Fund to above-average risk.
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.
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.
International Bond Fund, Michigan 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 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 FUND'S 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 Funds and the Tax-Free Money
Market Fund which may also be quoted from time to time, 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.
54
<PAGE>
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 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?
The purchase price for Class K Shares is the net asset value ("NAV") next
determined after we receive your order in proper form. Except in certain
limited circumstances, each Fund determines its NAV on each day the New York
Stock Exchange ("NYSE") is open for trading (a "Business Day") at the close of
such trading on the NYSE (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. 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.
We do not issue share certificates. 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.
55
<PAGE>
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 NAV next determined after we receive the
redemption request in proper form.
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 Fund cannot sell its assets or accurately determine
the value of its assets or if the SEC orders the Fund to suspend redemptions.
HOW CAN I REDEEM SHARES?
Redemption orders are effected at the NAV 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.
. 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 but 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 AND SUB-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, WAM Holdings, Inc. ("WAM") and WAM Holdings
II, Inc. ("WAM II"). MCM was founded in April, 1985 as a Delaware corporation
and was a registered investment advisor. WAM and WAM II are Delaware
corporations and are indirect, wholly-owned subsidiaries of Comerica
Incorporated, a Michigan banking corporation, which owns or controls
approximately 88% of the partnership interests in the Advisor. As of June 30,
1998, the Advisor and its affiliates had approximately $48.2 billion in assets
under management, of which $25.4 billion were invested in equity securities,
$8.1 billion were invested in money market or other short-term instruments,
$9.2 billion were invested in other fixed income securities and $5.5 billion in
non-discretionary assets.
56
<PAGE>
The Advisor provides overall investment management and research and credit
analysis for each Fund and is responsible for all purchases and sales of
portfolio securities for each Fund other than the Framlington Funds.
Framlington Overseas Investment Management Limited is the sub-advisor of the
Framlington Funds. The Sub-Advisor 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.
The Sub-Advisor provides research and credit analysis for each of the
Framlington Funds and is responsible for all purchases and sales of portfolio
securities for each of the Framlington Funds other than the Framlington Global
Financial Services Fund. Each of the Advisor and Sub-Advisor manages a portion
of the assets of the Framlington Global Financial Services Fund. The Advisor
is responsible for all purchases and sales of domestic securities held by the
Fund. The Sub-Advisor is responsible for the allocation of the Fund's assets
among countries and for all purchases and sales of foreign securities held by
the Fund.
During the fiscal year ended June 30, 1998, 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>
<S> <C>
Balanced Fund...................... 0.65%
Growth & Income Fund............... 0.75%
Growth Opportunities............... 0.75%
Index 500 Fund..................... 0.07%
International Equity Fund.......... 0.75%
Micro-Cap Equity Fund.............. 1.00%
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%
Framlington Emerging Markets Fund.. 1.25%
Framlington Global Financial
Services Fund..................... 0.75%
</TABLE>
<TABLE>
<S> <C>
Framlington Healthcare Fund....... 1.00%
Framlington International Growth
Fund............................. 1.00%
Bond Fund......................... 0.50%
Intermediate Bond Fund............ 0.50%
International Bond Fund........... 0.50%
U.S. Government Income Fund....... 0.50%
Michigan Tax-Free Bond Fund....... 0.50%
Tax-Free Bond Fund................ 0.50%
Tax-Free Intermediate Bond Fund... 0.50%
Cash Investment Fund.............. 0.35%
Tax-Free Money Market Fund........ 0.35%
U.S. Treasury Money Market Fund... 0.35%
</TABLE>
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. During the past fiscal
year, the Advisor waived advisory fees for the Index 500 Fund and 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.
During the fiscal year ended June 30, 1998, the Sub-Advisor received 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 or Sub-Advisor, in the case of the Framlington Funds, selects
broker-dealers to execute portfolio transactions for the Funds based on best
price and execution terms. The Advisor or Sub-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 materially equivalent
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.
57
<PAGE>
The table for each Fund:
. includes the average annual total returns of the common or collective
trust fund and the average annual total returns of the corresponding Fund
linked together;
. assumes that net investment income and dividends have been reinvested;
. assumes that the common or collective trust fund paid the same levels of
fees and expenses as the corresponding Fund currently pays;
. 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 (the Investment Company Act of 1940, as
amended (the "1940 Act") and the Internal Revenue Code of 1986, as
amended) as the corresponding Fund; and
. indicates past performance only and does not predict future results.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER SMALL COMPANY RUSSELL 2000
JUNE 30, 1998 GROWTH FUND (CLASS K)* INDEX**
------------- ---------------------- ------------
<S> <C> <C>
1 Year...................................... 12.36% 16.50%
3 Years..................................... 25.60% 18.85%
5 Years..................................... 18.86% 16.05%
10 Years.................................... 17.08% 13.57%
Inception on December 31, 1982.............. 15.01% 13.22%
</TABLE>
- --------
* 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.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER INTERNATIONAL FT/S&P ACTUARIES WORLD
JUNE 30, 1998 EQUITY FUND (CLASS K)* INDEX EX. U.S.**
------------- ---------------------- ----------------------
<S> <C> <C>
1 Year............................ 4.24% 2.83%
3 Years........................... 11.72% 9.79%
5 Years........................... 10.71% 9.35%
Inception on September 30, 1990... 10.46% 10.14%
</TABLE>
- --------
* 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.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER INDEX 500 FUND S&P 500
JUNE 30, 1998 (CLASS K)* INDEX**
------------- --------------------- -------
<S> <C> <C>
1 Year............................................ 29.42% 30.16%
3 Years........................................... 29.48% 30.24%
5 Years........................................... 22.39% 23.08%
10 Years.......................................... 17.78% 18.56%
Inception on January 27, 1988..................... 17.81% 18.64%
</TABLE>
- --------
* 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.
<TABLE>
<CAPTION>
LEHMAN BROTHERS
GOV'T/CORP.
PERIOD ENDED MUNDER BOND FUND BOND
JUNE 30, 1998 (CLASS K)* INDEX**
------------- ---------------- ---------------
<S> <C> <C>
1 Year......................................... 10.57% 11.28%
3 Years........................................ 7.18% 7.86%
5 Years........................................ 6.03% 6.88%
10 Years....................................... 7.89% 9.10%
</TABLE>
- --------
* 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.
58
<PAGE>
<TABLE>
<CAPTION>
MUNDER U.S. LEHMAN BROTHERS
GOVERNMENT GOV'T/CORP.
PERIOD ENDED INCOME FUND BOND
JUNE 30, 1998 (CLASS K)* INDEX**
------------- ----------- ---------------
<S> <C> <C>
1 Year.............................................. 9.70% 11.28%
3 Years............................................. 7.15% 7.86%
5 Years............................................. 5.44% 6.88%
10 Years............................................ 8.15% 9.10%
</TABLE>
- --------
* 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.
<TABLE>
<CAPTION>
MUNDER INTERMEDIATE LEHMAN BROTHERS
PERIOD ENDED BOND FUND INTERMEDIATE
JUNE 30, 1998 (CLASS K)* GOV'T/BOND INDEX**
------------- ------------------- ------------------
<S> <C> <C>
1 Year................................... 7.73% 8.54%
3 Years.................................. 6.02% 6.91%
5 Years.................................. 4.97% 6.11%
10 Years................................. 7.12% 8.25%
Inception on March 31, 1982.............. 8.77% 10.20%
</TABLE>
* 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.
<TABLE>
<CAPTION>
MUNDER TAX-FREE LEHMAN
PERIOD ENDED BOND FUND 20-YEAR MUNI
JUNE 30, 1998 (CLASS K)* BOND INDEX**
------------- --------------- ------------
<S> <C> <C>
1 Year............................................. 8.43% 10.19%
3 Years............................................ 6.88% 9.02%
5 Years............................................ 5.61% 7.07%
10 Years........................................... 7.15% 9.43%
</TABLE>
- --------
* Converted from common trust fund to mutual fund on July 5, 1994.
** Lehman 20-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.
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 the 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 a 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.
59
<PAGE>
The Lehman Brothers 20-Year Municipal Bond Index is a performance benchmark
for the long-term investment-grade tax-exempt bond market.
PERFORMANCE OF FRAMLINGTON ACCOUNTS 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 Standard & Poor's 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 1940 Act and requirements of the Internal
Revenue Code of 1986, as amended, to qualify as a regulated investment
company.
<TABLE>
<CAPTION>
S&P HEALTHCARE
PERIOD ENDED UK HEALTH COMPOSITE INDEX CAPITAL
DECEMBER 31, 1996 PORTFOLIO CHANGE
----------------- --------- -----------------------
<S> <C> <C>
1 Year........................................ 10.75% 18.48%
3 Years....................................... 96.93% 100.49%
5 Years....................................... 99.43% 45.60%
Inception on April 30, 1987................... 411.08% 239.64%
</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 UK tax. Source: Standard & Poor's 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>
PERIOD ENDED CANADIAN EMERGING MSCI EMERGING
DECEMBER 31, 1996 MARKETS ACCOUNT MARKETS FREE TOTAL RETURN
----------------- ----------------- -------------------------
<S> <C> <C>
1 Year.............................. 5.16% 6.03%
Inception on November 1, 1994....... (3.68)% (12.37)%
</TABLE>
MSCI Emerging Markets Free 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 United States only.
60
<PAGE>
The MSCI Emerging Markets Free Index is maintained by Morgan Stanley Capital
International and covers 26 countries and represents the investment
opportunities in emerging markets available to foreign investors. 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. The Transfer Agent is a wholly-owned subsidiary of First Data
Corporation and is located at 4400 Computer Drive, Westborough, Massachusetts,
01581-5120.
ADMINISTRATOR. State Street Bank and Trust Company ("State Street" or
"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 overseeing the maintenance of financial records and
fund accounting. As compensation for its services for the Company, the Trust
and Framlington, 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 annual rate of 0.113% on the first
$2.8 billion of net assets, plus 0.103% on the next $2.2 billion of net
assets, plus 0.101% on the next $2.5 billion of net assets, plus 0.095% on the
next $2.5 billion of net assets, plus 0.080% on the next $2.5 billion of net
assets, plus 0.070% on all net assets in excess of $12.5 billion (with a
$75,000 minimum fee per annum in the aggregate for all portfolios with respect
to the Administrator). If the assets of the Framlington Funds do not exceed
$120 million, the ultimate rate charged the Framlington Funds will be reduced
by their pro-rata portion of the total fees if calculated at the rates of
0.062% of the first $2.8 billion of net assets, plus 0.052% of the next $2.2
billion of net assets, plus 0.050% of all net assets in excess of $5 billion.
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 AND SUB-CUSTODIAN. Comerica Bank ("Comerica" or the "Custodian"),
whose principal business address is One Detroit Center, 500 Woodward Avenue,
Detroit, Michigan 48226, is the Funds' custodian. No compensation is paid to
the Custodian for its custodial services. Comerica receives a fee of 0.01% of
the aggregate average daily net assets of the Funds beneficially owned by
Comerica and its customers for certain shareholder services provided by
Comerica to the Funds. State Street serves as the Funds' sub-custodian.
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.
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.
61
<PAGE>
YEAR 2000. The Funds' operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to
as the "Year 2000 Issue," could adversely affect the handling of securities
trades, pricing and account servicing for the Funds. The Funds have been
informed that their major service providers have made compliance with the Year
2000 Issue a high priority and are taking steps that they believe are
reasonably designed to address the Year 2000 Issue with respect to their
computer systems. There can be, however, no assurance that these steps will be
successful, or that interaction with other non-complying computer systems will
not impair their services at that time.
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 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 Balanced Fund, Growth &
Income Fund, Small Company Growth Fund and International Bond Fund pay
dividends quarterly. The Growth Opportunities Fund, Framlington Emerging
Markets Fund, Framlington Global Financial Services Fund, Framlington
Healthcare Fund, Framlington International Growth Fund, International Equity
Fund, Micro-Cap Equity 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 Tax-Free Funds pay dividends monthly.
Dividends for the Money Market Funds are declared daily and paid monthly. 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 Fund at (800) 438-5789.
62
<PAGE>
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 about the tax treatment of
distributions from the Funds and about other potential tax liabilities,
including backup withholding for certain taxpayers, and about tax aspects of
dispositions of shares of the Funds, 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.
In general, as long as each Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. Each Fund intends to
qualify annually as a RIC. Even if it qualifies as a RIC, a Fund may still be
liable for any excise tax on income that is not distributed in accordance with
a calendar year requirement; the Funds intend to avoid the excise tax by making
timely distributions.
Generally, you will owe tax on the amounts distributed to you, regardless of
whether you receive these amounts in cash or reinvest them in additional Fund
shares. Shareholders not subject to tax on their income generally will not be
required to pay any tax on amounts distributed to them. Federal income tax on
distributions to an IRA or to a qualified retirement plan will generally be
deferred.
Capital gains derived from sales of portfolio securities held by a Fund will
generally be designated as long-term or short-term. Distributions from a Fund's
long-term capital gains are generally taxed at the long-term capital gains rate
regardless of how long you have owned shares in the Fund. Dividends from other
sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from each Fund in which
you are a shareholder a statement of the amount and nature of the distributions
made to you during the year.
If you redeem, transfer or exchange Fund shares, you may have taxable gain or
a loss. If you hold Fund shares for six months or less, and during that time
you receive a capital gain dividend, any loss you realize on the sale of these
Fund shares will be treated as a long-term loss to the extent of the earlier
distribution.
Dividends and certain interest income earned from foreign securities by a
Fund may be subject to foreign withholding or other taxes. A Fund may be
permitted to pass on to its shareholders the right to a credit or deduction for
income or other tax credits earned from foreign investments and will do so if
possible. These deductions or credits may be subject to tax law limitations.
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 a 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 of the
QEF, regardless of whether received, and such amounts will be subject to the
various distribution requirements described above. The Funds may also elect to
mitigate the tax effects of owning PFIC stock by making an annual mark-to-
market election with respect to PFIC shares.
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.
63
<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.
A-1
<PAGE>
CLASS Y SHARES
Prospectus
OCTOBER 27, 1998
THE MUNDER EQUITY FUNDS
Balanced
Growth & Income
Growth Opportunities
International Equity
Micro-Cap Equity
Multi-Season Growth
NetNet
Real Estate Equity Investment
Small-Cap Value
Small Company Growth
Value
THE MUNDER FRAMLINGTON FUNDS
Framlington Emerging Markets
Framlington Global Financial Services
Framlington Healthcare
Framlington International Growth
THE MUNDER INCOME FUNDS
Bond
Intermediate Bond
International Bond
U.S. Government Income
Michigan Tax-Free Bond
Tax-Free Bond
Tax-Free Intermediate Bond
Short Term Treasury
THE MUNDER MONEY MARKET FUNDS
Cash Investment
Money Market
Tax-Free Money Market
U.S. Treasury Money Market
Prospectus begins on next page
<PAGE>
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"):
Munder Framlington International
Munder Balanced Fund Growth Fund
Munder Growth & Income Fund
Munder Growth Opportunities Fund Munder Bond Fund
Munder International Equity Fund Munder Intermediate Bond Fund
Munder Micro-Cap Equity Fund Munder International Bond Fund
Munder Multi-Season Growth Fund Munder U.S. Government Income Fund
Munder NetNet Fund Munder Michigan Tax-Free Bond Fund*
Munder Real Estate Equity Investment FundMunder Tax-Free Bond Fund
Munder Small-Cap Value Fund Munder Tax-Free Intermediate Bond
Munder Small Company Growth Fund Fund
Munder Value Fund Munder Short Term Treasury Fund
Munder Framlington Emerging Markets Fund Munder Cash Investment Fund
Munder Money Market Fund
Munder Framlington Global Financial Services Fund
Munder Framlington Healthcare Fund Munder Tax-Free Money Market Fund
Munder U.S. Treasury Money Market
- -------- Fund
*The Michigan Tax-Free Bond Fund (formerly known as the Michigan Triple Tax-
Free Bond Fund) is offered only in the State of Michigan.
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 SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
CALL TOLL-FREE FOR SHAREHOLDER SERVICES
(800) 438-5789
THE DATE OF THIS PROSPECTUS IS OCTOBER 27, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Highlights
What are the key facts regarding the Funds?.............................. 3
Financial Information...................................................... 7
Fund Choices
What Funds are offered?.................................................. 30
Who may want to invest in the Funds?..................................... 41
What are the Funds' investments and investment practices?................ 41
What are the risks of investing in the Funds?............................ 52
Performance
How is the Funds' performance calculated?................................ 54
Where can I obtain performance data?..................................... 55
Purchases and Exchanges of Shares
What price do I pay for shares?.......................................... 56
When can I purchase shares?.............................................. 56
What is the minimum required investment?................................. 56
How can I purchase shares?............................................... 56
How can I exchange shares?............................................... 57
Redemptions of Shares
What price do I receive for redeemed shares?............................. 57
When can I redeem shares?................................................ 57
How can I redeem shares?................................................. 57
When will I receive redemption amounts?.................................. 58
Structure and Management of the Funds
How are the Funds structured?............................................ 58
Who manages and services the Funds?...................................... 58
What are my rights as a shareholder?..................................... 63
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?........................ 64
How will distributions be made?.......................................... 64
Are there tax implications of my investments in the Funds?............... 64
Additional Information..................................................... 65
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUNDS?
Q: What are the Funds' goals?
A:
. The Framlington Emerging Markets Fund, Framlington Global Financial
Services Fund, Framlington Healthcare Fund, Framlington International
Growth Fund, Growth Opportunities Fund, International Equity Fund, Micro-
Cap Equity Fund, Multi-Season Growth Fund, NetNet Fund, Small-Cap Value
Fund, Small Company Growth Fund and Value Fund primarily seek to provide
long-term capital appreciation.
. The Balanced Fund, Growth & Income Fund and Real Estate Equity Investment
Fund seek to provide capital appreciation and current income.
. The Bond Fund seeks to provide a high level of current income with capital
appreciation as a secondary consideration.
. 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.
. The International Bond Fund seeks to provide a competitive total return
through a combination of current income and capital appreciation.
. The U.S. Government Income Fund seeks to provide high current income.
. The Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund seek to provide
current interest income exempt from Federal income taxes.
. The Michigan Tax-Free Bond Fund seeks to provide as high a level of
current interest income exempt from regular Federal income taxes and
Michigan state income tax as is consistent with prudent investment
management and preservation of capital.
. The Short Term Treasury Fund seeks to provide an enhanced money market
return consistent with the preservation of capital.
. 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.
. The Money Market Fund seeks to provide current income consistent with the
preservation of capital and liquidity.
. 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: BALANCED FUND
. 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.
3
<PAGE>
FRAMLINGTON EMERGING MARKETS FUND, FRAMLINGTON GLOBAL FINANCIAL SERVICES FUND,
FRAMLINGTON HEALTHCARE FUND, FRAMLINGTON INTERNATIONAL GROWTH FUND, GROWTH &
INCOME FUND, GROWTH OPPORTUNITIES FUND, INTERNATIONAL EQUITY FUND, MICRO-CAP
EQUITY FUND, MULTI-SEASON GROWTH FUND, NETNET FUND, REAL ESTATE EQUITY
INVESTMENT FUND, SMALL-CAP VALUE FUND, SMALL COMPANY GROWTH FUND AND VALUE
FUND (THE "EQUITY FUNDS")
. These Funds invest primarily in Equity Securities.
BOND FUND, INTERMEDIATE BOND FUND, INTERNATIONAL BOND FUND AND U.S. GOVERNMENT
INCOME FUND (THE "BOND FUNDS")
. These Funds, other than the U.S. Government Income Fund, invest primarily
in Fixed Income Securities.
. The U.S. Government Income Fund invests primarily in obligations of the
U.S. government and its agencies and instrumentalities.
SHORT TERM TREASURY FUND
. The Short Term Treasury Fund invests only in U.S. Treasury securities and
repurchase agreements relating to U.S. Treasury securities.
MICHIGAN TAX-FREE BOND FUND, TAX-FREE BOND FUND AND TAX-FREE INTERMEDIATE BOND
FUND (THE "TAX-FREE FUNDS")
. 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.
. The Michigan 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 and Michigan state
income tax.
CASH INVESTMENT FUND, MONEY MARKET FUND, TAX-FREE MONEY MARKET FUND AND U.S.
TREASURY MONEY MARKET FUND (THE "MONEY MARKET FUNDS")
. These 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.
4
<PAGE>
Q: What are the Funds' risks?
A: The following table summarizes the primary risks of investing in the Funds:
<TABLE>
<CAPTION>
FUND RISK
-----------------------------------------------------------------------------
<S> <C>
Equity Funds and Balanced Fund Potential loss of investment due to
changes in the stock market in
general, changes in the stock prices
of particular companies and
perceptions about particular
industries.
-----------------------------------------------------------------------------
Bond Funds, Tax-Free Funds and Short Potential loss of investment due to
Term Treasury Fund changes in the bond market in
general, in the prices of debt
securities of particular companies
and in interest rates.
-----------------------------------------------------------------------------
Money Market Funds Potential failure to maintain a
$1.00 net asset value.
-----------------------------------------------------------------------------
Framlington Emerging Markets Fund, Because of large investments in
Framlington Global Financial Services foreign securities, the Funds are
Fund, riskier than domestic funds due to
Framlington International Growth Fund, factors such as freezes on
International Bond Fund and convertibility of currency, changes
International Equity Fund in exchange rates, political
instability and differences in
accounting and reporting standards.
-----------------------------------------------------------------------------
Growth Opportunities Fund, Because of large investments in mid-
Micro-Cap Equity Fund, NetNet Fund, capitalization, small-capitalization
Small Company Growth Fund and and/or emerging growth companies,
Small-Cap Value Fund the Funds are riskier than large-
capitalization funds since such
companies typically have greater
earnings fluctuations and greater
reliance on a few key customers than
larger companies.
-----------------------------------------------------------------------------
Real Estate Equity Investment Fund, These Funds concentrate their
Framlington Global Financial Services investments in single industries and
Fund, could experience larger price
Framlington Healthcare Fund and fluctuations than funds invested in
NetNet Fund a broader range of industries.
-----------------------------------------------------------------------------
International Bond Fund, Michigan Tax- These "non-diversified" Funds
Free Bond Fund and Tax-Free concentrate their investments in
Intermediate Bond Fund fewer issuers than diversified
funds, and could experience larger
price fluctuations than diversified
funds.
</TABLE>
Q: What are the options for investment in the Funds?
A: Each Equity Fund, other than the NetNet Fund offers five different
investment options, or classes: Class A, B, C, K and Y. The NetNet Fund offers
four different investment options, or classes: Class A, B, C and Y. Each Bond
and Tax-Free Fund offers five different investment options, or classes: Class
A, B, C, K and Y. The Short Term Treasury Fund offers Class Y Shares and
Michigan Municipal Shares. 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, K and Michigan
Municipal Shares are offered in other prospectuses.
5
<PAGE>
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. (the "Transfer Agent"), by mailing an Account Application
Form with a check to the Transfer Agent. 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: .Automatic Investment Plan
.Reinvestment privilege
.Free Checkwriting (certain Funds only--See "Redemption of Shares")
Q: When and how are distributions made?
A: Dividend distributions are made from the dividends and interest earned on
investments after expenses. Dividends paid at least annually: Framlington
Emerging Markets Fund, Framlington Global Financial Services Fund, Framlington
Healthcare Fund, Framlington International Growth Fund, Growth Opportunities
Fund, International Equity Fund, Micro-Cap Equity Fund, Multi-Season Growth
Fund, NetNet Fund, Small-Cap Value Fund and Value Fund.
Dividends paid at least quarterly (if income is available): Balanced Fund,
Growth & Income Fund, Small Company Growth Fund and International Bond Fund.
Dividends paid monthly: Real Estate Equity Investment Fund, Bond Fund,
Intermediate Bond Fund, U.S. Government Income Fund, Michigan Tax-Free Bond
Fund, Tax-Free Bond Fund, Tax-Free Intermediate Bond Fund.
Dividends declared daily and paid monthly: 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, if any, 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 services for the Framlington Funds. Framlington Overseas Investment
Management Limited (the "Sub-Advisor") is responsible for all purchases and
sales of securities held by the Framlington Emerging Markets Fund, Framlington
Healthcare Fund and Framlington International Growth Fund. The Advisor is
responsible for purchases and sales of domestic securities and the Sub-Advisor
is responsible for purchases and sales of foreign securities for the
Framlington Global Financial Services Fund.
6
<PAGE>
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.
<TABLE>
<S> <C>
Maximum Sales Charge on Purchase (as a % of Offering Price)................ None
Sales Charges Imposed on Reinvested Dividends.............................. None
Maximum Deferred Sales Charge.............................................. None
Redemption Fees (2)........................................................ None
Exchange Fees.............................................................. None
</TABLE>
- --------
Notes:
(1) Does not include fees which institutions may charge for services they
provide to you.
(2) 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 for the current fiscal year. Such expenses include payments to
Trustees, Directors, auditors, legal counsel and service providers (such as
the Advisor), registration fees and distribution fees. The expenses shown
below are based on expenses for the Funds' past fiscal year, except (i) the
expenses for the Growth Opportunities Fund and the Framlington Global
Financial Services Fund are based on estimated operating expenses for the
current fiscal year; and (ii) the expenses for the Framlington Emerging
Markets Fund, the Framlington International Growth Fund, the NetNet Fund and
the Short Term Treasury Fund have been restated to reflect anticipated
voluntary expense reimbursements for the current fiscal year.
<TABLE>
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES GROWTH
(AS A % OF AVERAGE NET BALANCED GROWTH & OPPORTUNITIES INTERNATIONAL MICRO-CAP
ASSETS) FUND INCOME FUND FUND EQUITY FUND EQUITY FUND
- ---------------------- ------------ ------------ ---------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Advisory Fees........... .65% .75% .75% .75% 1.00%
Other Expenses+......... .27% .19% .40%++ .25% .28%++
---- ----- ----- ----- -----
Total Fund Operating
Expenses+.............. .92% .94% 1.15%++ 1.00% 1.28%++
==== ===== ===== ===== =====
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES REAL ESTATE
(AS A % OF AVERAGE NET MULTI-SEASON NETNET EQUITY SMALL-CAP SMALL COMPANY
ASSETS) GROWTH FUND FUND INVESTMENT FUND VALUE FUND GROWTH FUND
- ---------------------- ------------ ------------ ---------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Advisory Fees........... .75%* 1.00% .74% .75% .75%
Other Expenses+......... .21% .31%++ .29% .27% .20%
---- ----- ----- ----- -----
Total Fund Operating
Expenses+.............. .96%* 1.31%++ 1.03% 1.02% .95%
==== ===== ===== ===== =====
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES FRAMLINGTON FRAMLINGTON FRAMLINGTON FRAMLINGTON
(AS A % OF AVERAGE NET VALUE EMERGING GLOBAL FINANCIAL HEALTHCARE INTERNATIONAL
ASSETS) FUND MARKETS FUND SERVICES FUND FUND GROWTH FUND
- ---------------------- ------------ ------------ ---------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Advisory Fees........... .74% 1.25% .75% 1.00% 1.00%
Other Expenses+......... .25% .32%++ .40%++ .33%++ .33%++
---- ----- ----- ----- -----
Total Fund Operating
Expenses+.............. .99% 1.57%++ 1.15%++ 1.33%++ 1.33%++
==== ===== ===== ===== =====
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES INTERMEDIATE INTERNATIONAL U.S. MICHIGAN
(AS A % OF AVERAGE NET BOND BOND GOVERNMENT TAX-FREE BOND
ASSETS) BOND FUND FUND FUND INCOME FUND FUND
- ---------------------- ------------ ------------ ---------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Advisory Fees........... .50% .50% .50% .50% .50%
Other Expenses.......... .21% .18% .36% .19% .23%
---- ----- ----- ----- -----
Total Fund Operating
Expenses............... .71% .68% .86% .69% .73%
==== ===== ===== ===== =====
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
TAX-
ANNUAL FUND OPERATING SHORT FREE
EXPENSES TAX-FREE TAX-FREE TERM CASH MONEY MONEY
(AS A % OF AVERAGE NET BOND INTERMEDIATE TREASURY INVESTMENT MARKET MARKET
ASSETS) FUND BOND FUND FUND FUND FUND FUND
- ---------------------- -------- ------------ -------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees........... .50% .50% .25% .35% .40% .35%
Other Expenses+......... .18% .19% .27%++ .16% .24% .19%
---- ---- ---- ---- ---- ----
Total Fund Operating
Expenses+.............. .68% .69% .52%++ .51% .64% .54%
==== ==== ==== ==== ==== ====
<CAPTION>
U.S.
ANNUAL FUND OPERATING TREASURY
EXPENSES MONEY
(AS A % OF AVERAGE NET MARKET
ASSETS) FUND
- ---------------------- --------
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees........... .35%
Other Expenses.......... .22%
----
Total Fund Operating
Expenses............... .57%
====
</TABLE>
- --------
* The Advisor expects to voluntarily waive a portion of its advisory fees for
the current fiscal year. Without waiver, the ratio of advisory fees to
average net assets would be .93% and total fund operating expenses would be
at 1.14%. The Advisor may discontinue such voluntary waivers at any time in
its sole discretion.
+ After expense reimbursements, if any.
++ The Advisor expects to voluntarily reimburse the Funds for certain
operating expenses. In the absence of such expense reimbursements, the
total fund operating expenses would be 1.89% for the Framlington Emerging
Markets Fund, 2.15% for the Framlington Healthcare Fund, 1.57% for the
Framlington International Growth Fund, 1.53% for the Micro-Cap Equity Fund,
1.61% for the NetNet Fund and .63% for the Short Term Treasury Fund; and it
is estimated that total fund operating expenses would be 1.32% for the
Framlington Global Financial Services Fund and 1.16% for the Growth
Opportunities Fund. The Advisor may discontinue such voluntary expense
reimbursements at any time in its sole discretion.
8
<PAGE>
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 EXPANSES MAY BE LARGER OR SMALLER THAN SHOWN.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Balanced Fund................................... $ 9 $29 $51 $114
Growth & Income Fund............................ $10 $30 $52 $116
Growth Opportunities Fund....................... $12 $37 -- --
International Equity Fund....................... $10 $32 $55 $123
Micro-Cap Equity Fund........................... $13 $41 $70 $155
Multi-Season Growth Fund........................ $10 $31 $53 $118
NetNet Fund..................................... $13 $42 $72 $159
Real Estate Equity Investment Fund.............. $11 $33 $57 $126
Small-Cap Value Fund............................ $10 $33 $56 $125
Small Company Growth Fund....................... $10 $30 $53 $117
Value Fund...................................... $10 $32 $55 $122
Framlington Emerging Markets Fund............... $16 $50 $86 $187
Framlington Global Financial Services Fund...... $12 $37 -- --
Framlington Healthcare Fund..................... $14 $42 $73 $161
Framlington International Growth Fund........... $14 $42 $73 $161
Bond Fund....................................... $ 7 $23 $40 $ 89
Intermediate Bond Fund.......................... $ 7 $22 $38 $ 85
International Bond Fund......................... $ 9 $27 $48 $107
U.S. Government Income Fund..................... $ 7 $22 $39 $ 86
Michigan Tax-Free Bond Fund..................... $ 7 $23 $41 $ 91
Tax-Free Bond Fund.............................. $ 7 $22 $38 $ 85
Tax-Free Intermediate Bond Fund................. $ 7 $22 $39 $ 86
Short Term Treasury Fund........................ $ 5 $16 $29 $ 66
Cash Investment Fund............................ $ 6 $18 $31 $ 64
Money Market Fund............................... $ 7 $21 $36 $ 80
Tax-Free Money Market Fund...................... $ 6 $17 $30 $ 68
U.S. Treasury Money Market Fund................. $ 6 $18 $32 $ 72
</TABLE>
9
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors, except that, for periods ended prior to June 30, 1995
for the Multi-Season Growth Fund and the Money Market Fund, such financial
highlights were audited by another independent auditor. 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>
BALANCED FUND(A)
----------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E) 2/28/94
------- ---------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 13.01 $ 12.35 $ 10.77 $ 9.95 $ 10.36 $ 10.00
------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income.. 0.37 0.31 0.30 0.10 0.21 0.16
Net realized and
unrealized gain/(loss)
on investments........ 1.62 1.31 1.55 0.85 (0.42) 0.32
------- ------- ------- ------- ------- -------
Total from investment
operations............ 1.99 1.62 1.85 0.95 (0.21) 0.48
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income..... (0.35) (0.30) (0.27) (0.13) (0.20) (0.12)
Distributions from net
realized gains........ (1.17) (0.66) -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions.... (1.52) (0.96) (0.27) (0.13) (0.20) (0.12)
------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 13.48 $ 13.01 $ 12.35 $ 10.77 $ 9.95 $ 10.36
======= ======= ======= ======= ======= =======
Total return (b)....... 16.23% 13.91% 17.35% 9.57% (1.91)% 4.81%
======= ======= ======= ======= ======= =======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $47,215 $70,314 $57,637 $48,844 $45,610 $43,997
Ratio of operating
expenses to average
net assets............ 0.92% 0.97% 0.90% 0.91%(c) 0.97% 0.95%(c)
Ratio of net investment
income to average net
assets................ 2.66% 2.55% 2.54% 2.76%(c) 2.14% 1.78%(c)
Portfolio turnover
rate.................. 79% 125% 197% 52% 116% 50%
Ratio of operating
expenses to average
net assets without
waivers............... 0.92% 0.97% 1.01% 1.26%(c) 1.32% 1.20%(c)
</TABLE>
- --------
(a) The Munder Balanced Fund Class Y Shares commenced operations on April 13,
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 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.
10
<PAGE>
<TABLE>
<CAPTION>
GROWTH
OPPORTUNITIES
GROWTH & INCOME FUND(A) FUND(A)
------------------------------------------------------ -------------
YEAR YEAR YEAR PERIOD PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(G) 6/30/96(G) 6/30/95(D) 2/28/95(E) 6/30/98
------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 15.23 $ 13.05 $ 11.14 $10.43 $10.00 $10.00
------- ------- -------- ------ ------ ------
Income from investment
operations:
Net investment income.. 0.32 0.35 0.35 0.11 0.25 0.01
Net realized and/or
unrealized gain on
investments........... 2.97 3.14 1.98 0.79 0.34 0.01
------- ------- -------- ------ ------ ------
Total from investment
operations............ 3.29 3.49 2.33 0.90 0.59 0.02
------- ------- -------- ------ ------ ------
Less distributions:
Dividends from net
investment income..... (0.32) (0.35) (0.33) (0.19) (0.16) --
Distributions from net
realized gains........ (2.56) (0.96) (0.09) -- (0.00)(f) --
------- ------- -------- ------ ------ ------
Total distributions.... (2.88) (1.31) (0.42) (0.19) (0.16) --
------- ------- -------- ------ ------ ------
Net asset value, end of
period................. $ 15.64 $ 15.23 $ 13.05 $11.14 $10.43 $10.02
======= ======= ======== ====== ====== ======
Total return (b)....... 23.32% 28.43% 21.26% 8.69% 6.02% 0.20%
======= ======= ======== ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $34,840 $29,674 $ 20,464 $7,860 $4,142 $1,573
Ratio of operating
expenses to average
net assets............ 0.94% 0.95% 0.96% 0.84%(c) 0.28%(c) 1.15%(c)
Ratio of net investment
income to average net
assets................ 2.03% 2.53% 2.81% 3.58%(c) 4.97%(c) 3.18%(c)
Portfolio turnover
rate.................. 73% 62% 37% 13% 12% 0%
Ratio of operating
expenses to average
net assets without
waivers and/or
expenses reimbursed... 0.94% 0.95% 1.03% 1.26%(c) 1.28%(c) 1.16%(c)
</TABLE>
- --------
(a) The Munder Growth & Income Fund Class Y Shares commenced operations on
July 5, 1994. The Munder Growth Opportunities Fund commenced operations on
June 24, 1998.
(b) Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charges.
(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) Amount represents less than $0.01 per share.
(g) Per share numbers have been calculated using the average shares method.
11
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND(A)
------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E,F) 2/28/94 2/28/93 2/29/92
-------- ---------- ---------- ---------- ------------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 15.80 $ 15.15 $ 13.45 $ 12.30 $ 13.68 $ 10.64 $ 10.76 $ 10.00
-------- -------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income.. 0.19 0.18 0.19 0.12 0.20 0.19 0.11 0.11
Net realized and
unrealized gain/(loss)
on investments........ 0.33 2.32 1.64 1.03 (1.47) 2.85 (0.10) 0.67
-------- -------- ------- ------- ------- ------- ------- -------
Total from investment
operations............ 0.52 2.50 1.83 1.15 (1.27) 3.04 0.01 0.78
-------- -------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income..... (0.22) (0.26) (0.13) -- (0.05) -- (0.11) (0.02)
Distributions from net
realized gains........ (1.00) (1.59) -- -- -- -- (0.02) --
Distributions from
capital............... -- -- -- -- (0.06) -- -- --
-------- -------- ------- ------- ------- ------- ------- -------
Total distributions.... (1.22) (1.85) (0.13) -- (0.11) -- (0.13) (0.02)
-------- -------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 15.10 $ 15.80 $ 15.15 $ 13.45 $ 12.30 $ 13.68 $ 10.64 $ 10.76
======== ======== ======= ======= ======= ======= ======= =======
Total return (b)....... 4.48% 18.35% 13.63% 9.35% (9.33)% 28.57% 0.09% 7.76%
======== ======== ======= ======= ======= ======= ======= =======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $102,081 $107,831 $89,435 $75,000 $68,263 $68,954 $42,740 $33,357
Ratio of operating
expenses to average
net assets............ 1.00% 1.01% 1.01% 0.96%(c) 0.93% 1.03% 1.02% 0.25%(c)
Ratio of net investment
income to average net
assets................ 1.28% 1.23% 1.32% 2.82%(c) 1.56% 1.65% 1.25% 4.16%(c)
Portfolio turnover
rate.................. 41% 46% 75% 14% 20% 15% 1% 0%
Ratio of operating
expenses to average
net assets without
waivers............... 1.00% 1.01% 1.08% 1.21%(c) 1.18% 1.28% 1.34% 1.33%(c)
</TABLE>
- --------
(a) The Munder International Equity 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) 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.
12
<PAGE>
<TABLE>
<CAPTION>
MICRO-CAP
EQUITY FUND(A)
----------------------
YEAR PERIOD
ENDED ENDED
6/30/98(D) 6/30/97(D)
---------- ----------
<S> <C> <C>
Net asset value, beginning of period.................. $ 12.83 $10.00
------- ------
Income from investment operations:
Net investment income/(loss)......................... (0.13) (0.03)
Net realized and unrealized gain on investments...... 4.99 2.86
------- ------
Total from investment operations..................... 4.86 2.83
------- ------
Less distributions:
Dividends from net investment income................. -- --
Distributions from net realized gains................ (0.64) --
------- ------
Total distributions.................................. (0.64) --
------- ------
Net asset value, end of period........................ $ 17.05 $12.83
======= ======
Total return (b)..................................... 38.19% 28.30%
======= ======
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)................. $15,337 $2,279
Ratio of operating expenses to average net assets.... 1.28% 1.25%(c)
Ratio of net investment income to average net assets. (0.72)% (0.63)%(c)
Portfolio turnover rate.............................. 172% 68%
Ratio of operating expenses to average net assets
without waivers and/or expenses reimbursed.......... 1.53% 7.65%(c)
</TABLE>
- --------
(a) The Munder Micro-Cap Equity Fund Class Y Shares commenced operations on
December 26, 1996.
(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.
13
<PAGE>
<TABLE>
<CAPTION>
NETNET
MULTI-SEASON GROWTH FUND(A) FUND(A)
------------------------------------------------------------------- -------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98(F) 6/30/97(F) 6/30/96(F) 6/30/95(D,E,H) 12/31/94 12/31/93 6/30/98
---------- ---------- ---------- -------------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 18.17 $ 14.94 $ 12.10 $ 10.43 $10.70 $10.20 $17.07
-------- -------- -------- ------- ------ ------ ------
Income from investment
operations:
Net investment
income/(loss)......... 0.05 0.08 0.09 0.00(g) 0.04 0.00(g) (0.01)
Net realized and
unrealized gain/(loss)
on investments........ 4.38 3.94 3.22 1.67 (0.27) 0.50 3.63
-------- -------- -------- ------- ------ ------ ------
Total from investment
operations............ 4.43 4.02 3.31 1.67 (0.23) 0.50 3.62
-------- -------- -------- ------- ------ ------ ------
Less distributions:
Dividends from net
investment income..... (0.02) (0.04) (0.07) -- -- -- --
Distributions from net
realized gains........ (0.92) (0.75) (0.40) -- (0.04) -- --
-------- -------- -------- ------- ------ ------ ------
Total distributions.... (0.94) (0.79) (0.47) -- (0.04) -- --
-------- -------- -------- ------- ------ ------ ------
Net asset value at end
of period.............. $ 21.66 $ 18.17 $ 14.94 $ 12.10 $10.43 $10.70 $20.69
======== ======== ======== ======= ====== ====== ======
Total return (b)....... 25.28% 27.96% 27.85% 16.01% (2.17)% 4.90% 20.97%
======== ======== ======== ======= ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $332,156 $176,027 $130,129 $87,604 $3,244 $2,322 $5,240
Ratio of operating
expenses to average
net assets............ 0.96% 1.00% 1.01% 1.40%(c) 1.50% 1.50%(c) 1.30%(c)
Ratio of net investment
income/(loss) to
average net assets.... 0.25% 0.50% 0.69% 0.53%(c) 0.29% 0.08%(c) (0.38)%(c)
Portfolio turnover
rate.................. 34% 33% 54% 27% 48% 238% 165%
Ratio of operating
expenses to average
net assets without
waivers and/or
expenses reimbursed... 1.14% 1.25% 1.26% 1.72%(c) 2.53% 2.70%(c) 1.62%(c)
</TABLE>
- --------
(a) The Munder Multi-Season Growth Fund Class Y Shares commenced operations on
August 16, 1993. The Munder NetNet Fund Class Y Shares commenced
operations on June 1, 1998.
(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, the 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.
(f) Per share numbers have been calculated using the average shares method.
(g) Amount represents less than $0.01 per share.
(h) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
14
<PAGE>
<TABLE>
<CAPTION>
SMALL-CAP VALUE
REAL ESTATE EQUITY INVESTMENT FUND(A) FUND(A)
----------------------------------------- ---------------------
YEAR PERIOD PERIOD
YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED
6/30/98(E) 6/30/97 6/30/96(E) 6/30/95(D) 6/30/98(E) 6/30/97(E)
---------- ------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 14.40 $ 11.22 $ 10.09 $10.00 $ 12.04 $ 10.00
------- ------- ------- ------ ------- -------
Income from investment
operations:
Net investment
income/(loss)......... 0.68 0.51 0.47 0.37 0.11 0.12
Net realized and
unrealized gain on
investments........... 0.66 3.22 1.13 0.08 2.84 1.96
------- ------- ------- ------ ------- -------
Total from investment
operations............ 1.34 3.73 1.60 0.45 2.95 2.08
------- ------- ------- ------ ------- -------
Less distributions:
Dividends from net
investment income..... (0.65) (0.51) (0.47) (0.36) (0.10) (0.04)
Distributions in excess
of net investment
income................ -- (0.01) -- -- -- --
Distributions from net
realized gains........ (0.14) -- -- -- (0.64) --
Distributions from
paid-in capital....... -- (0.03) -- -- -- --
------- ------- ------- ------ ------- -------
Total distributions.... (0.79) (0.55) (0.47) (0.36) (0.74) (0.04)
------- ------- ------- ------ ------- -------
Net asset value, end of
period................. $ 14.95 $ 14.40 $ 11.22 $10.09 $ 14.25 $ 12.04
======= ======= ======= ====== ======= =======
Total return (b)....... 9.24% 33.79% 16.20% 4.64% 24.84% 20.86%
======= ======= ======= ====== ======= =======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $82,611 $48,206 $19,125 $4,989 $71,251 $18,271
Ratio of operating
expenses to average
net assets............ 1.03% 1.10% 1.00% 1.25%(c) 1.02% 1.13%(c)
Ratio of net investment
income/(loss) to
average net assets.... 4.40% 4.05% 4.50% 5.28%(c) 0.81% 2.18%(c)
Portfolio turnover
rate.................. 15% 15% 17% 3% 53% 73%
Ratio of operating
expenses to average
net assets without
waivers............... 1.03% 1.13% 1.27% 6.98%(c) 1.02% 1.26%(c)
</TABLE>
- --------
(a) The Munder Real Estate Equity Investment Fund Class Y Shares commenced
operations on October 3, 1994. The Munder Small-Cap Value Fund Class Y
Shares commenced operations on December 26, 1996.
(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 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.
(e) Per share numbers have been calculated using the average shares method.
15
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND(A)
----------------------------------------------------------------------------------------
PERIOD YEAR YEAR PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED ENDED ENDED ENDED
6/30/98(F) 6/30/97(F) 6/30/96(F) 6/30/95(E) 2/28/95(D) 2/28/94 2/28/93 2/29/92
---------- ---------- ---------- ---------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 21.84 $ 21.21 $ 15.33 $ 13.93 $ 14.38 $ 12.72 $ 11.49 $ 10.00
-------- -------- -------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment loss.... (0.07) (0.07) (0.07) (0.01) (0.02) (0.04) 0.04 0.03
Net realized and
unrealized gain/(loss)
on investments........ 2.60 3.69 7.19 1.41 (0.41) 1.97 1.23 1.47
-------- -------- -------- ------- ------- ------- ------- -------
Total from investment
operations............ 2.53 3.62 7.12 1.40 (0.43) 1.93 1.27 1.50
-------- -------- -------- ------- ------- ------- ------- -------
Less distributions:
Distributions from net
realized gains........ (4.11) (2.99) (1.24) -- (0.02) (0.27) (0.04) (0.01)
-------- -------- -------- ------- ------- ------- ------- -------
Total distributions.... (4.11) (2.99) (1.24) -- (0.02) (0.27) (0.04) (0.01)
-------- -------- -------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 20.26 $ 21.84 $ 21.21 $ 15.33 $ 13.93 $ 14.38 $ 12.72 $ 11.49
======== ======== ======== ======= ======= ======= ======= =======
Total return (b)....... 12.57% 19.26% 48.65% 10.05% (3.00)% 15.19% 11.13% 15.01%
======== ======== ======== ======= ======= ======= ======= =======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $209,081 $152,772 $107,492 $79,968 $72,207 $64,466 $48,569 $36,386
Ratio of operating
expenses to average
net assets............ 0.95% 0.97% 0.96% 0.96%(c) 0.98% 0.95% 0.96% 0.22%(c)
Ratio of net investment
loss to average net
assets................ (0.32)% (0.37)% (0.41)% (0.16)%(c) (0.15)% (0.28)% 0.10% 1.16%(c)
Portfolio turnover
rate.................. 123% 98% 98% 39% 45% 47% 46% 43%
Ratio of operating
expenses to average
net assets without
waivers............... 0.95% 0.97% 1.03% 1.21%(c) 1.23% 1.20% 1.16% 0.97%(c)
</TABLE>
- --------
(a) The Munder 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) Fiscal year end 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.
16
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND(A)
--------------------------------
PERIOD
YEAR ENDED YEAR ENDED ENDED
6/30/98(D) 6/30/97(D) 6/30/96(D)
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period........ $ 14.00 $ 11.59 $ 10.00
-------- ------- -------
Income from investment operations:
Net investment income...................... 0.13 0.12 0.09
Net realized and unrealized gain/(loss) on
investments............................... 3.38 3.63 1.56
-------- ------- -------
Total from investment operations........... 3.51 3.75 1.65
-------- ------- -------
Less distributions:
Dividends from net investment income....... (0.13) (0.12) (0.06)
Distributions from net realized gains...... (1.15) (1.22) --
-------- ------- -------
Total distributions........................ (1.28) (1.34) (0.06)
-------- ------- -------
Net asset value, end of period.............. $ 16.23 $ 14.00 $ 11.59
======== ======= =======
Total return (b)........................... 26.12% 34.66% 16.52%
======== ======= =======
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)....... $165,235 $80,004 $35,432
Ratio of operating expenses to average net
assets.................................... 0.99% 1.02% 0.95%(c)
Ratio of net investment income to average
net assets................................ 0.86% 0.95% 0.89%(c)
Portfolio turnover rate.................... 92% 139% 223%
Ratio of operating expenses to average net
assets without waivers.................... 0.99% 1.06% 1.05%(c)
</TABLE>
- --------
(a) The Munder 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) Per share numbers have been calculated using the average shares method.
