<PAGE>
As filed with the Securities and Exchange Commission
on August 28, 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. 5 [X]
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940[X]
Amendment No. 6 [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 60 days after filing
pursuant to paragraph (a)(1) 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 Not applicable
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 Not Applicable
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
7. Redemption or Repurchase Redemptions of Shares
8. 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 Not Applicable
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>
<S> <C> <C>
22. Calculation of Performance Data Performance Information
23. Financial Statements Not applicable
</TABLE>
<PAGE>
THE MUNDER FRAMLINGTON FUNDS TRUST
The purposes of this Post-Effective Amendment filing are (i) to combine
prospectuses with respect to certain series of the Registrant and (ii) to
incorporate supplements to the prospectuses and Statement of Additional
Information.
<PAGE>
CLASS A, B & C SHARES
[Munder
Logo]
PROSPECTUS
October 27, 1998
THE MUNDER EQUITY FUNDS
Accelerating Growth
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 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 Accelerating Growth Fund*
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
* The Accelerating Growth Fund is closed to new investors.
Munder Capital Management (the "Advisor") serves as the investment adviser
of the Funds.
This Prospectus explains the objectives, policies, risks and fees of each
Fund. You should read this Prospectus carefully before investing and retain it
for future reference. A Statement of Additional Information ("SAI") describing
each of the Funds has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated by reference into this Prospectus. You can
obtain the SAI free of charge by calling the Funds at (800) 438-5789. In
addition, the SEC maintains a Web site (http://www.sec.gov) that contains the
SAI and other information regarding the Funds.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED OR GUARANTEED. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF THE PRINCIPLE 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............................................ 5
Fund Choices
What Funds are offered?..................................... 34
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?............... 48
Performance
How is the Funds' performance calculated?................... 49
Where can I obtain performance data?........................ 50
Purchases and Exchanges of Shares
What share class should I choose for my investment?......... 50
What price do I pay for shares?............................. 51
When can I purchase shares?................................. 53
What is the minimum required investment?.................... 53
How can I purchase shares?.................................. 54
How can I exchange shares?.................................. 55
Redemptions of Shares
What price do I receive for redeemed shares?................ 55
When can I redeem shares?................................... 56
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?........................ 61
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?........... 61
How will distributions be made?............................. 62
Are there tax implications of my investments in the Funds?.. 62
Additional Information........................................... 63
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUNDS?
Q: What are the Funds' goals?
A:
. The Accelerating Growth Fund, 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
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
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 foreign securities, the Funds are
Framlington International Growth Fund, riskier than domestic funds due to factors such as freezes on
Framlington Emerging Markets Fund and convertibility of currency, changes in exchange rates, political
Framlington Global Financial Services Fund instability and differences in accounting and reporting standards.
- ---------------------------------------------------------------------------------------------------------------------
Micro-Cap Equity Fund, Because of large investments in mid-capitalization, small-
Small-Cap Value Fund, capitalization and/or emerging growth companies, the Funds are
Small Company Growth Fund, riskier than large-capitalization funds since such companies
Growth Opportunities Fund and typically have greater earnings fluctuations and greater reliance on
NetNet Fund a few key customers than larger companies.
- ---------------------------------------------------------------------------------------------------------------------
Real Estate Equity Investment Fund, These Funds concentrate their investments in single industries and
Framlington Healthcare Fund, could experience larger price fluctuations than funds invested in a
Framlington Global Financial Fund and broader range of industries.
NetNet Fund
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
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 MAXIMUM
CLASS RULE 12B-1 FEES* END SALES LOAD** 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.
(i) If you invest over $250,000, you must buy Class A or Class C Shares.
Q: How do I buy and sell shares of the Funds?
A: Funds Distributor, Inc. (the "Distributor") sells shares of the Funds. You
may purchase shares from the Distributor through broker-dealers or other
financial institutions or from the Funds' transfer agent, First Data Investor
Services Group, Inc. (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?
<TABLE>
<CAPTION>
A: 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. 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): Accelerating
Growth Fund, Balanced Fund, Growth & Income Fund and Small Company Growth Fund.