17
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON
GLOBAL
FINANCIAL FRAMLINGTON
FRAMLINGTON EMERGING SERVICES FRAMLINGTON INTERNATIONAL GROWTH
MARKETS FUND(A) FUND(A) HEALTHCARE FUND(A) FUND(A)
---------------------- ----------- ------------------ ---------------------
PERIOD PERIOD PERIOD PERIOD
YEAR ENDED ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED
6/30/98(D) 6/30/97(D) 6/30/98 6/30/98(D) 6/30/97 6/30/98(D) 6/30/97(D)
---------- ---------- ----------- ---------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 12.92 $10.00 $10.00 $10.89 $10.00 $ 11.35 $ 10.00
------- ------ ------ ------ ------ ------- -------
Income from investment
operations:
Net investment
income/(loss)......... 0.13 0.07 0.01 (0.11) (0.03) 0.05 0.07
Net realized and
unrealized gain/(loss)
on investments........ (3.72) 2.88 0.18 1.06 0.92 0.61 1.28
------- ------ ------ ------ ------ ------- -------
Total from investment
operations............ (3.59) 2.95 0.19 0.95 0.89 0.66 1.35
------- ------ ------ ------ ------ ------- -------
Less distributions:
Dividends from net
investment income..... (0.06) (0.03) -- -- -- (0.03) --
Distributions from net
realized gains........ (0.05) -- -- -- -- (0.03) --
Distributions in excess
of net realized gains. (0.22) (0.01)
------- ------ ------ ------ ------ ------- -------
Total distributions.... (0.33) (0.03) -- -- -- (0.07) --
------- ------ ------ ------ ------ ------- -------
Net asset value, end of
period................. $ 9.00 $12.92 $10.19 $11.84 $10.89 $ 11.94 $ 11.35
======= ====== ====== ====== ====== ======= =======
Total return (b)....... (28.12)% 29.51% 1.90% 8.72% 8.90% 5.86% 13.50%
======= ====== ====== ====== ====== ======= =======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $14,332 $4,826 $1,834 $5,458 $2,086 $64,643 $23,831
Ratio of operating
expenses to average
net assets............ 1.64% 1.54%(c) 1.14%(c) 1.37% 1.30%(c) 1.37% 1.30%(c)
Ratio of net investment
income/(loss) to
average net assets.... 1.18% 1.39%(c) 3.60%(c) (0.95)% (0.70)%(c) 0.46% 1.26%(c)
Portfolio turnover
rate.................. 94% 46% 0% 47% 14% 38% 15%
Ratio of operating
expenses to average
net assets without
expenses reimbursed... 1.89% 5.18%(c) -- 2.15% 7.08%(c) 1.57% 2.31%(c)
</TABLE>
- --------
(a) The Munder Framlington Emerging Markets Fund, The Munder Framlington
Healthcare Fund and The Munder Framlington International Growth Fund Class
Y Shares all commenced operations on December 31, 1996. The Munder
Framlington Global Financial Services Fund commenced operations on June
24, 1998.
(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.
18
<PAGE>
<TABLE>
<CAPTION>
BOND FUND(A)
----------------------------------------------------------------------------------------
YEAR YEAR PERIOD YEAR YEAR PERIOD
YEAR ENDED ENDED ENDED ENDED YEAR ENDED ENDED ENDED ENDED
6/30/98(E) 6/30/97 6/30/96 6/30/95(D) 2/28/95(E,F) 2/28/94 2/28/93 2/29/92(A)
---------- -------- -------- ---------- ------------ -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 9.58 $ 9.53 $ 9.70 $ 9.31 $ 9.91 $ 9.92 $ 10.13 $ 10.00
-------- -------- -------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income.. 0.61 0.63 0.64 0.21 0.64 0.58 0.77 0.20
Net realized and
unrealized gain/(loss)
on investments........ 0.39 0.03 (0.21) 0.39 (0.64) (0.03) (0.12) 0.07
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations............ 1.00 0.66 0.43 0.60 -- 0.55 0.65 0.27
-------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income..... (0.59) (0.61) (0.60) (0.21) (0.60) (0.56) (0.77) (0.14)
Distributions from net
realized gains........ -- -- -- -- -- -- (0.09) --
Total distributions.... (0.59) (0.61) (0.60) (0.21) (0.60) (0.56) (0.86) (0.14)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period................. $ 9.99 $ 9.58 $ 9.53 $ 9.70 $ 9.31 $ 9.91 $ 9.92 $ 10.13
======== ======== ======== ======== ======== ======== ======== ========
Total return (b)....... 10.72% 7.09% 4.50% 6.48% 0.70% 5.63% 6.75% 2.70%
======== ======== ======== ======== ======== ======== ======== ========
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $221,427 $113,493 $113,020 $146,741 $141,704 $147,770 $154,078 $145,120
Ratio of operating
expenses to average
net assets............ 0.72% 0.71% 0.70% 0.70%(c) 0.67% 0.80% 0.76% 0.19%(c)
Ratio of net investment
income to average net
assets................ 6.18% 6.59% 6.51% 6.72%(c) 6.82% 5.70% 7.50% 8.32%(c)
Portfolio turnover
rate.................. 222% 279% 507% 99% 165% 128% 77% 34%
Ratio of operating
expenses to average
net assets without
waivers............... 0.72% 0.71% 0.79% 0.94%(c) 0.91% 0.94% 0.94% 0.93%(c)
</TABLE>
- --------
(a) The Munder Bond 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) 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.
(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.
19
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND(A)
------------------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98(F) 6/30/97(F) 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/95(E) 2/28/94 2/28/93
---------- ---------- -------- ---------- ---------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 9.33 $ 9.31 $ 9.51 $ 9.27 $ 9.91 $ 10.47 $ 9.91 $ 10.47 $ 10.07
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income.. 0.57 0.57 0.60 0.23 0.60 0.59 0.60 0.59 0.54
Net realized and
unrealized gain/(loss)
on investments........ 0.16 0.03 (0.20) 0.24 (0.59) (0.20) (0.59) (0.20) 0.49
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations............ 0.73 0.60 0.40 0.47 0.01 0.39 0.01 0.39 1.03
-------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income...... (0.56) (0.58) (0.60) (0.23) (0.64) (0.58) (0.64) (0.58) (0.54)
Distributions from net
realized gains........ -- -- -- -- (0.01) (0.37) (0.01) (0.37) (0.09)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions.... (0.56) (0.58) (0.60) (0.23) (0.65) (0.95) (0.65) (0.95) (0.63)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period................. $ 9.50 $ 9.33 $ 9.31 $ 9.51 $ 9.27 $ 9.91 $ 9.27 $ 9.91 $ 10.47
======== ======== ======== ======== ======== ======== ======== ======== ========
Total return (b)....... 7.99% 6.60% 4.29% 5.12% 0.78% 3.79% 0.78% 3.79% 10.56%
======== ======== ======== ======== ======== ======== ======== ======== ========
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $226,856 $161,606 $182,937 $157,484 $162,185 $162,738 $162,185 $162,738 $152,470
Ratio of operating
expenses to average
net assets............ 0.68% 0.68% 0.69% 0.70%(c) 0.68% 0.80% 0.68% 0.80% 0.77%
Ratio of net investment
income to average net
assets................ 6.02% 6.16% 6.33% 7.37%(c) 6.96% 5.63% 6.96% 5.63% 5.53%
Portfolio turnover
rate.................. 194% 825% 494% 84% 80% 155% 80% 155% 104%
Ratio of operating
expenses to average
net assets without
waivers............... 0.68% 0.68% 0.77% 0.94%(c) 0.93% 0.94% 0.93% 0.94% 0.95%
</TABLE>
- --------
(a) The Munder Intermediate Bond 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) 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.
20
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL BOND U.S. GOVERNMENT
FUND(A) INCOME FUND(A)
-------------------- --------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98 6/30/97 6/30/96(F) 6/30/95(D) 2/28/95(E)
--------- --------- ------- ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 9.83 $ 10.00 $ 10.09 $ 9.98 $ 10.30 $ 9.89 $ 10.00
--------- --------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income... 0.22 0.25 0.62 0.68 0.74 0.24 0.44
Net realized and
unrealized gain/(loss)
on investments......... (0.11) (0.34) 0.36 0.07 (0.27) 0.41 (0.07)
--------- --------- ------- ------- ------- ------- -------
Total from investment
operations............. 0.11 (0.09) 0.98 0.75 0.47 0.65 0.37
--------- --------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income...... (0.24) (0.08) (0.63) (0.64) (0.71) (0.24) (0.48)
Distributions from net
realized gains......... (0.02) -- (0.06) (0.00)(g) (0.08) -- --
--------- --------- ------- ------- ------- ------- -------
Total distributions..... (0.26) (0.08) (0.69) (0.64) (0.79) (0.24) (0.48)
--------- --------- ------- ------- ------- ------- -------
Net asset value, end of
period.................. $ 9.68 $ 9.83 $ 10.38 $ 10.09 $ 9.98 $ 10.30 $ 9.89
========= ========= ======= ======= ======= ======= =======
Total return (b)........ 1.12% (0.90)% 9.97% 7.75% 4.58% 6.64% 3.85%
========= ========= ======= ======= ======= ======= =======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)...... $ 49,834 $ 51,679 $70,842 $55,098 $46,695 $12,862 $11,647
Ratio of operating
expenses to average net
assets................. 0.86% 0.89%(c) 0.69% 0.71% 0.72% 0.72%(c) 0.70%(c)
Ratio of net investment
income to average net
assets................. 3.78% 3.86%(c) 6.25% 6.76% 7.17% 7.21%(c) 7.27%(c)
Portfolio turnover rate. 81% 75% 85% 130% 133% 42% 143%
Ratio of operating
expenses to average net
assets without waivers. 0.86% 0.93%(c) 0.69% 0.71% 0.79% 0.96%(c) 0.94%
</TABLE>
- --------
(a) The Munder International Bond Fund Class Y Shares commenced operations on
October 2, 1996. The Munder 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 and
does not reflect any applicable sales charges.
(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.
(g) Amount represents less than $0.01 per share.
21
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN TAX-FREE BOND FUND(A)
------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E) 6/30/95(D) 2/28/95(E,F) 2/28/94
------- ---------- ---------- ---------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 9.65 $ 9.35 $ 9.34 $ 9.24 $ 9.73 $10.00
------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income.. 0.40 0.46 0.44 0.17 0.50 0.05
Net realized and
unrealized gain/(loss)
on investments........ 0.47 0.29 0.07 0.10 (0.54) (0.30)
------ ------ ------ ------ ------ ------
Total from investment
operations............ 0.87 0.75 0.51 0.27 (0.04) (0.25)
------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income..... (0.44) (0.45) (0.50) (0.17) (0.45) (0.02)
Distributions from net
realized gains........ (0.02) (0.00)(g) -- -- -- --
------ ------ ------ ------ ------ ------
Total distributions.... (0.46) (0.45) (0.50) (0.17) (0.45) (0.02)
------ ------ ------ ------ ------ ------
Net asset value, end of
period................. $10.06 $ 9.65 $ 9.35 $ 9.34 $ 9.24 $ 9.73
====== ====== ====== ====== ====== ======
Total return (b)....... 9.17% 8.26% 5.51% 2.92% 0.10% (2.47)%
====== ====== ====== ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $1,011 $ 652 $ 204 $ 771 $ 604 $2,252
Ratio of operating
expenses to average
net assets............ 0.73% 0.63% 0.26% 0.27%(c) 0.31% 0.21%(c)
Ratio of net investment
income to average net
assets................ 4.54% 4.82% 5.26% 5.31%(c) 5.06% 3.67%
Portfolio turnover
rate.................. 34% 19% 31% 8% 53% 0%
Ratio of operating
expenses to average
net assets
without waivers....... 0.73% 0.77% 0.84% 1.01%(c) 1.05% 0.95%(c)
</TABLE>
- --------
(a) The Munder Michigan Tax-Free Bond Fund (formerly known as the Munder
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
and does not reflect any applicable sales charges.
(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.
(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.
22
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE BOND FUND(A)
-----------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E) 6/30/95(D,E) 2/28/95(F) 2/28/94
------- ---------- ---------- ------------ ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $10.51 $10.34 $10.29 $10.13 $10.06 $10.69
------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income.. 0.52 0.50 0.49 0.16 0.30 0.42
Net realized and
unrealized gain/(loss)
on investments........ 0.37 0.25 0.06 0.16 0.10 (0.14)
------ ------ ------ ------ ------ ------
Total from investment
operations............ 0.89 0.75 0.55 0.32 0.40 0.28
------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income..... (0.51) (0.50) (0.49) (0.16) (0.33) (0.42)
Distributions from net
realized gains........ (0.16) (0.08) (0.01) -- -- (0.11)
------ ------ ------ ------ ------ ------
Total distributions.... (0.67) (0.58) (0.50) (0.16) (0.33) (0.53)
------ ------ ------ ------ ------ ------
Net asset value, end of
period................. $10.73 $10.51 $10.34 $10.29 $10.13 $10.44
====== ====== ====== ====== ====== ======
Total return (b)....... 8.70% 7.40% 5.38% 3.17% 4.08% 2.64%
====== ====== ====== ====== ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $4,123 $3,946 $1,929 $1,498 $ 953 $3,074
Ratio of operating
expenses to average
net assets............ 0.68% 0.70% 0.73% 0.77%(c) 0.68%(c) 0.80%
Ratio of net investment
income to average net
assets................ 4.85% 4.77% 4.67% 4.63%(c) 4.94%(c) 3.99%
Portfolio turnover
rate.................. 61% 45% 15% 12% 50% 38%
Ratio of operating
expenses to average
net assets without
waivers............... 0.68% 0.70% 0.81% 1.01%(c) 0.92%(c) 0.94%
</TABLE>
- --------
(a) The Munder Tax-Free Bond Fund Class Y Shares commenced operations on July
21, 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 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.
(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.
23
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(A)
------------------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR
ENDED YEAR ENDED YEAR ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/96(F) 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93
------- ---------- ---------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ... $10.42 $10.34 $10.37 $ 10.17 $ 10.44 $10.69 $10.40
------ ------ ------ ------- ------- ------ ------
Income from investment
operations:
Net investment income.. 0.45 0.44 0.45 0.15 0.42 0.42 0.07
Net realized and
unrealized gain/(loss)
on investments........ 0.14 0.11 (0.04) 0.20 (0.23) (0.14) 0.31
------ ------ ------ ------- ------- ------ ------
Total from investment
operations............ 0.59 0.55 0.41 0.35 0.19 0.28 0.38
------ ------ ------ ------- ------- ------ ------
Less distributions:
Dividends from net
investment income..... (0.45) (0.44) (0.44) (0.15) (0.44) (0.42) (0.07)
Distributions from net
realized gains........ (0.09) (0.03) -- -- (0.02) (0.11) (0.02)
------ ------ ------ ------- ------- ------ ------
Total distribution .... (0.54) (0.47) (0.44) (0.15) (0.46) (0.53) (0.09)
------ ------ ------ ------- ------- ------ ------
Net asset value, end of
period................. $10.47 $10.42 $10.34 $ 10.37 $ 10.17 $10.44 $10.69
====== ====== ====== ======= ======= ====== ======
Total return (b) ...... 5.70% 5.40% 3.95% 3.43% 2.34% 2.64% 3.68%
====== ====== ====== ======= ======= ====== ======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $9,419 $7,511 $5,285 $11,100 $10,709 $3,074 $ 489
Ratio of operating
expenses to average
net assets............ 0.69% 0.68% 0.71% 0.73%(c) 0.70% 0.80% 0.79%(c)
Ratio of net investment
income to average net
assets................ 4.32% 4.21% 4.16% 4.27%(c) 4.44% 3.99% 4.08%(c)
Portfolio turnover rate
...................... 27% 31% 20% 5% 52% 38% 57%
Ratio of operating
expenses to average
net assets without
waivers............... 0.69% 0.68% 0.79% 0.97%(c) 0.94% 0.94% 0.93%(c)
</TABLE>
- --------
(a) The Munder Tax-Free Intermediate Bond Fund Class Y Shares commenced
operations on December 17, 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 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.
24
<PAGE>
<TABLE>
<CAPTION>
SHORT TERM TREASURY
FUND (A)
---------------------
PERIOD
YEAR ENDED ENDED
6/30/98(D) 6/30/97(D)
---------- ----------
<S> <C> <C>
Net asset value, beginning of period................... $ 10.01 $ 10.00
------- -------
Income from investment operations:
Net investment income................................. 0.53 0.22
Net realized and unrealized gain/(loss) on
investments.......................................... 0.04 0.01
------- -------
Total from investment operations...................... 0.57 0.23
------- -------
Less distributions:
Dividends from net investment income.................. (0.53) (0.22)
------- -------
Total distributions................................... (0.53) (0.22)
------- -------
Net asset value, end of period......................... $ 10.05 $ 10.01
======= =======
Total return (b)...................................... 5.81% 2.30%
======= =======
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).................. $38,466 $49,055
Ratio of operating expenses to average net assets..... 0.52% 0.52%(c)
Ratio of net investment income to average net assets.. 5.24% 5.26%(c)
Portfolio turnover rate............................... 104% 40%
Ratio of operating expenses to average net assets
without expenses reimbursed.......................... 0.63% 0.55%(c)
</TABLE>
- --------
(a) The Munder Short Term Treasury Fund Class Y Shares commenced operations on
January 29, 1997.
(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.
25
<PAGE>
<TABLE>
<CAPTION>
CASH INVESTMENT FUND(A)
---------------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93 2/29/92 2/28/91
-------- -------- -------- ---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income... 0.051 0.050 0.051 0.019 0.042 0.027 0.031 0.052 0.073
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations............. 0.051 0.050 0.051 0.019 0.042 0.027 0.031 0.052 0.073
-------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income...... (0.051) (0.050) (0.051) (0.019) (0.042) (0.027) (0.031) (0.052) (0.073)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions..... (0.051) (0.050) (0.051) (0.019) (0.042) (0.027) (0.031) (0.052) (0.073)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ========
Total return (b)........ 5.30% 5.07% 5.27% 1.87% 4.23% 2.70% 3.17% 5.30% 7.56%
======== ======== ======== ======== ======== ======== ======== ======== ========
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)...... $327,417 $279,427 $317,825 $340,394 $324,793 $282,363 $320,296 $317,943 $317,545
Ratio of operating
expenses to average net
assets................. 0.51% 0.55% 0.53% 0.52%(c) 0.55% 0.53% 0.48% 0.44% 0.45%(c)
Ratio of net investment
income to average net
assets................. 5.17% 4.96% 5.13% 5.64%(c) 4.27% 2.66% 3.12% 5.12% 7.43%
Ratio of operating
expenses to average net
assets without waivers. 0.51% 0.55% 0.53% 0.54%(c) 0.58% 0.58% 0.59% 0.63% 0.65%(c)
</TABLE>
- --------
(a) The Munder 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.
26
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND(A)
--------------------------------------------------------------
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED PERIOD ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D,E) 12/31/94 12/31/93
------- -------- -------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- -------- -------- -------- -------- -------
Income from investment
operations:
Net investment income.. 0.050 0.049 0.051 0.024 0.040 0.010
------- -------- -------- -------- -------- -------
Total from investment
operations............ 0.050 0.049 0.051 0.024 0.040 0.010
------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net
investment income..... (0.050) (0.049) (0.051) (0.024) (0.040) (0.010)
------- -------- -------- -------- -------- -------
Total distributions.... (0.050) (0.049) (0.051) (0.024) (0.040) (0.010)
------- -------- -------- -------- -------- -------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======== ======== ======== ======== =======
Total return (b)....... 5.14% 4.97% 5.17% 2.44% 3.88% 0.96%
======= ======== ======== ======== ======== =======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $68,689 $124,621 $223,396 $263,513 $145,685 $90,086
Ratio of operating
expenses to average
net assets ........... 0.64% 0.64% 0.62% 0.60%(c) 0.60% 0.60%
Ratio of net investment
income to average net
assets................ 5.03% 4.86% 5.09% 5.46%(c) 3.81% 2.57%
Ratio of operating
expenses to average
net assets without
waivers............... 0.64% 0.64% 0.62% 0.66%(c) 0.74% 0.73%
</TABLE>
- --------
(a) The Munder 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.
27
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND(A)
---------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93 2/29/92 2/28/91
------- ------- ------- ---------- ---------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- ------- -------- -------
Income from investment
operations:
Net investment income.. 0.031 0.030 0.031 0.012 0.026 0.020 0.025 0.039 0.051
------- ------- ------- ------- ------- ------- ------- -------- -------
Total from investment
operations............ 0.031 0.030 0.031 0.012 0.026 0.020 0.025 0.039 0.051
------- ------- ------- ------- ------- ------- ------- -------- -------
Less distributions:
Dividends from net
investment income..... (0.031) (0.030) (0.031) (0.012) (0.026) (0.020) (0.025) (0.039) (0.051)
------- ------- ------- ------- ------- ------- ------- -------- -------
Total distributions.... (0.031) (0.030) (0.031) (0.012) (0.026) (0.020) (0.025) (0.039) (0.051)
------- ------- ------- ------- ------- ------- ------- -------- -------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= ======= ======== =======
Total return (b)....... 3.13% 3.04% 3.16% 1.19% 2.59% 2.02% 2.50% 3.99% 5.28%
======= ======= ======= ======= ======= ======= ======= ======== =======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $20,397 $22,951 $25,594 $23,430 $30,884 $53,798 $94,749 $102,453 $94,546
Ratio of operating
expenses to average
net assets............ 0.54% 0.53% 0.53% 0.54%(c) 0.55% 0.54% 0.50% 0.44% 0.45%(c)
Ratio of net investment
income to average net
assets................ 3.08% 3.01% 3.14% 3.51%(c) 2.54% 2.00% 2.45% 3.89% 5.30%(c)
Ratio of operating
expenses to average
net assets without
waivers............... 0.54% 0.53% 0.55% 0.59%(c) 0.60% 0.59% 0.58% 0.62% 0.66%(c)
</TABLE>
- --------
(a) The Munder Tax-Free Money Market Fund Class Y Shares commenced operations
on March 14, 1990.
(b) Total return represents aggregate total return for 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.
28
<PAGE>
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND(A)
-------------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94(E) 2/28/93 2/29/92 2/28/91
------- -------- -------- ---------- ---------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- -------- -------- -------- -------- -------- -------- ------- -------
Income from investment
operations:
Net investment income.. 0.049 0.048 0.049 0.018 0.039 0.026 0.030 0.050 0.068
------- -------- -------- -------- -------- -------- -------- ------- -------
Total from investment
operations............ 0.049 0.048 0.049 0.018 0.039 0.026 0.030 0.050 0.068
------- -------- -------- -------- -------- -------- -------- ------- -------
Less distributions:
Dividends from net
investment income..... (0.049) (0.048) (0.049) (0.018) (0.039) (0.026) (0.030) (0.050) (0.068)
------- -------- -------- -------- -------- -------- -------- ------- -------
Total distributions.... (0.049) (0.048) (0.049) (0.018) (0.039) (0.026) (0.030) (0.050) (0.068)
------- -------- -------- -------- -------- -------- -------- ------- -------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======== ======== ======== ======== ======== ======== ======= =======
Total return (b)....... 5.00% 4.91% 5.02% 1.80% 4.01% 2.59% 3.05% 5.08% 6.97%
======= ======== ======== ======== ======== ======== ======== ======= =======
Ratios to average net
assets/supplemental
data:
Net assets, end of
period (in 000's)..... $37,437 $233,549 $309,873 $231,055 $240,590 $245,800 $102,429 $83,619 $88,498
Ratio of operating
expenses to average
net assets............ 0.57% 0.54% 0.54% 0.55%(c) 0.55% 0.53% 0.51% 0.44% 0.45%(c)
Ratio of net investment
income to average net
assets................ 4.92% 4.79% 4.89% 5.38%(c) 3.88% 2.56% 2.98% 4.95% 6.94%(c)
Ratio of operating
expenses to average
net assets without
waivers............... 0.57% 0.54% 0.56% 0.60%(c) 0.60% 0.58% 0.60% 0.63% 0.66%(c)
</TABLE>
- --------
(a) The Munder 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.
29
<PAGE>
FUND CHOICES
WHAT FUNDS ARE OFFERED?
This Prospectus offers Class Y Shares of the 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?"
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. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
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 Standard and Poor's
500 Composite Price Index ("S&P 500").
30
<PAGE>
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 Old MCM, Inc.
("MCM"), the predecessor to the Advisor, since January 1987.
GROWTH OPPORTUNITIES 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 the
Equity Securities of companies with market capitalizations between $500
million and $10 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 MidCap 400 Index.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
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
American Depositary Receipts ("ADRs"). At least once a quarter, the Advisor
creates a list of Foreign Securities and ADRs (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 (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 100% 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
$250 million.
31
<PAGE>
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.
MULTI-SEASON GROWTH FUND
GOAL AND PRINCIPAL INVESTMENTS. 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 of companies with 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. Leonard J. Barr II is the Fund's portfolio manager, a
position he has held since the Fund's inception in April 1993. Mr. Barr is the
Senior Vice President and Director of Research of the Advisor. From April 1988
to April 1993 he held similar positions with MCM.
32
<PAGE>
NETNET FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. Under normal conditions, the Fund will invest at least
65% of its assets in Equity Securities.
In choosing which companies' stock the Fund should purchase, the Advisor
invests in those companies listed on a U.S. securities exchange or NASDAQ
which are engaged in the research, design, development or manufacturing, or
engaged to a significant extent in the business of distributing products,
processes or services for use with Internet or Intranet related businesses.
The Internet is a world-wide network of computers designed to permit users to
share information and transfer data quickly and easily. The World Wide Web
("WWW"), which is a means of graphically interfacing with the Internet, is a
hyper-text based publishing medium containing text, graphics, interactive
feedback mechanisms and links within WWW documents and to other WWW documents.
An Intranet is the application of WWW tools and concepts to a company's
internal documents and databases.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
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 and Robert E. Crosby jointly manage
the Fund. Mr. Hoglund has managed the Fund since October 1996. Mr. Hoglund
formerly was the primary analyst of the Fund (October 1994 to October 1996).
Mr. Crosby has managed the Fund since March 1998. Mr. Crosby formerly was the
primary analyst of the Fund (October 1996 to March 1998). Mr. Crosby has been
with the Advisor since 1993, and also serves as portfolio manager for
separately managed institutional accounts.
33
<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 the company 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, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive 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 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. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge Capital Management, Inc. ("Woodbridge") (1994-1995) and an
Assistant Vice President in Equity Research for Merrill Lynch, Pierce Fenner &
Smith in New York (1992-1994).
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 $1 billion, which is less than the market
capitalization of S&P 500 companies.
34
<PAGE>
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. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
VALUE FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide long-
term capital appreciation, its secondary goal is to provide income. 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 the company 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, Edward Eberle and Brian Wall jointly
manage the Fund. Mr. Seizert, a Chief Executive 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 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. Mr. Wall was formerly a primary analyst for the Fund.
Prior to joining the Advisor in 1995, he was a Senior Equity Analyst with
Woodbridge (1994-1995) and an Assistant Vice President in Equity Research for
Merrill Lynch, Pierce Fenner & Smith in New York (1992-1994).
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.
35
<PAGE>
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. A committee of professional portfolio managers employed
by the Sub-Advisor makes investment decisions for the Fund. William Calvert
heads the committee.
FRAMLINGTON GLOBAL FINANCIAL SERVICES FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. Under normal market conditions, the Fund invests at least
65% of its assets in Equity Securities of U.S. and foreign companies which are
principally engaged in the financial services industry and companies providing
services primarily within the financial services industry. The Fund focuses
specifically on companies which are likely to benefit from growth or
consolidation in the financial services industry.
Examples of companies in the financial services industry are:
. commercial, industrial and investment banks
. savings and loan associations
. brokerage companies
. consumer and industrial finance companies
. real estate and leasing companies
. insurance companies
. holding companies for each of the above.
A company is "principally engaged" in the financial services industry if at
least 50% of its gross income, net sales or net profits comes from activities
in the financial services industry or if the company dedicates more than 50% of
its assets to the production of revenues from the financial services industry.
Under normal market conditions, the Fund invests at least 65% of its assets
in at least three different countries, including the United States.
The Sub-Advisor allocates assets among countries based on its analysis of the
trends in the financial services industry in particular regions, the relative
valuation of financial services companies in different regions and its
assessment of the prospects for a particular equity market and its currency.
PORTFOLIO MANAGEMENT. A committee of professional managers employed by the
Advisor or the Sub-Advisor makes decisions for the Fund.
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 these companies are located
in the United States.
36
<PAGE>
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.
BOND FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide a
high level of current income, its secondary goal is 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.
37
<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.
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 fifteen 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.
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.
38
<PAGE>
MICHIGAN 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 and
Michigan state income tax as is consistent with prudent investment management
and preservation of capital.
. Except during temporary defensive periods, at least 80% 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 thirty 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 net 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 thirty
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 net 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.
39
<PAGE>
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.
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.
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.
TAX-FREE MONEY MARKET FUND
. The Fund's goal is 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.
. 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.
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.
40
<PAGE>
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
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 in EQUITY SECURITIES, which include 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 (other than the Short Term Treasury 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.
41
<PAGE>
The Equity Funds may purchase ADRS, EUROPEAN DEPOSITARY RECEIPTS ("EDRS")
and GLOBAL DEPOSITARY 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 and the Short Term
Treasury 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 (other than the Short Term Treasury 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. Under normal market conditions,
the Equity 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 can be changed only by shareholders.
All of the Funds, other than the International Bond Fund, the Michigan 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 if they 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. These
Funds will acquire short-term instruments only if they (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 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
42
<PAGE>
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
The following 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.
43
<PAGE>
EQUITY FUNDS
<TABLE>
<CAPTION>
MULTI-
GROWTH & GROWTH INTERNATIONAL MICRO-CAP SEASON
INVESTMENTS AND BALANCED INCOME OPPORTUNITIES EQUITY EQUITY GROWTH
INVESTMENT PRACTICES FUND FUND FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES. 25% 25% 25% Y 25% 25%
Includes securities
issued by non-U.S.
companies. Present more
risks than U.S.
securities.
- ----------------------------------------------------------------------------------------
LOWER-RATED DEBT Y 20% Y Y Y Y
SECURITIES. Fixed
Income Securities which
are rated below
investment grade by
Standard & Poor's
Ratings Service,
Moody's Investors
Service, Inc. or other
nationally recognized
rating agency.
Considered riskier than
investment grade
securities.
- ----------------------------------------------------------------------------------------
INVESTMENT-GRADE ASSET Y N N N N N
BACKED SECURITIES.
Includes debt
securities backed by
mortgages, installment
sales contracts and
credit card
receivables.
- ----------------------------------------------------------------------------------------
STRIPPED SECURITIES. Y N N N N N
Includes participations
in trusts that hold
U.S. Treasury and
agency securities which
represent either the
interest payments or
principal payments on
the securities or
combination of both.
- ----------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY Y Y Y Y Y Y
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 a currency
value, but also limits
gains from currency
changes.
- ----------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES Y Y Y Y Y Y
AND FORWARD
COMMITMENTS. Agreement
by a Fund to purchase
securities at a set
price, with delivery
and 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 Y Y Y Y Y Y
FUTURES. (1) Contracts
in which a Fund has the
right or the
obligation, at
maturity, to make
delivery of, or receive
securities, the cash
value of an index, or
foreign currency. Used
for hedging purposes or
to maintain liquidity.
</TABLE>
44
<PAGE>
EQUITY FUNDS (CONTINUED)
<TABLE>
<CAPTION>
FRAMLINGTON
REAL ESTATE SMALL FRAMLINGTON GLOBAL
EQUITY SMALL-CAP COMPANY EMERGING FINANCIAL FRAMLINGTON FRAMLINGTON
NETNET INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE INTERNATIONAL
FUND FUND FUND FUND FUND FUND FUND FUND GROWTH FUND
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Y N 25% 25% 25% Y Y Y Y
- -----------------------------------------------------------------------------------------------
N 5% Y Y Y Y Y Y Y
- -----------------------------------------------------------------------------------------------
N N N N N N Y N N
- -----------------------------------------------------------------------------------------------
N N N N N N Y N N
- -----------------------------------------------------------------------------------------------
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 Y Y
</TABLE>
Key:
Y = Investment allowed without restriction
N = Investment not allowed
(1) The limitation on margins and premiums for futures and options on futures
is 5% of a Fund's assets.
45
<PAGE>
EQUITY FUNDS (CONTINUED)
<TABLE>
<CAPTION>
MULTI-
GROWTH & GROWTH INTERNATIONAL MICRO-CAP SEASON
INVESTMENTS AND BALANCED INCOME OPPORTUNITIES EQUITY EQUITY GROWTH
INVESTMENT PRACTICES FUND FUND FUND FUND FUND FUND
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPTIONS. A Fund may buy Y Y Y Y Y Y
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
securities indices,
individual securities,
foreign currencies, or
futures contracts. See
the SAI for more
details and additional
limitations.
- ---------------------------------------------------------------------------------------
REVERSE REPURCHASE Y Y Y Y Y Y
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.
- ---------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT Y Y Y Y Y Y
TRUSTS. Companies,
usually traded
publicly, that manage
a portfolio of real
estate. Risks involved
in such investments
include vulnerability
to decline in real
estate prices and new
construction rates.
- ---------------------------------------------------------------------------------------
SHORT SALES. A N N N N N N
transaction in which
the Fund sells a
security it does not
own in anticipation
that the market price
of that security will
decline. It must
borrow the security
sold short and deliver
it to the broker-
dealer through which
it made the short sale
as collateral for its
obligation to deliver
the security upon
conclusion of the
sale. May also sell
securities that it
owns or has the right
to acquire at no
additional cost but
does not intend to
deliver to the buyer,
a practice known as
selling short "against
the box."
- ---------------------------------------------------------------------------------------
ILLIQUID SECURITIES. 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
Typically there is no
ready market for these
securities, which
inhibits the ability
to sell them for full
market value, or there
are legal restrictions
on their resale by the
Fund.
- ---------------------------------------------------------------------------------------
LENDING SECURITIES. A 25% 25% 25% 25% 25% 25%
Fund may lend
securities to
financial institutions
which pay for the use
of the securities. May
increase return.
Slight risk of
borrower failing
financially.
</TABLE>
- --------------------------------------------------------------------------------
46
<PAGE>
EQUITY FUNDS (CONTINUED)
<TABLE>
<CAPTION>
FRAMLINGTON
REAL ESTATE SMALL FRAMLINGTON GLOBAL
EQUITY SMALL-CAP COMPANY EMERGING FINANCIAL FRAMLINGTON FRAMLINGTON
NETNET INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE INTERNATIONAL
FUND FUND FUND FUND FUND FUND FUND FUND GROWTH FUND
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Y Y Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------
N N N N N N Y N N
- ------------------------------------------------------------------------------------------------
15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
- ------------------------------------------------------------------------------------------------
25% 25% 25% 25% 25% 25% 25% 25% 25%
</TABLE>
Key:
Y = Investment allowed without restriction
N = Investment not allowed
(1) The limitation on margins and premiums for futures and options on futures
is 5% of a Fund's assets.
(2) Based on net assets.
47
<PAGE>
BOND FUNDS
<TABLE>
<CAPTION>
U.S.
INVESTMENTS AND BOND INTERMEDIATE INTERNATIONAL GOVERNMENT
INVESTMENT PRACTICES FUND BOND FUND BOND FUND INCOME FUND
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOREIGN SECURITIES. Securities issued by foreign governments 25% 25% Y 25%
and their agencies, instrumentalities or political
subdivisions, supranational organizations, and foreign
corporations. Does not include Bank Obligations.
- --------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Includes debt securities backed by Y Y Y Y
mortgages, installment sales contracts and credit card
receivables.
- --------------------------------------------------------------------------------------------------------------------
INTEREST RATE AND CURRENCY SWAPS. Agreement to exchange Y(1) Y(1) Y Y(1)
payments calculated on the basis of relative interest or
currency rates. Derivative instruments used solely for
hedging.
- --------------------------------------------------------------------------------------------------------------------
INTEREST RATE CAPS AND FLOORS. Entitle purchaser to receive N N Y N
payments of interest to the extent that a specified reference
rate exceeds or falls below a predetermined level.
- --------------------------------------------------------------------------------------------------------------------
U.S. Government Obligations. Include securities issued by, or Y Y Y Y
guaranteed by, the U.S. Government or its agencies or
instrumentalities.
- --------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Include participations in trusts that Y Y Y Y
hold U.S. Treasury and agency securities which represent
either the interest payments or principal payments on the
securities or combination of both.
- --------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells securities and Y Y Y Y
agrees to buy them back later at an agreed upon time and
price. A method to borrow money for temporary purposes.
- --------------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Obligations of a Y Y Y Y
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
a currency value, but also limits gains from currency
changes.
- --------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar denominated bank obligations, Y Y Y Y
including certificates of deposit, bankers' acceptances, bank
notes and time deposits, issued by U.S. or foreign banks or
savings institutions having total assets in excess of $1
billion.
- --------------------------------------------------------------------------------------------------------------------
SUPRANATIONAL ORGANIZATION OBLIGATIONS. Fixed Income Y Y Y N
Securities issued or guaranteed by supranational
organizations such as the World Bank.
- --------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a Fund to make Y Y Y Y
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. Agreements by a 25% 25% 25% 25%
Fund to purchase securities at a set price, with delivery and
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.
- --------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for 15%(2) 15%(2) 15%(2) 15%(2)
these securities, which inhibits the ability to sell them for
full market value, or there are legal restrictions on their
resale by the Fund.
</TABLE>
48
<PAGE>
BOND FUNDS (CONTINUED)
<TABLE>
<CAPTION>
U.S.
INVESTMENTS AND BOND INTERMEDIATE INTERNATIONAL GOVERNMENT
INVESTMENT PRACTICES FUND BOND FUND BOND FUND INCOME FUND
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FUTURES AND OPTIONS ON FUTURES. (3) Contracts in which a Fund Y Y Y Y
has the right or the obligation, at maturity, to make
delivery of, or receive securities, the cash value of an
index, or foreign currency. Used for hedging purposes or to
maintain liquidity.
- --------------------------------------------------------------------------------------------------------------------
OPTIONS. A Fund may buy options giving it the right to require Y Y Y Y
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
securities indices, individual securities, foreign currencies
or futures contracts. See the SAI for more details and
additional limitations.
- --------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend securities to financial 25% 25% 25% 25%
institutions which pay for the use of the securities. May
increase return. Slight risk of borrower failing financially.
</TABLE>
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 and options on futures
is 5% of a Fund's assets.
49
<PAGE>
TAX-FREE FUNDS AND SHORT TERM TREASURY FUND
<TABLE>
<CAPTION>
SHORT MICHIGAN TAX-FREE
TERM TAX-FREE TAX-FREE INTERMEDIATE
INVESTMENTS AND TREASURY BOND BOND BOND
INVESTMENT PRACTICES FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL OBLIGATIONS. Payable from the N Y Y Y
issuer's general revenue, the revenue of a
specific project, current revenues or a
reserve fund.
- -------------------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL OBLIGATIONS. Municipal N Y Y Y
Obligations issued by the State of Michigan
and its political subdivisions.
- -------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Securities issued by N 10% 10% 10%
foreign governments and their agencies,
instrumentalities or political subdivisions,
supranational organizations, and foreign
corporations. Does not include Bank
Obligations.
- -------------------------------------------------------------------------------------------------
FUTURES AND OPTIONS ON FUTURES. (1) Contracts N Y Y Y
in which a Fund has the right or the
obligation, at maturity, to make delivery
of, or receive securities, the cash value of
an index, or foreign currency. Used for
hedging purposes or to maintain liquidity.
- -------------------------------------------------------------------------------------------------
OPTIONS. A Fund may buy options giving it the N Y Y N
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
securities indices, individual securities,
foreign currencies or futures contracts. See
the SAI for more details and additional
limitations.
- -------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD N 25% 25% 25%
COMMITMENTS. Agreements by a Fund to
purchase securities at a set price, with
delivery and 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.
- -------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no N 15%(2) 15%(2) 15%(2)
ready market for these securities, which
inhibits the ability to sell them for full
market value, or there are legal
restrictions on their resale by the Fund.
- -------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend 25% 25% 25% 25%
securities to financial institutions which
pay for the use of the securities. May
increase return. Slight risk of borrower
failing financially.
- -------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES. Includes U.S. Y Y Y Y
Treasury bills, notes and bonds.
</TABLE>
Key:
Y= Investment allowed without restriction
N=Investment not allowed
(1)The limitation on margins and premiums for futures and options on futures is
5% of a Fund's assets.
(2)Based on net assets.
50
<PAGE>
MONEY MARKET FUNDS
<TABLE>
<CAPTION>
U.S.
TREASURY
CASH MONEY TAX-FREE MONEY
INVESTMENT MARKET MONEY MARKET
INVESTMENTS AND INVESTMENT PRACTICES FUND FUND FUND FUND
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS:
. Commercial paper (including paper
of Canadian companies, Canadian
branches of U.S. companies, and
Europaper) Y Y N N
. Corporate bonds Y Y N N
. Other short-term obligations Y Y N N
. Variable master demand notes Y Y N N
. Bond debentures Y Y N N
. Notes. Y Y N N
- -------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Include debt Y Y N N
securities backed by mortgages,
installment sales contracts and
credit card receivables.
- -------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS:
. Issued or guaranteed by U.S. Y Y N Y
Government
. Issued or guaranteed by U.S. Y Y N N
Government Agencies and
instrumentalities
- -------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar Y Y N N
denominated bank obligations,
including certificates of deposit,
bankers' acceptances, bank notes,
time deposits issued by U.S. or
foreign banks or savings institutions
having total assets in excess of $1
billion.
- -------------------------------------------------------------------------------
STRIPPED SECURITIES:
. Participation in trusts that hold
U.S. Treasury and agency securities Y Y Y N
. U.S. Treasury-issued receipts Y Y Y 35%
. Non-U.S. Treasury receipts. Y Y Y N
- -------------------------------------------------------------------------------
MUNICIPAL REVENUE OBLIGATIONS. N N Y N
Obligations the interest on which is
paid solely from the revenues of
similar projects.
- -------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS. Payable from 5% 5% No more N
the issuer's general revenue, the than 25%
revenue of a specific project, in any
current revenues or a reserve fund. one state
- -------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund Y Y N Y
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 by 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 25% 25% 25% 25%
COMMITMENTS. Agreements by a Fund to
purchase securities at a set price,
with delivery and 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.
- -------------------------------------------------------------------------------
FOREIGN SECURITIES. Debt obligations 25% 25% N N
issued by foreign governments, and
their agencies, instrumentalities or
political subdivisions, supranational
organizations and foreign
corporations. Does not include Bank
Obligations.
- -------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there 10%(1) 10%(1) 10%(1) 10%(1)
is no ready market for these
securities, which inhibits the
ability to sell them for full market
value, or there are legal
restrictions on their resale by the
Fund.
- -------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend 25% 33 1/3% 25% 25%
securities to financial institutions
which pay for the use of the
securities. May increase return.
Slight risk of borrower failing
financially.
</TABLE>
Key:
Y = Investment allowed without restriction
N = Investment not allowed
(1) Based on net assets.
51
<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 is 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); (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; and (7)
inability to close out certain hedged positions to avoid adverse tax
consequences.
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.
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 these 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 diversity
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.
52
<PAGE>
Money Market Funds
Each Money Market Fund attempts to maintain a constant net asset value of
$1.00 per share. However, your investment in these 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 net
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.
Growth Opportunities Fund, Micro-Cap Equity Fund, NetNet Fund, Small-Cap
Value 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 Global Financial Services
Fund, Framlington International Growth Fund, International Equity Fund and
International Bond Fund
Investing in any of these Funds, with their 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.
Framlington Global Financial Services Fund
Financial services companies are subject to extensive governmental
regulation which may limit both the amount and types of loans and other
financial commitments they can make, and the interest rates and fees they can
charge. Profitability is largely dependent on the availability and cost of
capital funds, and can fluctuate significantly when interest rates change.
Credit losses resulting from financial difficulties of borrowers can
53
<PAGE>
negatively impact the industry. Insurance companies may be subject to severe
price competition. Legislation is currently being considered which would
reduce the separation between commercial and investment banking businesses. If
enacted, this could significantly impact the industry and the Fund. The Fund
may be riskier than a fund investing in a broader range of industries.
Although securities of large and well-established companies in the financial
services industry will be held in the Fund's portfolio, the Fund also will
invest in medium, small and/or newly-public companies which may be subject to
greater share price fluctuations and declining growth, particularly in the
event of rapid changes in the industry and/or increased competition.
Securities of those smaller and/or less seasoned companies may, therefore,
expose shareholders of the Fund to above-average risk.
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.
NetNet Fund
The Fund will invest primarily in companies engaged in Internet and Intranet
related activities. The value of such companies is particularly vulnerable to
rapidly changing technology, extensive government regulation and relatively
high risks of obsolescence caused by scientific and technological advances.
The value of the Fund's shares may fluctuate more than shares of a fund
investing in a broader range of industries.
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.
International Bond Fund, Michigan 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 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 FUND'S 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.
54
<PAGE>
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 Funds and the Tax-Free Money
Market Fund which may also be quoted from time to time, 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:
. fiduciary and discretionary accounts of institutions;
. 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);
. directors, trustees, officers and employees of the Trust, the Company,
Framlington, the Advisor and the Distributor;
. the Advisor's investment advisory clients; and
. family members of employees of the Advisor.
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.
55
<PAGE>
WHAT PRICE DO I PAY FOR SHARES?
The purchase price for Class Y Shares is the net asset value ("NAV") next
determined after we receive your order in proper form. 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 NAV on
each day the New York Stock Exchange ("NYSE") is open for trading (a "Business
Day") at the close of such trading on the NYSE (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. 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.
. 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.
. BY MAIL. You may open an account by completing, signing and mailing an
Account Application Form and a check or other negotiable bank draft
(payable to The Munder Funds) to: THE MUNDER FUNDS, C/O FIRST DATA
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 to the address listed above.
. BY WIRE. You may make additional investments in the Funds by wire. 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.:
Note that banks may charge fees for transmitting wires.
. 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.
56
<PAGE>
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.
We do not issue share certificates. 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. 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 NAV next determined after we receive the
redemption request in proper form.
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 Fund cannot sell its assets or accurately
determine the value of its assets or if the SEC orders the Fund to suspend
redemptions.
HOW CAN I REDEEM SHARES?
Redemption orders are effected at the NAV 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.
. INVOLUNTARY REDEMPTION. We may redeem your account if its value falls
below $250 as a result of redemptions (but not as a result of a decline
in NAV). You will be notified in writing and allowed 60 days to increase
the value of your account to the minimum investment level.
. FREE CHECKWRITING. Free checkwriting is available to holders of Class Y
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
57
<PAGE>
more but 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 AND SUB-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, WAM Holdings, Inc. ("WAM") and WAM
Holdings II, Inc. ("WAM II"). MCM was founded in April, 1985 as a Delaware
corporation and was a registered investment advisor. WAM and WAM II are
Delaware corporations and are indirect, wholly-owned subsidiaries of Comerica
Incorporated, a Michigan banking corporation, which owns or controls
approximately 88% of the partnership interests in the Advisor. As of June 30,
1998, the Advisor and its affiliates had approximately $48.2 billion in assets
under management, of which $25.4 billion were invested in equity securities,
$8.1 billion were invested in money market or other short-term instruments,
$9.2 billion were invested in other fixed income securities and $5.5 billion
in non-discretionary assets.
The Advisor provides overall investment management and research and credit
analysis for each Fund and is responsible for all purchases and sales of
portfolio securities for each Fund other than the Framlington Funds.
Framlington Overseas Investment Management Limited is the sub-advisor of the
Framlington Funds. The Sub-Advisor 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.
The Sub-Advisor provides research and credit analysis for each of the
Framlington Funds and is responsible for all purchases and sales of portfolio
securities for each of the Framlington Funds other than the Framlington Global
Financial Services Fund. Each of the Advisor and Sub-Advisor manages a portion
of the assets of the Framlington Global Financial Services Fund. The Advisor
is responsible for all purchases and sales of domestic securities held by the
Fund. The Sub-Advisor is responsible for the allocation of the Fund's assets
among countries and for all purchases and sales of foreign securities held by
the Fund.
58
<PAGE>
During the fiscal year ended June 30, 1998, 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>
<S> <C>
Balanced Fund...................... 0.65%
Growth & Income Fund............... 0.75%
Growth Opportunities............... 0.75%
International Equity Fund.......... 0.75%
Micro-Cap Equity Fund.............. 1.00%
Multi-Season Growth Fund........... 0.75%
NetNet 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%
Framlington Emerging Markets Fund.. 1.25%
Framlington Global Financial
Services Fund..................... 0.75%
Framlington Healthcare Fund........ 1.00%
</TABLE>
<TABLE>
<S> <C>
Framlington International Growth Fund................................. 1.00%
Bond Fund............................................................. 0.50%
Intermediate Bond Fund................................................ 0.50%
International Bond Fund............................................... 0.50%
U.S. Government Income Fund........................................... 0.50%
Michigan 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%
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%
</TABLE>
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. During the
past fiscal year, the Advisor waived advisory fees for the Multi-Season Growth
Fund.
During the fiscal year ended June 30, 1998, the Sub-Advisor received 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 or Sub-Advisor, in the case of the Framlington Funds, elects
broker-dealers to execute portfolio transactions for the Funds based on best
price and execution terms. The Advisor or Sub-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 materially equivalent
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:
. includes the average annual total returns of the common or collective
trust fund and the average annual total returns of the corresponding Fund
linked together;
. assumes that net investment income and dividends have been reinvested;
. assumes that the common or collective trust fund paid the same levels of
fees and expenses as the corresponding Fund currently pays;
. 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 (the Investment Company Act of 1940, as
amended (the "1940 Act") and the Internal Revenue Code of 1986, as
amended) as the corresponding Fund; and
. indicates past performance only and does not predict future results.
59
<PAGE>
<TABLE>
<CAPTION>
MUNDER SMALL COMPANY
PERIOD ENDED GROWTH FUND RUSSELL 2000
JUNE 30, 1998 (CLASS Y)* INDEX**
------------- -------------------- ------------
<S> <C> <C>
1 Year........................................ 12.57% 16.50%
3 Years....................................... 25.90% 18.85%
5 Years....................................... 19.11% 16.05%
10 Years...................................... 17.33% 13.57%
Inception on December 31, 1982................ 15.26% 13.22%
</TABLE>
- --------
* 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.
<TABLE>
<CAPTION>
FT/S&P ACTUARIES
PERIOD ENDED MUNDER INTERNATIONAL EQUITY FUND WORLD INDEX EX.
JUNE 30, 1998 (CLASS Y)* U.S.**
------------- -------------------------------- ----------------
<S> <C> <C>
1 Year....................... 4.48% 2.83%
3 Years...................... 12.01% 9.79%
5 Years...................... 10.96% 9.35%
Inception on September 30,
1990........................ 10.69% 10.14%
</TABLE>
- --------
* 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.
<TABLE>
<CAPTION>
PERIOD ENDED
JUNE 30, 1998 MUNDER INDEX 500 FUND (CLASS Y)* S&P 500 INDEX**
------------- -------------------------------- ---------------
<S> <C> <C>
1 Year.................. 29.76% 30.16%
3 Years................. 29.81% 30.24%
5 Years................. 22.68% 23.08%
10 Years................ 18.05% 18.56%
Inception on January 27,
1988................... 18.08% 18.64%
</TABLE>
- --------
* 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.
<TABLE>
<CAPTION>
LEHMAN BROTHERS
PERIOD ENDED MUNDER BOND FUND GOV'T/CORP.
JUNE 30, 1998 (CLASS Y)* BOND INDEX**
------------- ---------------- ---------------
<S> <C> <C>
1 Year......................................... 10.72% 11.28%
3 Years........................................ 7.41% 7.86%
5 Years........................................ 6.27% 6.88%
10 Years....................................... 8.11% 9.10%
</TABLE>
- --------
* 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.
<TABLE>
<CAPTION>
MUNDER
U.S. GOVERNMENT LEHMAN BROTHERS
PERIOD ENDED INCOME FUND GOV'T/CORP.
JUNE 30, 1998 (CLASS Y)* BOND INDEX**
------------- --------------- ---------------
<S> <C> <C>
1 Year.......................................... 9.97% 11.28%
3 Years......................................... 7.41% 7.86%
5 Years......................................... 5.70% 6.88%
10 Years........................................ 8.41% 9.10%
</TABLE>
- --------
*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.
60
<PAGE>
<TABLE>
<CAPTION>
MUNDER LEHMAN BROTHERS
INTERMEDIATE INTERMEDIATE
PERIOD ENDED BOND FUND GOV'T/BOND
JUNE 30, 1998 (CLASS Y)* INDEX**
- ------------- ------------ ---------------
<S> <C> <C>
1 Year............................................. 7.99% 8.54%
3 Years............................................ 6.28% 6.91%
5 Years............................................ 5.19% 6.11%
10 Years........................................... 7.36% 8.25%
Inception on March 31, 1982........................ 9.01% 10.20%
</TABLE>
- --------
*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.
<TABLE>
<CAPTION>
MUNDER TAX-FREE LEHMAN
PERIOD ENDED BOND FUND 20-YEAR MUNI
JUNE 30, 1998 (CLASS Y)* BOND INDEX**
- ------------- --------------- ------------
<S> <C> <C>
1 Year............................................. 8.70% 10.19%
3 Years............................................ 7.15% 9.02%
5 Years............................................ 5.85% 7.07%
10 Years........................................... 7.41% 9.43%
</TABLE>
- --------
*Converted from common trust fund to mutual fund on July 21, 1994.
**Lehman 20-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.
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 the 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 a 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 20-Year Municipal Bond Index is a performance benchmark
for the long-term investment-grade tax-exempt bond market.
PERFORMANCE OF FRAMLINGTON ACCOUNTS 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
61
<PAGE>
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 Standard & Poor's 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 1940 Act and requirements of the Internal
Revenue Code of 1986, as amended, to qualify as a regulated investment
company.
<TABLE>
<CAPTION>
S&P
HEALTHCARE
COMPOSITE
PERIOD ENDED U.K. INDEX
DECEMBER 31, HEALTH CAPITAL
1996 PORTFOLIO CHANGE
------------ --------- ----------
<S> <C> <C>
1 Year.................................................... 10.75% 18.48%
3 Years................................................... 96.93% 100.49%
5 Years................................................... 99.43% 45.60%
Inception on April 30, 1987............................... 411.08% 239.64%
</TABLE>
Performance for the Health trust account is calculated on an offer-bid
basis; U.S. Dollar adjusted total return net of all management fees but not
reflective of U.K. tax. Source: Standard & Poor's 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>
MSCI
EMERGING
CANADIAN MARKETS
PERIOD ENDED EMERGING FREE
DECEMBER 31, MARKETS TOTAL
1996 ACCOUNT RETURN
------------ -------- --------
<S> <C> <C>
1 Year...................................................... 5.16% 6.03%
Inception on November 1, 1994............................... (3.68)% (12.37)%
</TABLE>
MSCI Emerging Markets Free 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 United States only.
62
<PAGE>
The MSCI Emerging Markets Free Index is maintained by Morgan Stanley Capital
International, and covers 26 countries and represents the investment
opportunities in emerging markets available to foreign investors. 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. The Transfer Agent is a wholly-owned subsidiary of First Data
Corporation and is located at 4400 Computer Drive, Westborough, Massachusetts,
01581-5120.
ADMINISTRATOR. State Street Bank and Trust Company ("State Street" or
"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 overseeing the maintenance of financial records and
fund accounting. As compensation for its services for the Company, the Trust
and Framlington, 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 annual rate of 0.113% on the first
$2.8 billion of net assets, plus 0.103% on the next $2.2 billion of net
assets, plus 0.101% on the next $2.5 billion of net assets, plus 0.095% on the
next $2.5 billion of net assets, plus 0.080% on the next $2.5 billion of net
assets, plus 0.070% on all net assets in excess of $12.5 billion (with a
$75,000 minimum fee per annum in the aggregate for all portfolios with respect
to the Administrator). If the assets of the Framlington Funds do not exceed
$120 million, the ultimate rate charged the Framlington Funds will be reduced
by their pro-rata portion of the total fees if calculated at the rates of
0.062% of the first $2.8 billion of net assets, plus 0.052% of the next $2.2
billion of net assets, plus 0.050% of all net assets in excess of $5 billion.
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 AND SUB-CUSTODIAN. Comerica Bank ("Comerica" or the "Custodian"),
whose principal business address is One Detroit Center, 500 Woodward Avenue,
Detroit, Michigan 48226, is the Funds' custodian. No compensation is paid to
the Custodian for its custodial services. Comerica receives a fee of 0.01% of
the aggregate average daily net assets of the Funds beneficially owned by
Comerica and its customers for certain shareholder services provided by
Comerica to the Funds. State Street serves as the Funds' sub-custodian.
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.
YEAR 2000. The Funds' operations depend on the seamless functioning of
computer systems in the financial service industry, including those of its
service providers. Many computer software systems in use today cannot properly
process date-related information after December 31, 1999 because of the method
by which dates are encoded and calculated. This failure, commonly referred to
as the "Year 2000 Issue," could adversely affect the handling of securities
trades, pricing and account servicing for the Funds. The Funds have been
informed that their major service providers have made compliance with the Year
2000 Issue a high priority and are taking steps that they believe are
reasonably designed to address the Year 2000 Issue with respect to their
computer systems. There can be, however, no assurance that these steps will be
successful, or that interaction with other non-complying computer systems will
not impair their services at that time.
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
63
<PAGE>
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 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 Balanced Fund, Growth &
Income Fund, Small Company Growth Fund and International Bond Fund pay
dividends quarterly. The Framlington Emerging Markets Fund, Framlington Global
Financial Services Fund, Framlington Healthcare Fund, Framlington
International Growth Fund, Growth Opportunities Fund, International Equity
Fund, Micro-Cap Equity Fund, Multi-Season Growth Fund, NetNet Fund, Small-Cap
Value Fund and Value Fund pay dividends at least annually. The Bond Funds
(other than the International Bond Fund) pay dividends monthly. Dividends for
the Cash Investment Fund, Money Market Fund, U.S. Treasury Money Market Fund
and Tax-Free Money Market Fund are declared daily and paid monthly.
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 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 about the tax treatment of
distributions from the Funds and about other potential tax liabilities,
including backup withholding for certain taxpayers, and about tax aspects of
dispositions of shares of the Funds, 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.
In general, as long as each Fund meets the requirements to qualify as a
regulated investment company ("RIC") under Federal tax laws, it will not be
subject to Federal income tax on its income and capital gains that it
distributes in a timely manner to its shareholders. Each Fund intends to
qualify annually as a RIC. Even if it
64
<PAGE>
qualifies as a RIC, a Fund may still be liable for any excise tax on income
that is not distributed in accordance with a calendar year requirement; the
Funds intend to avoid the excise tax by making timely distributions.
Generally, you will owe tax on the amounts distributed to you, regardless of
whether you receive these amounts in cash or reinvest them in additional Fund
shares. Shareholders not subject to tax on their income generally will not be
required to pay any tax on amounts distributed to them. Federal income tax on
distributions to an IRA or to a qualified retirement plan will generally be
deferred.
Capital gains derived from sales of portfolio securities held by a Fund will
generally be designated as long-term or short-term. Distributions from a
Fund's long-term capital gains are generally taxed at the long-term capital
gains rate regardless of how long you have owned shares in the Fund. Dividends
from other sources are generally taxed as ordinary income.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from each Fund in which
you are a shareholder a statement of the amount and nature of the
distributions made to you during the year.
If you redeem, transfer or exchange Fund shares, you may have taxable gain
or a loss. If you hold Fund shares for six months or less, and during that
time you receive a capital gain dividend, any loss you realize on the sale of
these Fund shares will be treated as a long-term loss to the extent of the
earlier distribution.
Dividends and certain interest income earned from foreign securities by a
Fund may be subject to foreign withholding or other taxes. A Fund may be
permitted to pass on to its shareholders the right to a credit or deduction
for income or other tax credits earned from foreign investments and will do so
if possible. These deductions or credits may be subject to tax law
limitations.
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 a 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 of the
QEF, regardless of whether received, and such amounts will be subject to the
various distribution requirements described above. The Funds may also elect to
mitigate the tax effects of owning PFIC stock by making an annual mark-to-
market election with respect to PFIC shares.
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.
65
<PAGE>
<TABLE>
<S> <C>
Munder Balanced Fund Munder Framlington Healthcare Fund
Munder Equity Selection Fund Munder Framlington International Growth Fund
Munder Growth Opportunities Fund Munder Bond Fund
Munder Index 500 Fund Munder Intermediate Bond Fund
Munder Growth & Income Fund Munder International Bond Fund
Munder International Equity Fund Munder Short Term Treasury Fund
Munder Micro-Cap Equity Fund Munder U.S. Government Income Fund
Munder Multi-Season Growth Fund Munder Michigan Tax-Free Bond Fund
Munder Real Estate Equity Investment Fund (formerly Munder Michigan Triple Tax-Free Bond Fund)
Munder Small-Cap Value Fund Munder Tax-Free Bond Fund
Munder Small Company Growth Fund Munder Tax-Free Intermediate Bond Fund
Munder Value Fund Munder Cash Investment Fund
Munder NetNet Fund Munder Money Market Fund
Munder Framlington Emerging Markets Fund Munder Tax-Free Money Market Fund
Munder Framlington Global Financial Services 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 fifteen investment portfolios, eleven
of which are described in this Statement of Additional Information; The Munder
Funds Trust (the "Trust") currently offers a selection of fifteen investment
portfolios, fourteen of which are described in this Statement of Additional
Information; and The Munder Framlington Funds Trust ("Framlington") currently
offers a selection of four 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
Company's, the Trust's, and Framlington's Prospectuses dated October 27, 1998.
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 October 27, 1998.
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.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
General................................................................. 3
Fund Investments........................................................ 4
Risk Factors and Special Considerations -- Index 500 Fund............... 20
Risk Factors and Special Considerations -- Michigan Tax-Free Bond Fund
and Tax-Free Intermediate Bond Fund..................................... 21
Investment Limitations.................................................. 22
Trustees, Directors and Officers........................................ 28
Investment Advisory and Other Service Arrangements...................... 32
Portfolio Transactions.................................................. 45
Additional Purchase and Redemption Information.......................... 48
Net Asset Value......................................................... 51
Performance Information................................................. 52
Taxes................................................................... 60
Additional Information Concerning Shares................................ 66
Miscellaneous........................................................... 68
Registration Statement.................................................. 88
Financial Statements.................................................... 88
Appendix A.............................................................. A-1
Appendix B.............................................................. B-1
</TABLE>
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.
2
<PAGE>
GENERAL
The following Funds are described in this Statement of Additional Information:
The Munder Funds Trust
- ----------------------
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 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 Growth Opportunities Fund ("Growth Opportunities Fund")
Munder Micro-Cap Equity Fund ("Micro-Cap Fund")
Munder Multi-Season Growth Fund ("Multi-Season Fund")
Munder NetNet Fund ("NetNet 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
- ----------------------------------
Munder Framlington Emerging Markets Fund ("Emerging Markets Fund")
Munder Framlington Global Financial Services Fund ("Global Financial Services
Fund")
Munder Framlington Healthcare Fund ("Healthcare Fund")
Munder 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," 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.
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. ("MCM"), Munder Group LLC, WAM Holdings, Inc. ("WAM") and WAM
Holdings II, Inc. ("WAM II"). MCM was founded in April 1985 as a Delaware
3
<PAGE>
corporation and was a registered investment advisor. WAM and WAM II are
indirect, wholly-owned subsidiaries of Comerica Incorporated which owns or
controls approximately 88% of the partnership interests in the Advisor.
Framlington Overseas Investment Management Limited (the "Sub-Advisor")
serves as sub-advisor for the 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 in this Statement of Additional Information 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 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. The Tax-Free Bond Fund and Tax-Free Money
Market Fund each have a fundamental policy to invest at least 80% of its
respective assets in municipal obligations bearing tax-exempt interest; all
other investment policies, other than those specifically designated as
fundamental, are non-fundamental policies and may be changed without the
authorization of the holders of a majority of a 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 to this Statement of
Additional Information. For purposes of this Statement of Additional
Information, the Equity Selection Fund, Global Financial Services Fund, Growth &
Income Fund, Growth Opportunities Fund, Index 500 Fund, International Equity
Fund, Micro-Cap Fund, Multi-Season Fund, NetNet 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 Money
Market Fund are referred to as the "Money Market Funds."
BORROWING. Each of the Funds is authorized to borrow money in amounts up
to 5% of the value of its total assets at the time of such borrowings for
temporary purposes, and 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 Fund.
FOREIGN SECURITIES. Each Equity Fund (except Global Financial Services
Fund, Real Estate Fund, International Equity Fund, International Growth Fund,
Emerging Markets Fund and Healthcare Fund), each Bond Fund, each Tax-Free Bond
Fund, the Balanced Fund, the Cash Investment Fund and the Money Market 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 Global Financial Services Fund will invest at least 65% of its
assets in securities of issuers located in at least three countries, one of
which may be the United States. The Emerging Markets Fund will invest at least
65% of its assets in emerging market countries. There is no limit on the
Healthcare Fund's investments in foreign securities. The Multi-Season Fund and
NetNet
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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
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% minimum 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 Eastern 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 a Fund.
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
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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 (Sub-Advisor with respect to the
Framlington Fund), 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 currency
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 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
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
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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
currency contracts and conversions of foreign currencies and U.S. dollars.
Cash or liquid securities equal to the amount of a Fund's assets that could
be required to consummate forward contracts will be designated on the records of
the Fund or the Funds' sub-custodian except to the extent the contracts are
otherwise "covered." For the purpose of determining the adequacy of the
designated securities, the designated 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 designated daily so that the value of the designated
securities 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 put option) permitting the Fund to sell the same currency at a
price as high as or higher than the Fund's price to buy the currency.
FUTURES CONTRACTS AND RELATED OPTIONS. The Equity Funds, the Balanced
Fund, the Bond Funds, the Tax-Free Bond Funds and the International Bond Fund
may purchase and sell futures contracts on interest-bearing securities or
securities indices, and may purchase and sell call and put options on futures
contracts. For a detailed description of futures contracts and related options,
see Appendix B to this Statement of Additional Information.
ILLIQUID SECURITIES. The Equity Funds, Balanced Fund, Tax-Free Bond Funds,
International Bond Fund and the Bond Funds may invest up to 15%, and each of the
Money Market Funds may invest up to 10%, of the value of its net assets
(determined at time of acquisition) in securities that are illiquid. Illiquid
securities would generally include securities for which there is a limited
trading market, repurchase agreements and time deposits with notice/termination
dates in excess of seven days, and certain securities that are subject to
trading restrictions because they are not registered under the Securities Act of
1933, as amended (the "Act"). If, after the time of acquisition, events cause
this limit to be exceeded, the Fund will take steps to reduce the aggregate
amount of illiquid securities as soon as reasonably practicable in accordance
with the policies of the SEC.
Each Fund (except U.S. Treasury Money Market Fund and Short Term Treasury
Fund) may invest in commercial obligations issued in reliance on the "private
placement" exemption from registration afforded by Section 4(2) of the Act
("Section 4(2) paper"). A Fund may also purchase securities that are not
registered under the Act, but which can be sold to qualified institutional
buyers in accordance with Rule 144A under the Act, ("Rule 144A securities").
Section 4(2) paper is restricted as to disposition under the Federal securities
laws, and generally is sold to institutional investors who agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction. Section 4(2)
paper normally is resold to other institutional investors through or with the
assistance of the issuer or investment dealers which make a market in the
Section 4(2) paper, thus providing liquidity. Rule 144A securities generally
must be sold only to other qualified institutional buyers. If a particular
investment in Section 4(2) paper or Rule 144A securities is not determined to be
liquid, that investment will be included within the Fund's limitation on
investment in illiquid securities. The Advisor will determine the liquidity of
such investments pursuant to guidelines established by the Boards of
Directors/Trustees. It is possible that unregistered securities purchased by
the Fund in reliance upon Rule 144A 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.
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
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 Funds 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 Funds' ability to engage in
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certain interest rate transactions. Gains from transaction in interest rate
swaps distributed to shareholders of the Funds will be taxable as ordinary
income or, in certain circumstances, as long-term capital gains to the
shareholders.
Each of the Funds' 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 Funds' 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
earmarking cash, U.S. Government securities or other high-grade liquid
securities on the books of the Fund or the Fund's sub-custodian, to avoid any
potential leveraging of a Fund's portfolio.
The Funds 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 Funds 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 Funds 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 Funds' ability to terminate existing swap
agreements or to realize amounts to be received under such agreements.
INVESTMENT COMPANY SECURITIES. Each of 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.
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 each Fund's, other than the Money Market Fund's, total assets; and
33 1/3% of the Money Market Fund's total assets) to securities firms and
financial institutions, provided that each loan is secured continuously by
collateral in the form of cash, high quality money market instruments or short-
term U.S. Government securities adjusted daily to have a market value at least
equal to the current market value of the securities loaned. These loans are
terminable at any time, and the 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 Directors/Trustees.
LOWER-RATED DEBT SECURITIES. It is expected that each Fund (other than the
Money Market Funds, Index 500 Fund and Growth & Income Fund) will invest not
more than 5% of its total assets in securities that are rated
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below investment grade by Standard & Poor's Rating Service, a division of
McGraw-Hill Companies, Inc. ("S&P"), or Moody's Investors Service, Inc.
("Moody's"), or in comparable unrated securities. The Growth & Income Fund may
invest up to 20% of the value of its total assets in such securities. The Money
Market Funds and the Index 500 Fund may not invest 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. A description of applicable credit ratings is set forth in Appendix A of
this Statement of Additional Information.
MONEY MARKET INSTRUMENTS. As described in the Prospectuses, each of the
Funds (except the Short Term Treasury Fund) 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 of purchase A-1 and/or P-1 by S&P or Moody's. In addition, the Funds
may acquire unrated commercial paper and corporate bonds that
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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 (Sub-Advisor with respect to
the Framlington Funds) 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 U.S. 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
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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. Each of 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 the writer of the option 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, and the writer of the option the obligation to buy,
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 wishes to terminate its obligation may effect
a "closing purchase transaction." This is accomplished by buying an option of
the same series as the option previously written. The effect of the purchase is
that the writer's position will be canceled by the clearing corporation.
However, a writer may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who is the holder
of an option may liquidate its position by effecting a "closing sale
transaction." The cost of such a closing purchase plus transaction costs may be
greater than the premium received upon the original option, in which event the
Fund will have incurred a loss in 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.
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The Funds 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 liquid securities in such
amount as are earmarked on the books of the Fund or the Fund's sub-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 sub-custodian
cash or liquid securities 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 in cash or liquid securities is
earmarked on the books of the Fund or the Fund's sub-custodian. A Fund will
limit its investment in uncovered call options purchased or written by the Fund
to 33 1/3% of the Fund's total assets. A Fund will write put options only if
they are "secured" by cash or liquid securities earmarked on the books of the
Fund or the Fund's sub-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.
The Funds may purchase put options to hedge against a decline in the value
of their portfolios. By using put options in this way, a 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. The Funds may
purchase call options to hedge against an increase in the price of securities
that they anticipate purchasing in the future. The premium paid for the call
option plus any transaction costs will reduce the benefit, if any, realized by a
Fund upon exercise of the option, and, unless the price of the underlying
security rises sufficiently, the option may expire worthless to the Fund.
When a Fund purchases an option, the premium paid by it is recorded as an
asset of the Fund. When 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
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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 earmarked securities (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 volume; or one or more Exchanges could, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that Exchange (or in that class or series of options)
would cease to exist, although outstanding options that had been issued by the
Options Clearing Corporation as a result of trades on that Exchange would
continue to be exercisable in accordance with their terms.
Currency transactions, including options on currencies and currency
futures, are subject to risks different from those of other portfolio
transactions. Because currency control is of great importance to the issuing
governments and influences economic planning and policy, purchases and sales of
currency and related instruments can be negatively affected by government
exchange controls, blockages, and manipulations or exchange restrictions imposed
by governments. These can result in losses to a Fund if it is unable to deliver
or receive currency or funds in settlement of obligations and could also cause
hedges it has entered into to be rendered useless, resulting in full currency
exposure as well as the incurring of transaction costs. Buyers and sellers of
currency futures are subject to the same risks that apply to the use of futures
generally. Further, settlement of a currency futures contract for the purchase
of most currencies must occur at a bank based in the issuing nation. Trading
options on currency futures is relatively new, and the ability to establish and
close out positions on such options is subject to the maintenance of a liquid
market which may not always be available. Currency exchange rates may fluctuate
based on factors extrinsic to the issuing country's economy.
REAL ESTATE SECURITIES. The Real Estate Fund may invest without limit in
shares of real estate investment trusts ("REITs"). The Equity Funds and the
Balanced Fund may also invest in 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 Funds
will not invest in real estate directly, but only in securities issued by real
estate companies. However, the Funds 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
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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, 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 REITs under the Internal Revenue Code of 1986, as amended (the "Internal
Revenue 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. Each of 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 the securities 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 collateral in an amount that is greater than
the repurchase price. Default by, or bankruptcy of, the seller would, however,
expose a Fund to possible loss because of adverse market action or delays in
connection with the disposition of underlying obligations except with respect to
repurchase agreements secured by U.S. Government securities. 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 or less.
The repurchase price under repurchase agreements 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, as applicable, 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 Tax-Free Money Market
Fund, Tax-Free Bond Funds and Short Term Treasury Fund) may borrow funds for
temporary or emergency purposes by selling portfolio securities to financial
institutions such as banks and broker/dealers and agreeing to repurchase them at
a mutually specified date and price ("reverse repurchase agreements"). Reverse
repurchase agreements involve the risk that the market value of the securities
sold by a Fund may decline below the repurchase price. A Fund will pay interest
on amounts obtained pursuant to a reverse repurchase agreement. While reverse
repurchase agreements are outstanding, a Fund will maintain cash, U.S.
Government securities or other liquid securities designated on the books of the
Fund or the Fund's sub-custodian in 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
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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.
SHORT SALES. The Global Financial Services Fund may make short sales of
securities. A short sale is a transaction in which the Fund sells a security it
does not own in anticipation that the market price of that security will
decline. When the Fund makes a short sale, it must borrow the security sold
short and deliver it to the broker-dealer through which it made the short sale
as collateral for its obligation to deliver the security upon conclusion of the
sale. The Fund may also sell securities that it owns or has the right to
acquire at no additional cost but does not intend to deliver to the buyer, a
practice known as selling short "against-the-box." The Fund may have to pay a
fee to borrow particular securities and is often obligated to pay over any
payments received on such borrowed securities. The Fund's obligation to replace
the borrowed security will be secured by collateral deposited with the broker-
dealers, usually cash, U.S. Government securities or other highly liquid
securities similar to those borrowed. The Fund will also be required to deposit
similar collateral with its custodian or sub-custodian to the extent necessary
so that the value of both collateral deposits in the aggregate is at all times
equal to as least 100% of the current market value of the security sold short.
Depending on arrangements made with the broker-dealer from which it borrowed the
security regarding payment over any received by the Fund on such security, the
Fund may not received any payments (including interest) on its collateral
deposited with such broker-dealer. The Fund will incur transaction costs,
including interest expenses, in connection with opening, maintaining, and
closing short sales.
If the price of the security sold short increases between the time of the
short sale and the time the Fund replaces the borrowed security, the Fund will
incur a loss; conversely, if the price declines, the Fund will realize a capital
gain. Any gain is limited to the price at which it sold the security short; its
potential loss is theoretically unlimited.
STAND-BY COMMITMENTS. The Balanced Fund, Cash Investment Fund, Money
Market Fund, the Tax-Free Bond Funds and 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 Funds 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 the 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 and bond 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
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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 or Sub-Advisor, as the case may
be, 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 or bond index futures, the Funds will be
required to deposit as "initial margin" an amount of cash or 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 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. Certain 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
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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 Company, the Trust and Framlington are 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 U.S. 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 on
U.S. Treasury securities through the Federal Reserve book-entry record-keeping
system. The Federal Reserve program as established by the U.S. 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 Boards 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
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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, U.S. Treasury Notes and U.S. 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, GNMA, 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 or Sub-
Advisor, as the case may be, 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, International Bond Fund,
Cash Investment Fund and 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
Fund's limitation on illiquid investments.
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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 Fund will earmark cash or liquid portfolio securities
equal to the amount of the commitment. Normally, the Fund will earmark
portfolio securities to satisfy a purchase commitment, and in such a case the
Fund may be required subsequently to earmark additional assets 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 earmarks portfolio securities to
cover such purchase commitments than when it earmarks cash. Because a Fund's
liquidity and ability to manage its portfolio might be affected when it earmarks
cash or portfolio securities to cover such purchase commitments, the Advisor
(Sub-Advisor with respect to the Framlington Funds) 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 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 Cash Investment Fund and Money Market Fund 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. Each of Cash Investment Fund,
Money Market Fund and Tax-Free Money Market Fund 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 rated
in the highest rating category by an NRSRO 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
Board of Directors/Trustees, that the unrated and single rated securities are of
comparable quality to the appropriate rated securities.
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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 Board of Directors/Trustees 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.
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 Composite Stock Price 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
have 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
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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 55% from the payment of State taxes and
45% 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.
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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. Although no opinion is expressed with
respect to the ultimate disposition and consequences of any litigation in
combination with any State Revenue loss, the implementation of any tax reduction
proposal or the failure of the State to realize any budget assumption, the
Attorney General of the State has indicated in a recent official statement
prepared in connection with issuance of general obligation bonds of the State
that, except as listed below, such ultimate dispositions and consequences of any
single proceeding or all legal proceedings should not themselves have a material
adverse effect on the security for such bonds.
On August 22, 1994, the Ingham Circuit and probate courts, together with
the 55th District Court, filed suits in the Court of Claims and Ingham County
Circuit Court against the State of Michigan and Ingham County for declaratory
and injunctive relief, and for damages, due to the alleged failure of the State
Court Administrative Office to properly calculate Ingham County's reimbursement
under the court funding statute. These cases have been dismissed by stipulation
of the parties because the plaintiffs are raising the same claims as members of
a class action captioned as 10th Judicial Circuit, et al v State of Michigan, et
al. Plaintiffs assert that the amount in controversy exceeds $5 million dollars.
The case is currently pending final class certification.
In an order dated June 10, 1997 and a decision rendered July 31, 1997, the
Michigan Supreme Court decided, in the consolidated cases of Durant v State of
Michigan and Schmidt v State of Michigan, that the special education, special
education transportation, bilingual education, driver training and school lunch
programs provided by local school districts are state mandated programs within
the meaning of Michigan Constitution, Article 9, (S) 29 (part of the so-called
Headlee Amendment) and, therefore, the state is obligated to fund these programs
at levels established by the Headlee Amendment. In fashioning a remedy in this
case of first impression under the Headlee Amendment, the Court concluded that,
in future cases, the correct remedy will typically be limited to a declaratory
judgment. However, due to the protracted nature of the Durant and Schmidt
litigation, the Court ruled that money damages, without interest, shall be paid
to the 84 plaintiff school districts for the full amount of the underfunding for
the state mandated programs during the 1991-92, 1992-93, and 1993-94 school
years. On November 19, 1997, the Governor signed legislation providing
approximately $212 million to the 84 plaintiff school districts to cover the
underfunding for those three years. That payment was made to the 84 plaintiff
school districts on April 15, 1998 from the State's Budget Stabilization Fund.
The board of education of each plaintiff school district is to determine the
appropriate distribution of the award between taxpayer relief and/or use by the
district for other public purposes. The Court has affirmed the award to
plaintiffs of their costs including attorney fees. Approximately 400 other
school districts have asserted similar claims. In companion legislation signed
by the Governor on November 19, 1997, the State will pay each "non-Durant"
school district for its underfunded state mandated program costs for those same
three years, if the district agreed, by March 2, 1998, to waive any claim
against the State of the same nature as the claims made by the 84 Durant
plaintiffs through September 30, 1997. All "non-Durant" school districts
submitted the statutory waiver by March 2, 1998. It is estimated that the
aggregate payments to the "non-Durant" school districts will, over time, total
$632 million. Those payments, commencing in fiscal year 1998-1999, will be paid
out of the Budget Stabilization Fund and the General Fund, half in annual
payments over 10 years and half in annual payments over 15 years.
On May 14, 1998, more than 100 Michigan school districts and individuals
filed suit in the Michigan Court of Appeals, asserting that the current version
of the state school aid act violates the Headlee Amendment, in much the same
manner as prior versions of the act were ruled unconstitutional by the Michigan
Supreme Court in Durant v State Board of Education, 456 Mich 175 (1977). Durant,
et al. v State, et al. ("Durant II"). The Durant II plaintiffs are claiming
damages of approximately $347 million for the 1997-1998 school year for the
State's alleged underfunding of special education services, special education
transportation, and school lunch programs. The Durant II plaintiffs are also
requesting a declaratory judgment that the current version of the state school
aid act will not provide proper funding levels for future school years. They
also seek attorney fees and costs of the litigation.
The principal sectors of Michigan's diversified economy are the
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 industries, 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 1997, this figure had fallen to 14.5%.
Although manufacturing (including auto-related manufacturing) continues to be an
important part of the State's economy, approximately 66% of the civilian labor
force is currently engaged in service related employment.
On October 1, 1997, the State created the Year 2000 Project Office to
provide guidance, coordinate oversight for application software, manage Year
2000 funds, provide monitoring support, quality assurance and other matters. The
State has undertaken an inventory and assessment of all applications and
classified the software, has appropriated funds to carry out the project and
informed State agencies of the need to develop contingent plans for mission-
critical systems. The State's goal is to have all critical applications operable
by December 31, 1998, and all other applications operable by September 30, 1999.
Although the State is currently on schedule to meet its objectives for Year
2000 compliance, the State has not yet achieved Year 2000 compliance. Although
the State has expressed its belief that it will continue to meet the objectives
and time frames set forth above for the Year 2000 Project, there can be no
assurance that such completion will be done in a timely manner or that any other
organization or governmental agency with which the State electronically
interacts, including State vendors and the federal government, will be Year 2000
compliant. In the event of any such occurrences, the State may face material
adverse consequences with respect to its revenues and operations.
As of the date of this Statement of Additional Information, the State's
general obligation bonds have been rated "AA+" by Standard & Poor's Ratings
Service, a division of The McGraw-Hill Companies, Inc. ("S&P"), "Aa1" by Moody's
Investors Service, Inc. ("Moody's"), and "AA+" by Fitch ICBA ("Fitch"). In
January, 1998, the State received an upgrade from S&P from its prior rating of
"AA". In March, 1998, the State received an upgrade from Moody's from its prior
rating of "Aa2". In April, 1998, the State received an upgrade from Fitch from
its prior rating of "AA". Such ratings are in each case based upon certain
information and materials concerning the Bonds and the State furnished by the
State to such rating agencies. Any explanation of the significance of such
ratings may be obtained only from the rating agencies furnishing the same. There
is no assurance that such ratings will prevail for any given period of time or
that they will not be revised downward or withdrawn entirely by any or all of
such rating agencies if, in the judgment of any or all of them, circumstances so
warrant. Any such downward revision or withdrawal of such ratings, or any or all
of them, may have an adverse effect on the market price of the Bonds. To the
extent that the portfolio of Michigan municipal bonds is comprised of revenue of
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").
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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 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;
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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 Fund and Bond Fund may
enter into forward currency contracts in accordance with its
investment objectives and policies; or
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; or
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 and the Global
Financial Services Fund will invest more than 25% of its total assets
in securities of issuers conducting their principal business
activities in the financial services industry);
24
<PAGE>
3. Borrow money or enter into reverse repurchase agreement 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 investment limitation 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 that the Global Financial Services Fund may 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 of
forward foreign currency exchange contracts, financial futures
contracts and options on financial futures contracts, foreign currency
futures contracts, and options on securities, foreign currencies and
securities indices, as permitted by the Fund's Prospectus; or
11. Issue senior securities, except as permitted by the 1940 Act.
Additional investment restrictions adopted by each Fund 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 (i)
provided that securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities are not considered to represent
industries; (ii) except that the Real Estate Fund will invest more
than 25% of its assets in securities of issuers in the real estate
industry; (iii) except that the NetNet Fund will invest more than 25%
of its assets in securities of companies engaged in the research,
design, development, manufacturing or distribution of products,
processes or services for use with the Internet or
25
<PAGE>
Intranet related businesses; and (iv) provided that with respect to
the Equity Selection Fund 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;
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 U.S. 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 investment limitation 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 Growth
Opportunities, Multi-Season, NetNet, Real Estate, Value and
International Bond Funds of forward currency 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
26
<PAGE>
amounts (when aggregated with amounts borrowed under clause (i)) not
exceeding 33 1/3% of its total assets;
2. Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by investment limitation 1 above; or
3. 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); or
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 U.S. Government, its
agencies or instrumentalities, at the close of each quarter of its taxable
year.
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.
27
<PAGE>
TRUSTEES, DIRECTORS AND OFFICERS
The trustees, directors and executive officers of the Trust, Framlington
and the Company, and their business addresses, ages, and principal occupations
during the past five years, are:
<TABLE>
<CAPTION>
Positions with Trust, Company and Principal Occupation
Name, Address and Age Framlington+ During Past Five Years
- --------------------- ------------ ----------------------
<S> <C> <C>
Charles W. Elliott Trustee/Director and Chairman of Senior Advisor to the President,
1024 Essex Circle the Board of Trustees and Directors Western Michigan University (since
Kalamazoo, MI 49008 July 1995); Executive Vice President,
Age: 66 Administration & Chief Financial
Officer, Kellogg Company (January 1987
through June 1995). Board of
Directors, Steelcase Financial
Corporation; Board of Directors,
Enesco Group.
John Rakolta, Jr. Trustee/Director and Vice Chairman Chairman and Chief Executive Officer,
1876 Rathmor of the Boards of Trustees and Walbridge Aldinger Company
Bloomfield Hills, MI 48304 Directors (construction company).
Age: 51
Thomas B. Bender Trustee/Director Partner, Financial &
7 Wood Ridge Road Investment Management Group.
Glen Arbor, MI 49636
Age: 65
David J. Brophy Trustee/Director Professor, University of Michigan.
1025 Martin Place Director, River Place Financial
Ann Arbor, MI 48104 Corporation.
Age: 62
Dr. Joseph E. Champagne Trustee/Director Dean, University Center, Macomb
319 East Snell Road College (since September 1997);
Rochester, MI 48306 Corporate and Executive Consultant
Age: 60 (since September 1995); Chancellor,
Lamar University (September 1994 to
September 1995); Consultant to
Management; President and Chief
Executive Officer, Crittenton
Corporation (holding company for
healthcare facilities) and Crittenton
Development Corporation
(August 1991 to August 1993). Chairman
of Board of Directors, Ross Operating
Valve of Troy, Michigan.
</TABLE>
28
<PAGE>
<TABLE>
<S> <C> <C>
Thomas D. Eckert Trustee/Director President and Chief Executive Officer,
10726 Falls Pointe Drive Capital Automotive REIT (real estate
Great Falls, VA 22066 investment trust specializing in
Age: 51 retail automotive properties) (since
November 1997); President and Chief
Operating Officer, Mid-Atlantic Group
of Pulte Home Corporation (developer
of residential land and construction
of housing units) (1983 to 1997).
Lee P. Munder* Trustee/Director and President Chairman of the Advisor (since
1029 N. Ocean Blvd. February 1998); Chief Executive
Palm Beach, FL 33480 Officer, World Asset Management (since
Age: 53 January 1995); Chief Executive
Officer, MCM (predecessor of Advisor)
(since 1985); Director, LPM Investment
Services, Inc. ("LPM"); Director,
Capital Automotive REIT.
Terry H. Gardner Vice President, Vice President and Chief Financial
480 Pierce Street Chief Financial Officer Officer of the Advisor (since 1993),
Suite 300 and Treasurer Vice President and Chief Financial
Birmingham, MI 48009 Officer, MCM (since 1993); Secretary,
Age: 38 LPM.
Paul Tobias Vice President Chief Executive Officer of the Advisor
480 Pierce Street (since February 1998); Chief Operating
Suite 300 Officer of the Advisor (since April
Birmingham, MI 48009 1995); Executive Vice President of the
Age: 47 Advisor (April 1995 to February 1998);
Executive Vice President, Comerica,
Inc. (since 1995).
Gerald Seizert Vice President Chief Executive Officer of the Advisor
480 Pierce Street (since February 1998); Chief
Suite 300 Investment Officer/Equities of the
Birmingham, MI 48009 Advisor (since April 1995); Executive
Age: 46 Vice President of the Advisor (April
1995 to February 1998); Managing
Director (1991 to 1995), Director
(1992 to 1995), and Vice President
(1984 to 1991) of Loomis, Sayles and
Company, L.P.
Elyse G. Essick Vice President Vice President and Director of
480 Pierce Street Marketing of the Advisor (since January
Suite 300 1995); Vice President and Director of
Birmingham, MI 48009 Client Services, MCM (August 1988 to
Age: 40 December 1994).
</TABLE>
29
<PAGE>
<TABLE>
<S> <C> <C>
James C. Robinson Vice President Vice President and Chief Investment
480 Pierce Street Officer/Fixed Income of the Advisor;
Suite 300 Vice President and Director of Fixed
Birmingham, MI 48009 Income, MCM (1987 to 1994).
Age: 37
Leonard J. Barr Vice President Vice President and Director of Core
480 Pierce Street Equity Research of the Advisor (since
Suite 300 January 1995); Director and Senior
Birmingham, MI 48009 Vice President, MCM (since 1988);
Age: 54 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: 53 Woodbridge (June 1992 to December 1994).
Lisa A. Rosen Secretary, Assistant Treasurer General Counsel of the Advisor (since
480 Pierce Street May 1996); Counsel, First Data
Suite 300 Investor Services Group, Inc. (June 1994 to
Birmingham, MI 48009 May 1996); Assistant Vice President
Age: 31 and Counsel, The Boston Company
Advisors, Inc. (July 1993 to May 1994);
Associate with Hutchins, Wheeler &
Dittmar (law firm) (September 1991 to
June 1993).
Therese Hogan Assistant Secretary Director, State Regulation Department,
53 State Street First Data Investor Services Group
Boston, MA 02109 (since June 1994); Senior Legal
Age: 36 Assistant, Palmer & Dodge (law firm)
(October 1993 to June 1994); Blue Sky
Paralegal, Robinson & Cole (law firm)
(February 1984 to October 1993).
</TABLE>
+ Individual holds same position with St. Clair Funds, Inc., ("St. Clair") a
registered investment company.
* Trustee/Director is an "Interested person" of the Trust, Framlington and
the Company as defined in the 1940 Act.
Trustees who are not interested persons of the Trust and Framlington and
Directors who are not interested persons of the Company receive an aggregate fee
from the Trust, Framlington the Company and St. Clair for service on those
organizations' respective Boards, comprised of an annual retainer fee of $30,000
and a fee of $2,500 for each Board meeting attended; and are reimbursed for all
out-of-pocket expenses relating to attendance at such meetings.
30
<PAGE>
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, 1998.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Charles W. Elliot John Rakolta, Jr. Thomas B. David J. Dr. Joseph E. Thomas D.
Chairman, Vice Chairman, Bender Brophy Champagne Eckert
Trustee and Trustee and Trustee and Trustee and Trustee and Trustee and
Director Director Director Director Director Director
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Aggregate Compensation
from the Company $5,785 $5,785 $5,785 $5,276 $5,785 $5,785
- -------------------------------------------------------------------------------------------------------------------------------
Aggregate Compensation
from the Trust $22,997 $22,997 $22,997 $21,096 $22,997 $22,997
- -------------------------------------------------------------------------------------------------------------------------------
Aggregate Compensation
from Framlington $398 $398 $398 $360 $398 $398
- -------------------------------------------------------------------------------------------------------------------------------
Aggregate Compensation
from St. Clair $319 $319 $319 $268 $319 $319
- -------------------------------------------------------------------------------------------------------------------------------
Pension Retirement
Benefits Accrued as Part of
Fund Expenses None None None None None None
- -------------------------------------------------------------------------------------------------------------------------------
Estimated Annual Benefits
upon Retirement None None None None None None
- -------------------------------------------------------------------------------------------------------------------------------
Total from the Fund
Complex $29,500 $29,500 $29,500 $27,000 $29,500 $29,500
- -------------------------------------------------------------------------------------------------------------------------------
</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 September 30, 1998, the Trustees and officers
of the Trust, as a group, owned less than 1% of all classes of outstanding
shares of the Funds of the Trust, the Trustees and officers of Framlington, as a
group, owned less than 1% of all classes of outstanding shares of the Funds of
Framlington except the Emerging Markets Fund in which Trustees and officers, as
a group, owned 1.051% of Class Y shares of the Fund, 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 except Micro-Cap Fund, Money
Market Fund and the NetNet Fund in which the Directors and officers, as a group,
owned 2.218%, 1.700% and 2.400% of Class Y shares of those Funds, respectively.
As of September 30, 1998, the Advisor and its affiliates, through common
ownership, owned beneficially 11,492.654 Class Y shares of the Multi-Season
Growth Fund, 47,585.780 Class Y shares of the NetNet Fund and 2,154,029.680
Class Y shares of the Money Market Fund which represented less than 1%, 18.638%
and 2.509% of the outstanding Class Y shares of those Funds, respectively.
SHAREHOLDER AND TRUSTEE LIABILITY. Under Massachusetts law, shareholders
of a business trust may, under certain circumstances, be held personally liable
for the obligations of the trust. However, the Trust's and Framlington'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
Framlington for the acts or obligations of the Trust or Framlington, and that
every note, bond, contract, order or other undertaking made by the Trust or
Framlington 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
Framlington shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Trust or
31
<PAGE>
Framlington, 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 Framlington 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 Framlington shall look
solely to the trust property for payment; that no Trustee of the Trust or
Framlington 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 Framlington; 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 Framlington to the same extent that Trustees are entitled to
indemnification.
INVESTMENT ADVISORY AND OTHER SERVICE ARRANGEMENTS
INVESTMENT ADVISOR AND SUB-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 the investment advisor to the investment portfolios of the Company on January
31, 1995, upon the closing agreement (the "Joint Venture Agreement") among MCM,
Comerica, Woodbridge and WAM, pursuant to which MCM contributed its investment
advisory business and Comerica contributed the investment advisor business of
its indirect subsidiaries, Woodbridge and World Asset Management, to the
Advisor. The general partners of the Advisor are WAM, WAM II, MCM and Munder
Group LLC. WAM and WAM II 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.
The Funds have entered into new Investment Advisory Agreements (the
"Advisory Agreements"), dated July 2, 1998, with the Advisor pursuant to terms
of an Exemptive Order (the "Order") granted by the SEC. Under the terms of the
Order, the Advisory Agreements must be approved by the shareholders within one
hundred and fifty (150) days but no later than November 30, 1998. The Funds
will call a special meeting of the shareholders to approve the Advisory
Agreements. Until shareholder approval is obtained, the fees paid to the
Advisor will be paid into an escrow account. If the Advisory Agreements are not
approved by the shareholders, the Board of Directors/Trustees will consider
appropriate action.
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 Directors/Trustees. Under the
terms of the Advisory Agreement between the Advisor and Framlington, the Advisor
furnishes overall investment management for the Framlington Funds, 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.
Once the Advisory Agreements are approved by shareholders, they will
continue in effect for a period of two years from their effective dates. 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 Boards of
Directors/Trustees who are not parties to the Advisory Agreement or interested
persons (as defined in the 1940 Act), cast in person at a meeting called for the
purpose of voting on such 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 Boards of Directors/Trustees. Each Advisory Agreement is
terminable with respect to a Fund by vote of the Boards of Directors/Trustees,
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
32
<PAGE>
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.
The Framlington Funds have entered into a new Sub-Advisory Agreement, dated
July 2, 1998, with the Advisor and the Sub-Advisor pursuant to terms of an
Exemptive Order (the "Order") granted by the SEC. Under the terms of the Order,
the Sub-Advisory Agreement must be approved by the shareholders within one
hundred and fifty (150) days but no later than November 30, 1998. The Funds
will call a special meeting of the shareholders to approve the Sub-Advisory
Agreement. Until shareholder approval is obtained, the fees paid to the Sub-
Advisor will be paid into an escrow account. If the Sub-Advisory Agreement is
not approved by the shareholders, the Board of Trustees will consider
appropriate action. Under the terms of the Sub-Advisory Agreements, the Sub-
Advisor provides sub-advisory services to the Framlington Funds. Subject to the
supervision of the Advisor, the Sub-Advisor is responsible for the management of
each Fund's portfolio, including decisions regarding purchases and sales of
portfolio securities by the Framlington Funds. The Sub-Advisor is also
responsible for arranging the execution of portfolio management decisions,
including the selection of brokers to execute trades and the negotiation of
related brokerage commissions.
The 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
. Emerging Markets Fund**
1.00% of the first $500 million of average daily net assets and .75%
of net assets in excess of $500 million
. Multi-Season Fund*
1.00% of the first $250 million of average daily net assets and .75%
of net assets in excess of $250 million
. International Growth Fund**
. Healthcare Fund**
1.00% of average daily net assets
. Micro-Cap Fund**
. NetNet Fund**
33
<PAGE>
.75% of average daily net assets
. Equity Selection Fund
. Global Financial Services Fund
. Growth & Income Fund
. Growth Opportunities Fund
. International Equity Fund
. Small-Cap Value Fund
. Small Company Growth Fund
.74% of average daily net assets
. Real Estate Fund
. Value Fund
.65% of average daily net assets
. Balanced Fund
.50% of average daily net assets
. Bond Fund
. Intermediate Bond Fund
. International Bond Fund
. U.S. Income Fund
. Michigan Bond Fund
. Tax-Free Bond Fund
. Tax-Free Intermediate Bond Fund
.40% of average daily net assets
. Money Market Fund
.35% of average daily net assets
. Cash Investment Fund
. Tax-Free Money Market Fund
. U.S. Treasury Money Market Fund
.25% of average daily net assets
. Short 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
. Index 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 Micro-Cap Fund, the NetNet Fund, Short Term
Treasury Fund, Growth Opportunities Fund, International Growth Fund, Emerging
Markets Fund, Healthcare Fund and Global Financial Services Fund.
The Advisor may discontinue such fee waivers and/or expense reimbursements
at any time, in its sole discretion.
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
34
<PAGE>
International Growth Fund and the Healthcare Fund, up to .625% of average daily
net assets for the Emerging Markets Fund and .375% of average daily net assets
for the Global Financial Services Fund.
For the fiscal year ended June 30, 1998 (and for the period from
commencement of operations through June 30, 1998 for the Global Financial
Services Fund and Growth Opportunities Fund), the Advisor received fees after
waivers, if any, of $524,133 for the Balanced Fund, $1,900,685 for the Growth &
Income Fund, $884,003 for the Index 500 Fund, $1,628,425 for the International
Equity Fund, $3,045,349 for the Small Company Growth Fund, $1,116,093 for the
Bond Fund, $2,770,357 for the Intermediate Bond Fund, $1,386,132 for the U.S.
Income Fund, $261,589 for the Michigan Bond Fund, $1,017,292 for the Tax-Free
Bond Fund, $1,542,255 for the Tax-Free Intermediate Bond Fund, $3,750,786 for
the Cash Investment Fund, $1,075,987 for the Tax-Free Money Market Fund,
$470,094 for the U.S. Treasury Money Market Fund, $6,169,411 for the Multi-
Season Fund, $612,857 for the Real Estate Fund, $454,600 for the Money Market
Fund, $1,066,142 for the Value Fund, $516,840 for the International Growth Fund,
$554,427 for the Emerging Markets Fund, $143,897 for the Healthcare Fund,
$304,989 for the Micro-Cap Equity Fund, $1,028,013 for the Small-Cap Value Fund,
$135,827 for the Short Term Treasury Fund, $253,258 for the International Bond
Fund, $62,684 for NetNet Fund, $302 for the Global Financial Services Fund and
$193 for the Growth Opportunities Fund.
For the fiscal year ended June 30, 1997 (and for the period from
commencement of operations through 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 $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. Income Fund,
$132,451 for the Michigan Bond Fund, $1,006,688 for the Tax-Free Bond Fund,
$1,584,769 for the Tax-Free Intermediate Bond 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, $3,189,742 for the Multi-Season Fund, $259,015
for the Real Estate Fund, $599,286 for the Money Market 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, $20,442 for the Small-Cap Value Fund, $51,885 for the Short Term Treasury
Fund and $143,476 for the International Bond Fund.