Dividends paid monthly: Real Estate Equity Investment Fund.
The Funds distribute capital gains at least annually. Unless you elect to
receive distributions in cash, all dividends and capital gain distributions of a
Fund will be automatically used to purchase additional shares of that Fund.
Q: Who manages the Funds' assets?
A: Munder Capital Management is the Funds' investment advisor. The Advisor is
responsible for all purchases and sales of the securities held by the Funds
other than the Framlington Funds. The Advisor provides overall investment
management 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, Healthcare and
International Growth Funds. The Advisor is responsible for purchases and sales
of domestic securities and the Sub-Advisor is responsible for sales of foreign
securities for the Framlington Global Financial Services Fund.
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.
5
<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 Real
Estate Equity Investment Fund and Value Fund have been restated to reflect the
discontinuation of voluntary expense reimbursements effective as of the date of
this Prospectus, (ii) the expenses for the Multi-Season Growth Fund reflect an
anticipated voluntary advisory fee waiver for the current fiscal year, (iii) 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 (iv) the expenses for
the Micro-Cap Equity Fund, Small-Cap Value Fund, Growth Opportunities Fund and
the Framlington Funds are based on estimated operating expenses for the current
fiscal year and reflect anticipated voluntary expense reimbursements for the
Micro-Cap Equity Fund, Framlington Healthcare Fund, Framlington Global Financial
Services Fund and Growth Opportunities Fund. The Advisor may discontinue such
voluntary waivers or expense reimbursements at any time in its 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. [Update]
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS) ACCELERATING GROWTH FUND BALANCED FUND
- ----------------------------------------------------------- ----------------------------- ------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees.............................................. .75% .75% .75% .65% .65% .65%
12b-1 Fees................................................. .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses............................................. .20% .20% .20% .32% .32% .32%
---- ---- ---- ---- ---- ----
Total Fund Operating Expenses.............................. 1.20% 1.95% 1.95% 1.22% 1.97% 1.97%
==== ==== ==== ==== ==== ====
ANNUAL FUND
OPERATING GROWTH & INCOME FUND GROWTH OPPORTUNITIES FUND INTERNATIONAL EQUITY FUND
------------------------------- ------------------------------- ------------------------------
EXPENSES (AS A % OF CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
AVERAGE NET 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% .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+......... .20% .20% .20% .40%++ .40%++ .40%++ .26% .26% .26%
----- ----- ----- ------ ----- ----- ----- ----- -----
Total Fund Operating
Expenses+............... 1.20% 1.95% 1.95% 1.40%++ 2.15%++ 2.15%++ 1.26% 2.01% 2.01%
===== ===== ===== ====== ===== ===== ===== ===== =====
ANNUAL FUND
OPERATING MICRO-CAP EQUITY FUND MULTI-SEASON GROWTH FUND NETNET FUND
------------------------------- ------------------------------- ------------------------------
EXPENSES (AS A % CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
OF AVERAGE NET 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% .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+......... .25%++ .25%++ .25%++ .25% .25% .25% .28%++ .28%++ .28%++
----- ----- ----- ----- ----- ----- ----- ----- -----
Total Fund Operating
Expenses+............... 1.50%++ 2.25%++ 2.25%++ 1.25%* 2.00%* 2.00%* 1.53%++ 2.28%++ 2.28%++
===== ===== ===== ===== ===== ===== ===== ===== =====