For the fiscal year ended June 30, 1996 (and for the period from
commencement of operations through June 30, 1996 for the Value Fund) 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 and
$189,909 for the Value Fund.
For the fiscal year ended June 30, 1998, the Advisor voluntarily waived
advisory fees and/or reimbursed expenses in the amounts of $421,846 for the
Index 500 Fund, $75,264 for the Micro-Cap Equity Fund, $1,214,795 for the Multi-
Season Growth Fund, $110,473 for the Emerging Markets Fund, $112,541 for the
Healthcare Fund, $105,456 for the International Growth Fund, $62,711 for the
Short Term Treasury Fund, $33,890 for the NetNet Fund and $2 for the Growth
Opportunities Fund.
For the fiscal year ended June 30, 1997 the Advisor voluntarily waived
advisory fees and/or reimbursed expenses in the amounts of $1,063,248 for the
Multi-Season Fund, $10,143 for the Real Estate Fund, $17,688 for the Value Fund,
$360,721 for the Index 500 Fund and $51,815 for the Michigan Bond Fund.
For the fiscal year ended June 30, 1996, the Advisor voluntarily reimbursed
expenses in the following amounts: $34,671 for the Real Estate Fund, $70,016 for
the Value Fund and $21,376 for the Index 500 Fund.
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
35
<PAGE>
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 Service and
Distribution Plans 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 Boards of Directors/Trustees, including a
majority of the Directors/Trustees who are not interested persons of the Trust,
Framlington 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 Directors/Trustees in
the manner described above. Each Plan may be terminated at any time, without
penalty, by vote of a majority of the Non-Interested Plan Directors or by a vote
of a majority of the outstanding voting securities (as defined in the 1940 Act)
of the relevant class of the respective Fund 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 Directors/Trustees periodic reports of amounts
expended under the Plan and the purpose for which such expenditures were made.
The Directors/Trustees 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) retaining 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 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>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96
--------------------------------------------
<S> <C> <C> <C>
Funds of the Trust
Balanced Fund $ 1,274 $ 981 $ 136.95
Bond Fund $ 2,735 $ 2,203 $ 29.40
Cash Investment Fund $269,773 $ 0 $ 0
Growth & Income Fund $ 14,520 $ 5,324 $ 268.00
Index 500 Fund $140,154 $48,763 $23,640.4
Intermediate Bond Fund $ 17,654 $13,919 $ 345.66
International Equity Fund $ 15,618 $13,505 $1,946.82
Michigan Bond Fund $ 2,067 $ 1,206 $ 23.32
Small Company Growth Fund $ 59,251 $17,843 $1,158.43
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96
----------------------------------------------------------------
<S> <C> <C> <C>
Tax-Free Bond Fund $ 7,966 $ 1,206 $ 23.32
Tax-Free Intermediate Bond Fund $ 17,556 $ 14,678 $ 85.26
Tax-Free Money Market Fund $154,996 $ 0 $ 0
U.S. Income Fund $ 6,581 $ 0 $ 0
U.S. Treasury Money Market Fund $ 18,269
Funds of the Company
Growth Opportunities Fund $ 0+ N/A N/A
International Bond Fund $ 400 $ 39* N/A
Micro-Cap Fund $ 2,066 $ 79* N/A
Money Market Fund $ 31,560 $ 1,198* N/A
Multi-Season Fund $ 55,691 $ 30,811 $1,945.49
NetNet Fund $ 14,387 N/A N/A
Real Estate Fund $ 6,769 $ 1,559 $ 179.10
Short Term Treasury Fund++ $ 11 $ 0 $ 0
Small-Cap Value Fund $ 10,714 $ 558* N/A
Value Fund $ 10,919 $ 2,347 $ 41.77
Funds of Framlington
Emerging Markets Fund $ 1,804 $ 285 N/A
Global Financial Services Fund $ 0+ N/A N/A
Healthcare Fund $ 7,066 $ 241 N/A
International Growth Fund $ 3,287 $ 759 N/A
</TABLE>
____________________________________
* Figures reflect period from commencement of operations through
June 30, 1997.
+ Figures reflect period from commencement of operations through
June 30, 1998.
++ As of June 2, 1998, Class A Shares of Short Term Treasury Fund
were closed to all investments.
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS B SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JUNE 30, 1998.
<TABLE>
<CAPTION>
DISTRIBUTION AND SERVICER FEES CDSCs
-------------------------------------------------
<S> <C> <C>
Funds of the Trust
Balanced Fund $ 3,890 $ 1,004
Bond Fund $ 6,329 $ 245
Growth & Income Fund $ 10,447 $ 2,013
Index 500 Fund $421,479 $51,363
Intermediate Bond Fund $ 5,683 $ 1,556
International Equity Fund $ 11,221 $ 2,246
Michigan Bond Fund $ 4,234 $ 27
Small Company Growth Fund $107,506 $ 6,931
Tax-Free Bond Fund $ 3,552 $ 50
Tax-Free Intermediate Bond Fund $ 3,575 $ 0
U.S. Income Fund $ 12,408 $ 1
Funds of the Company
Growth Opportunities Fund+ $ 0 $ 0
International Bond Fund $ 401 $ 0
Micro-Cap Fund $ 81,387 $18,345
Money Market Fund $ 7,386 $ 2,888
Multi-Season Fund $942,437 $57,921
NetNet Fund+ $ 1,359 $ 0
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION AND SERVICER FEES CDSCs
-------------------------------------------------
<S> <C> <C>
Real Estate Fund $63,758 $ 6,409
Short Term Treasury Fund++ $ 1,848 $ 92
Small-Cap Value Fund $15,054 $ 590
Value Fund $15,819 $ 129
Funds of Framlington
Emerging Markets Fund $ 4,169 $ 1,670
Global Financial Services Fund $ 0 $ 0
Healthcare Fund $42,842 $ 7,566
International Growth Fund $ 2,170 $ 190
</TABLE>
_____________________________________
+ Figures reflect period from commencement of operations through June 30, 1998.
++ As of June 2, 1998, Class B Shares of Short Term Treasury Fund were closed to
all investments.
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS B SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JUNE 30, 1997.
<TABLE>
<CAPTION>
DISTRIBUTION AND SERVICER FEES CDSC's
---------------------------------------------------
<S> <C> <C>
Funds of the Trust
Balanced Fund $ 1,249 $ 0.00
Bond Fund $ 5,482 $ 447.26
Growth & Income Fund $ 3,519 $ 535.41
Index 500 Fund $153,426 $ 0.00
Intermediate Bond Fund $ 2,627 $ 0.00
International Equity Fund $ 10,398 $ 318.86
Michigan Bond Fund $ 2,779 $ 0.00
Small Company Growth Fund $ 21,679 $ 930.13
Tax-Free Bond Fund $ 566 $ 0.00
Tax-Free Intermediate Bond Fund $ 1,782 $ 0.00
Funds of the Company
International Bond Fund* $ 11 $ 0.00
Micro-Cap Fund* $ 513 $ 0.00
Money Market Fund $ 1,925 $ 711.20
Multi-Season Fund $ 27,446 $ 0.00
Real Estate Fund $731,958 $26,020.64
Short Term Treasury Fund* $ 116 $ 0.00
Small-Cap Value Fund* $ 648 $ 0.00
U.S. Income Fund $ 13,452 $ 0.00
Value Fund $ 2,689 $ 0.00
Funds of Framlington
Emerging Markets Fund* $ 95 $ 0.00
Healthcare Fund* $ 1,240 $ 0.00
International Growth Fund* $ 175 $ 0.00
</TABLE>
____________________________________
* Figures reflect period from commencement of operations through June 30, 1997.
38
<PAGE>
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS B SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JUNE 30, 1996.
<TABLE>
<CAPTION>
DISTRIBUTION SERVICER
FEES FEES CDSC's
-------------------------------------------------------------
<S> <C> <C> <C>
Funds of the Trust
Balanced Fund $ 400.45 $ 133.48 $ 199.11
Bond Fund $ 590.01 $ 196.67 $ 861.49
Growth & Income Fund $ 1,147.15 $ 382.37 $ 300.00
Index 500 Fund $ 15,750.66 $ 4,500.20 $ 1,207.75
Intermediate Bond Fund $ 206.34 $ 68.79 $ 0.00
International Equity Fund $ 3,131.06 $ 1,043.68 $ 1,008.01
Michigan Bond Fund $ 1,923.70 $ 641.24 $ 405.63
Small Company Growth Fund $ 2,247.94 $ 749.31 $ 100.00
Tax-Free Bond Fund $ 131.90 $ 43.96 $ 979.34
Tax-Free Intermediate Bond Fund $ 298.44 $ 99.48 $ 0.53
U.S. Income Fund $ 3,656.37 $ 1,218.79 $ 199.27
Funds of the Company
Money Market Fund $ 1,496.13 $ 498.72 $ 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
Value Fund $ 424.07 $ 141.36 $ 181.56
</TABLE>
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS C SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JUNE 30, 1998*.
<TABLE>
<CAPTION>
DISTRIBUTION AND SERVICER FEES CDSC's
------------------------------------------------
<S> <C> <C>
Funds of the Trust
Balanced Fund $ 880 $ 29
Bond Fund $ 1,545 $ 862
Growth & Income Fund $ 7,781 $ 67
Index 500* N/A N/A
Intermediate Bond Fund $ 1,584 $ 7,747
International Equity Fund $ 23,594 $11,988
Michigan Bond Fund $ 747 $ 0
Small Company Growth Fund $ 51,322 $13,088
Tax-Free Bond Fund $ 396 $ 0
U.S. Income Fund $ 268 $ 35
Funds of the Company
Growth Opportunities Fund+ $ 0 $ 0
International Bond Fund $ 2 $ 0
Micro-Cap Fund $ 42,988 $24,200
Money Market Fund $ 13,170 $ 3
Multi-Season Fund $112,333 $ 556
NetNet Fund* N/A N/A
Real Estate Fund $ 10,810 $ 261
Short Term Treasury Fund $ 159 $ 10
Small-Cap Value Fund $ 9,109 $ 159
Value Fund $ 8,593 $ 23
Funds of Framlington
Emerging Markets Fund $ 448 $ 0
Global Financial Services Fund+ $ 0 $ 0
Healthcare Fund $ 20,953 $ 474
International Growth Fund $ 1,303 $ 142
</TABLE>
39
<PAGE>
___________________________________
* As of June 30, 1998, the NetNet Fund and Index 500 Fund had not commenced
selling Class C shares. As of June 2, 1998, Class C Shares of Short Term
Treasury were closed to all investments.
+ Figures reflect period from commencement of operations through June 30, 1998.
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS C SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JUNE 30, 1997.*
<TABLE>
<CAPTION>
DISTRIBUTION AND SERVICER FEES CDSC's
------------------------------------------------
<S> <C> <C>
Funds of the Trust
Balanced Fund $ 337 $ 0.00
Bond Fund $ 787 $ 0.00
Growth & Income Fund $ 2,683 $ 0.00
Intermediate Bond Fund $ 1,136 $ 0.00
International Equity Fund $18,452 $ 0.00
Michigan Bond Fund $ 568 $ 0.00
Small Company Growth Fund $13,938 $212.00
U.S. Income Fund $ 93 $ 0.00
Funds of the Company
Micro-Cap Fund** $ 48 $ 0.00
Money Market Fund $ 5,932 $ 0.00
Multi-Season Fund $73,808 $391.84
Real Estate Fund $ 1,829 $ 2.38
Small-Cap Value Fund** $ 223 $ 0.00
Value Fund $ 4,397 $ 0.00
Funds of Framlington
Emerging Markets Fund** $ 49 $ 0.00
Healthcare Fund** $ 125 $ 0.00
International Growth Fund** $ 63 $ 0.00
</TABLE>
___________________________________
* 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 through June 30, 1997.
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS C SERVICE AND DISTRIBUTION PLANS
FOR THE FISCAL YEAR ENDED JUNE 30, 1996.*
<TABLE>
<CAPTION>
DISTRIBUTION
FEES AND SERVICER FEES CDSC's
------------------------------------------------
<S> <C> <C>
Funds of the Trust
Balanced Fund $ 4.9 $100.01
Bond Fund $ 123.26 $ 0.00
Growth & Income Fund $ 119.64 $ 0.00
Intermediate Bond Fund $ 98.38 $ 0.00
International Equity Fund $ 4,780.52 $293.87
Small Company Growth Fund $ 228.27 $149.87
Funds of the Company
Multi-Season Fund $42,836.64 $798.25
Real Estate Fund $ 17.76 $ 7.50
Value Fund $ 1,141.17 $ 0.00
</TABLE>
______________________________________
* As of June 30, 1996, the following funds had not commenced selling Class C
Shares: Index 500 Fund, US Government Income Fund, Michigan Bond Fund, Tax-
Free Bond Fund, Tax-Free Intermediate Bond Fund and Money Market Fund.
40
<PAGE>
The following amounts were paid by each Fund under its Class B Service and
Distribution Plans during the fiscal year ended June 30, 1998.
<TABLE>
<CAPTION>
Printing and Interest
Mailing of Carrying or
Prospectuses to other
other than Current Compensation to Compensation to Compensation to Financing
Advertising Shareholders Underwriters Dealers Sales Personnel Charges
----------- ------------------ --------------- --------------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Funds of the Trust
Balanced Fund $0 $0 $0 $ 323 $0 $ 912
Bond Fund $0 $0 $0 $ 598 $0 $ 794
Growth & Income Fund $0 $0 $0 $ 828 $0 $ 2,449
Index 500 Fund $0 $0 $0 $ 35,654 $0 $106,375
Intermediate Bond Fund $0 $0 $0 $ 813 $0 $ 360
International Equity Fund $0 $0 $0 $ 1906 $0 $ 1,557
Michigan Bond Fund $0 $0 $0 $ 726 $0 $ 408
Small Company Growth Fund $0 $0 $0 $ 4,710 $0 $ 27,734
Tax-Free Bond Fund $0 $0 $0 $ 145 $0 $ 949
Tax-Free Intermediate
Bond Fund $0 $0 $0 $ 426 $0 $ 974
U.S. Income Fund $0 $0 $0 $ 1008 $0 $ 230
Funds of the Company
Growth Opportunities
Fund* $0 $0 $0 $ 0 $0 $ 0
International Bond Fund $0 $0 $0 $ 2 $0 $ 135
Micro-Cap Fund $0 $0 $0 $ 382 $0 $ 30,137
Money Market Fund $0 $0 $0 $ 1,799 $0 $ (1,159)
Multi-Season Fund $0 $0 $0 $193,254 $0 $(10,010)
NetNet Fund* $0 $0 $0 $ 8 $0 $ 3,816
Real Estate Fund $0 $0 $0 $ 6,948 $0 $ 13,242
Short Term Treasury Fund+ $0 $0 $0 $ 95 $0 $ 87
Small-Cap Value Fund $0 $0 $0 $ 253 $0 $ 4,651
Value Fund $0 $0 $0 $ 1,213 $0 $ 2,553
Funds of Framlington
Emerging Markets Fund $0 $0 $0 $ 13 $0 $ 1,767
Global Financial
Services Fund* $0 $0 $0 $ 0 $0 $ 0
Healthcare Fund $0 $0 $0 $ 288 $0 $ 15,946
International Growth Fund $0 $0 $0 $ 44 $0 $ 825
</TABLE>
_________________________________________
* Figures reflect period from commencement of operations through June 30, 1998.
+ As of June 2, 1998, Class B Shares of Short Term Treasury Fund were closed to
all investments.
The following amounts were paid by each Fund under its Class C Service and
Distribution Plans during the fiscal year ended June 30, 1998.
<TABLE>
<CAPTION>
Printing and
Mailing of Interest
Prospectuses to Carrying or
other than other
Current Compensation to Compensation to Compensation to Financing
Advertising Shareholders Underwriters Dealers Sales Personnel Charges
----------- ---------------- --------------- --------------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Funds of the Trust
Balanced Fund $0 $0 $0 $ 262 $0 $ (6)
Bond Fund $0 $0 $0 $ 35 $0 $ 3
Growth & Income Fund $0 $0 $0 $ 1,659 $0 $ (113)
Index 500 Fund $0 $0 $0 N/A $0 N/A
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Printing and
Mailing of Interest
Prospectuses to Carrying or
other than other
Current Compensation to Compensation to Compensation to Financing
Advertising Shareholders Underwriters Dealers Sales Personnel Charge
----------- --------------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Intermediate Bond Fund $0 $0 $0 $ 493 $0 $ 2,970
International Equity Fund $0 $0 $0 $16,331 $0 $ (775)
Michigan Bond Fund $0 $0 $0 $ 360 $0 $ 7
Small Company Growth Fund $0 $0 $0 $ 8,224 $0 $ 1,177
Tax-Free Bond Fund $0 $0 $0 $ 253 $0 $ (9)
Tax-Free Intermediate $0 $0 $0 $ 0 $0 $ 3
Bond Fund
U.S. Income Fund $0 $0 $0 $ 6 $0 $ 28
Funds of the Company
Growth Opportunities Fund* $0 $0 $0 $ 0 $0 $ 0
International Bond Fund $0 $0 $0 $ 0 $0 $ 0
Micro-Cap Fund $0 $0 $0 $ 349 $0 $ 2,659
Money Market Fund $0 $0 $0 $11,654 $0 $ (142)
Multi-Season Fund $0 $0 $0 $69,188 $0 $(3,527)
NetNet Fund** N/A N/A N/A N/A N/A N/A
Real Estate Equity $0 $0 $0 $ 1,391 $0 $ 388
Investment Fund
Short Term Treasury Fund $0 $0 $0 $ 17 $0 $ 0
Small-Cap Value Fund $0 $0 $0 $ 208 $0 $ 599
Value Fund $0 $0 $0 $ 4,297 $0 $ 58
Funds of Framlington
Emerging Markets Fund $0 $0 $0 $ 20 $0 $ 66
Global Financial Services $0 $0 $0 $ 0 $0 $ 0
Fund*
Healthcare Fund $0 $0 $0 $ 74 $0 $ 786
International Growth Fund $0 $0 $0 $ 51 $0 $ 47
</TABLE>
_________________________________________
* Figures reflect period from commencement of operations through June 30,
1998.
** As of June 30, 1998, the fund had not commenced selling Class C Shares.
+ As of June 2, 1998, Class C Shares of Short Term Treasury Fund were closed
to all investments.
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 0.25% (on
an annualized basis) of the average daily net assets 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, Framlington 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, Framlington's or the Company's arrangements with
42
<PAGE>
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 Directors/Trustees will review, at least
quarterly, a written report of the amounts expended under Trust's, 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 Directors/Trustees, including a
majority of the Directors/Trustees 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 Directors/Trustees 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; 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. 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.
For the period November 1, 1997 through June 30, 1998, administration fees
of State Street accrued were: $27,469 for Balanced Fund, $86,722 for Bond Fund,
$374,880 for Cash Investment Fund, $85,474 for Growth & Income Fund, $235,148
for Index 500 Fund, $193,688 for Intermediate Bond Fund, $70,559 for
International Equity Fund, $18,511 for Michigan Bond Fund, $142,877 for Small
Company Growth Fund, $68,797 for Tax-Free Bond Fund, $104,833 for Tax-Free
Intermediate Bond Fund, $106,996 for Tax-Free Money Market Fund, $95,641 for
U.S. Income Fund, $32,072 for U.S. Treasury Money Market Fund, $16,884 for
International Bond Fund, $13,505 for Micro-Cap Fund, $36,373 for Money Market
Fund, $240,139 for Multi-Season Fund, $2,614 for NetNet Fund, $30,617 for Real
Estate Fund, $18,052 for Short Term Treasury Fund, $51,728 for Small Cap Value
Fund, $54,313 for Value Fund, $13 for Growth Opportunities Fund, $19,511 for
International Growth Fund, $16,445 for Emerging Markets Fund, $5,819 for
Healthcare Fund, and $15 for Global Financial Services Fund.
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 July 1, 1997 through October 31, 1997, administration fees
to Investor Services Group accrued were: $14,689 for Balanced Fund, $29,146 for
Bond Fund, $184,587 for Cash Investment Fund, $47,089 for Growth & Income Fund,
$109,244 for Index 500 Fund, $95,635 for Intermediate Bond Fund, $42,940 for
International Equity Fund, $8,786 for Michigan Bond Fund, $68,964 for Small
Company Growth Fund, $37,599 for Tax-Free Bond Fund, $56,420 for Tax-Free
Intermediate Bond Fund, $53,524 for Tax-Free Money Market Fund, $49,187 for U.S.
Income Fund, $39,194 for U.S. Treasury Money Market Fund, $9,604 for
International Bond Fund, $2,199 for Micro-Cap Fund, $23,555 for Money Market
Fund, $104,045 for Multi-Season Fund, $631 for NetNet Fund, $12,483 for Real
Estate Fund, $10,358 for Short Term Treasury Fund, $19,515 for Small Cap Value
Fund, $20,603 for Value Fund, $6,740 for International Growth Fund, $6,740 for
Emerging Markets Fund, and $6,740 for Healthcare Fund.
43
<PAGE>
For the fiscal year ended June 30, 1997, the administration fees of
Investor Services Group accrued were: Balanced Fund - $77,364; Growth & Income
Fund - $248,644; Index 500 Fund - $405,016; International Equity Fund -
$259,162; Small Company Growth Fund - $283,755; Bond Fund - $169,932;
Intermediate Bond Fund - $577,425; U.S. Income Fund - $265,637; Michigan Bond
Fund - $41,620; Tax-Free Bond Fund - $227,508; Tax-Free Intermediate Bond Fund -
$358,214; Cash Investment Fund - $1,115,110; Tax-Free Money Market Fund -
$283,803; $480,310-Multi-Season Fund; $39,493-Real Estate Fund, $169,405-Money
Market Fund, $61,224-Value Fund and U.S. Treasury Money Market Fund - $355,592,
respectively.
For the period from commencement of operations through June 30, 1997,
administration fees of Investor Services Group accrued were $9,644 - Emerging
Markets Fund; $9,644 - Healthcare Fund, $9,644 - International Growth Fund,
$730 - Micro-Cap Fund; $14,220 - Small-Cap Value Fund; $32,343 - International
Bond Fund and $23,349 - Short Term Treasury Fund.
For the fiscal year ended June 30, 1996, administration fees of Investor
Services Group accrued were: $62,095 - Balanced Fund, $202,655 - Growth & Income
Fund, $188,416 - Index 500 Fund, $201,299 - International Equity Fund, $194,176
- - Small Company Growth Fund, $190,967 - Bond Fund, $587,790 - Intermediate Bond
Fund, $216,970 - U.S. Income Fund, $31,899 - Michigan Bond Fund, $245,271 - Tax-
Free Bond Fund, $400,485 - Tax-Free Intermediate Bond Fund, $1,183,419 - Cash
Investment Fund, $378,955 - U.S. Treasury Money Market Fund, $285,214 - Tax-Free
Money Market Fund, $345,388 - Multi-Season Fund, $19,120 - Real Estate Fund and
$292,172 - Money Market Fund.
For the period from commencement of operations through June 30, 1996,
administration fees of Investor Services Group accrued were $29,705 - Value
Fund.
CUSTODIAN, SUB-CUSTODIAN AND TRANSFER AGENCY AGREEMENTS. Comerica Bank
(the "Custodian"), whose principal business address is One Detroit Center, 500
Woodward Avenue, Detroit, MI 48226, is the custodian of each Fund pursuant to
custodian agreements with respectively the Trust, Framlington and the Company.
The Custodian receives no compensation for such services. State Street serves as
the sub-custodian to the Funds pursuant to sub-custodian agreements (each, a
"Sub-Custodian Contract") among the Custodian, State Street and respectively the
Company, the Trust and Framlington. State Street is also the sub-custodian with
respect to the custody of foreign securities held by the Funds. State Street has
in turn entered into additional agreements with financial institutions and
depositaries located in foreign countries with respect to the custody of such
securities. Under the Sub-Custodian Contracts, State Street (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 Directors/Trustees concerning
the Funds' operations.
Prior to November 1, 1997, the Custodian was compensated for its services
as custodian. For the period July 1, 1997 to October 31, 1997 the Custodian
earned $317,499.
Investor Services Group serves as the transfer and dividend disbursing
agent for the Funds pursuant to transfer agency agreements with the Trust,
Framlington and the Company, respectively, 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 Directors/Trustees 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.
44
<PAGE>
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 Funds, 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 Boards of Directors/Trustees, 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 fiscal year ended June 30, 1998, the Funds paid brokerage
commission as follows: $50,853.97 -Balanced Fund, $341,166.96 - Growth & Income
Fund, $19,135.67 - Index 500 Fund, $164,775.05 - International Equity Fund,
$785,188.42 - Small Company Growth Fund, $96,724.20 - Micro-Cap Fund,
$497,706.76 - Multi-Season Fund, $7,410.00 - NetNet Fund, $84,409.50 - Real
Estate Fund, $206,248.80 - Small Cap Value Fund, $344,423.00 - Value Fund,
$1,227.00 - Growth Opportunities Fund, $254,864.46 - International Growth Fund,
$385,582.02 - Emerging Markets Fund and $22,123.61 -
45
<PAGE>
Healthcare Fund. For the period from commencement of operations through June 30,
1998, the Fund paid brokerage commission of $2,486.29 - Global Financial
Services.
For the fiscal year ended June 30, 1997, the Funds paid brokerage
commissions as follows: $54,221 -Balanced Fund, $336,161 - Growth & Income Fund,
$61,393 - Index 500 Fund, $155,081 - International Equity Fund, $366,346 -
Multi-Season Fund, $66,879 - Real Estate Fund and $355,997 - Small Company
Growth Fund. The other Funds of the Company and the Trust did not pay brokerage
commissions during the fiscal year ended June 30, 1997.
For the period from commencement of operations through June 30, 1997, the
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.
For the fiscal year ended June 30, 1996, the Funds paid brokerage
commissions as follows: $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 of the Company and the Trust did not pay brokerage
commissions during the fiscal year ended June 30, 1996.
For the period from commencement of operations through June 30, 1996, the
Value Fund paid brokerage commissions of $169,335.
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 or
the Sub-Advisor, as the case may be, 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 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
the section entitled "Financial Highlights." For the fiscal year ended June 30,
1998, the portfolio turnover rate for the Bond Fund and the Intermediate Bond
Fund was 222% and 194%, 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
Framlington Funds, the Sub-Advisor pursuant to the Sub-Advisory Agreement)
agrees to select broker-dealers in accordance with guidelines established
46
<PAGE>
by the Boards of Directors/Trustees 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 Directors/Trustees, 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 or Sub-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 or 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 or the Company's Board of Directors in accordance with Rule 10f-3
under the 1940 Act.
The Trust, the Company and Framlington are required to identify the
securities of their regular brokers or dealers (as defined in Rule 10b-1 under
the 1940) Act or their parent companies held by them as of the close of their
most recent fiscal year and state the value of such holdings. As of June 30,
1998, the Balanced Fund held securities of BankAmerica Corp valued at $1,011,319
Chase Manhattan valued at $951,300; Bond Fund held securities of Merrill Lynch
valued at $420,970; Cash Investment Fund held securities of Bank of Nova Scotia
valued at $50,000,000, Canadian Imperial Bank of Commerce valued at $50,000,000,
First Chicago valued at $49,293,000, Sanwa Bank valued at $24,925,000; Growth &
Income Fund held securities of Bank One Corp valued at $4,771,969; Index 500
Fund held securities of Bank of New York valued at $2,051,237, BankAmerica Corp
valued at $5,310,028, Bank One Corp valued at $3,523,164, Chase Manhattan valued
at $5,795,984, Citicorp valued at $6,059,550, First Chicago valued at
$2,289,272, J.P. Morgan & Co., Inc. valued at $1,874,000, Lehman Brothers
Holdings, Inc. valued at $829,919, Merrill Lynch valued at $2,868,975, Morgan
Stanley, Dean Witter, Discover & Co. valued at $4,933,245, Norwest valued at
$2,545,237, Wachovia Bank valued at $1,566,208; Intermediate Bond Fund held
securities of BankAmerica Corp valued at $5,897,000, Bank One Corp valued at
$6,197,000; International Equity Fund held securities of, ABN AMRO Holdings
valued at $1,221,094, Bank of Tokyo valued at $2,260,445; Money Market Fund held
securities of Bank of Nova Scotia valued at $4,000,000, Canadian Imperial Bank
of Commerce valued at $3,000,000, Sanwa Bank valued
47
<PAGE>
at $3,985,433; Multi-Season Growth Fund held securities of BankAmerica Corp
valued at $7,167,830, Chase Manhattan valued at $17,685,875; NetNet Fund held
securities of Ameritrade Holding Corporation valued at $618,300 Charles Schwab &
Co. Inc. valued at $487,500; Small Cap Value Fund held securities of McDonald &
Co. valued at $3,871,875; Value Fund held securities of Paine Webber Group,
Inc. valued at $4,360,387 and Global Financial Services Fund held securities of
BankAmerica Corp valued at $26,000.
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 Boards of Directors/Trustees; taxes;
interest; legal and auditing fees; brokerage fees and commissions; 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; and the expense of using independent pricing services. 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
Directors/Trustees in a manner that the Boards 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. 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 most
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:
. By Mail
. By Telephone
. 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.
48
<PAGE>
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
<TABLE>
<CAPTION>
REDEMPTION DURING CDSC
- --------------------------------------------------------------------------------
<S> <C>
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%
</TABLE>
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 $250; 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.
49
<PAGE>
No CDSC is imposed to the extent that the current net asset value of the
shares redeemed does not exceed (a) the current net asset value of shares
purchased through reinvestment of dividends or capital gain distributions plus
(b) the current net asset value of shares purchased more than one year prior to
the redemption, plus (c) increases in the net asset value of the shareholder's
shares above the purchase payments made during the preceding one year.
The 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, the Framlington 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 REDEMPTION 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 (the "NYSE") is
restricted by applicable rules and regulations of the SEC; (ii) the NYSE is
closed for other than customary weekend and holiday closings; (iii) the SEC has
by order permitted such suspension or postponement for the protection of the
shareholders; or (iv) 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 $250; 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 $250 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., Eastern 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.
50
<PAGE>
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
Directors/Trustees 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
Money Market Fund for purposes of sales and redemptions. These procedures
include a review by the Boards of Directors/Trustees, 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
Directors/Trustees will promptly consider whether any and, if any, what action
should be initiated. If the Board believes that the extent of any deviation
from a Money Market 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 under the 1940 Act, 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/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.
51
<PAGE>
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 Fund; (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 table below shows 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, 1998.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C Class K Class Y
- ------------------------------------------------------------------------------------------------------------------------------
Effective Effective Effective Effective Effective
Yield Yield Yield Yield Yield Yield Yield Yield Yield Yield
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash Investment 4.87% 4.98% N/A N/A N/A N/A 4.97% 5.09% 5.12% 5.24%
Fund
- -----------------------------------------------------------------------------------------------------------------------------
Money Market 4.74% 4.84% 3.99% 4.06% 3.92% 3.99% N/A N/A 4.99% 5.10%
Fund
- -----------------------------------------------------------------------------------------------------------------------------
Tax-Free Money 2.73% 2.77% N/A N/A N/A N/A 2.83% 2.87% 2.98% 3.02%
Market Fund
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury 4.67% 4.77% N/A N/A N/A N/A 4.77% 4.88% 4.93% 5.04%
Money Market
Fund
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
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
1 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, 1998, the tax-
equivalent yield for Class A, Class K and Class Y Shares of the Tax-Free Money
Market Fund was 3.97% (Class A), 4.11% (Class K) and 4.33% (Class Y) 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
52
<PAGE>
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.
PERFORMANCE OF THE NON-MONEY MARKET FUNDS
YIELD. 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:
YIELD = 2 [(a-b + 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, currently 2.50% of the per share offering price for Class A) 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. The tax-equivalent yield for each Tax-Free Bond 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%.
53
<PAGE>
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, 1998 were:
<TABLE>
<CAPTION>
30-Day Yield Tax-Equivalent 30-Day Yield
------------------------ ----------------------------
<S> <C> <C>
Bond Fund 5.22% N/A
Intermediate Bond Fund 5.00% N/A
U.S. Income Fund 5.36% N/A
International Bond Fund 5.13% N/A
Michigan Bond Fund 3.91% 5.98%
Tax-Free Bond Fund 3.85% 5.63%
Tax-Free Intermediate Bond Fund 3.70% 5.45%
</TABLE>
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, 1998 were:
<TABLE>
<CAPTION>
30-Day Yield Tax-Equivalent 30-Day Yield
--------------------------- ----------------------------
<S> <C> <C>
Bond Fund 4.68% N/A
Intermediate Bond Fund 4.46% N/A
U.S. Income Fund 4.83% N/A
International Bond Fund 2.51% N/A
Michigan Bond Fund 3.32% 5.08%
Tax-Free Bond Fund 3.26% 4.77%
Tax-Free Intermediate Bond Fund 3.10% 4.56%
</TABLE>
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, 1998 were:
<TABLE>
<CAPTION>
30-Day Yield Tax-Equivalent 30-Day Yield
--------------------------- ---------------------------
<S> <C> <C>
Bond Fund 4.68% N/A
Intermediate Bond Fund 4.46% N/A
U.S. Income Fund 4.83% N/A
International Bond Fund 2.50% N/A
Michigan Bond Fund 3.32% 5.08%
Tax-Free Bond Fund 3.26% 4.77%
</TABLE>
54
<PAGE>
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, 1998 were:
<TABLE>
<CAPTION>
30-Day Yield Tax-Equivalent 30-Day Yield
------------ ---------------------------
<S> <C> <C>
Bond Fund 5.44% N/A
Intermediate Bond Fund 5.21% N/A
U.S. Income Fund 5.59% N/A
International Bond Fund+ 3.27% N/A
Short Term Treasury Fund 4.82% N/A
Michigan Bond Fund 4.07% 7.37%
Tax-Free Bond Fund 4.02% 5.88%
Tax-Free Intermediate Bond Fund 3.86% 5.68%
</TABLE>
+As of June 15, 1998, Class K Shares of Short Term Treasury Fund were renamed
the Michigan Municipal Shares.
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, 1998 were:
<TABLE>
<CAPTION>
30-Day Yield Tax-Equivalent 30-Day Yield
------------ ---------------------------
<S> <C> <C>
Bond Fund 5.69% N/A
Intermediate Bond Fund 5.47% N/A
U.S. Income Fund 5.84% N/A
International Bond Fund 3.52% N/A
Short Term Treasury Fund 5.07% N/A
Michigan Bond Fund 4.33% 6.62%
Tax-Free Bond Fund 4.27% 6.25%
Tax-Free Intermediate Bond Fund 4.11% 6.05%
</TABLE>
TOTAL RETURN. 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:
P (1 + T)/n/ = ERV
Where:
P = hypothetical initial payment of $1,000;
T = average annual total return;
n = period covered by the computation, expressed in years; and
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).
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
55
<PAGE>
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 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, currently 2.50% of
the per share offering price for Class A) and the Balanced Fund and 4.00% of the
per share offering price for Class A Shares of the Bond Fund, International Bond
Fund and Tax-Free Bond Funds; 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, 1998 and
since commencement of operations.
<TABLE>
<CAPTION>
12 Month 5 Year Inception 12 Month 5 Year Inception
Period Ended Period Ended through Period Ended Period Ended through
Fund--Inception Date 6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund
Class A-4/30/93 15.93% 11.44% 11.49% 9.53% 10.17% 10.29%
Class B-6/21/94 15.11% N/A 14.45% 10.11% N/A 14.12%
Class C-1/24/96 15.00% N/A 14.09% 14.00% N/A N/A
Class K-4/16/93 15.86% 11.45% 11.18% N/A N/A N/A
Class Y-4/13/93 16.23% 11.69% 11.33% N/A N/A N/A
Growth & Income Fund
Class A-8/8/94 23.03% N/A 22.00% 16.23% N/A 20.24%
Class B-8/9/94 22.09% N/A 21.13% 17.09% N/A 20.69%
Class C-12/5/95 22.05% N/A 21.18% 21.05% N/A N/A
Class K-7/5/94 23.00% N/A 21.75% N/A N/A N/A
Class Y-7/5/94 23.32% N/A 22.03% N/A N/A N/A
Index 500 Fund
Class A-12/9/92 29.61% 22.49% 21.05% 26.35% 21.87% 20.49%
Class B-10/31/95 29.17% N/A 29.94% 26.17% N/A 29.45%
Class C N/A N/A N/A N/A N/A N/A
Class K12/7/92 29.42% 22.39% 20.96% N/A N/A N/A
Class Y-12/1/91 29.76% 22.68% 20.80% N/A N/A N/A
International Equity Fund
Class A-11/30/92 4.30% 10.70% 11.09% (1.46)% 9.46% 9.96%
Class B-3/9/94 3.54% N/A 7.43% (1.23)% N/A 7.06%
Class C-9/29/95 3.50% N/A 9.95% 2.50% N/A N/A
Class K-11/23/92 4.24% 10.71% 11.32% N/A N/A N/A
Class Y-12/1/91 4.48% 10.96% 10.52% N/A N/A N/A
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
12 Month 5 Year Inception 12 Month 5 Year Inception
Period Ended Period Ended through Period Ended Period Ended through
Fund--Inception Date 6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
International Growth Fund
Class A-2/20/97 5.60% N/A 13.42% (0.21)% N/A 8.78%
Class B-3/19/97 4.88% N/A 15.64% (0.12)% N/A 12.65%
Class C-2/13/97 5.50% N/A 13.23% 4.05% N/A N/A
Class K-1/10/97 5.60% N/A 14.11% N/A N/A N/A
Class Y-12/31/96 5.86% N/A 13.04% N/A N/A N/A
Emerging Markets Fund
Class A-1/14/97 (28.34)% N/A (6.17)% (32.27)% N/A (9.72)%
Class B-2/25/97 (28.90)% N/A (13.23)% (32.27)% N/A (15.75)%
Class C-3/3/97 (28.88)% N/A (12.34)% (29.57)% N/A N/A
Class K-1/10/97 (28.34)% N/A (5.35)% N/A N/A N/A
Class Y-12/31/96 (28.12)% N/A (4.66)% N/A N/A N/A
Healthcare Fund
Class A-2/14/97 8.54% N/A 3.33% 2.60% N/A 0.85%
Class B-1/31/97 7.83% N/A 4.33% 2.83% N/A 1.53%
Class C-1/13/97 7.73% N/A 8.38% 6.73% N/A N/A
Class K-4/1/97 8.45% N/A 19.54% N/A N/A N/A
Class Y-12/31/96 8.72% N/A 11.93% N/A N/A N/A
Micro-Cap Fund
Class A-12/26/96 38.01% N/A 45.76% 30.38% N/A 40.42%
Class B-2/24/97 36.87% N/A 41.16% 31.87% N/A 38.52%
Class C-3/31/97 36.95% N/A 54.86% 35.95% N/A N/A
Class K-12/31/96 37.90% N/A 45.10% N/A N/A N/A
Class Y-12/26/96 38.19% N/A 46.03% N/A N/A N/A
Small-Cap Fund
Class A-1/10/97 24.36% N/A 25.06% 17.52% N/A 29.93%
Class B-2/11/97 23.58% N/A 26.51% 18.58% N/A 23.85%
Class C-1/13/97 23.60% N/A 29.37% 22.60% N/A N/A
Class K-12/31/96 24.53% N/A 30.63% N/A N/A N/A
Class Y-12/26/96 24.84% N/A 31.25% N/A N/A N/A
NetNet Fund
Class A-8/19/96 87.23% N/A 61.84% 76.99% N/A 57.03%
Class B-6/1/98 N/A N/A 20.91% N/A N/A 15.91%
Class C N/A N/A N/A N/A N/A N/A
Class Y-6/1/98 N/A N/A 20.97% N/A N/A N/A
International Bond Fund
Class A-10/17/96 0.86% N/A 0.01% (3.19)% N/A (2.38)%
Class B-6/9/97 0.26% N/A 0.05% (4.66)% N/A (3.65)%
Class C-6/3/98 N/A N/A (1.83)% N/A N/A (0.84)%
Class K-3/25/97 0.80% N/A 3.03% N/A N/A N/A
Class Y-10/2/96 1.12% N/A 0.13% N/A N/A N/A
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
12 Month 5 Year Inception 12 Month 5 Year Inception
Period Ended Period Ended through Period Ended Period Ended through
Fund -- Inception Date 6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Multi-Season Fund
Class A-8/4/93 25.02% N/A 19.69% 18.14% N/A 18.32%
Class B-4/29/93 24.12% 18.43% 18.13% 19.12% 18.23% 18.03%
Class C-9/20/93 24.09% N/A 19.32% 23.09% N/A N/A
Class K-6/23/95 25.05% N/A 25.87% N/A N/A N/A
Class Y-8/16/93 25.28% N/A 20.09% N/A N/A N/A
Real Estate Fund
Class A-9/30/94 8.93% N/A 16.28% 2.92% N/A 14.55%
Class B-10/3/94 8.12% N/A 15.45% 3.12% N/A 14.91%
Class C-1/5/96 8.17% N/A 18.39% 7.17% N/A N/A
Class K-10/3/96 8.92% N/A 18.34% N/A N/A N/A
Class Y-10/3/94 9.24% N/A 16.61% N/A N/A N/A
Small Company Growth Fund
Class A-11/23/92 12.41% 18.86% 17.83% 6.22% 17.52% 16.64%
Class B-4/28/94 11.51% N/A 20.42% 6.96% N/A 20.15%
Class C-9/26/95 11.50% N/A 22.22% 10.59% N/A N/A
Class K-11/23/92 12.36% 18.86% 17.83% N/A N/A N/A
Class Y-12/1/91 12.57% 19.11% 18.97% N/A N/A N/A
Value Fund
Class A-9/14/95 25.53% N/A 25.54% 18.65% N/A 23.04%
Class B-9/19/95 24.93% N/A 24.74% 19.93% N/A 24.01%
Class C-2/9/96 24.78% N/A 24.74% 23.78% N/A N/A
Class K-11/30/95 25.84% N/A 25.95% N/A N/A N/A
Class Y-8/18/95 26.12% N/A 26.86% N/A N/A N/A
Bond Fund
Class A-12/9/92 10.45% 6.04% 7.03% 6.02% 5.17% 6.25%
Class B-3/13/96 9.75% N/A 6.89% 4.75% N/A 5.68%
Class C-3/25/96 9.84% N/A 6.79% 8.84% N/A N/A
Class K-11/23/92 10.57% 6.03% 6.98% N/A N/A N/A
Class Y-12/1/91 10.72% 6.27% 6.75% N/A N/A N/A
Intermediate Bond Fund
Class A-11/24/92 7.84% 4.98% 5.63% 3.51% 4.12% 4.86%
Class B-10/25/94 6.94% N/A 6.53% 1.94% N/A 5.83%
Class C-4/19/96 6.69% N/A 5.84% 5.69% N/A N/A
Class K-11/20/92 7.73% 4.97% 5.61% N/A N/A N/A
Class Y-12/1/91 7.99% 5.19% 6.17% N/A N/A N/A
US Government Income Fund
Class A-7/28/94 9.71% N/A 8.06% 5.32% N/A 6.94%
Class B-9/6/95 8.89% N/A 6.40% 3.89% N/A 5.44%
Class C-8/12/96 8.82% N/A 7.26% 7.82% N/A N/A
Class K-7/5/94 9.70% N/A 7.99% N/A N/A N/A
Class Y-7/5/94 9.97% N/A 8.26% N/A N/A N/A
</TABLE>
58
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<TABLE>
<CAPTION>
12 Month 5 Year Inception 12 Month 5 Year Inception
Period Ended Period Ended through Period Ended Period Ended through
Fund -- Inception Date 6/30/98* 6/30/98* 6/30/98* 6/30/98** 6/30/98** 6/30/98**
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Short Term Treasury Fund
Michigan Municipal 2.50% N/A 2.41% N/A N/A N/A
Shares+-4/2/97
Class Y-1/29/97 5.81% N/A 5.74% N/A N/A N/A
Michigan Bond Fund
Class A-2/15/94 9.01% N/A 5.15% 4.67% N/A 4.18%
Class B-7/5/94 8.23% N/A 6.58% 3.23% N/A 5.95%
Class C-10/4/96 8.24% N/A 6.79% 7.24% N/A N/A
Class K-1/3/94 9.02% N/A 4.90% N/A N/A N/A
Class Y-1/3/94 9.17% N/A 5.15% N/A N/A N/A
Tax-Free Bond Fund
Class A-10/9/95 8.54% N/A 6.41% 4.17% N/A 4.82%
Class B-12/6/94 7.65% N/A 7.52% 2.65% N/A 6.82%
Class C-7/7/98 N/A N/A N/A N/A N/A N/A
Class K-7/5/94 8.43% N/A 7.15% N/A N/A N/A
Class Y-7/21/94 8.70% N/A 7.31% N/A N/A N/A
Tax-Free Intermediate
Bond Fund
Class A-11/30/92 5.44% 4.27% 4.67% 1.26% 3.43% 3.92%
Class B-5/16/96 4.68% N/A 4.38% (0.32)% N/A 3.03%
Class C-7/8/98 N/A N/A N/A N/A N/A N/A
Class K-2/9/87++ 5.44% 4.27% 5.57% N/A N/A N/A
Class Y-12/17/92 5.70% 4.51% 4.89% N/A N/A N/A
</TABLE>
____________________________________________________________
* Figures do not include the effect of the sales charge.
** Figures include the effect of the applicable sales charge.
+ As of June 15, 1998, Class K Shares of Short Term Treasury Fund were renamed
the Michigan Municipal Shares.
++ For the ten year period ended June 30, 1998, the average annual return for
Class K Shares was 5.72%.
As of June 30, 1998, the following Classes had not commenced operations:
Class A Shares of Global Financial Services Fund and Growth Opportunities Fund;
Class B Shares of Global Financial Services Fund, Growth Opportunities Fund,
Cash Investment Fund, International Bond Fund, NetNet Fund, Tax-Free Money
Market Fund and U.S. Treasury Money Market Fund; Class C Shares of Global
Financial Services Fund, Growth Opportunities Fund, Cash Investment Fund, Tax-
Free Money Market Fund, Index 500 Fund, Tax-Free Intermediate Bond Fund, NetNet
Fund and U.S. Treasury Money Market Fund; and Class K Shares of Global Financial
Services Fund, Growth Opportunities Fund and NetNet Fund.
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.
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
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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.
TAXES
The following summarizes certain additional federal and state income 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. This discussion is based upon present provisions of
the Internal Revenue Code, the regulations promulgated thereunder, and judicial
and administrative ruling authorities, all of which are subject to change, which
change may be retroactive. Prospective investors should consult their own tax
advisors with regard to the federal tax consequences of the purchase, ownership
and disposition of Fund shares, as well as the tax consequences arising under
the laws of any state, foreign country, or other taxing jurisdiction.
GENERAL. Each Fund intends to elect and qualify to be taxed separately as
a regulated investment company under the Internal Revenue 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 Internal Revenue 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"). 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
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taxable to shareholders as gain from the sale or exchange of a capital asset
held for more than one year, regardless of the length of time a shareholder has
held his or her Fund shares and regardless of whether the distribution is paid
in cash or reinvested in shares. The Funds expect that capital gain dividends
will be taxable to shareholders as long-term gain. Capital gain dividends are
not eligible for the dividends received deduction.
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.
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.
Amounts not distributed on a timely basis in accordance with a calendar
year distribution requirement are subject to a nondeductible 4% excise tax. To
prevent imposition of the excise tax, a Fund must distribute during each
calendar year an amount equal to the sum of (1) at least 98% of its ordinary
income (not taking into account any capital gains or losses) for the calendar
year, (2) at least 98% of its capital gains in excess of its capital losses
(adjusted for certain ordinary losses, as prescribed by the Code) for the one-
year period ending on October 31 of the calendar year, and (3) any ordinary
income and capital gains for previous years that was not distributed during
those years. A distribution will be treated as paid on December 31 of the
current calendar year if it is declared by a Fund in October, November or
December with a record date in such a month and paid by a Fund during January of
the following calendar year. Such distributions will be taxable to shareholders
in the calendar year in which the distributions are declared, rather than the
calendar year in which the distributions are received. To prevent application
of the excise tax, a Fund intends to make its distributions in accordance with
the calendar year distribution requirement.
Although a 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, a Fund may be subject to
the tax laws of such states or localities.
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 and treated
as long-term capital gains. Furthermore, a loss realized by a
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<PAGE>
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, be disallowed if such shares have been held by the
shareholder for six months or less.
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.
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" generally 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.
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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.
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 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 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.
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, GLOBAL FINANCIAL SERVICES FUND AND INTERNATIONAL BOND FUND. Income
received by the International Equity Fund, the International Growth Fund, the
Emerging Markets Fund, the Global Financial Services 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 a Fund
qualifies as a regulated investment company, certain distribution requirements
are satisfied, and more than 50% of the value of the Fund's assets at the close
of the taxable year consists of securities of foreign corporations, the Fund may
elect, subject to limitation, to pass through its foreign tax credits to its
shareholders. The Fund may qualify for and make this election in some, but not
necessarily all, of its taxable years. If a Fund were to make an election, an
amount equal to the foreign income taxes paid by the Fund 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, a Fund 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
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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 limitations, including the restriction 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, all described above.
MARKET DISCOUNT. If a Fund purchases a debt security at a price lower than
the stated redemption price of such debt security, the excess of the stated
redemption price over the purchase price is "market discount". If the amount of
market discount is more than a de minimis amount, a portion of such market
discount must be included as ordinary income (not capital gain) by the Fund in
each taxable year in which the Fund owns an interest in such debt security and
receives a principal payment on it. In particular, the Fund will be required to
allocate that principal payment first to the portion of the market discount on
the debt security that has accrued but has not previously been includable in
income. In general, the amount of market discount that must be included for
each period is equal to the lesser of (i) the amount of market discount accruing
during such period (plus any accrued market discount for prior periods not
previously taken into account) or (ii) the amount of the principal payment with
respect to such period. Generally, market discount accrues on a daily basis for
each day the debt security is held by a Fund at a constant rate over the time
remaining to the debt security's maturity or, at the election of the Fund, at a
constant yield to maturity which takes into account the semi-annual compounding
of interest. Gain realized on the disposition of a market discount obligations
must be recognized as ordinary interest income (not capital gain) to the extent
of the "accrued market discount."
ORIGINAL ISSUE DISCOUNT. Certain debt securities acquired by the Funds may
be treated as debt securities that were originally issued at a discount. Very
generally, original issue discount is defined as the difference between the
price at which a security was issued and its stated redemption price at
maturity. Although no cash income on account of such discount is actually
received by a Fund, original issue discount that accrues on a debt security in a
given year generally is treated for federal income tax purposes as interest and,
therefore, such income would be subject to the distribution requirements
applicable to regulated investment companies.
Some debt securities may be purchased by the Fund, at a discount that
exceeds the original issue discount on such debt securities, if any. This
additional discount represents market discount for federal income tax purposes
(see 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
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<PAGE>
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.
Any regulated futures and foreign currency contracts and certain options
(namely, nonequity options and dealer equity options) 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 U.S. 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 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.
CONSTRUCTIVE SALES. Recently enacted rules may affect the timing and
character of gain if a Fund engages in transactions that reduce or eliminate its
risk of loss with respect to appreciated financial positions. If the Fund
enters into certain transactions in property while holding substantially
identical property, the Fund would be treated as if it had sold and immediately
repurchased the property and would be taxed on any gain (but not loss) from the
constructive sale. The character of gain from a constructive sale would depend
upon the Fund's holding period in the property. Loss from a constructive sale
would be recognized when the property was subsequently disposed of, and its
character would depend on the Fund's holding period and the application of
various loss deferral provisions of the Code.
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
65
<PAGE>
losses, may increase or decrease the amount of a Fund's investment company
taxable income to be distributed to its shareholders as ordinary income.
PASSIVE FOREIGN INVESTMENT COMPANIES. Certain Funds may invest in shares
of foreign corporations that may be classified under the Code as passive foreign
investment companies ("PFICs"). In general, a foreign corporation is classified
as a PFIC if at least on-half of its assets constitute investment-type assets,
or 75% or more of its gross income 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. Each Fund
will itself 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 were 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, another election would
involve marking to market the Fund's PFIC shares at the end of each taxable
year, with the result that unrealized gains would be treated as though they were
realized and reported as ordinary income. Any mark-to market losses and any
loss from an actual disposition of Fund shares would be deductible as ordinary
losses to the extent of any net mark-to-market gains included in income in prior
years.
Income received by a Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries.
Fund shareholders may be subject to state, local and foreign taxes on their
Fund distributions. In many states, Fund distributions which are derived from
interest on certain U.S. Government obligations are exempt from taxation. The
tax consequences to a foreign shareholder of an investment in the Fund may be
different from those described herein. Foreign shareholders are advised to
consult their own tax advisers with respect to the particular tax consequences
to them of an investment in the Fund. Shareholders are advised to consult their
own tax advisers with respect to the particular tax consequences to them of an
investment in the Fund.
OTHER TAXATION
The foregoing discussion relates only to U.S. federal income tax law and
certain state taxes as applicable to U.S. persons (i.e., U.S. citizens and
residents and domestic corporations, partnerships, trusts and estates).
Distributions by the Funds, and dispositions of Fund shares also may be subject
to other 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). 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.
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
66
<PAGE>
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 Directors/Trustees 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 Balanced, Growth & Income, Index
500, International Equity, Small Company Growth, Bond, Intermediate Bond, U.S.
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. The Cash Investment
Fund, Tax-Free Money Market Fund and U.S. Treasury Money Market Fund offer only
Class A Shares, Class K Shares and Class Y 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, Global
Financial Services 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, Growth Opportunities Fund,
Micro-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, All-Season Aggressive Fund, Financial Services Fund,
Short Term Treasury Fund and NetNet Fund. The shares of each Fund (other than
the Money Market Fund, All-Season Conservative Fund, All-Season Moderate Fund,
All-Season Aggressive Fund, Financial Services Fund, Short Term Treasury 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
and 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 Short Term Treasury Fund offers Class Y Shares and the
Michigan Municipal Shares (formerly, Class K Shares). The NetNet Fund offers
only Class A, Class B, Class C and Class Y Shares.
The Boards of the Trust, the Company and Framlington have adopted plans
pursuant to Rule 18f-3 under the 1940 Act ("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 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'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
Directors/Trustees. Rule 18f-2 under the 1940 Act provides that any matter
required to be submitted to the holders of the outstanding voting securities of
an investment company such as the Trust, 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
67
<PAGE>
affected by the matter. A Fund is affected by a matter, (i) unless it is clear
that the interests of each Fund in the matter are substantially identical or
(ii) 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.
Annual 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, each
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, 1775 Eye Street, N.W.,
Washington, DC 20006, 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, 200 Clarendon Street, Boston,
Massachusetts 02116, serves as the Trust's, Framlington's and the Company's
independent auditors.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES. As of October 1,
1998, 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:
68
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
Balanced Fund - Y Vishay Employees Savings Plus Plan 23.369%
c/o Comerica Bank
One Detroit Center
500 Woodward Avenue
Detroit, MI 48226
Spicer Axle Savings Plan 13.496%
2100 West State Boulevard
Fort Wayne, IN 46808
Perfection Bakeries 401(k) Plan 8.377%
c/o Comerica Bank
One Detroit Center
500 Woodward Avenue
Detroit, MI 48226
Ferco 401(k) Plan 7.779%
c/o Comerica Bank
One Detroit Center
500 Woodward Avenue
Detroit, MI 48226
Growth & Income Fund - Y Detrex Corp. Employees Retirement Plan 5.581%
Attn: Gerald Israel
24901 Northwestern Suite 500
Southfield, MI 48075
Index 500 Fund - Y Vishay Employees Savings Plus Plan 9.702%
c/o Comerica Bank
One Detroit Center
500 Woodward Avenue
Detroit, MI 48226
International Equity Fund - Y Herrick Foundation 12.296%
100 East Patterson Street
Tecumseh, MI 49286
Cash Investment Fund - Y Investors Fiduciary Trust Co. TTEE 7.790%
FBO Various Retirement Plans (UPI)
801 Pennsylvania
Kansas City, MO 64105
Michigan Bond Fund - Y James P. Vondale 6.234%
Carol L. Vondale JTWROS
1735 Sunburst
Troy, MI 48098
Mary E. Smith TTEE Mary E. Smith Trust 8.074%
15051 U.S. 12 Highway
Brooklyn, MI 49230
Albert Jones TTEE Phillip Jones 18.598%
Irrevocable Trust
1701 Shadford Road
Ann Arbor, MI 48104
Intermediate Bond Fund - Y Wayne State University 10.765%
5700 Cass Avenue
Detroit, MI 48226
</TABLE>
69
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
Tax-Free Bond Fund - Y P.F. Hurst T/W FBO Anthony Hurst 8.580%
Rehmann Robson Company
105 East Michigan
Jackson, MI 49201
P.F. Hurst T/W FBO Ronald Hurst 8.504%
Rehmann Robson Company
105 East Michigan
Jackson, MI 49201
P.F. Hurst T/A FBO Anthony Hurst 9.080%
Rehmann Robson Company
105 East Michigan
Jackson, MI 49201
P.F. Hurst T/A FBO Ronald Hurst 9.234%
Rehmann Robson Company
105 East Michigan
Jackson, MI 49201
Dorcas I. Gatley Irrevocable Trust 6.471%
n/o Sherry Ward
132 San Mateo Road
Half Moon Bay, CA 94019
Rufus W. Clark Family Testamentary Tst. 14.705%
P.O. Box 691
Wauna, WA 98395
Tax-Free Intermediate Bond Fund - Y Josephine Ford Employees Deferred Comp. 6.829%
Bodman, Longley & Dahling
Attn: David P. Larsen
100 Renaissance Center 34th Floor
Detroit, MI 48243
Leonard G. Miller Trust 6.899%
5325 Elmgate Bay
Orchard Lake, MI 48324
Money Market Fund - Y Koch Industries, Inc. 5.340%
c/o Wilshire Asset Management
1249 Ocean Avenue Suite 700
Santa Monica, CA 90401
Charles G. Koch 5.116%
Attn: Ruth Williams
4111 East 37th Street North
Wichita, KS 67220
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
Tax-Free Money Market Fund - Y Toni Wisne-Young Revocable Trust 23.414%
c/o Comerica Bank
One Detroit Center
500 Woodward Avenue
Detroit, MI 48226
George Rieveschl, Jr. Trust 11.641%
c/o Paul Trigg
Dykema, Gossett, Spencer et al
400 Renaissance Center
35th Floor
Detroit, MI 48243
Bruce Rockwell TUA 5.290%
364 Chalfonte
Grosse Pointe Farms, MI 48236
James A. Knight P/A 7.035%
P.O. Box 1089
Jackson, MI 49204
U.S. Treasury Money Market Fund - Y Pompano Beach Police & Fire 7.946%
Retirement System
Deputy Administrator
351 South Cypress Road
Suite 407
Pompano Beach, FL 22222
Canadian Imperial Bank 7.805%
909 Fannin Street
Suite 1200
Houston, TX 77010
Texas Political Sub Jt. Ins Fund 15.055%
12720 Hillcrest, Suite 1010
Dallas, TX 75230
Texas Political Sub Prop/Cas 10.949%
12720 Hillcrest, Suite 1010
Dallas, TX 75230
Micro-Cap Fund - Y Old Kent Bank on behalf of its clients 7.773%
Attn: Mutual Funds Specialist
4420 44th Street Suite A
Kentwood, MI 49512
</TABLE>
71
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
International Growth Fund - Y Interstate/Johnson & Lane on behalf of its 5.290%
clients
Interstate Tower
P.O. Box 1220
Charlotte, NC 28201-1220
NetNet Fund - Y Stanley Pottinger Exempt Trust 5.826%
49 Twin Lakes Road
South Salem, NY 10590
Cash Investment Fund - A National Financial Services for the 70.201%
exclusive benefit of its customers
P.O. Box 3908 Church Street Station
New York, NY 10008-3908
J.C. Bradford & Co. for the exclusive 6.500%
benefit of its customers
330 Commerce Street
Nashville, TN 37201-1809
Donaldson Lufkin & Jenrette 6.476%
Securities for the exclusive benefit of its
customers
P.O. Box 2052
Jersey City, NJ 07303
Tax-Free Money Market Fund - A National Financial Services for the 97.300%
exclusive benefit of its customers
P.O. Box 3908 Church Street Station
New York, NY 10008-3908
U.S. Treasury Money Market Fund - A National Financial Services for the 99.367%
exclusive benefit of its customers
P.O. Box 3908 Church Street Station
New York, NY 10008-3908
Balanced Fund - A Wilson Reichardt & Lobert MPP 12.549%
18853 North Fruitport Road
Spring Lake, MI 49456
Small Company Growth Fund - A MLPF&S for the sole benefit of its 26.710%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Wheat First Securities, Inc. for the exclusive 7.560%
benefit of its customers
2950 Prairie Street SW
Grandville, MI 49418-2072
</TABLE>
72
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
Index 500 Fund - A MLPF&S for the sole benefit of its 47.212%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
International Equity Fund - A MLPF&S for the sole benefit of its 29.941%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Main Street Trust Company for the benefit 15.589%
of its clients
1 Ellsworth Street
Martinsville, VA 24112-2811
Intermediate Bond Fund - A MLPF&S for the sole benefit of its 8.642%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Resources Trust Company 6.935%
P.O. Box 3865
Englewood, CO 80155
Bond Fund - A National Financial Services for the 20.802%
exclusive benefit of its customers
P.O. Box 3908 Church Street Station
New York, NY 10008-3908
Roney & Co. for the benefit of its clients 6.148%
P.O. Box 50566
Kalamazoo, MI 49005-0566
Tax-Free Intermediate Bond Fund - A Irma F. Giffels TTEE 25.473%
Irma F. Giffels Trust
P.O. Box 66734
St. Louis, MO 63166
MLPF&S for the sole benefit of its 17.465%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
National Financial Services for the 5.073%
exclusive benefit of its customers
P.O. Box 3908 Church Street Station
New York, NY 10008-3908
</TABLE>
73
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
Balanced Fund - A Trans-Industries Inc. 20.897%
Employees 401(k) Profit Sharing
Plan & Trust
2637 South Adams Road
Rochester Hills, MI 48309
Donaldson Lufkin & Jenrette 12.550%
Securities for the exclusive benefit of its
customers
P.O. Box 2052
Jersey City, NJ 07303
MLPF&S for the sole benefit of its 12.278%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Investors Fiduciary Trust Co. TTEE 7.903%
FBO Regan Productions Inc. 401(k)
801 Pennsylvania Avenue
Kansas City, MO 64105
National Financial Services for the 6.227%
exclusive benefit of its customers
P.O. Box 3908 Church Street Station
New York, NY 10008-3908
Michigan Bond Fund - A National Financial Services for the 62.804%
exclusive benefit of its customers
P.O. Box 3908 Church Street Station
New York, NY 10008-3908
MLPF&S for the sole benefit of its 10.472%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Tax-Free Bond Fund - A MLPF&S for the sole benefit of its 21.124%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Miaz & Co. 21.076%
Attn Mutual Funds Dept.
1000 North Water Street 14th Floor
Milwaukee, WI 53202
Paine Webber for the benefit of its clients 6.592%
19110 Devonshire
Birmingham, MI 48025-3946
</TABLE>
74
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
Growth & Income Fund - A MLPF&S for the sole benefit of its 28.773%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
U.S. Income Fund - A Resources Trust Company 16.573%
P.O. Box 3865
Englewood, CO 80155
Eamco 11.939%
c/o Riggs Bank NA
Mutual Funds Desk
P.O. Box 96211
Washington, DC 20090-6211
National Financial Services for the 7.975%
exclusive benefit of its customers
P.O. Box 3908 Church Street Station
New York, NY 10008-3908
MLPF&S for the sole benefit of its 7.455%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Roney & Co. for the benefit of its clients 6.569%
46 Warner
Grosse Pointe Farms, MI 48236
Multi-Season Growth Fund - A MLPF&S for the sole benefit of its 26.896%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Real Estate Fund - A Katina E. Dart 24.705%
P.O. Box 914
Okemos, MI 48805-0914
MLPF&S for the sole benefit of its 23.550%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Money Market Fund - A Credit Suisse First Boston Corp. 16.100%
11 Madison Ave. 4th Floor
New York, NY 10010
HC Fund Limited Partnership 8.164%
1300 West Belmont Ave Ste 209
Chicago, IL 60657-3240
</TABLE>
75
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
Money Market Fund - A Appel Equity Group LTD PA 7.544%
150 Great Neck Road #301
Great Neck, NY 11021
Halpern-Crane Partnership 7.477%
1300 West Belmont
Suite 209
Chicago, IL 60657
Value Fund - A MLPF&S for the sole benefit of its 20.411%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Intetnational Bond Fund - A Delaware Charter GTEE & Trust Co. 63.21%
FBO B. Marlo Dirks IRA
c/o George K. Baum & Company
120 West 12th Street
Kansas City, MO 64105
Raymond James & Assoc. 32.633%
Benjamin A. Heskett IRA
550 Hartford Street
Worthington, OH 43085
NetNet Fund - A MLPF&S for the sole benefit of its 15.328%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Micro-Cap Fund - A MLPF&S for the sole benefit of its 26.820%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
National Financial Services for the 9.920%
exclusive benefit of its customers
P.O. Box 3908 Church Street Station
New York, NY 10008-3908
Small-Cap Value Fund - A MLPF&S for the sole benefit of its 20.263%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
McDonald & Co. Securities for benefit of 10.033%
its clients
260 Brown Street
Birmingham, MI 48009
</TABLE>
76
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
International Growth Fund - A Painewebber for the benefit of 13.212%
RDM Holding LTD
350 Woodward
Suite 100
Birmingham, MI 48009
Trans-Industries, Inc. 11.034%
Employees 401(k) Profit Sharing
Plan & Trust
2637 South Adams Road
Rochester Hills, MI 48309
Resources Trust Company 7.393%
P.O. Box 3865
Englewood, CO 80155
Emerging Markets Fund - A Painewebber for the benefit of 22.099%
RDM Holding LTD
350 Woodward
Suite 100
Birmingham, MI 48009
Delaware Charter GTEE & Trust Co. 10.621%
FBO B. Marlo Dirks Ira
c/o George K. Baum & Company
120 West 12th Street
Kansas City, MO 64105
T.M.F. LTD Partnership I/A/A 5.700%
P.O. Box 554
Northville, MI 48167
Healthcare Fund - A MLPF&S for the sole benefit of its 65.992%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Small Company Growth Fund - B MLPF&S for the sole benefit of its 71.387%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Index 500 Fund - B MLPF&S for the sole benefit of its 55.951%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
</TABLE>
77
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
International Equity Fund - B MLPF&S for the sole benefit of its 64.985%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Susan Deseranno TTEE 5.001%
Susan Deseranno Trust
UAD 10/13/93
1063 Hawthorne Road
Grosse Pointe Woods, MI 48236
Intermediate Bond Fund - B MLPF&S for the sole benefit of its 68.310%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
National Financial Services for the 5.623%
exclusive benefit of its customers
P.O. Box 3908 Church Street Station
New York, NY 10008-3908
Bond Fund - B MLPF&S for the sole benefit of its 65.235%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Prudential Securities FBO 14.500%
Mr. William Holway
c/o Spike Trading
30 South Wacker Drive
Suite 1008
Chicago, IL 60606
State Street Bank & Trust CUST 7.114%
FBO Fredric Shotz IRA Rollover
798 Mere Point Road
Brunswick, ME 04011
Painewebber for the benefit of 5.225%
Verla M. Holmes
979 Moorings Drive
Colorado Springs, CO 80906
Tax-Free Intermediate Bond Fund - B MLPF&S for the sole benefit of its 97.731%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
</TABLE>
78
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
Balanced Fund - B MLPF&S for the sole benefit of its 66.344%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Michigan Bond Fund - B National Financial Services for the 63.719%
exclusive benefit of its customers
P.O. Box 3908 Church Street Station
New York, NY 10008-3908
Wexford Clearing Services Corp. FBO 8.222%
Jeanne Brown TTEE
Jeanne M. Brown Rev. Trust
UAD 12/8/86
210 Artesian Street
Harbor Springs, MI 49740
MLPF&S for the sole benefit of its 7.012%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Tax-Free Bond Fund - B MLPF&S for the sole benefit of its 94.944%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Growth & Income Fund - B MLPF&S for the sole benefit of its 52.079%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
U.S. Income Fund - B MLPF&S for the sole benefit of its 91.727%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Multi-Season Growth Fund - B MLPF&S for the sole benefit of its 57.405%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Real Estate Fund - B MLPF&S for the sole benefit of its 64.421%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
</TABLE>
79
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
Money Market Fund - B Fred Kavli 11.191%
14501 East Los Angeles Avenue
Moorpark, CA 93021
National Financial Services for the 10.622%
exclusive benefit of its customers
P.O. Box 3908 Church Street Station
New York, NY 10008-3908
State Street Bank & Trust CUST 6.957%
FBO Donald Soenon IRA
46040 Ann Arbor Trail
Plymouth, MI 48071
Value Fund - B MLPF&S for the sole benefit of its 66.107%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
International Bond Fund - B MLPF&S for the sole benefit of its 95.662%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
NetNet Fund - B MLPF&S for the sole benefit of its 40.214%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Micro-Cap Fund - B MLPF&S for the sole benefit of its 51.639%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Small-Cap Value Fund - B MLPF&S for the sole benefit of its 59.573%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
International Growth Fund - B Wexford Clearing Services Corp. FBO 33.282%
County Employees Annuity TTEE
Benefit Fund #3
c/o CTC Illinois Trust Co.
Attn: Sonny Panaligan
Chicago, IL 60606-6905
MLPF&S for the sole benefit of its 17.620%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
</TABLE>
80
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
International Growth Fund - B Delores L. Judler 6.822%
2711 Golfview Drive Apt. 206
Troy, MI 48084
Emerging Markets Fund - B Wexford Clearing Services Corp. FBO 57.275%
County Employees Annuity TTEE
Benefit Fund #3
c/o CTC Illinois Trust Co.
Attn: Sonny Panaligan
Chicago, IL 60606-6905
MLPF&S for the sole benefit of its 30.056%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Healthcare Fund - B MLPF&S for the sole benefit of its 42.419%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Wexford Clearing Services Corp. FBO 5.949%
County Employees Annuity TTEE
Benefit Fund #3
c/o CTC Illinois Trust Co.
Attn: Sonny Panaligan
Chicago, IL 60606-6905
National Financial Services 5.427%
for the exclusive benefit of
its customers
P.O. Box 3908 Church Street Station
New York, NY 10008-3908
Small Company Growth Fund - C MLPF&S for the sole benefit of its 77.811%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
International Equity Fund - C MLPF&S for the sole benefit of its 94.613%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Intermediate Bond Fund - C MLPF&S for the sole benefit of its 74.512%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
</TABLE>
81
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
Intermediate Bond Fund - Class C First of Michigan Corp. CUST 14.127%
FBO Laurence C. Hanna IRA Rollover
7611 Oliver
Whitmore Lake, MI 48189
Frank E. Prahl 11.355%
Box 53 Lakeview Road
Gays, IL 61928
Bond Fund - C MLPF&S for the sole benefit of its 97.575%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Tax-Free Intermediate Bond Fund - C Eugene R. Daniels & 96.870%
Cay Carol Daniels JTWROS
121 North Plum
Paxton, IL 60957
Balanced Fund - C MLPF&S for the sole benefit of its 78.392%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
National Financial Services 15.217%
for the exclusive benefit of
its customers
P.O. Box 3908 Church Street Station
New York, NY 10008-3908
Michigan Bond Fund - C Donaldson Lufkin Jenrette 67.787%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303
MLPF&S for the sole benefit of its 32.210%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Tax-Free Bond Fund - C MLPF&S for the sole benefit of its 99.977%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Growth & Income Fund - C MLPF&S for the sole benefit of its 61.340%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
</TABLE>
82
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
Growth & Income Fund - C Prudential Securities Inc. FBO 9.758%
Joseph Albert Mueller
IRA DTD 1/30/84
42723 Lulniu Lane
Oakhurst, CA 93644
Prudential Securities Inc. FBO 9.758%
Joseph A. Mueller
Heather A. Mueller JTTEN
42723 Lulniu Lane
Oakhurst, CA 93644
Marian C. Sherman 5.481%
8469 Ridge Road
East Jordan, MI 49727
U.S. Income Fund - C MLPF&S for the sole benefit of its 58.345%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Prudential Securities Inc. FBO 11.706%
Charles A. Gill DDS PA
Self Employed SEP DTD 6/24/87
1200 East Robinson Street
Orlando, FL 32801
Prudential Securities Inc. FBO 8.823%
Mr. Thomas A. Kazeck
IRA DTD 10/15/97
1731 Pinetree Road
Winter Park, FL 32789
Prudential Securities Inc. FBO 6.765%
Ruth Kazeck Cust
Elizabeth Ashley Kazeck
UNIF Trans Min Act FL
1731 Pinetree Road
Winter Park, FL 32789
Prudential Securities Inc. FBO 6.765%
Thomas Kazeck Cust
Andrew Kazeck
UNIF Trans Min Act FL
1731 Pinetree Road
Winter Park, FL 32789
</TABLE>
83
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
Multi-Season Growth Fund - C MLPF&S for the sole benefit of its 91.369%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Real Estate Fund - C MLPF&S for the sole benefit of its 67.498%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Money Market Fund - C Abner Sheffer 18.230%
7 Piccadilly Road
Great Neck, NY 11023
William Harold Newman 15.747%
1205 Longleaf Drive
Fayetteville, NC 28305
State Street Bank & Trust CUST 10.440%
FBO Calvin Ackerman
150 Great Neck Road # 301
Great Neck, NY 11021
Abe Rosenblatt 8.336%
19706 Waters Pond Lane Apt. 501
Boca Raton, FL 33434
Prudential Securities CUST
Dr. David Nibouar IRA DTD 3/18/97
685 Pennsgrove Road
Lincoln University, PA 19352
Douglas Green 6.363%
P.O. Box 527
Pleasant Hills, OR 97455
Dr. Stuart S. Burnstein TTEE 5.980%
Stuart S. Burnsteiin MD
MPP/PS Plan DTD 1/1/96
932 Old Hickory Road
Pittsburgh, PA 15243
Dentistry For You 5.234%
Forsthoefel & Young Inc.
Pension Plan 1/1/95
136 North Enterprise Street
P.O. Box 650
Celina, OH 45822
</TABLE>
84
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
Money Market Fund - C Frank Lee Pitcher DDS 5.079%
Sandra S. Pitcher JTWROS
7040 Navajo Tr. NE
Bremerton, WA 98311
Value Fund - C MLPF&S for the sole benefit of its 73.046%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
International Bond Fund - C State Street Bank & Trust CUST 99.156%
FBO Edward Moore IRA
24812 12th Avenue South
Des Moines, WA 98198
Small-Cap Value Fund - C MLPF&S for the sole benefit of its 51.181%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Painewebber for the benefit of 7.932%
Charles P. Huebner
1285 Avenue of the Americas
New York, NY 10019
International Growth Fund - C McDonald & Co. Securities Inc. FBO 50.170%
Grace Doreen Bull IRA Rollover
2711 Ridgewood Court
Bloomfield Hills, MI 48302
MLPF&S for the sole benefit of its 28.798%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Bryan Oreilly & Margaret Oreilly JTTEN 5.562%
7254 Overland Park
West Chester, OH 45069
Frank A. Ury APC Pension Plan 5.264%
DTD 12/16/97
P.O. Box 912
Vallejo, CA 94590
Emerging Markets Fund - C MLPF&S for the sole benefit of its 93.155%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
</TABLE>
85
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
Healthcare Fund - C MLPF&S for the sole benefit of its 88.358%
customers
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6484
Balanced Fund - K Bill Knapp's Profit Sharing/ 12.888%
401(k) Control
110 Knapp Drive
Battle Creek, MI 49015
Micro-Cap Fund - K Paul W. O'Malley Irrevocable Trust 10.708%
QTIP Marital Trust Account B
05600 Horton Creek Road
Charlevoix, MI 49720
Real Estate Fund - K Bennett E. Bidwell IAA 19.120%
626 Yarboro Drive
Bloomfield Hills, MI 48304
Harold Poling Trust IAA 29.585%
Ford Motor - Fairlane Plaza North
290 Town Center Dr. Suite 322
Dearborn, MI 48126
David & Nancy Katzman Stk. AC/IAA 22.482%
DeeKay enterprises
400 galleria Ovvicentre Suite 400
Southfield, MI 48034
International Bond Fund - K Trinity Endowment Trust 16.685%
Reverend David Eberhard
Historic Trinity Lutheran Church
1345 Gratiot
Detroit, MI 48207
Lillman Dwarka SEP 7.962%
232 Woodwind Drive
Bloomfield Hills, MI 48304
Robert C. Williams Irrevocable Trust 5.225%
4561 Motorway Drive
Waterford, MI 48328
Florence Uzelac Trust 10.542%
21029 West Glenhaven Circle
Northville, MI 48167
</TABLE>
86
<PAGE>
<TABLE>
<CAPTION>
Percent of
Total Shares
Name of Fund - Class Name and Address Outstanding
- -------------------- ---------------- -----------
<S> <C> <C>
International Bond - K Herbert I. Weinberg IRA Rollover 6.220%
7441 East Windrose Drive
Scottsdale, AZ 85260
Frank B. Walker, M.D. IRA Rollover 43.033%
14004 Harbor Place Drive
St. Clair Shores, MI 48080
Healthcare Fund - K G. L. Faistenhammer IRA Rollover 27.423%
19314 Parke Lane
Grosse Ile, MI 48138
Hubert S. Smith, Jr. Trust 17.269%
1236 West Center Avenue
Essexville, MI 48732
Hubert S. & Rita C. Smith Charitable 10.386%
Remainder Trust
1236 West Center Avenue
Essexville, MI 48732
Moore Irrevocable Trust 23.424%
FBO Diane Wilson
4382 Hickory Wood Drive
Okemos, MI 48864
Laura V. Schimmel Revocable Trust 6.982%
RR #1 Box 220 Island 8
Cedarville, MI 49719
International Growth Fund - K Frances B. Lee Trust 8.863%
3500 West South Boulevard
Rochester Hills, MI 48309
Cathedral Investment Fund 20.059%
Cathedral Church of St. Paul
Attn: Locksley Smith, Tsr.
4800 Woodward Avenue
Detroit, MI 48201
Short Term Treasury Fund - K Karl M. & Diane J. Steinmann IAA 99.227%
3 Park Avenue
St. Clair, MI 48079
Cash Investment Fund - K Arbor Investments Property 9.251%
Sam Valenti
3331 West Big Beaver Road
Troy, MI 48084
</TABLE>
87
<PAGE>
As of September 30, 1998, Munder Capital Management, on behalf of their
clients owned 89.620% of the Bond Fund Class Y shares, 42.064% of the Michigan
Bond Fund Class Y shares, 22.982% of the Growth & Income Fund Class Y shares,
81.273% of the International Equity Fund Class Y shares, 60.483% of the Small
Company Growth Fund Class Y shares, 66.343% of the Intermediate Bond Fund Class
Y shares, 5.460% of the Tax-Free Bond Fund Class Y shares, 7.409% of the Real
Estate Fund Class K shares, 97.635% of the Real Estate Fund Class A shares,
7.287% of the Multi-Season Growth Fund Class A shares, 70.317% of the Multi-
Season Growth Fund Class Y shares, 27.760% of the Tax-Free Intermediate Bond
Fund Class Y shares, 74.558% of the U.S. Income Fund Class Y shares, 31.488% of
the Value Fund Class A shares, 15.841% of the Value Fund Class K shares, 92.389%
of the Value Fund Class Y shares, 64.840% of the International Growth Fund Class
A shares, 51.740% of the International Growth Fund Class K shares, 97.060% of
the International Growth Fund Class Y shares, 67.710% of the Emerging Markets
Fund Class Y shares, 95.710% of the Healthcare Fund Class Y shares, 99.110% of
the Global Financial Services Fund Class Y shares, 75.710% of the Growth
Opportunities Fund Class Y shares, 12.880% of the Micro-Cap Fund Class K shares,
87.900% of the Micro-Cap Fund Class Y shares, 59.850% of the NetNet Fund Class Y
shares, 82.750% of the Small-Cap Value Fund Class Y shares, 63.25% of the
International Bond Fund Class K shares, 99.630% of the International Bond Fund
Class Y shares, 94.880% of the Short Term Treasury Fund Class Y shares and
100.000% of the Money Market Fund Class Y shares.
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 or 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, 1998 have been audited by Ernst &
Young LLP and are incorporated by reference into this Statement of Additional
Information from the Annual Reports of the Trust, Framlington and the Company
dated as of June 30, 1998. The information under the caption "Financial
Highlights" of the Funds for the period from commencement of operations through
June 30, 1998, appearing in the related Prospectuses dated October 27, 1998 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.
88
<PAGE>
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.
A-1
<PAGE>
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."
A-2
<PAGE>
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+".
A-3
<PAGE>
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.
B-1
<PAGE>
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 advisor 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 advisor 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 advisor 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 9 1/2%) 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 on the books of
the Fund or the Fund's sub-custodian 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 advisor 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
B-2
<PAGE>
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.
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>
Portfolio Futures
<S> <C>
Anticipate buying $62,500 in Equity Securities -Day Hedge is Placed-
Buying 1 Index Futures at 125
Value of Futures = $62,500/Contract
Buy Equity Securities with Actual Cost = $65,000 Day Hedge is Lifted-
</TABLE>
B-3
<PAGE>
Increase in Purchase Price = $2,500 Sell 1 Index Futures at 130
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
<TABLE>
<CAPTION>
Portfolio Futures
<S> <C>
Anticipate Selling $1,000,000 in Equity Securities - Day Hedge is Placed-
Sell 16 Index Futures at 125
Value of Futures = $1,000,000
Equity Securities - Own Stock Day Hedge is Lifted-
with Value = $960,000 Buy 16 Index Futures at 120
Loss in Portfolio Value = $40,000 Value of Futures = $960,000
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 Fund's sub-custodian in 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 Advisor 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
B-4
<PAGE>
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 Advisor 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 Advisor 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 Fund's sub-
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 Advisor 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
B-5
<PAGE>
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 Advisor'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.
B-6
<PAGE>
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 earmark liquid, high grade
assets on the books of the Fund or the Fund's sub-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.
B-7
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
---------------------------------
(a) Included in Part A:
Financial Highlights.
Included in Part B:
The Registrant's Annual Reports for the fiscal year ended June 30,
1998 and the Report of the Independent Auditors dated August 14, 1997
are incorporated by reference to the Definitive 30b-2 filed (EDGAR
Form N-30D) on September 10, 1998 as Accession No. 0000889697-98-
000280.
(b) Exhibits:
(1) (a) Declaration of Trust is incorporated herein by reference to Pre-
Effective Amendment No. 1 to the Registrant's Registration
Statement on Form N-1A filed with the Commission on December 19,
1996.
(b) Certificate of Designation of New Shares and Classification of
Shares on behalf of the Registrant is incorporated herein by
reference to Post-Effective Amendment No. 5 to the Registrant's
Registration Statement on Form N-1A filed with the Commission on
August 28, 1998.
(2) By-Laws are incorporated herein by reference to Pre-Effective
Amendment No. 1 to the Registrant's Registration Statement on Form N-
1A filed with the Commission on December 19, 1996.
(3) Not Applicable.
(4) Not Applicable.
(5) (a) Investment Advisory Agreement between Registrant and Munder
Capital Management dated July 2, 1998 is incorporated herein by
reference to Post-Effective Amendment No. 5 to the Registrant's
Registration Statement on Form N-1A filed with the Commission on
August 28, 1998.
(b) Form of Investment Sub-Advisory Agreement between Registrant,
Munder Capital Management and Framlington Overseas Investment
Management Limited dated July 2, 1998 is filed herein.
(6) (a) Distribution Agreement between Registrant and Funds Distributor,
Inc. dated November 6, 1996 with respect to the Munder
Framlington Emerging Markets Fund, Munder Framlington Healthcare
Fund and Munder Framlington International Growth Fund is
incorporated herein by reference to Post-Effective
<PAGE>
Amendment No. 5 to the Registrant's Registration Statement on
Form N-1A filed with the Commission on August 28, 1998.
(b) Form of Distribution Agreement between Registrant and Funds
Distributor, Inc. dated February 24, 1998 with respect to the
Munder Framlington Global Financial Services Fund is incorporated
by reference to Post-Effective Amendment No. 4 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on March 30, 1998.
(7) Not Applicable.
(8) (a) Custodian Agreement between Registrant and Comerica Bank dated
November 7, 1996 with respect to the Munder Framlington Emerging
Markets Fund, Munder Framlington Healthcare Fund and Munder
Framlington International Growth Fund is incorporated herein by
reference to Post-Effective Amendment No. 5 to the Registrant's
Registration Statement on Form N-1A filed with the Commission on
August 28, 1998.
(b) Form of Amendment to Custodian Agreement between Registrant and
Comerica Bank is incorporated herein by reference to Post-
Effective Amendment No. 1 to the Registrant's Registration
Statement on Form N-1A filed with the Commission on June 27,
1997.
(c) Notice to Custodian Agreement between Registrant and Comerica
Bank dated February 24, 1998 with respect to the Munder
Framlington Global Financial Services Fund is incorporated herein
by reference to Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on August 28, 1998.
(d) Form of Sub-Custodian Agreement between Registrant, State Street
Bank and Trust Company and Comerica Bank dated October 1, 1997
with respect to Munder Framlington Emerging Markets Fund, Munder
Framlington Healthcare Fund and Munder Framlington International
Growth Fund is incorporated by reference to Post-Effective
Amendment No. 4 to the Registrant's Registration Statement filed
on Form N-1A with the Commission on March 30, 1998.
(e) Notice to Sub-Custodian Agreement between Registrant, State
Street Bank and Trust Company and Comerica Bank dated February
24, 1998 with respect to the Munder Framlington Global Financial
Services Fund is incorporated herein by reference to Post-
Effective Amendment No. 5 to the Registrant's Registration
Statement on Form N-1A filed with the Commission on August 28,
1998.
(f) Form of Amendment to Sub-Custodian Agreement between Registrant,
State Street Bank and Trust Company and Comerica Bank is
incorporated herein by reference to Post-Effective Amendment No.
5 to the Registrant's Registration Statement on Form N-1A filed
with the Commission on August 28, 1998.
(9) (a) Transfer Agency and Registrar Agreement between Registrant and
First Data Investor Services Group, Inc. dated December 31, 1996
with respect to Munder
2
<PAGE>
Framlington Emerging Markets Fund, Munder Framlington Healthcare
Fund and Munder Framlington International Growth Fund is
incorporated herein by reference to Post-Effective Amendment No.
5 to the Registrant's Registration Statement on Form N-1A filed
with the Commission on August 28, 1998.
(b) Form of Notice to Transfer Agency and Registrar Agreement between
Registrant and First Data Investor Services Group, Inc. dated
February 24, 1998 with respect to the Munder Framlington Global
Financial Services Fund is incorporated by reference to Post-
Effective Amendment No. 4 to the Registrant's Registration
Statement filed with the Commission on March 30, 1998.
(c) Amendment dated June 1, 1998 to the Transfer Agency and Registrar
Agreement between Registrant and First Data Investor Services
Group, Inc. is incorporated herein by reference to Post-Effective
Amendment No. 5 to the Registrant's Registration Statement on
Form N-1A filed with the Commission on August 28, 1998.
(d) Amendment No. 2 dated June 1, 1998 to the Transfer Agency and
Registrar Agreement between Registrant and First Data Investor
Services Group, Inc. is incorporated herein by reference to Post-
Effective Amendment No. 5 to the Registrant's Registration
Statement on Form N-1A filed with the Commission on August 28,
1998.
(e) Amendment No. 3 dated June 1, 1998 to Transfer Agency and
Registrar Agreement between Registrant and First Data Investor
Services Group, Inc. is incorporated herein by reference to Post-
Effective Amendment No. 5 to the Registrant's Registration
Statement on Form N-1A filed with the Commission on August 28,
1998.
(f) Administration Agreement between Registrant and State Street Bank
and Trust Company dated October 31, 1997 with respect to Munder
Framlington Emerging Markets Fund, Munder Framlington Healthcare
Fund and Munder Framlington International Growth Fund is
incorporated by reference to Post-Effective Amendment No. 4 to
the Registrant's Registration Statement filed with the Commission
on March 30, 1998.
(g) Notice to Administration Agreement between Registrant and State
Street Bank and Trust Company dated February 24, 1998 with
respect to the Munder Framlington Global Financial Services Fund
is incorporated herein by reference to Post-Effective Amendment
No. 5 to the Registrant's Registration Statement on Form N-1A
filed with the Commission on August 28, 1998.
(10) (a) Opinion and Consent of Counsel is incorporated by reference to
the Rule 24f-2 Notice filed on August 28, 1997, Accession Number
0000927405-97-000311.
(b) Opinion and Consent of Counsel with respect to the Munder
Framlington Global Financial Services Fund is filed herein.
(11) (a) Consent of Independent Public Accountants is filed herein.
3
<PAGE>
(b) Powers of Attorney on behalf of the Registrant are incorporated
by reference to Post-Effective Amendment No. 4 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on March 30, 1998.
(c) Certified Resolution of Board authorizing signature on behalf of
Registrant pursuant to power of attorney is incorporated by
reference to Post-Effective Amendment No. 4 to the Registrant's
Registration Statement on Form N-1A filed with the Commission on
March 30, 1998.
(12) Not Applicable.
(13) (a) Purchase Agreement between Registrant and Funds Distributor,
Inc. dated November 7, 1996 with respect to Munder Framlington
Emerging Markets Fund, Munder Framlington Healthcare Fund and
Munder Framlington International Growth Fund is incorporated
herein by reference to Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on December 19, 1996.
(b) Purchase Agreement between Registrant and Funds Distributor, Inc.
with respect to the Munder Framlington Global Financial Services
Fund is incorporated herein by reference to Post-Effective
Amendment No. 5 to the Registrant's Registration Statement on
Form N-1A filed with the Commission on August 28, 1998.
(14) Form of Individual Retirement Custodial Account Adoption Agreement is
filed herein.
(15) (a) Service and Distribution Plan between Registrant and Funds
Distributor, Inc with respect to Munder Framlington Emerging
Markets Fund, Munder Framlington Healthcare Fund and Munder
Framlington International Growth Fund, Class A, B and C Shares is
incorporated herein by reference to Pre-Effective Amendment No. 1
to the Registrant's Registration Statement on Form N-1A filed
with the Commission on December 19, 1996.
(b) Form of Service and Distribution Plan for Class A Shares between
Registrant and Funds Distributor, Inc. with respect to the Munder
Framlington Global Financial Services Fund is incorporated by
reference to Post-Effective Amendment No. 4 to the Registrant's
Registration Statement on Form N-1A filed with the Commission on
March 30, 1998.
(c) Form of Service and Distribution Plan for Class B Shares between
Registrant and Funds Distributor, Inc. with respect to the Munder
Framlington Global Financial Services Fund is incorporated by
reference to Post-Effective Amendment No. 4 to the Registrant's
Registration Statement on Form N-1A filed with the Commission on
March 30, 1998.
(d) Service and Distribution Plan for Class C Shares between
Registrant and Funds Distributor, Inc. with respect to the Munder
Framlington Global Financial Services Fund is incorporated by
reference to Post-Effective Amendment No. 4 to the Registrant's
Registration Statement on Form N-1A filed with the Commission on
March 30, 1998.
4
<PAGE>
(e) Service Plan on behalf of the Registrant's Class K Shares with
respect to the Munder Framlington Emerging Markets Fund, Munder
Framlington Healthcare Fund and Munder Framlington International
Growth Fund is incorporated herein by reference to Pre-Effective
Amendment No. 1 to the Registrant's Registration Statement on
Form N-1A filed with the Commission on December 19, 1996.
(f) Service Plan on behalf of Registrant's Class K Shares with
respect to the Munder Framlington Global Financial Services Fund
is incorporated by reference to Post-Effective Amendment No. 4 to
the Registrant's Registration Statement on Form N-1A filed with
the Commission on March 30, 1998.
(16) Schedule for Computation of Performance Quotations is incorporated by
reference to Post-Effective Amendment No. 3 to the Registrant's
Registration Statement on Form N-1A filed with the Commission on
October 28, 1997.
(17) Financial Data Schedules are filed herein.
(18) (a) Amended and Restated Multi-Class Plan on behalf of the
Registrant with respect to the Munder Framlington Emerging
Markets Fund, Munder Framlington Healthcare Fund and Munder
Framlington International Growth Fund is incorporated herein by
reference to Post-Effective Amendment No. 1 to the Registrant's
Registration Statement on Form N-1A filed with the Commission on
June 27, 1997.
(b) Amended and Restated Multi-Class Plan on behalf of the Registrant
with respect to the Munder Framlington Global Financial Services
Fund is incorporated herein by reference to Post-Effective
Amendment No. 5 to the Registrant's Registration Statement on
Form N-1A filed with the Commission on August 28, 1998.
Item 25. Persons Controlled by or Under Common Control with Registrant.
--------------------------------------------------------------
Not Applicable.
Item 26. Number of Holders of Securities.
--------------------------------
As of October 1, 1998, the number of shareholders of record of each
Class of shares of each Series of the Registrant that was offered as
of that date was as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Class Class Class Class Class
A B C K Y
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Munder Framlington International Growth Fund 45 27 10 1 38
- --------------------------------------------------------------------------------------------------------------------------
Munder Framlington Emerging Markets Fund 57 21 11 3 44
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Class Class Class Class Class
A B C K Y
<S> <C> <C> <C> <C> <C>
Munder Framlington Global Financial Services Fund 0 0 0 0 14
- --------------------------------------------------------------------------------------
Munder Framlington Healthcare Fund 193 533 69 1 30
- --------------------------------------------------------------------------------------
</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
6
<PAGE>
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>
Name Position with Advisor
- ---- ---------------------
<S> <C>
Old MCM, Inc. Partner
Munder Group LLC Partner
WAM Holdings, Inc. Partner
WAM Holdings II, Inc. Partner
Lee P. Munder Chairman
Leonard J. Barr, II Senior Vice President and Director of Research
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
Sharon E. Fayolle Vice President and Director of Money Market Trading
Otto G. Hinzmann Vice President and Director of Equity Portfolio Management
Anne K. Kennedy Vice President and Director of Corporate Bond Trading
Richard R. Mullaney Vice President and Director of The Private Management Group
Ann F. Putallaz Vice President and Director of Fiduciary Services
Peter G. Root Vice President and Director of Government Securities Trading
Lisa A. Rosen General Counsel and Director of Mutual Fund Operations
James C. Robinson Vice President and Chief Investment Officer/Fixed Income
Gerald L. Seizert Chief Executive Officer and Chief Investment Officer/Equity
Paul D. Tobias Chief Executive Officer 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>
Name Position with Sub-Advisor
- ---- -------------------------
<S> <C>
Warren J. Coleman Director
Gary C. Fitzgerald Director
Jean-Luc Schilling Director
Michael A. Vogel Director
Robert Jenkins Portfolio Manager
</TABLE>
7
<PAGE>
For further 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, Suite
1300, Boston, Massachusetts 02109. 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 and is a member of the National Association of Securities
Dealers. FDI acts as principal underwriter of the following investment
companies other than the Registrant:
<TABLE>
<S> <C>
American Century California Tax-Free and Municipal Funds JP Morgan Funds
American Century Capital Portfolios, Inc. JPM Series Trust
American Century Government Income Trust JPM Series Trust II
American Century International Bond Funds Kobrick-Cendant Investment Trust
American Century Investment Trust LaSalle Partners Funds, Inc.
American Century Municipal Trust Merrimac Series
American Century Mutual Funds, Inc. Monetta Fund, Inc.
American Century Premium Reserves, Inc. Monetta Trust
American Century Quantitative Equity Funds The Montgomery Funds
The Montgomery Funds II
American Century Strategic Asset Allocations, Inc. The Munder Funds, Inc.
American Century Target Maturities Trust The Munder Funds Trust
American Century Variable Portfolios, Inc. National Investors Cash Management Fund, Inc.
American Century World Mutual Funds, Inc. Orbitex Group of Funds
BJB Investment Funds SG Cowen Funds, Inc.
The Brinson Funds SG Cowen Income & Growth Fund, Inc.
Dresdner RCM Capital Funds, Inc. SG Cowen Standby Reserve Fund, Inc.
Dresdner RCM Equity Funds, Inc. SG Cowen Series Fund, Inc.
Founders Funds, Inc. St. Clair Funds, Inc.
Harris Insight Funds Trust The Skyline Funds
HT Insight Funds, Inc. d/b/a Harris Insight Funds Waterhouse Investor Family of Funds, Inc.
JP Morgan Institutional Funds WEBS Index Fund, Inc.
</TABLE>
(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.
<TABLE>
<S> <C>
Director, President and Chief Executive Officer -Marie E. Connolly
Executive Vice President -George A. Rio
Executive Vice President -Donald R. Roberson
Executive Vice President -William S. Nichols
Senior Vice President -Michael S. Petrucelli
Senior Vice President, General Counsel, Chief Compliance Officer,
Secretary and Clerk -Margaret W. Chambers
Director, Senior Vice President, Treasurer and Chief Financial Officer -Joseph F. Tower, III
Senior Vice President -Paula R. David
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
Senior Vice President -Bernard A. Whalen
Senior Vice President -Allen B. Closser
Chairman and Director -William J. Nutt
</TABLE>
(c) Not Applicable.
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 advisor);
(2) First Data Investor Services Group, Inc., 53 State Street,
Exchange Place, Boston, Massachusetts 02109 or 4400 Computer
Drive, Westborough, Massachusetts 01581 (records relating to its
functions transfer agent);
(3) State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 or 150 Newport Avenue, North Quincy,
Massachusetts 02171 (records relating to its function as
administrator and subcustodian);
(4) Funds Distributor, Inc., 60 State Street, Boston, Massachusetts
02109 (records relating to its function as distributor); and
(5) Comerica Bank, 1 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.
9
<PAGE>
(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.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant certifies that this
Post-Effective Amendment No. 6 to the Registration Statement meets the
requirements for effectiveness pursuant to Rule 485(b) of the Securities Act of
1933, as amended, and the Registrant has duly caused this Post-Effective
Amendment No. 6 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Quincy and The
Commonwealth of Massachusetts, on the 27th day of October, 1998.
THE MUNDER FRAMLINGTON FUNDS TRUST
By: *
------------------------------
Lee P. Munder
* By: /s/ Cynthia Surprise
----------------------------
Cynthia Surprise
as Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 6 to the Registration Statement has been
signed by the following persons in the capacities and on the date indicated:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
* Trustee and October 27, 1998
- ---------------------------------- President
Lee P. Munder
* Trustee October 27, 1998
- ----------------------------------
Charles W. Elliott
* Trustee October 27, 1998
- ----------------------------------
Joseph E. Champagne
* Trustee October 27, 1998
- ----------------------------------
Thomas B. Bender
* Trustee October 27, 1998
- ----------------------------------
Thomas D. Eckert
* Trustee October 27, 1998
- ----------------------------------
John Rakolta, Jr.