ANNUAL FUND REAL ESTATE EQUITY
OPERATING INVESTMENT FUND SMALL-CAP VALUE FUND SMALL COMPANY GROWTH FUND
------------------------------- ------------------------------ ------------------------------
EXPENSES (AS A % OF CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
AVERAGE NET ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- ------------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees........... .74% .74% .74% .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+......... .36% .36% .36% .38% .38% .38% .22% .22% .22%
----- ----- ----- ----- ----- ----- ----- ----- -----
Total Fund Operating
Expenses+............... 1.35% 2.10% 2.10% 1.38% 2.13% 2.13% 1.22% 1.97% 1.97%
===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
ANNUAL FUND FRAMLINGTON EMERGING FRAMLINGTON GLOBAL FINANCIAL
OPERATING VALUE FUND MARKETS FUND SERVICES FUND
---------------------------- ----------------------------- ------------------------------
EXPENSES (AS A % OF CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
AVERAGE NET ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES SHARES
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees......... .74% .74% .74% 1.25% 1.25% 1.25% .75% .75% .75%
12b-1 Fees............ .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses+....... .28% .28% .28% .29% .29% .29% .50%++ .50%++ .50%++
----- ----- ----- ----- ----- ----- ----- ----- -----
Total Fund Operating
Expenses+............. 1.27% 2.02% 2.02% 1.79% 2.54% 2.54% 1.50%++ 2.25%++ 2.25%++
===== ===== ===== ===== ===== ===== ----- ===== =====
<CAPTION>
ANNUAL FUND FRAMLINGTON INTERNATIONAL
OPERATING EXPENSES FRAMLINGTON HEALTHCARE FUND GROWTH FUND
----------------------------------- ---------------------------------
(AS A PERCENTAGE OF AVERAGE CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
NET ASSETS) SHARES SHARES SHARES SHARES SHARES SHARES
- ------------------------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees......... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
12b-1 Fees............ .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses+....... .30%++ .30%++ .30%++ .30% .30% .30%
----- ----- ----- ----- ----- -----
Total Fund Operating
Expenses+............. 1.55%++ 2.30%++ 2.30%++ 1.55% 2.30% 2.30%
----- ===== ===== ===== ===== =====
</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 1.00% and total fund operating expenses would be 1.50%--Class A
Shares; 2.25%--Class B Shares; and 2.25%--Class C Shares.
+After expense reimbursements, if any.
++The Advisor expects to voluntarily reimburse the Funds for certain operating
expenses. In the absence of such expense reimbursements, it is estimated that
total fund operating expenses would be: Micro-Cap Equity Fund: 1.60%--Class A,
2.35%--Class B, 2.35%--Class C, Growth Opportunities Fund: 1.53%--Class A,
2.28%--Class B, 2.28%--Class C, NetNet Fund: 2.34%--Class A, 3.09%--Class B,
[_____ --Class C,] Framlington Global Financial Services Fund: 1.67%--Class A,
2.42%--Class B, 2.42%--Class C and Framlington Healthcare Fund: 1.76%--Class A,
2.51%--Class B and 2.51%--Class C.
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>
ACCELERATING GROWTH FUND BALANCED FUND
-------------------------------------- ---------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1 Year
. Redemption................. $ 67 $ 70 $ 30 $ 67 $ 70 $ 30
. No Redemption.............. $ 67 $ 20 $ 20 $ 67 $ 20 $ 20
3 Years
. Redemption................. $ 91 $ 91 $ 61 $ 92 $ 92 $ 62
. No Redemption.............. $ 91 $ 61 $ 61 $ 92 $ 62 $ 62
5 Years
. Redemption................. $117 $125 $105 $118 $126 $106
. No Redemption.............. $117 $105 $105 $118 $126 $106
10 Years
. Redemption................. $193 $227 $227 $195 $230 $230
. No Redemption.............. $193 $227 $227 $195 $230 $230