* Trustee October 27, 1998
- ----------------------------------
David J. Brophy
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
* Vice President, October 27, 1998
- ---------------------------------- Treasurer and
Terry H. Gardner Chief Financial
Officer
* By: /s/ Cynthia Surprise
----------------------------
Cynthia Surprise
as Attorney-in-Fact
</TABLE>
12
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
5(b) Form of Investment Sub-Advisory Agreement between Registrant,
Munder Capital Management and Framlington Overseas Investment
Management Limited
10(b) Opinion and Consent of Counsel with respect to Munder Framlington
Global Financial Services Fund
11(a) Consent of Independent Public Accountants (Ernst & Young)
14 Form of Individual Retirement Custodial Account Adoption
Agreement
17 Financial Data Schedules for the Registrant
</TABLE>
13
<PAGE>
Exhibit 5(b)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT, made as of the 2nd day of July, 1998, among Munder Capital
Management (the "Advisor"), a Delaware partnership, Framlington Overseas
Investment Management Limited (the "Sub-Advisor"), a subsidiary of Framlington
Group Limited, a pubic holding company, incorporated in England and in Wales and
registered under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and The Munder Framlington Funds Trust (the "Trust"), a Massachusetts
business trust and a diversified open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act").
WHEREAS, the Advisor has entered into an Investment Advisory Agreement,
dated July 2, 1998 with the Trust (the "Investment Advisory Agreement"),
pursuant to which the Advisor will act as investment advisor to the Trust;
WHEREAS, the shares of beneficial interest of the Trust are divided into
more than one separate series; and
WHEREAS, the Advisor wishes to retain the Sub-Advisor to render investment
advisory services to the portfolios of the Trust listed on Appendix A attached
hereto (the "Funds"), and the Sub-Advisor is willing to furnish such services to
the Funds;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed among the Trust, the Advisor and the Sub-Advisor
as follows:
1. Appointment
The Advisor hereby appoints the Sub-Advisor to act as sub-investment
advisor to the Funds for the periods and on the terms set forth herein. The
Sub-Advisor accepts the appointment and agrees to furnish the services set forth
herein for the compensation provided herein.
2. Services as Sub-Investment Advisor
Subject to the general supervision and direction of the Board of Trustees
of the Trust and the Advisor, the Sub-Advisor will (a) manage the investments of
each Fund in accordance with the Fund's investment objective and policies as
stated in the Fund's Prospectuses and the Statement of Additional Information
filed with the Securities and Exchange Commission, as they may be amended from
time to time; (b) make investment decisions for each Fund; (c) place purchase
and sale orders on behalf of each Fund; and (d) select brokers-dealers to
execute trades on behalf of the Funds.
The Sub-Advisor further agrees that, in performing its duties hereunder, it
will:
(a) comply with the 1940 Act and all rules and regulations thereunder, the
Advisers Act, the Internal Revenue Code, of 1986, as amended (the "Code"), and
all other applicable federal and state laws and regulations, and with any
applicable procedures adopted by the Trust's Trustees as advised to the Sub-
Advisor from time to time;
(b) use reasonable efforts to manage each Fund so that it will qualify, and
continue to qualify, as a regulated investment company under Subchapter M of the
Code and regulations issued thereunder;
<PAGE>
(c) maintain books and records with respect to the Funds' securities
transactions, render to the Advisor or Board such periodic and special reports
as the Board of Trustees of the Trust may reasonably request, and keep the
Advisor and the Trustees informed of developments materially affecting the
Funds' portfolios;
(d) make available to the Funds' administrator and the Trust, promptly upon
their request, such copies of the investment records and ledgers with respect to
the Funds as may be required to assist the administrator and the Trust in their
compliance with applicable laws and regulations; and
(e) immediately notify the Trust in the event that the Sub-Advisor or any
of its affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Sub-Advisor from serving as investment
advisor pursuant to this Agreement; or (2) becomes aware that it is the subject
of an administrative proceeding or enforcement action by the Securities and
Exchange Commission or other regulatory authority. The Sub-Advisor further
agrees to notify the Trust immediately of any material fact known to the Sub-
Advisor respecting or relating to the Sub-Advisor that is not contained in the
Trust's Registration Statement regarding the Funds, or any amendment or
supplement thereto, but that is required to be disclosed therein, and of any
statement contained therein that becomes untrue in any material respect.
3. Documents
The Advisor has delivered properly certified or authenticated copies of
each of the following documents to the Sub-Advisor and will deliver to it all
future amendments and supplements thereto, if any:
(a) certified resolution of the Board of Trustees of the Trust authorizing
the appointment of the Sub-Advisor and approving the form of this Agreement;
(b) the Registration Statement describing the Funds as filed with the
Securities and Exchange Commission and any amendments thereto; and
(c) exhibits, powers of attorneys, certificates and any and all other
documents relating to or filed in connection with the Registration Statement
described above.
4. Brokerage
In selecting brokers-dealers to execute transactions on behalf of the
Funds, the Sub-Advisor will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any Fund
transaction, the Sub-Advisor will consider all factors it deems relevant,
including, but not limited to, the breadth of the market in the security, the
price of the security, the financial condition and execution capability of the
broker-dealer and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. In selecting brokers-dealers to execute
a particular transaction, and in evaluating the best overall terms available,
the Sub-Advisor is authorized to consider the brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) provided to the Funds and/or other accounts
over which the Sub-Advisor or its affiliates exercise investment discretion.
The parties hereto acknowledge that it is desirable for the Trust that the Sub-
Advisor have access to supplemental investment and market research and security
and economic analysis provided by brokers-dealers who may execute brokerage
transactions at a higher cost to the Trust than may result when allocating
brokerage to other brokers on the basis of seeking the most favorable price and
efficient execution. Therefore, the Sub-Advisor may
2
<PAGE>
cause a Fund to pay a broker-dealer which furnishes brokerage and research
services a higher commission than that which might be charged by another broker-
dealer for effecting the same transaction, provided that the Sub-Advisor
determines in good faith that such commission is reasonable in relation to the
value of the brokerage and research services provided by such broker-dealer,
viewed in terms of either the particular transaction or the overall
responsibilities of the Sub-Advisor to the Funds. It is understood that the
services provided by such brokers may be useful to the Sub-Advisor in connection
with the Sub-Advisor's services to other clients. In accordance with Section
11(a) of the 1934 Act and Rule 11a2-2(T) thereunder and subject to any other
applicable laws and regulations, the Sub-Advisor and its affiliates are
authorized to effect portfolio transactions for the Funds and to retain
brokerage commissions on such transactions.
5. Records
The Sub-Advisor agrees to maintain and to preserve for the periods
prescribed under the 1940 Act any such records as are required to be maintained
by the Sub-Advisor with respect to the Funds by the 1940 Act. The Sub-Advisor
further agrees that all records which it maintains for the Funds are the
property of the Funds and it will promptly surrender any of such records upon
request.
6. Standard of Care
The Sub-Advisor shall exercise its best judgment in rendering the services
under this Agreement. The Sub-Advisor shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Advisor, the Funds or
the Funds' shareholders in connection with the matters to which this Agreement
relates, provided that nothing herein shall be deemed to protect or purport to
protect the Sub-Advisor against any liability to the Advisor, the Funds or to
the Funds' shareholders to which the Sub-Advisor would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the Sub-Advisor's reckless disregard
of its obligations and duties under this Agreement. As used in this Section 6,
the term "Sub-Advisor" shall include any officers, directors, employees, or
other affiliates of the Sub-Advisor performing services with respect to the
Funds.
7. Compensation
In consideration of the services rendered pursuant to this Agreement, the
Advisor will pay the Sub-Advisor a fee at an annual rate based on the Funds'
average daily net assets as set forth on Appendix A. This fee shall be computed
and accrued daily and payable monthly; however, with respect to any Fund for
which the effective date of this Agreement is prior to November 30, 1998, the
fee shall be maintained in an interest-bearing escrow account until such time as
shareholders of the Fund approve the payment of fees pursuant to this agreement.
If shareholders do not approve such payment of fees on or before November 30,
1998, the balance in the escrow account shall be paid to the Fund. For the
purpose of determining fees payable to the Sub-Advisor, the value of the Funds'
average daily net assets shall be computed at the times and in the manner
specified in the Funds' Prospectuses or Statement of Additional Information. As
to each Fund, if, in any fiscal year, the Advisor determines to waive fees
payable to it by the Fund or reimburse expenses to the Fund, the Sub-Advisor
will bear that portion of the fee waiver or expense reimbursement which bears
the same relation to such fee waiver or expense reimbursement as the fee payable
by the Fund to the Sub-Advisor during such year bears to the total of (i) the
annual fee payable by the Fund to the Sub-Advisor plus (ii) the annual fee
payable by the Fund to the Advisor, in each case without giving effect to the
fee waiver or expense reimbursement.
3
<PAGE>
8. Expenses
The Sub-Advisor will bear all expenses in connection with the performance
of its services under this Agreement. Each Fund will bear certain other
expenses to be incurred in its operation, including: taxes, interest, brokerage
fees and commissions, if any, fees of Trustees of the Trust who are not
officers, directors, or employees of the Advisor or any Sub-Advisor; Securities
and Exchange Commission fees and state blue sky qualification fees; charges of
custodians and transfer and dividend disbursing agents; the Fund's proportionate
share of insurance premiums; outside auditing and legal expenses; costs of
maintenance of the Fund's existence; costs attributable to investor services,
including, without limitation, telephone and personal expenses; charges of an
independent pricing service; costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes and for
distribution to existing shareholders; costs of shareholders' reports and
meetings of the shareholders of the Fund and of the officers or Board of
Trustees of the Trust; and any extraordinary expenses.
9. Services to Other Companies or Accounts
The investment advisory services of the Sub-Advisor to the Funds under this
Agreement are not to be deemed exclusive, and the Sub-Advisor, or any affiliate
thereof, shall be free to render similar services to other investment companies
and other clients (whether or not their investment objectives and policies are
similar to those of the Funds) and to engage in the activities, so long as its
services hereunder are not impaired thereby.
10. Duration and Termination
This Agreement shall become effective on the date first above written and
shall continue in effect, unless sooner terminated as provided herein, for two
years from such date and shall continue from year to year thereafter, provided
each continuance is specifically approved at least annually by (i) the vote of a
majority of the Board of Trustees of the Trust or (ii) a vote of a "majority"
(as defined in the 1940 Act) of each Fund's outstanding voting securities,
provided that in either event the continuance is also approved by a majority of
the Board of Trustees who are not "interested persons" (as defined in the 1940
Act) of any party to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is terminable,
without penalty, (a) on sixty (60) days' written notice by the Board of Trustees
of the Trust or by vote of holders of a "majority" (as defined in the 1940 Act)
of each Fund's shares, (b) on 90 days' written notice by the Advisor or (c) on
ninety (90) days' written notice by the Sub-Advisor. This Agreement will be
terminated automatically in the event of its "assignment" (as defined in the
1940 Act).
All transactions already initiated hereunder at the time of termination
shall be completed in accordance with the Sub-Advisor's usual practice.
On termination, the Sub-Advisor shall be entitled to charge the Advisor no
additional fee save for:
a) a proportion of the fee, corresponding to that part of the period by
reference to which any periodic fees are payable, which has expired at
the date of termination;
b) any additional expenses which the Sub-Advisor necessarily incurs in
terminating this Agreement.
4
<PAGE>
11. Amendment
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective with respect to a
Fund until approved by an affirmative vote of (i) a majority of the outstanding
voting securities of the Fund, and (ii) a majority of the Trustees of the Trust,
including a majority of Trustees who are not interested persons of any party to
this Agreement, cast in person at a meeting called for the purpose of voting on
such approval, if such approval is required by applicable law.
12. Names
It is understood that the name "Framlington Overseas Investment Management
Limited" or any derivative thereof or logo associated with that name is the
valuable property of the Sub-Advisor and its affiliates, and that each Fund has
the right to use such name (or derivative thereof or associated logo) only so
long as this Agreement shall continue with respect to that Fund. Upon
termination of this Agreement, each Fund shall forthwith cease to use such name
(or derivative thereof or associated logo) and the Trust shall promptly amend
its Declaration of Trust to change its name and the name of each Fund to comply
herewith.
The words "The Munder Framlington Funds Trust" and "Trustees" or "Board of
Trustees" used herein refer respectively to the Trust created and the Trustees,
as trustees of the Trust but not individually or personally acting from time to
time under a Declaration of Trust dated October 30, 1996 which is hereby
referred to and a copy of which is on file at the office of the Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of "The Munder Framlington Funds Trust" entered into in the name or
on behalf thereof by any of the Trustees, officers, representatives or agents of
the Trust are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders, officers, representatives or agents of
the Trust personally, but bind only the Trust Property, and all persons dealing
with any class of shares of the Trust must look solely to the Trust Property
belonging to such class for the enforcement of any claims against the Trust.
13. Miscellaneous
(a) This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
(b) Titles or captions of sections contained in this Agreement are inserted
only as a matter of convenience and for reference, and in no way define, limit,
extend or describe the scope of this Agreement or the intent of any provisions
thereof.
(c) This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all the
parties.
(d) This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in accordance with
the laws of the State of Michigan.
(e) If any provisions of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable
5
<PAGE>
to any extent, the remainder of this Agreement or the application of such
provision to such person or circumstance, other than these as to which it is so
determined to be invalid or unenforceable, shall not be affected thereby, and
each provision hereof shall be valid and shall be enforced to the fullest extent
permitted by law.
(f) Notices of any kind to be given to the Sub-Advisor by the Advisor shall
be in writing and shall be duly given if mailed or delivered to the Sub-Advisor
at 155 Bishopsgate, London EC2M 3XJ, England, or at such other address or to
such individual as shall be specified by the Sub-Advisor to the Advisor.
Notices of any kind to be given to the Advisor by the Sub-Advisor shall be in
writing and shall be duly given if mailed or delivered to 480 Pierce Street,
Birmingham, Michigan 48009, or at such the address or to such individual as
shall be specified by the Trust to the Sub-Advisor.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE MUNDER FRAMLINGTON FUNDS TRUST
Dated: July 2, 1998 By: ________________________
MUNDER CAPITAL MANAGEMENT
Dated: July 2, 1998 By: ________________________
FRAMLINGTON OVERSEAS INVESTMENT
MANAGEMENT LIMITED
Dated: July 2, 1998 By: ________________________
7
<PAGE>
APPENDIX A
<TABLE>
<CAPTION>
Annual Fees (as a Percentage of
Funds Average Daily Net Assets)
- ----- -------------------------
<S> <C>
Munder Framlington Emerging Markets Fund 0.625%
Munder Framlington International Growth Fund 0.50% of net assets up to $250 million; plus
0.375% of net assets of $250 million or more
Munder Framlington Healthcare Fund 0.50% of net assets up to $250 million; plus
0.375% of net assets of $250 million or more
Munder Framlington Global Financial Services 0.375%
Fund
</TABLE>
8
<PAGE>
APPENDIX B
Additional IMRO Provisions
--------------------------
1. Framlington Overseas Investment Management (the "Sub-Advisor") is regulated
in the conduct of its investment business in the United Kingdom by IMRO,
the Investment Management Regulatory Organization.
2. Services
The Sub-Advisor will provide discretionary investment management services
for Munder Capital Management (the "Advisor"). Further details of the
services to be provided are set out in the Investment Sub-Advisory
Agreement (the "Agreement"). Such services are to be provided on the basis
that the Advisor falls within the category of non-private investor.
3. Fees
Details of the Sub-Advisory fees are set out in Clause 7. Any remuneration
received by the Sub-Advisor hereunder shall supplement any other
remuneration receivable by the Sub-Advisor in connection with transactions
effected by the Sub-Advisor with or for the Advisor under this or any other
agreement with the Advisor.
4. Termination
The provisions in respect of termination of the Agreement are set out in
Clause 10. Termination of the Agreement by either party shall be without
prejudice to the completion of any transaction already initiated which
shall be completed in accordance with market practice.
5. The Portfolio
The investment objectives and any restrictions on the types of investments
and markets in which transactions may be affected are prescribed in
applicable laws (see Clause 2 of the Agreement) and are set-out in each
prospectus for Class Y, Class K, Class A, B, C shares (the "Prospectus")
and the Statement of Additional Information or as notified to and accepted
by the Sub-Advisor in accordance with the terms of the Agreement.
6. Subject to the Prospectus and Statement of Additional Information, the Sub-
Advisor shall be entitled without prior reference to the Advisor to effect
on behalf of the Advisor transactions:
a) in investments the price of which may be being stabilized; and
b) in units in Collective Investment Schemes which are not Regulated
Collective Investment Schemes and which are not regulated in
accordance with the 1940 Act and other applicable laws.
7. The Sub-Advisor may commit the Advisor to supplement the Funds either by
borrowing or by committing the Advisor to a contract the performance of
which may require the Advisor to supplement the Funds but such borrowing
may only take place in accordance with the 1940 Act.
9
<PAGE>
Borrowing shall only be effected on a short-term basis ancillary to the
proper management of the Funds pending settlement of other transactions or
to protect against currency fluctuations and in any event will be in
accordance with relevant regulations and the guidelines set out in the
Prospectus.
8. Valuation, Reports and Records
The Sub-Advisor shall send to the Advisor, at least once every 6 months, a
statement of the contents and valuation of the Funds, the transactions
entered into during such period and other information required by the IMRO
Rules to be contained in such statement. Such statement may contain a
measure of performance of the Funds by reference to the appropriate
indices.
The Sub-Advisor shall forward contract notes to the administrator of the
Funds, State Street Bank and Trust Company, as soon as possible after the
transaction at the address set out in the Prospectus or to such other
address as the Advisor may provide to the Sub-Advisor for that purpose.
9. Complaints
The Sub-Advisor has in operation, and ensures compliance with, a written
procedure for the effective consideration and proper handling of any
complaints the Advisor may have. The Advisor also has the right to make a
complaint direct to the Investment Ombudsman, at 6 Fredericks Place, London
EC2R 8BT.
Such procedure ensures that (unless a complaint can be settled instantly
and directly by the representative or employee of the Sub-Advisor
responsible for the matters involved in the complaint and does not involve
sums which are material in relation to the financial circumstances of the
complainant) the complaint is considered by an officer or employee of
appropriate seniority who was not himself concerned in the matter or (where
this is not possible) by a person of appropriate standing who is not an
officer or employee of the Sub-Advisor.
10. Compensation
In the event that the Sub-Advisor is unable to meet any liabilities to the
Advisor, the Advisor can apply to the Sub-Advisor or to IMRO for a
statement describing the rights to compensation.
11. Hedging
Where a liability in one currency is to be matched by an asset in a
different currency or where all or part of the investments are denominated
in a currency other than sterling, a movement of exchange rates may have a
separate effect, unfavorable as well as favorable, on the gain or loss
otherwise experienced on the investment.
12. Investments Not Readily Realisable
In relation to any Investments Not Readily Realisable in which the Funds
may be invested, the Advisor is advised that these are not readily
realisable, that there can not be any certainty that market makers will be
prepared to deal in them and that proper information for determining their
current value may not be available. The Sub-Advisor will notify the
Advisor of any transaction
10
<PAGE>
in an Investment Not Readily Realisable in the six monthly statements, or
as requested by the Advisor.
13. Margined Transactions, Options, Futures and Contracts for Differences
The Sub-Advisor shall be entitled without prior reference to, or the
written consent of, the Advisor, to effect transactions in Margined
Transactions, Options, Futures and Contracts for Differences. The Advisor
is warned that the markets can be highly volatile and that such investments
may carry a high risk of loss. The Sub-Advisor will only carry out such
transactions in accordance with the Agreement, and the provisions of the
Prospectus, the Statement of Additional Information, and applicable laws
and regulations.
14. Warrants
Warrants often involve a high degree of gearing so that a relatively small
movement in the price of the security to which the warrant relates may
result in a disproportionately large movement, unfavourable as well as
favourable, in the price of the warrant.
"Investment Not Readily has the meaning assigned to it by the IMRO Rules and
Realisable" includes, inter alia, investments (which are not
life policies or units in Regulated Collective
Investment Schemes) which are not traded on or under
the rules of a recognized investment exchange and
investments which are so traded, but not with
sufficient frequency or regularity for a reliable
quoted price for such transactions to be available.
"Margined Transactions" has the meaning assigned to it by the IMRO Rules and
includes, inter alia, a transaction relating to a
Future, an Option or a Contract for Differences under
the terms of which the Advisor may be liable to make
deposits in cash or collateral to secure performance
of obligations which he may have to perform when the
transaction fails to be completed or upon the earlier
closing out of his position.
11
<PAGE>
Exhibit 10(b)
DECHERT PRICE & RHOADS
1775 I STREET, N.W.
WASHINGTON, D.C. 20006
October 27, 1998
The Munder Funds Framlington Funds Trust
480 Pierce Street
Birmingham, MI 48009
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933 of an
indefinite number of shares of beneficial interest (the "Shares") of Framlington
Global Financial Services Fund, which is a series of The Munder Framlington
Funds Trust (the "Company"), we have examined such matters as we have deemed
necessary, and we are of the opinion that, as permitted by its Declaration of
Trust, and assuming that the Company or its agent receives consideration for the
Shares in accordance with the provisions of its Declaration of Trust, the Shares
will be legally and validly issued, will be fully paid, and will be non-
assessable by the Company.
We hereby consent to the use of this opinion as an exhibit to the Company's
Registration Statement on Form N-1A filed with the Securities and Exchange
Commission (File No. 333-15205), and to the use of our name in the prospectuses
and statement of additional information contained therein or incorporated
therein by reference, and any amendments thereto.
Very truly yours,
/s/ DECHERT PRICE & RHOADS
<PAGE>
Exhibit 11(a)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Financial
Highlights" in The Munder Equity Funds Class A, Class B and Class C Shares; The
Munder Funds Class Y Shares; and The Munder Funds Class K Shares Prospectuses
and "Independent Auditors" and "Financial Statements" in The Munder Funds
Statement of Additional Information included in Post-Effective Amendment No. 6
to the Registration Statement (Form N-1A, No. 333-15205) of The Munder
Framlington Funds Trust.
We also consent to the incorporation by reference into The Munder Funds
Statement of Additional Information of our reports dated August 14, 1998 with
respect to the financial statements and financial highlights of the Munder
Framlington Emerging Markets Fund, Munder Framlington Global Financial Services
Fund, Munder Framlington Healthcare Fund and Munder Framlington International
Growth Fund portfolios of The Munder Framlington Funds Trust, included in the
Annual Reports of The Munder Funds.
ERNST & YOUNG LLP
October 27, 1998
Boston, Massachusetts
<PAGE>
Exhibit 14
The Munder Funds (Munder logo)
State Street Bank and Trust Company
IRA Information Kit
INTRODUCTION
- ------------
What's New In The World Of IRAs?
An Individual Retirement Account ("IRA") has always provided an attractive
means to save money for the future on a tax-advantaged basis. Recent changes to
Federal tax law have now made the IRA an even more flexible investment and
savings vehicle. Among the new changes is the creation of the Roth Individual
Retirement Account ("Roth IRA"), which will be available for use after January
1, 1998. Under a Roth IRA, the earnings and interest on an individual's
nondeductible contributions grow without being taxed, and distributions may be
tax-free under certain circumstances. Most taxpayers (except for those with very
high income levels) will be eligible to contribute to a Roth IRA. A Roth IRA can
be used instead of a Regular IRA, to replace an existing Regular IRA, or
complement a Regular IRA you wish to continue maintaining.
Taxpayers with adjusted gross income of up to $100,000 are eligible to
convert existing IRAs into Roth IRAs. The details on conversion are found in the
description of Roth IRAs in this booklet.
Congress has also made significant changes to Regular IRAs. First, Congress
increased the income levels at which IRA holders who participate in employer-
sponsored retirement plans can make deductible Regular IRA contributions. Also
the rules for deductible contributions by an IRA holder whose spouse is a
participant in an employer-sponsored retirement plan have been liberalized.
Second, the 10% penalty tax for premature withdrawals (before age 59 1/2) will
no longer apply in the case of withdrawals to pay certain higher education
expenses or certain first-time homebuyer expenses.
What's in This Kit?
In this Kit you will find detailed information about Roth IRAs and about
the changes that have been made to Regular IRAs. You will also find everything
you need to establish and maintain either a Regular or Roth IRA, or to convert
all or part of an existing Regular IRA to a Roth IRA.
The first section of this Kit contains the instructions and forms you will
need to open a new Regular or Roth IRA, to transfer from another IRA to a State
Street Bank and Trust IRA, or to convert a Regular IRA to a Roth IRA.
The second section of this Kit contains our Universal IRA Disclosure
Statement. The Disclosure Statement is divided into three parts:
. Part One describes the basic rules and benefits which are specifically
applicable to your Regular IRA.
. Part Two describes the basic rules and benefits which are specifically
applicable to your Roth IRA.
. Part Three describes important rules and information applicable to all
IRAs.
The third section of this Kit contains the Universal IRA Custodial
Agreement. The Custodial Agreement is also divided into three parts:
. Part One contains provisions specifically applicable to Regular IRAs.
. Part Two contains provisions specifically applicable to Roth IRAs.
. Part Three contains provisions applicable to all IRAs (Regular and
Roth).
<PAGE>
This Universal Individual Retirement Custodial Account Kit contains
information and forms for both Regular IRAs and Roth IRAs. However, you may use
the Adoption Agreement in this Kit to establish only one Regular IRA or one Roth
IRA; separate Adoption Agreements must be completed if you want to establish
multiple (Roth or Regular) IRA accounts.
What's the Difference Between a Regular IRA and a Roth IRA?
With a Regular IRA, an individual can contribute up to $2,000 per year and
may be able to deduct the contribution from taxable income, reducing income
taxes. Taxes on investment growth and dividends are deferred until the money is
withdrawn. Withdrawals are taxed as additional ordinary income when received.
Nondeductible contributions, if any, are withdrawn tax-free. Withdrawals before
age 59 1/2 are assessed a 10% penalty in addition to income tax, unless an
exception applies.
With a Roth IRA, the contribution limits are essentially the same as
Regular IRAs, but there is no tax deduction for contributions. All dividends and
investment growth in the account are tax-free. Most important with a Roth IRA:
there is no income tax on qualified withdrawals from your Roth IRA.
Additionally, unlike a Regular IRA, there is no prohibition on making
contributions to Roth IRAs after turning age 70 1/2, and there's no requirement
that you begin making minimum withdrawals at that age.
The following chart highlights some of the major differences between a
Regular IRA and a Roth IRA:
<TABLE>
<CAPTION>
========================================================================================================================
Characteristics Regular Roth
IRA IRA
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Eligibility . Individuals (and their spouses) . Individuals (and their spouses)
who receive compensation who receive compensation
. Individuals age 70 1/2 and over . Individuals age 70 1/2 and over
may not contribute may contribute
- ------------------------------------------------------------------------------------------------------------------------
Tax Treatment of Contributions . Subject to limitations, . No deduction permitted for amounts
contributions are deductible contributed
- ------------------------------------------------------------------------------------------------------------------------
Contribution Limits . Individuals may contribute up to . Individuals may generally
$2,000 annually (or 100% of contribute up to $2,000 (or 100% of
compensation, if less) compensation, if less)
. Deductibility depends on income . Ability to contribute phases out
level for individuals who are active at income levels of $95,000 to
participants in an employer-sponsored $110,000 (individual taxpayer) and
retirement plan $150,000 to $160,000 (married
taxpayers)
. Overall limit for contributions to
all IRAs (Regular and Roth combined)
is $2,000 annually (or 100% of
compensation, if less)
- -------------------------------------------------------------------------------------------------------------------------
Earnings . Earnings and interest are not . Earnings and interest are not
taxed when received by your IRA taxed when received by your IRA
- -------------------------------------------------------------------------------------------------------------------------
Rollover/Conversions . Individual may rollover amounts . Rollovers from other Roth IRAs or
held in employer-sponsored retirement Regular IRAs only
arrangements (401(k), SEP IRA, etc.) . Amounts rolled over (or converted)
tax free to Regular IRA from another Regular IRA are subject
to income tax in the year rolled over
or converted
. Tax on amounts rolled over or
converted in 1998 is spread over four
year period (1998-2001)
- -------------------------------------------------------------------------------------------------------------------------
Withdrawals . Total (principal + earnings) . Not taxable as long as a qualified
taxable as income in year withdrawn distribution--generally, account open
(except for any prior non-deductible for 5 years, and age 59 1/2
contributions) . Minimum withdrawals not required
. Minimum withdrawals must begin after age 70 1/2
after age 70 1/2
=========================================================================================================================
</TABLE>
Is a Roth or a Regular IRA Right For Me?
We cannot act as your legal or tax advisor and so we cannot tell you which
kind of IRA is right for you. The information contained in this Kit is intended
to provide you with the basic information and material you will need if you
decide whether a Regular or Roth IRA is better for you, or if you want to
convert an existing Regular IRA to a Roth IRA. We suggest that you consult with
your accountant, lawyer or other tax advisor, or with a qualified financial
planner, to determine whether you should
<PAGE>
open a Regular or Roth IRA or convert any or all of an existing Regular IRA to a
Roth IRA. Your tax advisor can also advise you as to the state tax consequences
that may affect whether a Regular or Roth IRA is right for you.
SEPs and SIMPLEs.
The State Street Bank Regular IRA may be used in connection with a simplified
employee pension (SEP) plan maintained by your employer. To establish a Regular
IRA as part of your Employer's SEP plan, complete the Adoption Agreement for a
Regular IRA, indicating in the proper box that the IRA is part of a SEP plan. A
Roth IRA should not be used in connection with a SEP plan.
A Roth IRA may not be used as part of an employer SIMPLE IRA plan. A Regular IRA
may be used, but only after an individual has been participating for two or more
years (for the first two years, only a special SIMPLE IRA may be used). SIMPLE
IRA plans were added by the 1996 tax law to provide an easy and inexpensive way
for small employers to provide retirement benefits for their employees. If you
are interested in a SIMPLE IRA plan at your place of employment, call or write
to the number or address given at the end of the Disclosure Statement portion of
this Kit.
Other Points to Note.
The Disclosure Statement in this Kit provides you with the basic
information that you should know about State Street Bank and Trust Company
Regular IRAs and Roth IRAs. The Disclosure Statement provides general
information about the governing rules for these IRAs and the benefits and
features offered through each type of IRA. However, the State Street Bank and
Trust Company Adoption Agreement and the Custodial Agreement, are the primary
documents controlling the terms and conditions of your personal State Street
Bank and Trust Company Regular or Roth IRA, and these shall govern in the case
of any difference with the Disclosure Statement.
You or your when used throughout this Kit refer to the person for whom the
State Street Bank and Trust Company Regular or Roth IRA is established. A Roth
IRA is either a State Street Bank and Trust Company Roth IRA or any Roth IRA
established by any other financial institution. A Regular IRA is any non-Roth
IRA offered by State Street Bank and Trust Company or any other financial
institution.
<PAGE>
THE MUNDER FUNDS (MUNDER LOGO)
State Street Bank and Trust Company
Universal Individual Retirement Custodial Account
Instructions for Opening Your Regular IRA or Roth IRA
1. Read carefully the applicable sections of the Universal IRA Disclosure
Statement contained in this Kit, the Regular or Roth Individual Retirement
Custodial Account document (as applicable), the Adoption Agreement, and the
prospectus(es) for any Fund(s) you are considering. Consult your lawyer or
other tax adviser if you have any questions about how opening a Regular IRA
or Roth IRA will affect your financial and tax situation.
This Universal Individual Retirement Custodial Account Kit contains
information and forms for both Regular IRAs and Roth IRAs. However, you may
use the Adoption Agreement to establish only one Regular IRA or one Roth
IRA; separate Adoption Agreements must be completed if you want to
establish multiple (Roth or Regular) IRA accounts.
2. Complete the Adoption Agreement
- Print the identifying information where requested in Part 1 of the
Adoption Agreement.
- For a Regular IRA, check the box for Part A and check the other boxes
in Part A to specify the type of Regular IRA you are opening and
provide the registered information.
If this is an IRA to which you expect to make contributions each year,
check Box 1 and enclose a check in the amount of your first
contribution. Be sure to indicate whether this is a contribution for
last year or for the current year.
If this is a transfer directly from another IRA custodian or trustee,
check Box 2. Check the appropriate box to indicate whether the funds
transferred were originally from contributions to an employee
qualified plan or a 403(b) arrangement, or whether any of the funds
were originally from your annual contributions to the IRA. Complete
and sign the Universal IRA Transfer of Assets Form.
If this is a rollover of amounts distributed to you from another IRA
or an employer qualified plan or a 403(b) arrangement, check Box 3.
Check the appropriate box to indicate whether the transfer is coming
from a qualified plan or 403(b) arrangement, or an IRA that held only
funds that were originally from contributions to a qualified plan or
403(b), or whether any of the funds were originally from your annual
contributions to the IRA. Enclose a check for the rollover
contribution amount.
If this is a direct rollover from a qualified plan or 403(b)
arrangement, check Box 4. Complete and sign the Universal IRA Transfer
of Assets Form.
Check Box 5 if applicable (for an IRA that will be used to receive
employer contributions under an employer's simplified employee pension
(or "SEP") plan or under a grandfathered salary reduction SEP plan (or
"SARSEP")).
- For a Roth IRA, check the box for Part B. Check the other boxes in
Part B to specify the type of Roth IRA you are opening and provide the
requested information.
If this is a Roth IRA to which you expect to make contributions each
year, enclose a check in the amount of your first contribution. Be
sure to indicate whether this is a contribution for last year or for
the current year. Only annual contributions may be accepted in an
annual contribution Roth
<PAGE>
IRA account. NOTE: Roth IRAs are available starting January 1, 1998,
so you cannot make a contribution for 1997.
If you are converting an existing Regular IRA with the Bank as IRA
custodian or trustee, check Box 2. Indicate your current IRA account
number and how much you are converting. Conversion of an existing
Regular IRA will result in inclusion of taxable amounts in the
existing Regular IRA on your income tax return. Note: If a conversion,
rollover or transfer from a Regular IRA to a Roth IRA is being made,
only amounts converted, rolled over or transferred during the same tax
year will be accepted in a single Roth IRA. A separate Roth IRA must
be established to hold such amounts from a different tax year. Annual
contributions may never be deposited in a Roth IRA holding such
converted, rolled over or transferred amounts.
If you are making a rollover or a transfer from an existing Regular
IRA with a different custodian or trustee, check Box 3. A rollover or
transfer from an existing Regular IRA means that the taxable amount in
the existing Regular IRA will be treated as additional income on your
income tax return.
If you are making a rollover or a transfer from another Roth IRA with
a different trustee or custodian, check Box 4. Put the requested
information where indicated.
- In Part 3, indicate your investment choices.
- In Part 4, indicate your Primary and Alternate Beneficiaries. (Spousal
waiver must be signed if beneficiary is spouse.)
- Sign and date the Adoption Agreement in Part 5 at the end.
3. If you are transferring assets from an existing IRA to this IRA, complete
the Universal Transfer of Assets Form.
4. The Custodian fees for maintaining your IRA are listed in the FEES AND
EXPENSES section of Part Three of the Disclosure Statement or in the
Adoption Agreement. If you are paying by check, enclose a check for the
correct amount payable as specified below. If you do not pay by check, the
correct amount will be taken from your account.
5. Check to be sure you have properly completed all necessary forms and
enclosed a check for the Custodian's fees (unless being withdrawn from your
account) and a check for the first contribution to your Regular or Roth IRA
(if applicable). Your Regular IRA or Roth IRA cannot be accepted without
the properly completed documents or the Custodian fees.
All checks should be payable to "The Munder Funds."
Send the completed forms and checks to:
The Munder Funds
P.O. Box 5130
Westborough, MA 01581-5130
<PAGE>
THE MUNDER FUNDS (MUNDER LOGO)
State Street Bank and Trust Company
Individual Retirement Custodial Account
Adoption Agreement
I, the person signing this Adoption Agreement (hereinafter called the
"Depositor"), establish an Individual Retirement Account (IRA), which is either
a Regular IRA or a Roth IRA, as indicated below, (the "Account") with State
Street Bank and Trust Company as Custodian ("Bank"). A Regular IRA operates
under Internal Revenue Code Section 408(a). A Roth IRA operates under Internal
Revenue Code Section 408A. I agree to the terms of my Account, which are
contained in the applicable provisions of the document entitled "State Street
Bank and Trust Company Universal Individual Retirement Custodial Account" and
this Adoption Agreement. I certify the accuracy of the information in this
Adoption Agreement. My Account will be effective upon acceptance by Bank.
Part 1. Depositor Information
------------------------------------------ - -
Print Full Name Social Security Number
------------------------------------------ -------------------------
Address Date of Birth
------------------------------------------ -------------------------
City State Zip
( )-------------------
Daytime Telephone No.
Part 2. IRA Election
INSTRUCTIONS: To establish a Regular IRA, check Box A and complete Part A. To
establish a Roth IRA, check Box B and complete Part B. (In either case, complete
Part 3 to select your investment choices, and sign at the end of Part 5.)
. A. REGULAR IRA -- By checking this box, I designate my Account as a Regular
IRA under Code Section 408(a). (Complete 1, 2, 3 or 4 below to indicate the type
of Regular IRA you are opening. Check box 5, if applicable.)
1. . Annual Contributions
Current Contribution for the year ______. Check enclosed for
$________________.
This contribution does not exceed the maximum permitted amount
as described in the Regular IRA Disclosure Statement.
2. . Transfer
Transfer of existing Regular IRA directly from current Custodian or
Trustee. Complete the Universal IRA Transfer of Assets Form. G The
transferring IRA held annual contributions by me (or amounts transferred
or rolled over from another IRA holding annual contributions). G The
transferring IRA held only amounts that were originally contributions to
an employer qualified plan or 403(b) plan.
3. . Rollover
The requirements for a valid rollover are complex. See the Regular IRA
Disclosure Statement for additional information and consult your tax
advisor for help if needed. Check enclosed for $ .
. Rollover of a qualifying rollover distribution to Depositor from an
employer plan or 403(b) arrangement, or rollover from another Regular
IRA which held only assets distributed to Depositor from an employer
plan or 403(b) arrangement and to which Depositor made no direct
contributions. G Rollover of distribution to Depositor from another
Regular IRA that held amounts that originated from annual
contributions by the Depositor.
4. . Direct Rollover
. Direct rollover of an eligible distribution from a qualified plan.
. Direct rollover of an eligible distribution from a 403(b) account or
annuity.
Direct rollovers are described in the Regular IRA Disclosure
Statement.
5. . SEP Provision - check here if the Depositor intends to use this
Account in connection with a SEP Plan or grandfathered SARSEP Plan
established by the Depositor's employer.
. B.ROTH IRA -- By checking this box, I designate my Account as a Roth
IRA under Code Section 408A.(Complete 1, 2, 3 or 4 below to indicate
the type of Roth IRA you are opening.)
1. . Annual Contributions
Current Contribution for the year ________.
Check enclosed for $ _________________ This contribution does not
exceed the maximum permitted amount as described in the Roth IRA
Disclosure Statement.
2. . Conversion of existing Regular IRA with Bank as Custodian or Trustee
to a Roth IRA with Bank.
Current Regular IRA Account No.:_______________
Amount Converted
. All
. Part (specify how much): $__________________
3. . Rollover or Transfer from existing Regular IRA with a custodian or
trustee other than Bank to a Roth IRA with Bank.
4. . Rollover or Transfer from existing Roth IRA with another custodian or
trustee to a Roth IRA with Bank Date existing Roth IRA was originally
opened: ____________________ Indicate whether any amount in the
existing Roth IRA represents amounts converted or transferred from a
Regular IRA into such other Roth IRA:
[ ] Yes [ ] No
<PAGE>
If yes, date of the most recent conversion or transfer into such other
Roth: ________________________
Complete the Universal IRA Transfer of Assets Form if either 3 or 4 is
checked and the transaction is a transfer (as opposed to a rollover).
Note: If a conversion, rollover or transfer from a Regular IRA to a Roth
IRA is being made, only amounts converted, rolled over or transferred
during the same tax year will be accepted in a single Roth IRA. A
separate Roth IRA must be established to hold such amounts from a
different tax year. Annual contributions may not be deposited in a Roth
IRA holding such converted, rolled over or transferred amounts.
Part 3. Investments
Invest contributions to my Account as follows:
[Fund 1] _________%
[Fund 2] _________%
[Fund 3] _________%
[Fund 4] _________%
Must Total 100%
I acknowledge that I have sole responsibility for my investment choices
and that I have received a current prospectus for each Fund I select.
Please read the prospectus(es) of the Fund(s) selected before investing.
[Telephone Transfers Authorization]
Part 4. Designation of Beneficiary
As Depositor, I hereby make the following designation of beneficiary in
accordance with the State Street Bank and Trust Company Regular Individual
Retirement Custodial Account, or Roth Individual Retirement Custodial Account:
In the event of my death, pay any interest I may have under my Account to the
following Primary Beneficiary or Beneficiaries who survive me. Make payment in
the proportions specified below (or in equal proportions if no different
proportions are specified). If any Primary Beneficiary predeceases me, his share
is to be divided among the Primary Beneficiaries who survive me in the relative
proportions assigned to each such surviving Primary Beneficiary.
Primary Beneficiary or Beneficiaries:
Name Relationship Date of Birth Social Security Number Proportion
- --------- ------------ ------------- ---------------------- ----------
- --------- ------------ ------------- ---------------------- ----------
- --------- ------------ ------------- ---------------------- ----------
- --------- ------------ ------------- ---------------------- ----------
If none of the Primary Beneficiaries survives me, pay any interest I may have
under my Account to the following Alternate Beneficiary or Beneficiaries who
survive me. Make payment in the proportions specified below (or in equal
proportions if no different proportions are specified). If any Alternate
Beneficiary predeceases me, his share is to be divided among the Alternate
Beneficiaries who survive me in the relative proportions assigned to each such
surviving Alternate Beneficiary.
Alternate Beneficiary or Beneficiaries:
Name Relationship Date of Birth Social Security Number Proportion
- --------- ------------ ------------- ---------------------- ----------
- --------- ------------ ------------- ---------------------- ----------
- --------- ------------ ------------- ---------------------- ----------
- --------- ------------ ------------- ---------------------- ----------
IMPORTANT: This Designation of Beneficiary may have important tax or estate
planning effects. Also, if you are married and reside in a community property or
marital property state (Arizona, California, Idaho, Louisiana, Nevada, New
Mexico, Texas, Washington or Wisconsin), you may need to obtain your spouse's
consent if you have not designated your spouse as primary beneficiary for at
least half of your Account. See your lawyer or other tax professional for
additional information and advice.
<PAGE>
SPOUSAL (This section should be reviewed if the accountholder is married
CONSENT and designates a beneficiary other than the spouse. It is the
accountholder's responsibility to determine if this section
applies. The accountholder may need to consult legal counsel.
Neither the Custodian nor the Sponsor are liable for any
consequences resulting from a failure of the accountholder to
provide proper spousal consent.)
I am the spouse of the above-named accountholder. I acknowledge
that I have received a full and reasonable disclosure of my
spouse's property and financial obligations. Due to any possible
consequences of giving up my community property interest in this
IRA, I have been advised to see a tax professional or legal
advisor.
I hereby consent to the beneficiary designation(s) indicated
above. I assume full responsibility for any adverse consequence
that may result. No tax or legal advice was given to me by the
Custodian or Sponsor.
------------------------------- --------------------
SIGNATURE OF SPOUSE DATE
------------------------------- --------------------
SIGNATURE OF WITNESS FOR SPOUSE DATE
PART 5. Certifications and Signatures
If the Depositor has indicated a Regular IRA Rollover or Direct Rollover
above, Depositor certifies that the contribution does not include any employee
contributions to any qualified plan (other than accumulated deductible
employee contributions) or 403(b) arrangement; that any assets transferred in
kind by Depositor are the same assets received by the Depositor in the
distribution being rolled over; if the distribution is from another Regular
IRA, that Depositor has not made another rollover within the one-year period
immediately preceding this rollover; that such distribution was received
within 60 days of making the rollover to this Account; and that no portion of
the amount rolled over is a required minimum distribution under the required
distribution rules.
If Depositor has indicated a Conversion, Transfer or a Rollover of an existing
Regular IRA to a Roth IRA, Depositor acknowledges that the amount converted
will be treated as taxable income (except for prior nondeductible
contributions) for federal income tax purposes. If Depositor has indicated a
Rollover from another Roth IRA (Item 4 of Part B above), Depositor certifies
that the information given in Item 4 is correct and acknowledges that adverse
tax consequences or penalties could result from giving incorrect information.
Depositor has received and read the applicable sections of the "State Street
Bank and Trust Company Universal Individual Retirement Account Disclosure
Statement" relating to this Account (including the Custodian's fee schedule),
the Custodial Account document, and the "Instructions" pertaining to this
Adoption Agreement. Depositor acknowledges receipt of the Universal
Individual Retirement Custodial Account document and Universal IRA Disclosure
Statement at least 7 days before the date inscribed below and acknowledges
that Depositor has no further right of revocation.
Depositor acknowledges and understands that the beneficiaries named herein may
be changed or revoked at any time by filing a new designation in writing with
the Custodian. All forms must be acceptable to the Custodian and dated and
signed by the Depositor.
-------------------------- Custodian Acceptance. State Street Bank and Trust
Signature of Depositor Company will accept appointment as Custodian of the
Depositor's Account. However, this Agreement is not
Date-------- binding upon the Custodian until the Depositor has
received a statement of the transaction. Receipt by
the Depositor of a confirmation of the purchase of
the Fund shares indicated above will serve as
notification of State Street Bank and Trust
Company's acceptance of appointment as Custodian of
the Depositor's Account.
STATE STREET BANK AND TRUST COMPANY, CUSTODIAN
By--------------------------------------------
Date------------
If the Depositor is a minor under the laws of the Depositor's state of
residence, a parent or guardian must also sign the Adoption Agreement here.
Until the Depositor reaches the age of majority, the parent or guardian will
exercise the powers and duties of the Depositor.
----------------------------------------------------------
Signature of Parent or Guardian
RETAIN A PHOTOCOPY OF THE COMPLETED ADOPTION AGREEMENT FOR YOUR RECORDS
<PAGE>
THE MUNDER FUNDS (MUNDER LOGO)
State Street Bank and Trust Company Individual Retirement Custodial Account
Universal IRA Transfer of Assets Form
- --------------------------------------------------------------------------------
1. NAME AND ADDRESS OF DEPOSITOR
Name
-------------------------------------------------------------------------
Address
----------------------------------------------------------------------
Street City State Zip
Day Telephone No. ( ) Social Security No.
---------------------- ----------------
- --------------------------------------------------------------------------------
2. IDENTIFICATION OF RECEIVING ACCOUNT
This a transfer to a State Street Bank and Trust Company
X Regular IRA* X SEP IRA* X Roth IRA** X SIMPLE IRA***
* You may not transfer from a Roth IRA to a Regular IRA or a simplified
employee pension (SEP) IRA. Transfers to a Regular IRA or SEP IRA may be
made from another Regular IRA or SEP IRA, qualified employer plan, 403(b)
arrangement, or a simple IRA account (but not until at least 2 years after
the first contribution to your simple IRA account).
** Transfers to a Roth IRA are possible only from another Roth IRA or from a
Regular IRA, not from other types of tax-deferred accounts. A transfer
from a Regular IRA will trigger federal income tax on the taxable amount
transferred from the Regular IRA. Note: If a conversion, rollover or
transfer from a Regular IRA to a Roth IRA is being made, only amounts
converted, rolled over or transferred during the same tax year will be
accepted in a single Roth IRA. A separate Roth IRA must be established to
hold such amounts from a different tax year. Annual contributions may not
be deposited in a Roth IRA holding such converted, rolled over or
transferred amounts.
*** Transfers to a SIMPLE IRA may be made only from another SIMPLE IRA. During
the first two years after a SIMPLE IRA is established, transfers may be
made only to another SIMPLE IRA; after two years, transfers may be made
from a SIMPLE IRA to a Regular IRA.
If you already have a Regular IRA, SEP IRA or Roth IRA, indicate the Account
No.
------------------------
- --------------------------------------------------------------------------------
3. INSTRUCTIONS TO PRESENT IRA CUSTODIAN OR TRUSTEE (Completed by Depositor)
Name of Custodian/Trustee
----------------------------------------------------
Attn: Mr./Ms.
---------------------------------------------------------------
Address
----------------------------------------------------------------------
Street City State Zip
Identification of Sending Account (including Account No.)
--------------------
Please transfer assets from the above account to State Street Bank and Trust
Company. Transfer should be in cash according to the following instructions:
( ) Transfer the total amount in my Account
or ( ) Transfer $ and retain the balance.
--------------
<PAGE>
Make check payable to:
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- --------------------------------------------------------------------------------
4. INVESTMENT INSTRUCTIONS TO STATE STREET BANK AND TRUST COMPANY
(Depositor - check one box and complete if necessary)
( ) Invest the transferred amount in accordance with the investment
instructions in the Adoption Agreement for my State Street Bank and
Trust Company Individual Retirement Custodial Account.
( ) Invest the transferred [Fund 1] %
---------
amount as follows: [Fund 2] %
---------
[etc.] %
---------
Must Total 100%
I acknowledge that I have sole responsibility for my investment choices and
that I have received a current prospectus for each Fund I select. Please
read the prospectus(es) of the Fund(s) you select before investing.
I understand that the requirements for a valid transfer to a Regular IRA,
SEP IRA, Roth IRA or SIMPLE IRA are complex and that I have the
responsibility for complying with all requirements and for the tax results
of any such transfer.
- --------------------------------------------------------------------------------
5. SIGNATURE OF DEPOSITOR
The undersigned certifies to the present IRA custodian or trustee that the
undersigned has established a successor Individual Retirement Custodial
Account meeting the requirements of Internal Revenue Code Section 408(a),
408(p) or 408A (as the case may be) to which assets will be transferred,
and certifies to State Street Bank and Trust Company that the IRA from
which assets are being transferred meets the requirements of Internal
Revenue Code Section 408(a), 408(p) or 408A (as the case may be).
----------------------------- ------------------------------------------
Date Signature of Depositor
SIGNATURE GUARANTEE (only if required by current Custodian or Trustee)
Signature guaranteed by:
----------------------------------------------------
Name of Bank or Dealer Firm
----------------------------------------------------
Signature of Officer and Title
- --------------------------------------------------------------------------------
6. ACCEPTANCE BY NEW CUSTODIAN (Completed by State Street Bank and Trust
Company)
State Street Bank and Trust Company agrees to accept transfer of the above
amount for deposit to the Depositor's State Street Bank and Trust Company
Individual Retirement Custodial Account, and requests the liquidation and
transfer of assets as indicated above.
By:
----------------------------- ---------------------------------------
<PAGE>
THE MUNDER FUNDS (MUNDER LOGO)
State Street Bank and Trust Company
Universal Individual Retirement Account
Disclosure Statement
Part One: Description of Regular IRAs
--------------------------------------
SPECIAL NOTE
Part One of the Disclosure Statement describes the rules applicable to
Regular IRAs beginning January 1, 1998. IRAs described in these pages are called
"Regular IRAs" to distinguish them from the new "Roth IRAs" first available
starting in 1998. Roth IRAs are described in Part Two of this Disclosure
Statement.
For Regular IRA contributions for 1997 (including contributions made up to
April 15, 1998 but designated as contributions for 1997), there are different
rules for determining the deductibility of your contribution on your federal tax
return. For contributions for 1997, the "active participant" limits on
deductibility (described below) apply if either spouse is an active participant
in an employer-sponsored plan. Also, the adjusted gross income ("AGI") levels
for partially deductible or nondeductible Regular IRA contributions (described
below) are lower for 1997 ($25,000 for single taxpayers, with no deduction if
your AGI is above $35,000; and $40,000 for married taxpayers filing jointly,
with no deduction if your AGI is above $50,000). Also, the exceptions to the 10%
early withdrawal penalty for withdrawals to pay certain higher education or
first-time homebuyer expenses do not apply to withdrawals in 1997.
This Part One of the Disclosure Statement describes Regular IRAs. It does
not describe Roth IRAs, a new type of IRA available starting in 1998.
Contributions to a Roth IRA are not deductible (regardless of your AGI), but
withdrawals that meet certain requirements are not subject to federal income
tax, so that dividends and investment growth on amounts held in the Roth IRA can
escape federal income tax. Please see Part Two of this Disclosure Statement if
you are interested in learning more about Roth IRAs.
Regular IRAs described in this Disclosure Statement may be used as part of
a simplified employee pension (SEP) plan maintained by your employer. Under a
SEP your employer may make contributions to your Regular IRA, and these
contributions may exceed the normal limits on Regular IRA contributions. This
Disclosure Statement does not describe IRAs established in connection with a
SIMPLE IRA program maintained by your employer. Employers provide special
explanatory materials for accounts established as part of a SIMPLE IRA program.
Regular IRAs may be used in connection with a SIMPLE IRA program, but for the
first two years of participation a special SIMPLE IRA (not a Regular IRA) is
required.
YOUR REGULAR IRA
This Part One contains information about your Regular Individual Retirement
Custodial Account with State Street Bank and Trust Company as Custodian. A
Regular IRA gives you several tax benefits. Earnings on the assets held in your
Regular IRA are not subject to federal income tax until withdrawn by you. You
may be able to deduct all or part of your Regular IRA contribution on your
federal income tax return. State income tax treatment of your Regular IRA may
differ from federal treatment; ask your state tax department or your personal
tax advisor for details.
Be sure to read Part Three of this Disclosure Statement for important
additional information, including information on how to revoke your Regular IRA,
investments and prohibited transactions, fees and expenses, and certain tax
requirements.
ELIGIBILITY
What are the eligibility requirements for a Regular IRA?
You are eligible to establish and contribute to a Regular IRA for a year
if:
- You received compensation (or earned income if you are self
employed) during the year for personal services you rendered. If you
received taxable alimony, this is treated like compensation for IRA
purposes.
- You did not reach age 70 1/2 during the year.
Can I Contribute to a Regular IRA for my Spouse?
For each year before the year when your spouse attains age 70 1/2, you can
contribute to a separate Regular IRA for your spouse, regardless of whether your
spouse had any compensation or earned income in that year. This is called a
"spousal IRA." To make a contribution to a Regular IRA for your spouse, you must
file a joint tax return for the year with your spouse. For a spousal IRA, your
spouse must set up a different Regular IRA, separate from yours, to which you
contribute.
CONTRIBUTIONS
When Can I Make Contributions to a Regular IRA?
You may make a contribution to your existing Regular IRA or establish a new
Regular IRA for a taxable year by the due date (not including any extensions)
for your federal income tax return for the year. Usually this is April 15 of the
following year.
How Much Can I Contribute to my Regular IRA?
For each year when you are eligible (see above), you can contribute up to
the lesser of $2,000 or 100% of your compensation (or earned income, if you are
self-employed). However, under the tax laws, all or a portion of your
contribution may not be deductible.
If you and your spouse have spousal Regular IRAs, each spouse may contribute
up to $2,000 to his or her IRA for a year as long as the combined compensation
of both spouses for the year (as shown on your joint income tax return) is at
least $4,000. If the combined compensation of both spouses is less than $4,000,
the spouse with the higher amount of compensation may contribute up to that
spouse's compensation amount, or $2,000 if less. The spouse with the
<PAGE>
lower compensation amount may contribute any amount up to that spouse's
compensation plus any excess of the other spouse's compensation over the other
spouse's IRA contribution. However, the maximum contribution to either spouse's
Regular IRA is $2,000 for the year.
If you (or your spouse) establish a new Roth IRA and make contributions to
both your Regular IRA and a Roth IRA, the combined limit on contributions to
both your (or your spouse's) Regular IRA and Roth IRA for a single calendar year
is $2,000.
How Do I Know if my Contribution is Tax Deductible?
The deductibility of your contribution depends upon whether you are an
active participant in any employer-sponsored retirement plan. If you are not an
active participant, the entire contribution to your Regular IRA is deductible.
If you are an active participant in an employer-sponsored plan, your Regular
IRA contribution may still be completely or partly deductible on your tax
return. This depends on the amount of your income (see below).
Similarly, the deductibility of a contribution to a Regular IRA for your
spouse depends upon whether your spouse is an active participant in any
employer-sponsored retirement plan. If your spouse is not an active participant,
the contribution to your spouse's Regular IRA will be deductible. If your spouse
is an active participant, the Regular IRA contribution will be completely,
partly or not deductible depending upon your combined income.
An exception to the preceding rules applies to high-income married
taxpayers, where one spouse is an active participant in an employer-sponsored
retirement plan and the other spouse is not. A contribution to the non-active
participant spouse's Regular IRA will be only partly deductible at an adjusted
gross income level on the joint tax return of $150,000, and the deductibility
will be phased out as described below over the next $10,000 so that there will
be no deduction at all with an adjusted gross income level of $160,000 or
higher.
How do I Determine My or My Spouse's "Active Participant" status?
Your (or your spouse's) Form W-2 should indicate if you (or your spouse)
were an active participant in an employer-sponsored retirement plan for a year.
If you have a question, you should ask your employer or the plan administrator.
In addition, regardless of income level, your spouse's "active participant"
status will not affect the deductibility of your contributions to your Regular
IRA if you and your spouse file separate tax returns for the taxable year and
you lived apart at all times during the taxable year.
What are the Deduction Restrictions for Active Participants?
If you (or your spouse) are an active participant in an employer plan
during a year, the contribution to your Regular IRA (or your spouse's Regular
IRA) may be completely, partly or not deductible depending upon your filing
status and your amount of adjusted gross income ("AGI"). If AGI is any amount up
to the lower limit, the contribution is deductible. If your AGI falls between
the lower limit and the upper limit, the contribution is partly deductible. If
your AGI falls above the upper limit, the contribution is not deductible.
FOR ACTIVE PARTICIPANTS - 1998
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
If You Are If You Are Then Your Regular
Single Married Filing Jointly IRA Contribution Is
------------------------------------------------------------------------------
<S> <C> <C> <C>
------------------------------------------------------------------------------
Up to Up to Fully
Lower Limit Lower Limit Deductible
($30,000 for 1998) ($50,000 for 1998)
------------------------------------------------------------------------------
Adjusted More than Lower Limit More than Lower Limit Partly
Gross but less than but less than Deductible
Income Upper Limit Upper Limit
(AGI) Level ($40,000 for 1998) ($60,000 for 1998)
------------------------------------------------------------------------------
Upper Limit or more Upper Limit or more Not
Deductible
------------------------------------------------------------------------------
</TABLE>
The Lower Limit and the Upper Limit will change for 1999 and later years. The
Lower Limit and Upper Limit for these years are shown in the following table.
Substitute the correct Lower Limit and Upper Limit in the table above to
determine deductibility in any particular year. (Note: if you are married but
filing separate returns, your Lower Limit is always zero and your Upper Limit is
always $10,000).
<PAGE>
<TABLE>
<CAPTION>
TABLE OF LOWER AND UPPER LIMITS
- ----------------------------------------------------------------------------
Year Single Married
Filing Jointly
- ----------------------------------------------------------------------------
Lower Limit Upper Limit Lower Limit Upper Limit
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999 $31,000 $41,000 $51,000 $ 61,000
2000 $32,000 $42,000 $52,000 $ 62,000
2001 $33,000 $43,000 $53,000 $ 63,000
2002 $34,000 $44,000 $54,000 $ 64,000
2003 $40,000 $50,000 $60,000 $ 70,000
2004 $45,000 $55,000 $65,000 $ 75,000
2005 $50,000 $60,000 $70,000 $ 80,000
2006 $50,000 $60,000 $75,000 $ 85,000
2007 and $50,000 $60,000 $80,000 $100,000
later
- ----------------------------------------------------------------------------
</TABLE>
How do I Calculate my Deduction if I Fall in the "Partly Deductible" Range?
If your AGI falls in the partly deductible range, you must calculate the
portion of your contribution that is deductible. To do this, multiply your
contribution by a fraction. The numerator is the amount by which your AGI
exceeds the lower limit (for 1998: $30,000 if single, or $50,000 if married
filing jointly). The denominator is $10,000 (note that the denominator for
married joint filers is $20,000 starting in 2007). Subtract this from your
contribution and then round down to the nearest $10. The deductible amount is
the greater of the amount calculated or $200 (provided you contributed at least
$200). If your contribution was less than $200, then the entire contribution is
deductible.
For example, assume that you make a $2,000 contribution to your Regular
IRA in 1998, a year in which you are an active participant in your employer's
retirement plan. Also assume that your AGI is $57,555 and you are married,
filing jointly. You would calculate the deductible portion of your contribution
this way:
1. The amount by which your AGI exceeds the lower limit of the partly-deductible
range:
($57,555-$50,000) = $7,555
2. Divide this by $10,000: $ 7,555
------- = 0.7555
$10,000
3. Multiply this by your contribution limit:
0.7555 x $2,000 = $1,511
4. Subtract this from your contribution:
($2,000 - $1,551) = $489
5. Round this down to the nearest $10: = $480
6. Your deductible contribution is the greater of this amount or $200.
Even though part or all of your contribution is not deductible, you may still
contribute to your Regular IRA (and your spouse may contribute to your spouse's
Regular IRA) up to the limit on contributions. When you file your tax return for
the year, you must designate the amount of non-deductible contributions to your
Regular IRA for the year. See IRS Form 8606.
How Do I Determine My AGI?
AGI is your gross income minus those deductions which are available to all
taxpayers even if they don't itemize. Instructions to calculate your AGI are
provided with your income tax Form 1040 or 1040A.
What Happens if I Contribute more than Allowed to my Regular IRA?
The maximum contribution you can make to a Regular IRA generally is $2,000
or 100% of compensation or earned income, whichever is less. Any amount
contributed to the IRA above the maximum is considered an "excess contribution."
The excess is calculated using your contribution limit, not the deductible
limit. An excess contribution is subject to excise tax of 6% for each year it
remains in the IRA.
How can I Correct an Excess Contribution?
Excess contributions may be corrected without paying a 6% penalty. To do
so, you must withdraw the excess and any earnings on the excess before the due
date (including extensions) for filing your federal income tax return for the
year for which
<PAGE>
you made the excess contribution. A deduction should not be taken for any excess
contribution. Earnings on the amount withdrawn must also be withdrawn. The
earnings must be included in your income for the tax year for which the
contribution was made and may be subject to a 10% premature withdrawal tax if
you have not reached age 59 1/2.
What Happens if I Don't Correct the Excess Contribution by the Tax Return Due
Date?
Any excess contribution withdrawn after the tax return due date (including
any extensions) for the year for which the contribution was made will be subject
to the 6% excise tax. There will be an additional 6% excise tax for each year
the excess remains in your account.
Under limited circumstances, you may correct an excess contribution after
tax filing time by withdrawing the excess contribution (leaving the earnings in
the account). This withdrawal will not be includable in income nor will it be
subject to any premature withdrawal penalty if (1) your contributions to all
Regular IRAs do not exceed $2,000 and (2) you did not take a deduction for the
excess amount (or you file an amended return (Form 1040X) which removes the
excess deduction).
How are Excess Contributions Treated if None of the Preceding Rules Apply?
Unless an excess contribution qualifies for the special treatment outlined
above, the excess contribution and any earnings on it withdrawn after tax filing
time will be includable in taxable income and may be subject to a 10% premature
withdrawal penalty. No deduction will be allowed for the excess contribution for
the year in which it is made.
Excess contributions may be corrected in a subsequent year to the extent
that you contribute less than your maximum amount. As the prior excess
contribution is reduced or eliminated, the 6% excise tax will become
correspondingly reduced or eliminated for subsequent tax years. Also, you may be
able to take an income tax deduction for the amount of excess that was reduced
or eliminated, depending on whether you would be able to take a deduction if you
had instead contributed the same amount.
Are the Earnings on My Regular IRA Funds Taxed?
Any dividends on or growth of the investments held in your Regular IRA are
generally exempt from federal income taxes and will not be taxed until withdrawn
by you, unless the tax exempt status of your Regular IRA is revoked (this is
described in Part Three of this Disclosure Statement).
TRANSFERS/ROLLOVERS
Can I Transfer or Roll Over a Distribution I Receive from my Employer's
Retirement Plan into a Regular IRA?
Almost all distributions from employer plans or 403(b) arrangements (for
employees of tax-exempt employers) are eligible for rollover to a Regular IRA.
The main exceptions are
. payments over the lifetime or life expectancy of the participant (or
participant and a designated beneficiary),
. installment payments for a period of 10 years or more,
. required distributions (generally the rules require distributions
starting at age 70 1/2 or for certain employees starting at retirement, if
later), and
. payments of employee after-tax contributions.
If you are eligible to receive a distribution from a tax qualified retirement
plan as a result of, for example, termination of employment, plan
discontinuance, or retirement, all or part of the distribution may be
transferred directly into your Regular IRA. This is a called a "direct
rollover." Or, you may receive the distribution and make a regular rollover to
your Regular IRA within 60 days. By making a direct rollover or a regular
rollover, you can defer income taxes on the amount rolled over until you
subsequently make withdrawals from your IRA.
The maximum amount you may roll over is the amount of employer
contributions and earnings distributed. You may not roll over any after-tax
employee contributions you made to the employer retirement plan. If you are over
age 70 1/2 and are required to take minimum distributions under the tax laws,
you may not roll over any amount required to be distributed to you under the
minimum distribution rules. Also, if you are receiving periodic payments over
your designated beneficiary's life expectancy or for a period of at least 10
years, you may not roll over these payments. A rollover to a regular IRA must be
completed within 60 days after the distribution from the employer retirement
plan to be valid.
NOTE: A qualified plan administrator or 403(b) sponsor MUST WITHHOLD 20% OF
YOUR DISTRIBUTION for federal income taxes UNLESS you elect a direct rollover.
Your plan or 403(b) sponsor is required to provide you with information about
direct and traditional rollovers and withholding taxes before you receive your
distribution and must comply with your directions to make a direct rollover.
The rules governing rollovers are complicated. Be sure to consult your tax
advisor or the IRS if you have a question about rollovers.
Once I Have Rolled Over a Plan Distribution into a Regular IRA, Can I
Subsequently Roll Over into another Employer's Qualified Retirement Plan?
Yes. Part or all of an eligible distribution received from a qualified plan
may be transferred from the Regular IRA holding it to another qualified plan.
However, the IRA must have no assets other than those which were previously
distributed to you from the qualified plan. Specifically, the IRA cannot contain
any contributions by you (or your spouse). Also, the new qualified plan must
accept rollovers. Similar rules apply to Regular IRAs established with rollovers
from 403(b) arrangements.
Can I Make a Traditional Rollover from my Regular IRA to another Regular IRA?
You may make a rollover from one Regular IRA to another Regular IRA you
have or you establish to receive the rollover. Such a rollover must be completed
within 60 days after the withdrawal from your first Regular IRA. After making a
traditional rollover from one Regular IRA to another, you must wait a full year
(365 days) before you can make another such rollover. (However, you can instruct
a Regular IRA custodian to
<PAGE>
transfer amounts directly to another Regular IRA custodian; such a direct
transfer does not count as a rollover.)
What Happens If I Combine Rollover Contributions With My Normal Contributions In
One IRA?
If you wish to make both a normal annual contribution and a rollover
contribution, you may wish to open two separate Regular IRAs by completing two
Adoption Agreements and two sets of forms. You should consult a tax advisor
before making your annual contribution to the IRA you established with rollover
contributions (or make a rollover contribution to the IRA to which you make your
annual contributions). This is because combining your annual contributions and
rollover contributions originating from an employer plan distribution would
prohibit the future rollover out of the IRA into another qualified plan. If
despite this, you still wish to combine a rollover contribution and the IRA
holding your annual contributions, you should establish the account as a Regular
IRA on the Adoption Agreement (not a Rollover IRA or Direct Rollover IRA) and
make the contributions to that account.
How Do Rollovers Affect my Contribution or Deduction Limits?
Rollover contributions, if properly made, do not count toward the maximum
contribution. Also, rollovers are not deductible and they do not affect your
deduction limits as described above.
What About Converting My Regular IRA to a Roth IRA?
The rules for converting a Regular IRA to a new Roth IRA, or making a
rollover from a Regular IRA to a new Roth IRA, are described in Part Two below.
WITHDRAWALS
When can I make withdrawals from my Regular IRA?
You may withdraw from your Regular IRA at any time. However, withdrawals
before age 59 1/2 may be subject to a 10% penalty tax in addition to regular
income taxes (see below).
When must I start making withdrawals?
If you have not withdrawn your entire IRA by the April 1 following the year
in which you reach 70 1/2, you must make minimum withdrawals in order to avoid
penalty taxes. The rule allowing certain employees to postpone distributions
from an employer qualified plan until actual retirement (even if this is after
age 70 1/2) does not apply to Regular IRAs.
The minimum withdrawal amount is determined by dividing the balance in your
Regular IRA (or IRAs) by your life expectancy or the combined life expectancy of
you and your designated beneficiary. The minimum withdrawal rules are complex.
Consult your tax advisor for assistance.
The penalty tax is 50% of the difference between the minimum withdrawal
amount and your actual withdrawals during a year. The IRS may waive or reduce
the penalty tax if you can show that your failure to make the required minimum
withdrawals was due to reasonable cause and you are taking reasonable steps to
remedy the problem.
How Are Withdrawals From My Regular IRA Taxed?
Amounts withdrawn by you are includable in your gross income in the taxable
year that you receive them, and are taxable as ordinary income. Lump sum
withdrawals from a Regular IRA are not eligible for averaging treatment
currently available to certain lump sum distributions from qualified employer
retirement plans.
Since the purpose of a Regular IRA is to accumulate funds for retirement,
your receipt or use of any portion of your Regular IRA before you attain age
59 1/2 generally will be considered as an early withdrawal and subject to a 10%
penalty tax.
The 10% penalty tax for early withdrawal will not apply if:
- The distribution was a result of your death or disability.
- The purpose of the withdrawal is to pay certain higher education
expenses for yourself or your spouse, child, or grandchild.
Qualifying expenses include tuition, fees, books, supplies and
equipment required for attendance at a post-secondary educational
institution. Room and board expenses may qualify if the student is
attending at least half-time.
- The withdrawal is used to pay eligible first-time homebuyer
expenses. These are the costs of purchasing, building or rebuilding
a principal residence (including customary settlement, financing or
closing costs). The purchaser may be you, your spouse, or a child,
grandchild, parent or grandparent of you or your spouse. An
individual is considered a "first-time homebuyer" if the individual
(or the individual's spouse, if married) did not have an ownership
interest in a principal residence during the two-year period
immediately preceding the acquisition in question. The withdrawal
must be used for eligible expenses within 120 days after the
withdrawal. (If there is an unexpected delay, or cancellation of the
home acquisition, a withdrawal may be redeposited as a rollover).
There is a lifetime limit on eligible first-time homebuyer expenses
of $10,000 per individual.
- The distribution is one of a scheduled series of substantially equal
periodic payments for your life or life expectancy (or the joint
lives or life expectancies of you and your beneficiary).
If there is an adjustment to the scheduled series of payments,
the 10% penalty tax may apply. The 10% penalty will not apply if you
make no change in the series of payments until the end of five years
or until you reach age 59 1/2, whichever is later. If you make a
change before then, the penalty will apply. For example, if you begin
receiving payments at age 50 under a withdrawal program providing for
substantially equal payments over your life expectancy, and at age 58
you elect to receive the remaining amount in your Regular IRA in a
lump-sum, the 10% penalty tax will apply to the lump sum and to the
amounts previously paid to you before age 59 1/2.
<PAGE>
- The distribution does not exceed the amount of your deductible
medical expenses for the year (generally speaking, medical expenses
paid during a year are deductible if they are greater than 7 1/2% of
your adjusted gross income for that year).
- The distribution does not exceed the amount you paid for health
insurance coverage for yourself, your spouse and dependents. This
exception applies only if you have been unemployed and received
federal or state unemployment compensation payments for at least 12
weeks; this exception applies to distributions during the year in
which you received the unemployment compensation and during the
following year, but not to any distributions received after you have
been reemployed for at least 60 days.
How are Nondeductible Contributions Taxed When They are Withdrawn?
A withdrawal of nondeductible contributions (not including earnings) will
be tax-free. However, if you made both deductible and nondeductible
contributions to your Regular IRA, then each distribution will be treated as
partly a return of your nondeductible contributions (not taxable) and partly a
distribution of deductible contributions and earnings (taxable). The nontaxable
amount is the portion of the amount withdrawn which bears the same ratio as your
total nondeductible Regular IRA contributions bear to the total balance of all
your Regular IRAs (including rollover IRAs and SEPs, but not including Roth
IRAs).
For example, assume that you made the following Regular IRA contributions:
<TABLE>
<CAPTION>
Year Deductible Nondeductible
---- ---------- -------------
<S> <C> <C>
1995 $2,000
1996 $2,000
1997 $1,000 $1,000
1998 $1,000
------ ------
$5,000 $2,000
</TABLE>
In addition assume that your Regular IRA has total investment earnings
through 1998 of $1,000. During 1998 you withdraw $500. Your total account
balance as of 12-31-98 is $7,500 as shown below.
<TABLE>
<S> <C>
Deductible Contributions $5,000
Nondeductible Contributions $2,000
Earnings On IRA $1,000
Less 1998 Withdrawal $ 500
------
Total Account Balance as of 12/31/98 $7,500
</TABLE>
To determine the nontaxable portion of your 1998 withdrawal, the total 1998
withdrawal ($500) must be multiplied by a fraction. The numerator of the
fraction is the total of all nondeductible contributions remaining in the
account before the 1998 withdrawal ($2,000). The denominator is the total
account balance as of 12-31-98 ($7,500) plus the 1998 withdrawal ($500) or
$8,000. The calculation is:
<TABLE>
<CAPTION>
<S> <C> <C>
Total Remaining
Nondeductible Contributions $2,000 x $500 = $ 125
--------------------------- ------
Total Account Balance $8,000
</TABLE>
Thus, $125 of the $500 withdrawal in 1998 will not be included in your
taxable income. The remaining $375 will be taxable for 1998. In addition, for
future calculations the remaining nondeductible contribution total will be
$2,000 minus $125, or $1,875.
A loss in your Regular IRA investment may be deductible. You should consult
your tax advisor for further details on the appropriate calculation for this
deduction if applicable.
Is there a penalty tax on certain large withdrawals or accumulations in my IRA?
Earlier tax laws imposed a "success" penalty equal to 15% of withdrawals
from all retirement accounts (including IRAs, 401(k) or other employer
retirement plans, 403(b) arrangements and others) in a year exceeding a
specified amount (initially $150,000 per year). Also, there was a 15% estate tax
penalty on excess accumulations remaining in IRAs and other tax-favored
arrangements upon your death. These 15% penalty taxes have been repealed.
Important: Please see Part Three below which contains important information
applicable to all State Street Bank and Trust Company IRAs.
<PAGE>
Part Two: Description of Roth IRAs
-----------------------------------
SPECIAL NOTE
Part Two of the Disclosure Statement describes the rules generally
applicable to Roth IRAs beginning January 1, 1998.
Roth IRAs are a new kind of IRA available for the first time in 1998.
Contributions to a Roth IRA for 1997 are not permitted. Contributions to a Roth
IRA are not tax-deductible, but withdrawals that meet certain requirements are
not subject to federal income taxes. This makes the dividends on and growth of
the investments held in your Roth IRA tax-free for federal income tax purposes
if the requirements are met.
Regular IRAs, which have existed since 1975, are still available.
Contributions to a Regular IRA may be tax-deductible. Earnings and gains on
amounts while held in a Regular IRA are tax-deferred. Withdrawals are subject to
federal income tax (except for prior after-tax contributions which may be
recovered without additional federal income tax).
This Part Two does not describe Regular IRAs. If you wish to review
information about Regular IRAs, please see Part One of this Disclosure
Statement.
This Disclosure Statement also does not describe IRAs established in
connection with a SIMPLE IRA program or a Simplified Employee Pension (SEP) plan
maintained by your employer. Roth IRAs may not be used in connection with a
SIMPLE IRA program or a SEP plan.
YOUR ROTH IRA
Your Roth IRA gives you several tax benefits. While contributions to a Roth
IRA are not deductible, dividends on and growth of the assets held in your Roth
IRA are not subject to federal income tax. Withdrawals by you from your Roth IRA
are excluded from your income for federal income tax purposes if certain
requirements (described below) are met. State income tax treatment of your Roth
IRA may differ from federal treatment; ask your state tax department or your
personal tax advisor for details.
Be sure to read Part Three of this Disclosure Statement for important additional
information, including information on how to revoke your Roth IRA, investments
and prohibited transactions, fees and expenses and certain tax requirements.
ELIGIBILITY
What are the eligibility requirements for a Roth IRA?
Starting with 1998, you are eligible to establish and contribute to a Roth
IRA for a year if you received compensation (or earned income if you are self
employed) during the year for personal services you rendered. If you received
taxable alimony, this is treated like compensation for IRA purposes.
In contrast to a Regular IRA, with a Roth IRA you may continue making
contributions after you reach age 70 1/2.
Can I Contribute to Roth IRA for my Spouse?
Starting with 1998, if you meet the eligibility requirements you can not
only contribute to your own Roth IRA, but also to a separate Roth IRA for your
spouse out of your compensation or earned income, regardless of whether your
spouse had any compensation or earned income in that year. This is called a
"spousal Roth IRA." To make a contribution to a Roth IRA for your spouse, you
must file a joint tax return for the year with your spouse. For a spousal Roth
IRA, your spouse must set up a different Roth IRA, separate from yours, to which
you contribute.
Of course, if your spouse has compensation or earned income, your spouse
can establish his or her own Roth IRA and make contributions to it in accordance
with the rules and limits described in this Part Two of the Disclosure
Statement.
CONTRIBUTIONS
When Can I Make Contributions to a Roth IRA?
You may make a contribution to your Roth IRA or establish a new Roth IRA
for a taxable year by the due date (not including any extensions) for your
federal income tax return for the year. Usually this is April 15 of the
following year. For example, you will have until April 15, 1999 to establish and
make a contribution to a Roth IRA for 1998.
Caution: Since Roth IRAs are available starting January 1, 1998, you may
not make a contribution by April 15, 1998 to a Roth IRA for 1997.
How Much Can I Contribute to my Roth IRA?
For each year when you are eligible (see above), you can contribute up to
the lesser of $2,000 or 100% of your compensation (or earned income, if you are
self-employed).
Annual contributions may be made only to a Roth IRA annual contribution
account which does not contain converted or transferred funds from a Regular
IRA.
Your Roth IRA limit is reduced by any contributions for the same year to a
Regular IRA. For example, assuming you have at least $2,000 in compensation or
earned income, if you contribute $500 to your Regular IRA for 1998, your maximum
Roth IRA contribution for 1998 will be $1,500.
If you and your spouse have spousal Roth IRAs, each spouse may contribute
up to $2,000 to his or her Roth IRA for a year as long as the combined
compensation of both spouses for the year (as shown on your joint income tax
return) is at least $4,000. If the combined compensation of both spouses is less
than $4,000, the spouse with the higher amount of compensation may contribute up
to that spouse's compensation amount, or $2,000 if less. The spouse with the
lower compensation amount may contribute any amount up to that spouse's
compensation plus any excess the other spouse's compensation over the other
spouse's Roth IRA contribution. However, the maximum contribution to either
spouse's Roth IRA is $2,000 for the year.
<PAGE>
As noted above, the spousal Roth IRA limits are reduced by any
contributions for the same calendar year to a Regular IRA maintained by you or
your spouse.
For taxpayers with high income levels, the contribution limits may be
reduced (see below).
Are Contributions to a Roth IRA Tax Deductible?
Contributions to a Roth IRA are not deductible. This is a major difference
between Roth IRAs and Regular IRAs. Contributions to a Regular IRA may be
deductible on your federal income tax return depending on whether or not you are
an active participant in an employer-sponsored plan and on your income level.
Are the Earnings on my Roth IRA Funds Taxed?
Any dividends on or growth of investments held in your Roth IRA are
generally exempt from federal income taxes and will not be taxed until withdrawn
by you, unless the tax exempt status of your Roth IRA is revoked. If the
withdrawal qualifies as a tax-free withdrawal (see below), amounts reflecting
earnings or growth of assets in your Roth IRA will not be subject to federal
income tax.
Which is Better, a Roth IRA or a Regular IRA?
This will depend upon your individual situation. A Roth IRA may be better
if you are an active participant in an employer-sponsored plan and your adjusted
gross income is too high to make a deductible IRA contribution (but not too high
to make a Roth IRA contribution). Also, the benefits of a Roth IRA vs. a Regular
IRA may depend upon a number of other factors including: your current income tax
bracket vs. your expected income tax bracket when you make withdrawals from your
IRA, whether you expect to be able to make nontaxable withdrawals from your Roth
IRA (see below), how long you expect to leave your contributions in the IRA, how
much you expect the IRA to earn in the meantime, and possible future tax law
changes.
Consult a qualified tax or financial advisor for assistance on this
question.
Are there Any Restrictions on Contributions to my Roth IRA?
Taxpayers with very high income levels may not be able to contribute to a
Roth IRA at all, or their contribution may be limited to an amount less than
$2,000. This depends upon your filing status and the amount of your adjusted
gross income (AGI). The following table shows how the contribution limits are
restricted:
ROTH IRA CONTRIBUTION LIMITS
<TABLE>
<CAPTION>
------------------------- --------------------------------------- --------------------------------------
If You Are If You Are Then You May Make
Single Taxpayer Married Filing Jointly
-------------------------- --------------------------------------- -------------------------------------
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Up to Up to Full
$95,000 $150,000 Contribution
----------------------------------------------------------------------------------------------------------
Adjusted More than $95,000 More than $150,000 Reduced Contribution (see
Gross but less than but less than explanation below)
Income (AGI) Level $110,000 $160,000
----------------------------------------------------------------------------------------------------------
$110,000 $160,000 Zero (No Contribution)
and up and up
------------------------------------------------------------------------------------------------------------
</TABLE>
Note: If you are a married taxpayer filing separately, your maximum Roth
IRA contribution limit phases out over the first $15,000 of adjusted gross
income. If your AGI is $15,000 or more you may not contribute to a Roth IRA for
the year. (Note: Pending legislation in Congress may reduce this number from
$15,000 to $10,000. Consult your tax advisor or the IRS for the latest
developments.)
How do I Calculate my Limit if I Fall in the "Reduced Contribution" Range?
If your AGI falls in the reduced contribution range, you must calculate
your contribution limit. To do this, multiply your normal contribution limit
($2,000 or your compensation if less) by a fraction. The numerator is the amount
by which your AGI exceeds the lower limit of the reduced contribution range
($95,000 if single, or $150,000 if married filing jointly). The denominator is
$15,000 (single taxpayers) or $10,000 (married filing jointly). Subtract this
from your normal limit and then round down to the nearest $10. The contribution
limit is the greater of the amount calculated or $200.
For example, assume that your AGI for the year is $157,555 and you are
married, filing jointly. You would calculate your Roth IRA contribution limit
this way:
1. The amount by which your AGI exceeds the lower limit of the reduced
contribution deductible range:
($157,555-$150,000) = $7,555
2. Divide this by $10,000: $7,555
-------
$10,000 = 0.7555
3. Multiply this by $2,000 (or your compensation for the year, if less):
0.7555 x $2,000 = $1,511
4. Subtract this from your $2,000 limit:
($2,000 - $1,551) = $489
5. Round this down to the nearest $10 = $480
<PAGE>
6. Your contribution limit is the greater of this amount or $200.
Remember, your Roth IRA contribution limit of $2,000 is reduced by any
contributions for the same year to a Regular IRA. If you fall in the reduced
contribution range, the reduction formula applies to the Roth IRA contribution
limit left after subtracting your contribution for the year to a Regular IRA.
How Do I Determine My AGI?
AGI is your gross income minus those deductions which are available to all
taxpayers even if they don't itemize. Instructions to calculate your AGI are
provided with your income tax Form 1040 or 1040A.
There are two additional rules when calculating AGI for purposes of Roth
IRA contribution limits. First, if you are making a deductible contribution for
the year to a Regular IRA, your AGI is reduced by the amount of the deduction.
Second, if you are converting a Regular IRA to a Roth IRA in a year (see below),
the amount includable in your income as a result of the conversion is not
considered AGI when computing your Roth IRA contribution limit for the year.
(Note: a bill pending in Congress might affect the first rule--consult your tax
advisor or the IRS for the latest developments.)
What Happens if I Contribute more than Allowed to my Roth IRA?
The maximum contribution you can make to a Roth IRA generally is $2,000 or
100% of compensation or earned income, whichever is less. As noted above, your
maximum is reduced by the amount of any contribution to a Regular IRA for the
same year and may be further reduced if you have high AGI. Any amount
contributed to the Roth IRA above the maximum is considered an "excess
contribution."
An excess contribution is subject to excise tax of 6% for each year it remains
in the Roth IRA.
How can I Correct an Excess Contribution?
Excess contributions may be corrected without paying a 6% penalty. To do
so, you must withdraw the excess and any earnings on the excess before the due
date (including extensions) for filing your federal income tax return for the
year for which you made the excess contribution. Earnings on the amount
withdrawn must also be withdrawn. The earnings must be included in your income
for the tax year for which the contribution was made and may be subject to a 10%
premature withdrawal tax if you have not reached age 592 (unless an exception to
the 10% penalty tax applies).
What Happens if I Don't Correct the Excess Contribution by the Tax Return Due
Date?
Any excess contribution withdrawn after the tax return due date (including
any extensions) for the year for which the contribution was made will be subject
to the 6% excise tax. There will be an additional 6% excise tax for each year
the excess remains in your account.
Unless an excess contribution qualifies for the special treatment outlined
above, the excess contribution and any earnings on it withdrawn after tax filing
time will be includable in taxable income and may be subject to a 10% premature
withdrawal penalty.
You may reduce the excess contributions by making a withdrawal equal to the
excess. Earnings need not be withdrawn. To the extent that no earnings are
withdrawn, the withdrawal will not be subject to income taxes or possible
penalties for premature withdrawals before age 59 1/2. Excess contributions may
also be corrected in a subsequent year to the extent that you contribute less
than your Roth IRA contribution limit for the subsequent year. As the prior
excess contribution is reduced or eliminated, the 6% excise tax will become
correspondingly reduced or eliminated for subsequent tax years.
CONVERSION OF EXISTING REGULAR IRA
Can I convert an Existing Regular IRA into a Roth IRA?
Yes, starting in 1998 you can convert an existing Regular IRA into a Roth
IRA if you meet the adjusted gross income (AGI) limits described below.
Conversion may be accomplished either by establishing a Roth IRA and then
transferring the amount in your Regular IRA you wish to convert to the new Roth
IRA. Or, if you want to convert an existing Regular IRA with State Street Bank
as custodian to a Roth IRA, you may give us directions to convert.
You are eligible to convert a Regular IRA to a Roth IRA if, for the year of
the conversion, your AGI is $100,000 or less. The same limit applies to married
and single taxpayers, and the limit is not indexed to cost-of-living increases.
Married taxpayers are eligible to convert a Regular IRA to a Roth IRA only if
they file a joint income tax return; married taxpayers filing separately are not
eligible to convert.
Note: No contributions other than Roth IRA conversion contributions made
during the same tax year may be deposited in a single Roth IRA conversion
account.
Caution: You should be extremely cautious in converting an existing IRA
into a Roth IRA early in a year if there is any possibility that your AGI for
the year will exceed $100,000. Although a bill pending in Congress would permit
you to transfer amounts back to your Regular IRA if your AGI exceeds $100,000,
under the current rules, if you have already converted during a year and you
turn out to have more than $100,000 of AGI, there may be adverse tax results for
you. Consult your tax advisor or the IRS for the latest developments.
What are the Tax Results from Converting?
The taxable amount in your Regular IRA you convert to a Roth IRA will be
considered taxable income on your federal income tax return for the year of the
conversion. All amounts in a Regular IRA are taxable except for your prior non-
deductible contributions to the Regular IRA.
If you make the conversion during 1998, the taxable income is spread over
four years. In other words, you would include one quarter of the taxable amount
on your federal income tax return for 1998, 1999, 2000 and 2001.
Should I convert my Regular IRA to a Roth IRA?
Only you can answer this question, in consultation with your tax or
financial advisors. A number of factors, including the following, may be
relevant. Conversion may be advantageous if you expect to leave the converted
funds on deposit in your Roth IRA for at least five years and to be able to
withdraw the funds under circumstances that will not be taxable (see below). The
benefits of converting will also depend on whether you expect to be in the same
tax bracket when you withdraw from your Roth IRA as you are now. Also,
conversion is based upon an assumption that Congress will not change the tax
rules for withdrawals from Roth IRAs in the future, but his cannot be
guaranteed.
TRANSFERS/ROLLOVERS
<PAGE>
Can I Transfer or Roll Over a Distribution I Receive from my Employer's
Retirement Plan into a Roth IRA?
Distributions from qualified employer-sponsored retirement plans or 403(b)
arrangements (for employees of tax-exempt employers) are not eligible for
rollover or direct transfer to a Roth IRA. However, in certain circumstances it
may be possible to make a direct rollover of an eligible distribution to a
Regular IRA and then to convert the Regular IRA to Roth IRA (see above). Consult
your tax or financial advisor for further information on this possibility.
Can I Make a Rollover from my Roth IRA to another Roth IRA?
You may make a rollover from one Roth IRA to another Roth IRA you have or
you establish to receive the rollover. Such a rollover must be completed within
60 days after the withdrawal from your first Roth IRA. After making a rollover
from one Roth IRA to another, you must wait a full year (365 days) before you
can make another such rollover. (However, you can instruct a Roth IRA custodian
to transfer amounts directly to another Roth IRA custodian; such a direct
transfer does not count as a rollover.)
How Do Rollovers Affect my Roth IRA Contribution Limits?
Rollover contributions, if properly made, do not count toward the maximum
contribution. Also, you may make a rollover from one Roth IRA to another even
during a year when you are not eligible to contribute to a Roth IRA (for
example, because your AGI for that year is too high).
WITHDRAWALS
When can I make withdrawals from my Roth IRA?
You may withdraw from your Roth IRA at any time. If the withdrawal meets
the requirements discussed below, it is tax-free. This means that you pay no
federal income tax even though the withdrawal includes earnings or gains on your
contributions while they were held in your Roth IRA.
When must I start making withdrawals?
There are no rules on when you must start making withdrawals from your Roth
IRA or on minimum required withdrawal amounts for any particular year during
your lifetime. Unlike Regular IRAs, you are not required to start making
withdrawals from a Roth IRA by the April 1 following the year in which you reach
age 70 1/2.
After your death, there are IRS rules on the timing and amount of
distributions. In general, the amount in your Roth IRA must be distributed by
the end of the fifth year after your death. However, distributions to a
designated beneficiary that begin by the end of the year following the year of
your death and that are paid over the life expectancy of the beneficiary satisfy
the rules. Also, if your surviving spouse is your designated beneficiary, the
spouse may defer the start of distributions until you would have reached age 70
1/2 had you lived.
What are the requirements for a tax-free withdrawal?
To be tax-free, a withdrawal from your Roth IRA must meet two requirements.
First, the Roth IRA must have been open for 5 or more years before the
withdrawal. Second, at least one of the following conditions must be satisfied:
. You are age 59 1/2 or older when you make the withdrawal.
. The withdrawal is made by your beneficiary after you die.
. You are disabled (as defined in IRS rules) when you make the withdrawal.
. You are using the withdrawal to cover eligible first time homebuyer
expenses. These are the costs of purchasing, building or rebuilding a
principal residence (including customary settlement, financing or
closing costs). The purchaser may be you, your spouse or a child,
grandchild, parent or grandparent of you or your spouse. An individual
is considered a "first-time homebuyer" if the individual (or the
individual's spouse, if married) did not have an ownership interest in a
principal residence during the two-year period immediately preceding the
acquisition in question. The withdrawal must be used for eligible
expenses within 120 days after the withdrawal (if there is an unexpected
delay, or cancellation of the home acquisition, a withdrawal may be
redeposited as a rollover).
There is a lifetime limit on eligible first-time homebuyer expenses of
$10,000 per individual.
For a Roth IRA that you set up with amounts rolled over or converted from a
Regular IRA, the 5 year period begins with the year in which the conversion or
rollover was made. (Note: a bill pending in Congress might affect this rule --
consult your tax advisor or the IRS for the latest developments.)
For a Roth IRA that you started with a normal contribution, the 5 year
period starts with the year for which you make the initial normal contribution.
How Are Withdrawals From My Roth IRA Taxed if the Tax-Free Requirements are not
Met?
If the qualified withdrawal requirements are not met, a withdrawal
consisting of your own prior contribution amounts to your Roth IRA will not be
considered taxable income in the year you receive it, nor will the 10% penalty
apply. To the extent that the nonqualified withdrawal consists of dividends or
gains while your contributions were held in your Roth IRA, the withdrawal is
includable in your gross income in the taxable year you receive it, and may be
subject to the 10% withdrawal penalty. All amounts withdrawn from your Roth IRA
are considered withdrawals of your contributions until you have withdrawn the
entire amount you have contributed. After that, all amounts withdrawn are
considered taxable withdrawals of dividends and gains.
Note that, for purposes of determining what portion of any distribution is
includable in income, all of your Roth IRA accounts are considered as one single
account. Amounts withdrawn from any one Roth IRA account are deemed to be
withdrawn from contributions first. Since all your Roth IRAs are considered to
be one account for this purpose, withdrawals from Roth IRA accounts are not
considered to be from earnings or interest until an amount equal to all
contributions made to all of an individual's Roth IRA accounts is withdrawn. The
following example illustrates this:
A single individual contributes $1,000 a year to his State Street Bank and
Trust Company Roth IRA account and $1,000 a year to the Brand X Roth IRA account
over a period of ten years. At the end of 10 years his account balances are as
follows:
<PAGE>
<TABLE>
<CAPTION>
Principal Earnings
Contributions
<S> <C> <C>
State Street Bank
Roth IRA $10,000 $10,000
Brand X Roth IRA $10,000 $10,000
------- -------
Total $20,000 $20,000
</TABLE>
At the end of 10 years, this person has $40,000 in both Roth IRA accounts,
of which $20,000 represents his contributions (aggregated) and $20,000
represents his earnings (aggregated). This individual, who is 40, withdraws
$15,000 from his Brand X Roth IRA (not a qualified withdrawal). We look to the
aggregate amount of all principal contributions in this case $20,000 to
determine if the withdrawal is from contributions, and thus non-taxable. In this
example, there is no ($0) taxable income as a result of this withdrawal because
the $15,000 withdrawal is less than the total amount of aggregated contributions
($20,000). If this individual then withdrew $15,000 from his State Street Bank
Roth IRA, $5,000 would not be taxable (the remaining aggregate contributions)
and $10,000 would be treated as taxable income for the year of the withdrawal,
subject to regular income taxes and the 10% premature withdrawal penalty (unless
an exception applies).
Note: If passed, a bill currently pending in Congress will change the rules
and the results discussed above. Under the proposed legislation, in general,
separate Roth IRAs established for annual contributions and conversions for
separate years are not aggregated as explained above to determine the tax on
withdrawals. See your tax advisor for more information and the latest
developments.
Taxable withdrawals of dividends and gains from a Roth IRA are treated as
ordinary income. Withdrawals of taxable amounts from a Roth IRA are not eligible
for averaging treatment currently available to certain lump sum distributions
from qualified employer-sponsored retirement plans, nor are such withdrawals
eligible for taxable gains tax treatment.
Your receipt of any taxable withdrawal from your Roth IRA before you attain
age 592 generally will be considered as an early withdrawal and subject to a 10%
penalty tax.
The 10% penalty tax for early withdrawal will not apply if any of the
following exceptions applies:
- The withdrawal was a result of your death or disability.
- The withdrawal is one of a scheduled series of substantially equal
periodic payments for your life or life expectancy (or the joint lives or
life expectancies of you and your beneficiary).
If there is an adjustment to the scheduled series of payments,
the 10% penalty tax will apply. For example, if you begin receiving
payments at age 50 under a withdrawal program providing for substantially
equal payments over your life expectancy, and at age 58 you elect to
withdraw the remaining amount in your Roth IRA in a lump-sum, the 10%
penalty tax will apply to the lump sum and to the amounts previously paid
to you before age 592 to the extent they were includable in your taxable
income.
- The withdrawal is used to pay eligible higher education expenses. These
are expenses for tuition, fees, books, and supplies required to attend an
institution for post-secondary education. Room and board expenses are also
eligible for a student attending at least half-time. The student may be
you, your spouse, or your child or grandchild. However, expenses that are
paid for with a scholarship or other educational assistance payment are not
eligible expenses.
- The withdrawal is used to cover eligible first time homebuyer expenses
(as described above in the discussion of tax-free withdrawals).
- The withdrawal does not exceed the amount of your deductible medical
expenses for the year (generally speaking, medical expenses paid during a
year are deductible if they are greater than 72% of your adjusted gross
income for that year).
- The withdrawal does not exceed the amount you paid for health insurance
coverage for yourself, your spouse and dependents. This exception applies
only if you have been unemployed and received federal or state unemployment
compensation payments for at least 12 weeks; this exception applies to
distributions during the year in which you received the unemployment
compensation and during the following year, but not to any distributions
received after you have been reemployed for at least 60 days.
What About the 15 percent Penalty Tax?
The rule imposing a 15% penalty tax on very large withdrawals from tax-
favored arrangements (including IRAs, 403(b) arrangements and qualified
employer-sponsored plans), or on excess amounts remaining in such tax-favored
arrangements at your death, has been repealed. This 15% tax no longer applies.
Important: The discussion of the tax rules for Roth IRAs in this Disclosure
Statement is based upon the best available information. However, Roth IRAs are
new under the tax laws, and the IRS has not issued regulations or rulings on the
operation and tax treatment of Roth IRA accounts. Also, if enacted, legislation
now pending in Congress will change some of the rules. Therefore, you should
consult your tax advisor for the latest developments or for advice about how
maintaining a Roth IRA will affect your personal tax or financial situation.
Also, please see Part Three below which contains important information
applicable to all State Street Bank and Trust Company IRAs.
<PAGE>
Part Three: Rules for All IRAs (Regular and Roth)
GENERAL INFORMATION
IRA Requirements
All IRAs must meet certain requirements. Contributions generally must be
made in cash. The IRA trustee or custodian must be a bank or other person who
has been approved by the Secretary of the Treasury. Your contributions may not
be invested in life insurance or collectibles or be commingled with other
property except in a common trust or investment fund. Your interest in the
account must be nonforfeitable at all times. You may obtain further information
on IRAs from any district office of the Internal Revenue Service.
May I Revoke My IRA?
You may revoke a newly established Regular or Roth IRA at any time within
seven days after the date on which you receive this Disclosure Statement. A
Regular or Roth IRA established more than seven days after the date of your
receipt of this Disclosure Statement may not be revoked.
To revoke your Regular or Roth IRA, mail or deliver a written notice of
revocation to the Custodian at the address which appears at the end of this
Disclosure Statement. Mailed notice will be deemed given on the date that it is
postmarked (or, if sent by certified or registered mail, on the date of
certification or registration). If you revoke your Regular or Roth IRA within
the seven-day period, you are entitled to a return of the entire amount you
originally contributed into your Regular or Roth IRA, without adjustment for
such items as sales charges, administrative expenses or fluctuations in market
value.
INVESTMENTS
How Are My IRA Contributions Invested?
You control the investment and reinvestment of contributions to your
Regular or Roth IRA. Investments must be in one or more of the Fund(s) available
from time to time as listed in the Adoption Agreement for your Regular or Roth
IRA or in an investment selection form provided with your Adoption Agreement or
from the Fund Distributor or Service Company. You direct the investment of your
IRA by giving your investment instructions to the Distributor or Service Company
for the Fund(s). Since you control the investment of your Regular or Roth IRA,
you are responsible for any losses; neither the Custodian, the Distributor nor
the Service Company has any responsibility for any loss or diminution in value
occasioned by your exercise of investment control. Transactions for your Regular
or Roth IRA will generally be at the applicable public offering price or net
asset value for shares of the Fund(s) involved next established after the
Distributor or the Service Company (whichever may apply) receives proper
investment instructions from you; consult the current prospectus for the Fund(s)
involved for additional information.
Before making any investment, read carefully the current prospectus for any
Fund you are considering as an investment for your Regular IRA or Roth IRA. The
prospectus will contain information about the Fund's investment objectives and
policies, as well as any minimum initial investment or minimum balance
requirements and any sales, redemption or other charges.
Because you control the selection of investments for your Regular or Roth
IRA and because mutual fund shares fluctuate in value, the growth in value of
your Regular or Roth IRA cannot be guaranteed or projected.
Are There Any Restrictions on the Use of my IRA Assets?
The tax-exempt status of your Regular or Roth IRA will be revoked if you
engage in any of the prohibited transactions listed in Section 4975 of the tax
code. Upon such revocation, your Regular or Roth IRA is treated as distributing
its assets to you. The taxable portion of the amount in your IRA will be subject
to income tax (unless, in the case of a Roth IRA, the requirements for a tax-
free withdrawal are satisfied). Also, you may be subject to a 10% penalty tax on
the taxable amount as a premature withdrawal if you have not yet reached the age
of 59 1/2.
Any investment in a collectible (for example, rare stamps) by your Regular
or Roth IRA is treated as a withdrawal; the only exception involves certain
types of government-sponsored coins or certain types of precious metal bullion.
What Is A Prohibited Transaction?
Generally, a prohibited transaction is any improper use of the assets in
your Regular or Roth IRA. Some examples of prohibited transactions are:
- Direct or indirect sale or exchange of property between you
and your Regular or Roth IRA.
- Transfer of any property from your Regular or Roth IRA to
yourself or from yourself to your Regular or Roth IRA.
Your Regular or Roth IRA could lose its tax exempt status if you use all or
part of your interest in your Regular or Roth IRA as security for a loan or
borrow any money from your Regular or Roth IRA. Any portion of your Regular or
Roth IRA used as security for a loan will be treated as a distribution in the
year in which the money is borrowed. This amount may be taxable and you may also
be subject to the 10% premature withdrawal penalty on the taxable amount.
FEES AND EXPENSES
Custodian's Fees
The following is a list of the fees charged by the Custodian for
maintaining either a Regular IRA or a Roth IRA.
Account Installation Fee $10.00
Annual Maintenance Fee per mutual fund $10.00
Termination, Rollover, or Transfer of
Account to Successor Custodian $10.00
General Fee Policies
. Fees may be paid by you directly, or the Custodian may deduct them from
your Regular or Roth IRA.
. Fees may be changed upon 30 days written notice to you.
<PAGE>
. The full annual maintenance fee will be charged for any calendar year during
which you have a Regular or Roth IRA with us. This fee is not prorated for
periods of less than one full year.
. If provided for in this Disclosure Statement or the Adoption Agreement,
termination fees are charged when your account is closed whether the funds
are distributed to you or transferred to a successor custodian or trustee.
. The Custodian may charge you for its reasonable expenses for services not
covered by its fee schedule.
Other Charges
. There may be sales or other charges associated with the purchase or
redemption of shares of a Fund in which your Regular IRA or Roth IRA is
invested. Before investing, be sure to read carefully the current prospectus
of any Fund you are considering as an investment for your Regular IRA or
Roth IRA for a description of applicable charges.
TAX MATTERS
What IRA Reports does the Custodian Issue?
The Custodian will report all withdrawals to the IRS and the recipient on
the appropriate form. For reporting purposes, a direct transfer of assets to a
successor custodian or trustee is not considered a withdrawal.
The Custodian will report to the IRS the year-end value of your account and
the amount of any rollover (including conversions of a Regular IRA to a Roth
IRA) or regular contribution made during a calendar year, as well as the tax
year for which a contribution is made. Unless the Custodian receives an
indication from you to the contrary, it will treat any amount as a contribution
for the tax year in which it is received. It is most important that a
contribution between January and April 15th for the prior year be clearly
designated as such.
What Tax Information Must I Report to the IRS?
You must file Form 5329 with the IRS for each taxable year for which you
made an excess contribution or you take a premature withdrawal that is subject
to the 10% penalty tax, or you withdraw less than the minimum amount required
from your Regular IRA. If your beneficiary fails to make required minimum
withdrawals from your Regular or Roth IRA after your death, your beneficiary may
be subject to an excise tax and be required to file Form 5329.
For Regular IRAs, you must also report each nondeductible contribution to
the IRS by designating it a nondeductible contribution on your tax return. Use
Form 8606. In addition, for any year in which you make a nondeductible
contribution or take a withdrawal, you must include additional information on
your tax return. The information required includes: (1) the amount of your
nondeductible contributions for that year; (2) the amount of withdrawals from
Regular IRAs in that year; (3) the amount by which your total nondeductible
contributions for all the years exceed the total amount of your distributions
previously excluded from gross income; and (4) the total value of all your
Regular IRAs as of the end of the year. If you fail to report any of this
information, the IRS will assume that all your contributions were deductible.
This will result in the taxation of the portion of your withdrawals that should
be treated as a nontaxable return of your nondeductible contributions.
Which Withdrawals Are Subject to Withholding?
Roth IRA
Federal income tax will be withheld at a flat rate of 10% of any taxable
withdrawal from your Roth IRA, unless you elect not to have tax withheld.
Withdrawals from a Roth IRA are not subject to the mandatory 20% income tax
withholding that applies to most distributions from qualified plans or 403(b)
accounts that are not directly rolled over to another plan or IRA.
Regular IRA
Federal income tax will be withheld at a flat rate of 10% from any
withdrawal from your Regular IRA, unless you elect not to have tax withheld.
Withdrawals from a Regular IRA are not subject to the mandatory 20% income tax
withholding that applies to most distributions from qualified plans or 403(b)
accounts that are not directly rolled over to another plan or IRA.
ACCOUNT TERMINATION
You may terminate your Regular IRA or Roth IRA at any time after its
establishment by sending a completed withdrawal form (or other withdrawal
instructions in a form acceptable to the Custodian), or a transfer authorization
form, to:
STATE STREET BANK AND TRUST COMPANY
P.O. Box ___
Boston, MA ________
Your Regular IRA or Roth IRA with State Street Bank will terminate upon the
first to occur of the following:
- The date your properly executed withdrawal form or instructions (as
described above) withdrawing your total Regular IRA or Roth IRA balance is
received and accepted by the Custodian or, if later, the termination date
specified in the withdrawal form.
- The date the Regular IRA or Roth IRA ceases to qualify under the tax
code. This will be deemed a termination.
- The transfer of the Regular IRA or Roth IRA to another
custodian/trustee.
- The rollover of the amounts in the Regular IRA or Roth IRA to
another custodian/trustee.
Any outstanding fees must be received prior to such a termination of your
account.
The amount you receive from your IRA upon termination of the account will
be treated as a withdrawal, and thus the rules relating to Regular IRA or Roth
IRA withdrawals will apply. For example, if the IRA is terminated before you
reach age 59 1/2, the 10% early withdrawal penalty may apply to the taxable
amount you receive.
IRA DOCUMENTS
Regular IRA
The terms contained in Articles I to VII of Part One of the State Street
Bank and Trust Company Universal Individual Retirement Custodial Account
document have been promulgated by the IRS in Form 5305-A for use in establishing
a Regular IRA Custodial Account that meets the requirements of Code Section
<PAGE>
408(a) for a valid Regular IRA. This IRS approval relates only to the form of
Articles I to VII and is not an approval of the merits of the Regular IRA or of
any investment permitted by the Regular IRA.
Roth IRA
The terms contained in Articles I to VII of Part Two of the State Street
Bank and Trust Company Universal Individual Retirement Account Custodial
Agreement have been promulgated by the IRS in Form 5305-RA for use in
establishing a Roth IRA Custodial Account that meets the requirements of Code
Section 408A for a valid Roth IRA. This IRS approval relates only to the form of
Articles I to VII and is not an approval of the merits of the Roth IRA or of any
investment permitted by the Roth IRA.
Based on our legal advice relating to current tax laws and IRS meetings,
State Street Bank believes that the use of a Universal Individual Retirement
Account Information Kit such as this, containing information and documents for
both a Regular IRA or a Roth IRA, will be acceptable to the IRS. However, if the
IRS makes a ruling, or if Congress enacts legislation, regarding the use of
different documentation, State Street Bank will forward to you new documentation
for your Regular IRA or a Roth IRA (as appropriate) for you to read and, if
necessary, an appropriate new Adoption Agreement to sign. By adopting a Regular
IRA or a Roth IRA using these materials, you acknowledge this possibility and
agree to this procedure if necessary. In all cases, to the extent permitted
State Street Bank will treat your IRA as being opened on the date your account
was opened using the Adoption Agreement in this Kit.
ADDITIONAL INFORMATION
For additional information you may write to the following address or call the
following telephone number.
[ADDRESS]
[800 Number]
<PAGE>
State Street Bank and Trust Company Universal Individual Retirement Account
---------------------------------------------------------------------------
Custodial Agreement
-------------------
Part One: Provisions applicable to Regular IRAs Provisions
- -----------------------------------------------------------
The following provisions of Articles I to VII are in the form promulgated
by the Internal Revenue Service in Form 5305-A for use in establishing an
individual retirement custodial account.
Article I.
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c)(but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993 include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code or an
employer contribution to a simplified employee pension plan as described in
section 408(k).
Article II.
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
Article III.
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5) of the Code).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m) except as otherwise permitted by section 408(m)(3)
which provides an exception for certain gold and silver coins and coins issued
under the laws of any state.
Article IV.
1. Notwithstanding any provisions of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section 1.401(a)(9)-
2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to
begin to the Depositor under paragraph 3, or to the surviving spouse under
paragraph 4, other than in the case of a life annuity, life expectancies shall
be recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date, the April 1
following the calendar year end in which the Depositor reaches age 70 1/2. By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the
Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last
survivor lives of the Depositor and his or her designated
beneficiary.
(d) Equal or substantially equal annual payments over a specified
period that may not be longer than the Depositor's life
expectancy.
(e) Equal or substantially equal annual payments over a specified
period that may not be longer than the joint life and last
survivor expectancy of the Depositor and his or her designated
beneficiary.
4. If the Depositor dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her
interest has begun, distribution must continue to be made in
accordance with paragraph 3.
(b) If the Depositor dies before distribution of his or her interest
has begun, the entire remaining interest will, at the election
of the Depositor or, if the Depositor has not so elected, at the
election of the beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over
the life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following
the year of the Depositor's death. If, however, the
beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of
the year in which the Depositor would have turned age
70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations
has irrevocably commenced, distributions are treated as having
begun on the Depositor's required beginning date, even though
payments may actually have been made before that date.
<PAGE>
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving
spouse, no additional cash contributions or rollover
contributions may be accepted in the account.
5. In the case of distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies.) In the case of distributions
under paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designated
beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2.
In the case of a distribution in accordance with paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
Article V.
1. The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepare any reports required under section 408(i)
and Regulations sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor as prescribed by the Internal Revenue Service.
Article VI.
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and the related
regulations will be invalid.
Article VII.
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear on the Adoption
Agreement.
<PAGE>
Part Two: Provisions applicable to Roth IRAs
---------------------------------------------
The following provisions of Articles I to VII are in the form promulgated
by the Internal Revenue Service in Form 5305-RA for use in establishing a Roth
Individual Retirement Custodial Account.
Article I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then,
except in the case of a rollover contribution described in section 408A(e), the
Custodian will accept only cash contributions and only up to a maximum amount of
$2,000 for any tax year of the Depositor.
2. If this Roth IRA is designated as a Roth Conversion IRA, no
contributions other than IRA Conversion Contributions made during the same tax
year will be accepted.
Article IA
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single Depositor, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married Depositor who files jointly, between AGI of $150,000 and $160,000;
and for a married Depositor who files separately, between $0 and $10,000. In
case of a conversion, the Custodian will not accept IRA Conversion Contributions
in a tax year if the Depositor's AGI for that tax year exceeds $100,000 or if
the Depositor is married and files a separate return. Adjusted gross income is
defined in section 408A(c)(3) and does not include IRA Conversion Contributions.
Article II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
Article III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.
Article IV
1. If the Depositor dies before his or her entire interest is distributed
to him or her and the Depositor's surviving spouse is not the sole beneficiary,
the entire remaining interest will, at the election of the Depositor or, if the
Depositor has not so elected, at the election of the beneficiary or
beneficiaries, either:
(a) Be distributed by December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(b) Be distributed over the life expectancy of the designated beneficiary
starting no later than December 31 of the year following the year of
the Depositor's death.
If distributions do not begin by the date described in (b), distribution
method (a) will apply.
2. In the case of distribution method 1(b) above, to determine the minimum
annual payment for each year, divide the Depositor's entire interest in the
trust as of the close of business on December 31 of the preceding year by the
life expectancy of the designated beneficiary using the attained age of the
designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence and subtract 1 for each subsequent year.
3. If the Depositor's spouse is the sole beneficiary on the Depositor's
date of death, such spouse will then be treated as the Depositor.
Article V
1. The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepare any reports required under sections
408(i) and 408A(d)(3)(E), and Regulations section 1.408-5 and 1.408-6, and under
guidance published by the Internal Revenue Service.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor as prescribed by the Internal Revenue Service.
Article VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.
Article VII
This agreement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance. Other
amendments may be made with the consent of the persons whose signatures appear
below.
<PAGE>
Part Three: Provisions applicable to both Regular IRAs and Roth IRAs
---------------------------------------------------------------------
Article VIII.
1. As used in this Article VIII the following terms have the following
meanings:
"Account" or "Custodial Account" means the individual retirement account
established using the terms of either Part One or Part Two and, in either event,
Part Three of this State Street Bank and Trust Company Universal Individual
Retirement Account Custodial Agreement and the Adoption Agreement signed by the
Depositor. The Account may be a Regular Individual Retirement Account or a Roth
Individual Retirement Account, as specified by the Depositor. See Section 24
below.
"Custodian" means State Street Bank and Trust Company.
"Fund" means any registered investment company which is advised, sponsored
or distributed by Sponsor; provided, however, that such a mutual fund or
registered investment company must be legally offered for sale in the state of
the Depositor's residence.
"Distributor" means the entity which has a contract with the Fund(s) to
serve as distributor of the shares of such Fund(s).
In any case where there is no Distributor, the duties assigned hereunder to
the Distributor may be performed by the Fund(s) or by an entity that has a
contract to perform management or investment advisory services for the Fund(s).
"Service Company" means any entity employed by the Custodian or the
Distributor, including the transfer agent for the Fund(s), to perform various
administrative duties of either the Custodian or the Distributor.
In any case where there is no Service Company, the duties assigned
hereunder to the Service Company will be performed by the Distributor (if any)
or by an entity specified in the second preceding paragraph.
"Sponsor" means [insert fund management company or other fund entity that
is making Fund(s) available under this Agreement and has the power to appoint a
successor Custodian.]
2. The Depositor may revoke the Custodial Account established hereunder by
mailing or delivering a written notice of revocation to the Custodian within
seven days after the Depositor receives the Disclosure Statement related to the
Custodial Account. Mailed notice is treated as given to the Custodian on date of
the postmark (or on the date of Post Office certification or registration in the
case of notice sent by certified or registered mail). Upon timely revocation,
the Depositor's initial contribution will be returned, without adjustment for
administrative expenses, commissions or sales charges, fluctuations in market
value or other changes.
The Depositor may certify in the Adoption Agreement that the Depositor
received the Disclosure Statement related to the Custodial Account at least
seven days before the Depositor signed the Adoption Agreement to establish the
Custodial Account, and the Custodian may rely upon such certification.
3. All contributions to the Custodial Account shall be invested and
reinvested in full and fractional shares of one or more Funds. Such investments
shall be made in such proportions and/or in such amounts as Depositor from time
to time in the Adoption Agreement or by other written notice to the Service
Company (in such form as may be acceptable to the Service Company) may direct.
The Service Company shall be responsible for promptly transmitting all
investment directions by the Depositor for the purchase or sale of shares of one
or more Funds hereunder to the Funds' transfer agent for execution. However, if
investment directions with respect to the investment of any contribution
hereunder are not received from the Depositor as required or, if received, are
unclear or incomplete in the opinion of the Service Company, the contribution
will be returned to the Depositor, or will be held uninvested (or invested in a
money market fund if available) pending clarification or completion by the
Depositor, in either case without liability for interest or for loss of income
or appreciation. If any other directions or other orders by the Depositor with
respect to the sale or purchase of shares of one or more Funds for the Custodial
Account are unclear or incomplete in the opinion of the Service Company, the
Service Company will refrain from carrying out such investment directions or
from executing any such sale or purchase, without liability for loss of income
or for appreciation or depreciation of any asset, pending receipt of
clarification or completion from the Depositor.
All investment directions by Depositor will be subject to any minimum
initial or additional investment or minimum balance rules applicable to a Fund
as described in its prospectus.
All dividends and capital gains or other distributions received on the
shares of any Fund held in the Depositor's Account shall be (unless received in
additional shares) reinvested in full and fractional shares of such Fund (or of
any other Fund offered by the Sponsor, if so directed).
4. Subject to the minimum initial or additional investment, minimum
balance and other exchange rules applicable to a Fund, the Depositor may at any
time direct the Service Company to exchange all or a specified portion of the
shares of a Fund in the Depositor's Account for shares and fractional shares of
one or more other Funds. The Depositor shall give such directions by written
notice acceptable to the Service Company, and the Service Company will process
such directions as soon as practicable after receipt thereof (subject to the
second paragraph of Section 3 of this Article VIII).
5. Any purchase or redemption of shares of a Fund for or from the
Depositor's Account will be effected at the public offering price or net asset
value of such Fund (as described in the then effective prospectus for such Fund)
next established after the Service Company has transmitted the Depositor's
investment directions to the transfer agent for the Fund(s).
Any purchase, exchange, transfer or redemption of shares of a Fund for or
from the Depositor's Account will be subject to any applicable sales, redemption
or other charge as described in the then effective prospectus for such Fund.
6. The Service Company shall maintain adequate records of all purchases or
sales of shares of one or more Funds for the Depositor's Custodial Account. Any
account maintained in connection herewith shall be in the name of the Custodian
for the benefit of the Depositor. All assets of the Custodial Account shall be
registered in the name of the Custodian or of a suitable nominee. The books and
records of the Custodian shall show that all such investments are part of the
Custodial Account.
<PAGE>
The Custodian shall maintain or cause to be maintained adequate records
reflecting transactions of the Custodial Account. In the discretion of the
Custodian, records maintained by the Service Company with respect to the Account
hereunder will be deemed to satisfy the Custodian's recordkeeping
responsibilities therefor. The Service Company agrees to furnish the Custodian
with any information the Custodian requires to carry out the Custodian's
recordkeeping responsibilities.
7. Neither the Custodian nor any other party providing services to the
Custodial Account will have any responsibility for rendering advice with respect
to the investment and reinvestment of Depositor's Custodial Account, nor shall
such parties be liable for any loss or diminution in value which results from
Depositor's exercise of investment control over his Custodial Account. Depositor
shall have and exercise exclusive responsibility for and control over the
investment of the assets of his Custodial Account, and neither Custodian nor any
other such party shall have any duty to question his directions in that regard
or to advise him regarding the purchase, retention or sale of shares of one or
more Funds for the Custodial Account.
8. The Depositor may in writing appoint an investment advisor with respect
to the Custodial Account on a form acceptable to the Custodian and the Service
Company. The investment advisor's appointment will be in effect until written
notice to the contrary is received by the Custodian and the Service Company.
While an investment advisor's appointment is in effect, the investment advisor
may issue investment directions or may issue orders for the sale or purchase of
shares of one or more Funds to the Service Company, and the Service Company will
be fully protected in carrying out such investment directions or orders to the
same extent as if they had been given by the Depositor.
The Depositor's appointment of any investment advisor will also be deemed
to be instructions to the Custodian and the Service Company to pay such
investment advisor's fees to the investment advisor from the Custodial Account
hereunder without additional authorization by the Depositor or the Custodian.
9. Distribution of the assets of the Custodial Account shall be made at
such time and in such form as Depositor (or the Beneficiary if Depositor is
deceased) shall elect by written order to the Custodian. Depositor acknowledges
that any distribution of a taxable amount from the Custodial Account (except for
distribution on account of Depositor's disability or death, return of an "excess
contribution" referred to in Code Section 4973, or a "rollover" from this
Custodial Account) made earlier than age 59 1/2 may subject Depositor to an
"additional tax on early distributions" under Code Section 72(t) unless an
exception to such additional tax is applicable. For that purpose, Depositor will
be considered disabled if Depositor can prove, as provided in Code Section
72(m)(7), that Depositor is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or be of long-continued and indefinite duration.
It is the responsibility of the Depositor (or the Beneficiary) by appropriate
distribution instructions to the Custodian to insure that any applicable
distribution requirements of Code Section 401(a)(9) and Article IV above are
met. If the Depositor (or Beneficiary) does not direct the Custodian to make
distributions from the Custodial Account by the time that such distributions are
required to commence in accordance with such distribution requirements, the
Custodian (and Service Company) shall assume that the Depositor (or Beneficiary)
is meeting the minimum distribution requirements from another individual
retirement arrangement maintained by the Depositor (or Beneficiary) and the
Custodian and Service Company shall be fully protected in so doing. The
Depositor (or the Depositor's surviving spouse) may elect to comply with the
distribution requirements in Article IV using the recalculation of life
expectancy method, or may elect that the life expectancy of the Depositor and/or
the Depositor's surviving spouse, as applicable, will not be recalculated; any
such election may be in such form as the Depositor (or surviving spouse)
provides (including the calculation of minimum distribution amounts in
accordance with a method that does not provide for recalculation of the life
expectancy of one or both of the Depositor and surviving spouse and instructions
for withdrawals to the Custodian in accordance with such method).
Notwithstanding paragraph 2 of Article IV, unless an election to have life
expectancies recalculated annually is made by the time distributions are
required to begin, life expectancies shall not be recalculated. Neither the
Custodian nor any other party providing services to the Custodial Account
assumes any responsibility for the tax treatment of any distribution from the
Custodial Account; such responsibility rests solely with the person ordering the
distribution.
10. The Custodian assumes (and shall have) no responsibility to make any
distribution except upon the written order of Depositor (or Beneficiary if
Depositor is deceased) containing such information as the Custodian may
reasonably request. Also, before making any distribution or honoring any
assignment of the Custodial Account, Custodian shall be furnished with any and
all applications, certificates, tax waivers, signature guarantees and other
documents (including proof of any legal representative's authority) deemed
necessary or advisable by Custodian, but Custodian shall not be responsible for
complying with any order or instruction which appears on its face to be genuine,
or for refusing to comply if not satisfied it is genuine, and Custodian has no
duty of further inquiry. Any distributions from the Account may be mailed,
first-class postage prepaid, to the last known address of the person who is to
receive such distribution, as shown on the Custodian's records, and such
distribution shall to the extent thereof completely discharge the Custodian's
liability for such payment.
11. (a) The term "Beneficiary" means the person or persons designated as
such by the "designating person" (as defined below) on a form
acceptable to the Custodian for use in connection with the
Custodial Account, signed by the designating person, and filed
with the Custodian. The form may name individuals, trusts,
estates, or other entities as either primary or contingent
beneficiaries. However, if the designation does not effectively
dispose of the entire Custodial Account as of the time
distribution is to commence, the term "Beneficiary" shall then
mean the designating person's estate with respect to the assets
of the Custodial Account not disposed of by the designation
form. The form last accepted by the Custodian before such
distribution is to commence, provided it was received by the
Custodian (or deposited in the U.S. Mail or with a reputable
delivery service) during the designating person's lifetime,
shall be controlling and, whether or not fully dispositive of
the Custodial Account, thereupon shall revoke all such forms
previously filed by that person. The term "designating person"
means Depositor during his/her lifetime; after Depositor's
death, it also means Depositor's spouse, but only if the spouse
elects to treat the Custodial Account as the spouse's own
Custodial Account in accordance with applicable provisions of
the Code.
(b) When and after distributions from the Custodial Account to
Depositor's Beneficiary commence, all rights and obligations
assigned to Depositor hereunder shall inure to, and be enjoyed
and exercised by, Beneficiary instead of Depositor.
12. (a) The Depositor agrees to provide information to the Custodian at
such time and in such manner as may be necessary for the
Custodian to prepare any reports
<PAGE>
required under Section 408(i) or Section 408A(d)(3)(E) of the
Code and the regulations thereunder or otherwise.
(b) The Custodian or the Service Company will submit reports to the
Internal Revenue Service and the Depositor at such time and
manner and containing such information as is prescribed by the
Internal Revenue Service.
(c) The Depositor, Custodian and Service Company shall furnish to
each other such information relevant to the Custodial Account
as may be required under the Code and any regulations issued or
forms adopted by the Treasury Department thereunder or as may
otherwise be necessary for the administration of the Custodial
Account.
(d) The Depositor shall file any reports to the Internal Revenue
Service which are required of him by law (including Form 5329),
and neither the Custodian nor Service Company shall have any
duty to advise Depositor concerning or monitor Depositor's
compliance with such requirement.
13. (a) Depositor retains the right to amend this Custodial Account
document in any respect at any time, effective on a stated date
which shall be at least 60 days after giving written notice of
the amendment (including its exact terms) to Custodian by
registered or certified mail, unless Custodian waives notice as
to such amendment. If the Custodian does not wish to continue
serving as such under this Custodial Account document as so
amended, it may resign in accordance with Section 17 below.
(b) Depositor delegates to the Custodian the Depositor's right so to
amend, provided (i) the Custodian does not change the
investments available under this Custodial Agreement and (ii)
the Custodian amends in the same manner all agreements
comparable to this one, having the same Custodian, permitting
comparable investments, and under which such power has been
delegated to it; this includes the power to amend retroactively
if necessary or appropriate in the opinion of the Custodian in
order to conform this Custodial Account to pertinent provisions
of the Code and other laws or successor provisions of law, or
to obtain a governmental ruling that such requirements are met,
to adopt a prototype or master form of agreement in
substitution for this Agreement, or as otherwise may be
advisable in the opinion of the Custodian. Such an amendment by
the Custodian shall be communicated in writing to Depositor,
and Depositor shall be deemed to have consented thereto unless,
within 30 days after such communication to Depositor is mailed,
Depositor either (i) gives Custodian a written order for a
complete distribution or transfer of the Custodial Account, or
(ii) removes the Custodian and appoints a successor under
Section 17 below.
Pending the adoption of any amendment necessary or desirable to
conform this Custodial Account document to the requirements of
any amendment to any applicable provision of the Internal
Revenue Code or regulations or rulings thereunder, the
Custodian and the Service Company may operate the Depositor's
Custodial Account in accordance with such requirements to the
extent that the Custodian and/or the Service Company deem
necessary to preserve the tax benefits of the Account.
(c) Notwithstanding the provisions of subsections (a) and (b) above,
no amendment shall increase the responsibilities or duties of
Custodian without its prior written consent.
(d) This Section 13 shall not be construed to restrict the
Custodian's right to substitute fee schedules in the manner
provided by Section 16 below, and no such substitution shall be
deemed to be an amendment of this Agreement.
14. (a) Custodian shall terminate the Custodial Account if this Agreement
is terminated or if, within 30 days (or such longer time as
Custodian may agree) after resignation or removal of Custodian
under Section 17, Depositor or Sponsor, as the case may be, has
not appointed a successor which has accepted such appointment.
Termination of the Custodial Account shall be effected by
distributing all assets thereof in a single payment in cash or
in kind to Depositor, subject to Custodian's right to reserve
funds as provided in Section 17.
(b) Upon termination of the Custodial Account, this custodial account
document shall have no further force and effect (except for
Sections 15(f), 17(b) and (c) hereof which shall survive the
termination of the Custodial Account and this document), and
Custodian shall be relieved from all further liability
hereunder or with respect to the Custodial Account and all
assets thereof so distributed.
15. (a) In its discretion, the Custodian may appoint one or more
contractors or service providers to carry out any of its
functions and may compensate them from the Custodial Account
for expenses attendant to those functions. In the event of such
appointment, all rights and privileges of the Custodian under
this Agreement shall pass through to such contractors or
service providers who shall be entitled to enforce them as if a
named party.
(b) The Service Company shall be responsible for receiving all
instructions, notices, forms and remittances from Depositor and
for dealing with or forwarding the same to the transfer agent
for the Fund(s).
(c) The parties do not intend to confer any fiduciary duties on
Custodian or Service Company (or any other party providing
services to the Custodial Account), and none shall be implied.
Neither shall be liable (or assumes any responsibility) for the
collection of contributions, the proper amount, time or tax
treatment of any contribution to the Custodial Account or the
propriety of any contributions under this Agreement, or the
purpose, time, amount (including any minimum distribution
amounts), tax treatment or propriety of any distribution
hereunder, which matters are the sole responsibility of
Depositor and Depositor's Beneficiary.
(d) Not later than 60 days after the close of each calendar year (or
after the Custodian's resignation or removal), the Custodian or
Service Company shall file with Depositor a written report or
reports reflecting the transactions effected by it during such
period and the assets of the Custodial Account at its close.
Upon the expiration of 60 days after such a report is sent to
Depositor (or Beneficiary), the Custodian or Service
<PAGE>
Company shall be forever released and discharged from all
liability and accountability to anyone with respect to
transactions shown in or reflected by such report except with
respect to any such acts or transactions as to which Depositor
shall have filed written objections with the Custodian or
Service Company within such 60 day period.
(e) The Service Company shall deliver, or cause to be delivered, to
Depositor all notices, prospectuses, financial statements and
other reports to shareholders, proxies and proxy soliciting
materials relating to the shares of the Funds(s) credited to
the Custodial Account. No shares shall be voted, and no other
action shall be taken pursuant to such documents, except upon
receipt of adequate written instructions from Depositor.
(f) Depositor shall always fully indemnify Service Company,
Distributor, the Fund(s), Sponsor and Custodian and save them
harmless from any and all liability whatsoever which may arise
either (i) in connection with this Agreement and the matters
which it contemplates, except that which arises directly out of
the Service Company's, Distributor's, Fund's, Sponsor's or
Custodian's bad faith, gross negligence or willful misconduct,
(ii) with respect to making or failing to make any
distribution, other than for failure to make distribution in
accordance with an order therefor which is in full compliance
with Section 10, or (iii) actions taken or omitted in good
faith by such parties. Neither Service Company nor Custodian
shall be obligated or expected to commence or defend any legal
action or proceeding in connection with this Agreement or such
matters unless agreed upon by that party and Depositor, and
unless fully indemnified for so doing to that party's
satisfaction.
(g) The Custodian and Service Company shall each be responsible
solely for performance of those duties expressly assigned to it
in this Agreement, and neither assumes any responsibility as to
duties assigned to anyone else hereunder or by operation of
law.
(h) The Custodian and Service Company may each conclusively rely upon
and shall be protected in acting upon any written order from
Depositor or Beneficiary, or any investment advisor appointed
under Section 8, or any other notice, request, consent,
certificate or other instrument or paper believed by it to be
genuine and to have been properly executed, and so long as it
acts in good faith, in taking or omitting to take any other
action in reliance thereon. In addition, Custodian will carry
out the requirements of any apparently valid court order
relating to the Custodial Account and will incur no liability
or responsibility for so doing.
16. (a) The Custodian, in consideration of its services under this
Agreement, shall receive the fees specified on the applicable
fee schedule. The fee schedule originally applicable shall be
the one specified in the Adoption Agreement or Disclosure
Statement, as applicable. The Custodian may substitute a
different fee schedule at any time upon 30 days' written notice
to Depositor. The Custodian shall also receive reasonable fees
for any services not contemplated by any applicable fee
schedule and either deemed by it to be necessary or desirable
or requested by Depositor.
(b) Any income, gift, estate and inheritance taxes and other taxes of
any kind whatsoever, including transfer taxes incurred in
connection with the investment or reinvestment of the assets of
the Custodial Account, that may be levied or assessed in
respect to such assets, and all other administrative expenses
incurred by the Custodian in the performance of its duties
(including fees for legal services rendered to it in connection
with the Custodial Account) shall be charged to the Custodial
Account. If the Custodian is required to pay any such amount,
the Depositor (or Beneficiary) shall promptly upon notice
thereof reimburse the Custodian.
(c) All such fees and taxes and other administrative expenses charged
to the Custodial Account shall be collected either from the
amount of any contribution or distribution to or from the
Account, or (at the option of the person entitled to collect
such amounts) to the extent possible under the circumstances by
the conversion into cash of sufficient shares of one or more
Funds held in the Custodial Account (without liability for any
loss incurred thereby). Notwithstanding the foregoing, the
Custodian or Service Company may make demand upon the Depositor
for payment of the amount of such fees, taxes and other
administrative expenses. Fees which remain outstanding after 60
days may be subject to a collection charge.
17. (a) Upon 30 days' prior written notice to the Custodian, Depositor or
Sponsor, as the case may be, may remove it from its office
hereunder. Such notice, to be effective, shall designate a
successor custodian and shall be accompanied by the successor's
written acceptance. The Custodian also may at any time resign
upon 30 days' prior written notice to Sponsor, whereupon the
Sponsor shall notify the Depositor (or Beneficiary) and shall
appoint a successor to the Custodian. In connection with its
resignation hereunder, the Custodian may, but is not required
to, designate a successor custodian by written notice to the
Sponsor or Depositor (or Beneficiary), and the Sponsor or
Depositor (or Beneficiary) will be deemed to have consented to
such successor unless the Sponsor or Depositor (or Beneficiary)
designates a different successor custodian and provides written
notice thereof together with such a different successor's
written acceptance by such date as the Custodian specifies in
its original notice to the Sponsor or Depositor (or
Beneficiary) (provided that the Sponsor or Depositor (or
Beneficiary) will have a minimum of 30 days to designate a
different successor).
(b) The successor custodian shall be a bank, insured credit union, or
other person satisfactory to the Secretary of the Treasury
under Code Section 408(a)(2). Upon receipt by Custodian of
written acceptance by its successor of such successor's
appointment, Custodian shall transfer and pay over to such
successor the assets of the Custodial Account and all records
(or copies thereof) of Custodian pertaining thereto, provided
that the successor custodian agrees not to dispose of any such
records without the Custodian's consent. Custodian is
authorized, however, to reserve such sum of money or property
as it may deem advisable for payment of all its fees,
compensation, costs, and expenses, or for payment of any other
liabilities constituting a charge on or against the assets of
the Custodial Account or on or against the Custodian, with
<PAGE>
any balance of such reserve remaining after the payment of all
such items to be paid over to the successor custodian.
(c) Any Custodian shall not be liable for the acts or omissions of
its predecessor or its successor.
18. References herein to the "Internal Revenue Code" or "Code" and
sections thereof shall mean the same as amended from time to time, including
successors to such sections.
19. Except where otherwise specifically required in this Agreement, any
notice from Custodian to any person provided for in this Agreement shall be
effective if sent by first-class mail to such person at that person's last
address on the Custodian's records.
20. Depositor or Depositor's Beneficiary shall not have the right or power
to anticipate any part of the Custodial Account or to sell, assign, transfer,
pledge or hypothecate any part thereof. The Custodial Account shall not be
liable for the debts of Depositor or Depositor's Beneficiary or subject to any
seizure, attachment, execution or other legal process in respect thereof except
to the extent required by law. At no time shall it be possible for any part of
the assets of the Custodial Account to be used for or diverted to purposes other
than for the exclusive benefit of the Depositor or his/her Beneficiary except to
the extent required by law.
21. When accepted by the Custodian, this Agreement is accepted in and
shall be construed and administered in accordance with the laws of the state
where the principal offices of the Custodian are located. Any action involving
the Custodian brought by any other party must be brought in a state or federal
court in such state.
If in the Adoption Agreement, Depositor designates that the Custodial
Account is a Regular IRA, this Agreement is intended to qualify under Code
Section 408(a) as an individual retirement Custodial Account and to entitle
Depositor to the retirement savings deduction under Code Section 219 if
available. If in the Adoption Agreement Depositor designates that the Custodial
Account is a Roth IRA, this Agreement is intended to qualify under Code Section
408A as a Roth individual retirement Custodial Account and to entitle Depositor
to the tax-free withdrawal of amounts from the Custodial Account to the extent
permitted in such Code section.
If any provision hereof is subject to more than one interpretation or any
term used herein is subject to more than one construction, such ambiguity shall
be resolved in favor of that interpretation or construction which is consistent
with the intent expressed in whichever of the two preceding sentences is
applicable.
However, the Custodian shall not be responsible for whether or not such
intentions are achieved through use of this Agreement, and Depositor is referred
to Depositor's attorney for any such assurances.
22. Depositor should seek advice from Depositor's attorney regarding the
legal consequences (including but not limited to federal and state tax matters)
of entering into this Agreement, contributing to the Custodial Account, and
ordering Custodian to make distributions from the Account. Depositor
acknowledges that Custodian and Service Company (and any company associated
therewith) are prohibited by law from rendering such advice.
23. If any provision of any document governing the Custodial Account
provides for notice, instructions or other communications from one party to
another in writing, to the extent provided for in the procedures of the
Custodian, Service Company or another party, any such notice, instructions or
other communications may be given by telephonic, computer, other electronic or
other means, and the requirement for written notice will be deemed satisfied.
24. The legal documents governing the Custodial Account are as follows:
(a) If in the Adoption Agreement the Depositor designated the
Custodial Account as a Regular IRA under Code Section 408(a),
the provisions of Part One and Part Three of this Agreement and
the provisions of the Adoption Agreement are the legal
documents governing the Depositor's Custodial Account.
(b) If in the Adoption Agreement the Depositor designated the
Custodial Account as a Roth IRA under Code Section 408A, the
provisions of Part Two and Part Three of this Agreement and the
provisions of the Adoption Agreement are the legal documents
governing the Depositor's Custodial Account.
(c) In the Adoption Agreement the Depositor must designate the
Custodian Account as either a Roth IRA or a Regular IRA, and a
separate account will be established for such IRA. One
Custodial Account may not serve as a Roth IRA and a Regular IRA
(through the use of subaccounts or otherwise).
25. Articles I through VII of Part One of this Agreement are in the form
promulgated by the Internal Revenue Service as Form 5305-A. It is anticipated
that, if and when the Internal Revenue Service promulgates changes to Form 5305-
A, the Custodian will amend this Agreement correspondingly.
Articles I through VII of Part Two of this Agreement are in the form
promulgated by the Internal Revenue Service as Form 5305-RA. It is anticipated
that, if and when the Internal Revenue Service promulgates changes to Form 5305-
RA, the Custodian will amend this Agreement correspondingly.
The Internal Revenue Service has endorsed the use of documentation
permitting a Depositor to establish either a Regular IRA or Roth IRA (but not
both using a single Adoption Agreement), and this Kit complies with the
requirements of the IRS guidance for such use. If the Internal Revenue Service
subsequently determines that such an approach is not permissible, or that the
use of a "combined" Adoption Agreement does not establish a valid Regular IRA or
a Roth IRA (as the case may be), the Custodian will furnish the Depositor with
replacement documents and the Depositor will if necessary sign such replacement
documents. Depositor acknowledge and agrees to such procedures and to cooperate
with Custodian to preserve the intended tax treatment of the Account.
26. If the Depositor maintains an Individual Retirement Account under Code
section 408(a), Depositor may convert or transfer such other IRA to a Roth IRA
under Code section 408A using the terms of this Agreement and the Adoption
Agreement by completing and executing the Adoption Agreement and giving suitable
directions to the Custodian and the custodian or trustee of such other IRA.
Alternatively, the Depositor may convert or transfer such other IRA to a Roth
IRA by use of a reply card or by telephonic, computer or electronic means in
accordance with procedures adopted by the Custodian or Service Company intended
to meet the requirements of Code section 408A, and the Depositor will be deemed
to have executed the Adoption Agreement and adopted the provisions of this
Agreement and the Adoption Agreement in accordance with such procedures.
27. The Depositor acknowledges that he or she has received and read the
current prospectus for each Fund in which his or her Account is invested and the
Individual Retirement Account Disclosure Statement related to the Account. The
Depositor represents under penalties of perjury that his or her Social Security
number (or other Taxpayer Identification Number) as stated in the Adoption
Agreement is correct.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> MUNDER FRAMLINGTON EMERGING MARKETS CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 67,982,742
<INVESTMENTS-AT-VALUE> 56,073,826
<RECEIVABLES> 1,247,736
<ASSETS-OTHER> 586,593
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 57,908,155
<PAYABLE-FOR-SECURITIES> 485,863
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,023,983
<TOTAL-LIABILITIES> 10,509,846
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 65,760,332
<SHARES-COMMON-STOCK> 70,348
<SHARES-COMMON-PRIOR> 41,177
<ACCUMULATED-NII-CURRENT> (127,776)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (6,321,583)
<ACCUM-APPREC-OR-DEPREC> (11,912,664)
<NET-ASSETS> 47,398,309
<DIVIDEND-INCOME> 872,177
<INTEREST-INCOME> 380,207
<OTHER-INCOME> 0
<EXPENSES-NET> (806,673)
<NET-INVESTMENT-INCOME> 445,711
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> MUNDER FRAMLINGTON EMERGING MARKETS CLASS B
<S> <C>
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<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
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<NUMBER-OF-SHARES-REDEEMED> (13,539)
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<ACCUMULATED-NII-PRIOR> 623
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<PER-SHARE-NAV-BEGIN> 12.91
<PER-SHARE-NII> 0.02
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 023
<NAME> MUNDER FRAMLINGTON EMERGING MARKETS CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
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<ACCUMULATED-NII-CURRENT> (127,776)
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<NET-ASSETS> 47,398,309
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<REALIZED-GAINS-CURRENT> (5,791,184)
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<DISTRIBUTIONS-OF-INCOME> (4)
<DISTRIBUTIONS-OF-GAINS> (635)
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<NUMBER-OF-SHARES-SOLD> 32,857
<NUMBER-OF-SHARES-REDEEMED> (20,000)
<SHARES-REINVESTED> 47
<NET-CHANGE-IN-ASSETS> 37,464,631
<ACCUMULATED-NII-PRIOR> 623
<ACCUMULATED-GAINS-PRIOR> 216,301
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<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
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<AVERAGE-NET-ASSETS> 45,000
<PER-SHARE-NAV-BEGIN> 12.92
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> (3.71)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 024
<NAME> MUNDER FRAMLINGTON EMERGING MARKETS CLASS K
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
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<ACCUMULATED-NII-CURRENT> (127,776)
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<OVERDISTRIBUTION-GAINS> (6,321,583)
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<NUMBER-OF-SHARES-SOLD> 3,932,077
<NUMBER-OF-SHARES-REDEEMED> (737,301)
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<NET-CHANGE-IN-ASSETS> 37,464,631
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<PER-SHARE-NAV-BEGIN> 12.92
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 025
<NAME> MUNDER FRAMLINGTON EMERGING MARKETS CLASS Y
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
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<ACCUMULATED-NII-CURRENT> (127,776)
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<OVERDISTRIBUTION-GAINS> (6,321,583)
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<EXPENSES-NET> (806,673)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 045
<NAME> MUNDER FRAMLINGTON GLOBAL FINANCIAL SERVICES CLASS Y
<S> <C>
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<FISCAL-YEAR-END> JUN-30-1998
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<NET-ASSETS> 1,834,322
<DIVIDEND-INCOME> 84
<INTEREST-INCOME> 1,335
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<EXPENSES-NET> (342)
<NET-INVESTMENT-INCOME> 1,077
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<NUMBER-OF-SHARES-SOLD> 180,165
<NUMBER-OF-SHARES-REDEEMED> (119)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> MUNDER FRAMLINGTON HEALTHCARE CLASS A
<S> <C>
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<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-01-1998
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<PAID-IN-CAPITAL-COMMON> 22,095,463
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<ACCUMULATED-NII-CURRENT> (2,990)
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<NET-ASSETS> 22,647,412
<DIVIDEND-INCOME> 10,294
<INTEREST-INCOME> 49,485
<OTHER-INCOME> 0
<EXPENSES-NET> (268,400)
<NET-INVESTMENT-INCOME> (208,621)
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<NUMBER-OF-SHARES-REDEEMED> (28,756)
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<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 381,000
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<PER-SHARE-NII> (0.15)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 032
<NAME> MUNDER FRAMLINGTON HEALTHCARE CLASS B
<S> <C>
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<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
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<PAID-IN-CAPITAL-COMMON> 22,095,463
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<ACCUMULATED-NII-CURRENT> (2,990)
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<NET-ASSETS> 22,647,412
<DIVIDEND-INCOME> 10,294
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<EXPENSES-NET> (268,400)
<NET-INVESTMENT-INCOME> (208,621)
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<NUMBER-OF-SHARES-REDEEMED> (22,987)
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<OVERDIST-NET-GAINS-PRIOR> (68,392)
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<GROSS-EXPENSE> 381,000
<AVERAGE-NET-ASSETS> 4,284,000
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<PER-SHARE-NII> (0.23)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 033
<NAME> MUNDER FRAMLINGTON HEALTHCARE CLASS C
<S> <C>
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<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
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<NUMBER-OF-SHARES-REDEEMED> (15,939)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 034
<NAME> MUNDER FRAMLINGTON HEALTHCARE CLASS K
<S> <C>
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<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
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<INTEREST-INCOME> 49,485
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<REALIZED-GAINS-CURRENT> 260,574
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<PER-SHARE-NAV-BEGIN> 10.89
<PER-SHARE-NII> (0.14)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 035
<NAME> MUNDER FRAMLINGTON HEALTHCARE CLASS Y
<S> <C>
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<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
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<ACCUMULATED-NII-CURRENT> (2,990)
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<DIVIDEND-INCOME> 10,294
<INTEREST-INCOME> 49,485
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<OVERDIST-NET-GAINS-PRIOR> (68,392)
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<GROSS-EXPENSE> 381,000
<AVERAGE-NET-ASSETS> 5,042,000
<PER-SHARE-NAV-BEGIN> 10.89
<PER-SHARE-NII> (0.11)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> MUNDER FRAMLINGTON INTERNATIONAL GROWTH CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 69,032,118
<INVESTMENTS-AT-VALUE> 75,487,663
<RECEIVABLES> 374,253
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<SHARES-COMMON-STOCK> 134,290
<SHARES-COMMON-PRIOR> 97,197
<ACCUMULATED-NII-CURRENT> (45,004)
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<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (363,987)
<ACCUM-APPREC-OR-DEPREC> 6,455,891
<NET-ASSETS> 69,302,115
<DIVIDEND-INCOME> 785,443
<INTEREST-INCOME> 159,797
<OTHER-INCOME> 0
<EXPENSES-NET> (720,587)
<NET-INVESTMENT-INCOME> 224,653
<REALIZED-GAINS-CURRENT> (457,298)
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<DISTRIBUTIONS-OF-GAINS> (3,881)
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<NET-CHANGE-IN-ASSETS> 43,089,297
<ACCUMULATED-NII-PRIOR> 7,821
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<OVERDISTRIB-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 826,000
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<PER-SHARE-NAV-BEGIN> 11.35
<PER-SHARE-NII> 0.02
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> MUNDER FRAMLINGTON INTERNATIONAL GROWTH CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 69,032,118
<INVESTMENTS-AT-VALUE> 75,487,663
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<SHARES-COMMON-PRIOR> 11,341
<ACCUMULATED-NII-CURRENT> (45,004)
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<OVERDISTRIBUTION-GAINS> (363,987)
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<INTEREST-INCOME> 159,797
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<EXPENSES-NET> (720,587)
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<REALIZED-GAINS-CURRENT> (457,298)
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<DISTRIBUTIONS-OF-GAINS> (645)
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<NUMBER-OF-SHARES-SOLD> 38,978
<NUMBER-OF-SHARES-REDEEMED> (400)
<SHARES-REINVESTED> 19
<NET-CHANGE-IN-ASSETS> 43,089,297
<ACCUMULATED-NII-PRIOR> 7,821
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<INTEREST-EXPENSE> 0
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<PER-SHARE-NAV-BEGIN> 11.32
<PER-SHARE-NII> (0.06)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 013
<NAME> MUNDER FRAMLINGTON INTERNATIONAL GROWTH CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 69,032,118
<INVESTMENTS-AT-VALUE> 75,487,663
<RECEIVABLES> 374,253
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<SHARES-COMMON-PRIOR> 5,476
<ACCUMULATED-NII-CURRENT> (45,004)
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<OVERDISTRIBUTION-GAINS> (363,987)
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<INTEREST-INCOME> 159,797
<OTHER-INCOME> 0
<EXPENSES-NET> (720,587)
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<REALIZED-GAINS-CURRENT> (457,298)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 014
<NAME> MUNDER FRAMLINGTON INTERNATIONAL GROWTH CLASS K
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 69,032,118
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<SHARES-COMMON-PRIOR> 95,935
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<OVERDISTRIBUTION-GAINS> (363,987)
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<INTEREST-INCOME> 159,797
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 015
<NAME> MUNDER FRAMLINGTON INTERNATIONAL GROWTH CLASS Y
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1997
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</TABLE>