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND GROWTH OPPORTUNITIES FUND INTERNATIONAL EQUITY 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 $ 70 $ 30 $ 69 $ 73 $ 32 $ 67 $ 70 $ 30
. No Redemption... $ 67 $ 20 $ 20 $ 69 $ 73 $ 22 $ 67 $ 20 $ 20
3 YEARS
. Redemption...... $ 91 $ 91 $ 61 $ 98 $122 $ 68 $ 93 $ 93 $ 63
. No Redemption.... $ 91 $ 61 $ 61 $ 98 $122 $ 68 $ 93 $ 63 $ 63
5 YEARS
. Redemption...... $117 $125 $105 $120 $128 $108
. No Redemption.... $117 $105 $105 $120 $108 $108
10 YEARS
. Redemption...... $193 $227 $227 $199 $234 $234
. No Redemption.... $193 $227 $227 $199 $234 $234
<CAPTION>
MICRO-CAP EQUITY FUND MULTI-SEASON GROWTH FUND NETNET 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 $ 33 $ 67 $ 70 $ 30 $ 70 $ 75
. No Redemption... $ 69 $ 23 $ 23 $ 67 $ 20 $ 20 $ 70 $ 23
3 YEARS
. Redemption...... $100 $100 $ 70 $ 93 $ 93 $ 63 $101 $104
. No Redemption... $100 $ 70 $ 70 $ 93 $ 63 $ 63 $101 $ 72
5 YEARS
. Redemption...... $132 $140 $120 $120 $128 $108
. No Redemption... $132 $120 $120 $120 $108 $108
10 YEARS
. Redemption...... $225 $250 $258 $198 $233 $233
. No Redemption... $225 $258 $258 $198 $233 $233
<CAPTION>
REAL ESTATE EQUITY
INVESTMENT FUND SMALL-CAP VALUE FUND SMALL COMPANY 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...... $ 68 $ 71 $ 31 $ 68 $ 72 $ 32 $ 67 $ 70 $ 30
. No Redemption... $ 68 $ 21 $ 21 $ 68 $ 22 $ 22 $ 67 $ 20 $ 20
3 YEARS
. Redemption...... $ 95 $ 96 $ 66 $ 96 $ 97 $ 67 $ 92 $ 92 $ 62
. No Redemption... $ 95 $ 66 $ 66 $ 96 $ 67 $ 67 $ 92 $ 62 $ 62
5 YEARS
. Redemption...... $125 $133 $113 $127 $134 $114 $118 $126 $106
. No Redemption... $125 $113 $113 $127 $114 $114 $118 $106 $106
10 YEARS
. Redemption...... $209 $243 $243 $212 $246 $246 $195 $230 $230
. No Redemption... $209 $243 $243 $212 $246 $246 $195 $230 $230
<CAPTION>
VALUE FUND FRAMLINGTON EMERGING FRAMLINGTON GLOBAL FINANCIAL
----------
MARKETS FUND SERVICES 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 $ 31 $ 72 $ 76 $ 36 $ 70 $ 74 $ 33
. No Redemption... $ 67 $ 21 $ 21 $ 72 $ 26 $ 26 $ 70 $ 23 $ 23
3 YEARS
. Redemption...... $ 93 $ 93 $ 63 $108 $109 $ 79 $101 $104 $ 71
. No Redemption... $ 93 $ 63 $ 63 $108 $ 79 $ 79 $101 $ 71 $ 71
5 YEARS
. Redemption...... $121 $129 $109 $147 $155 $135
. No Redemption... $121 $109 $109 $147 $135 $135
10 YEARS
. Redemption...... $200 $235 $235 $254 $288 $288
. No Redemption... $200 $235 $235 $254 $288 $288
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON HEALTHCARE FUND FRAMLINGTON INTERNATIONAL GROWTH FUND
-------------------------------------- ---------------------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES SHARES SHARES
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1 YEAR
. Redemption................. $ 70 $ 73 $ 33 $ 70 $ 73 $ 33
. No Redemption.............. $ 70 $ 23 $ 23 $ 70 $ 23 $ 23
3 YEARS
. Redemption................. $101 $102 $ 72 $101 $102 $ 72
. No Redemption.............. $101 $ 72 $ 72 $101 $ 72 $ 72
5 YEARS
. Redemption................. $135 $143 $123 $135 $143 $123
. No Redemption.............. $135 $123 $123 $135 $123 $123
10 YEARS
. Redemption................. $230 $264 $264 $230 $264 $264
. No Redemption.............. $230 $264 $264 $230 $264 $264
</TABLE>
9
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights were audited by Ernst & Young LLP,
independent auditors, except that Multi-Season Growth Fund's financial
statements for periods ended prior to June 30, 1995 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>
ACCELERATING GROWTH (A)
--------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(I) 6/30/96 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..................
Income from investment operations:
Net investment income/(loss).....................
Net realized and unrealized gain/(loss) on
investments......................................
Total from investment operations.................
Less distributions:
Dividends from net investment income.............
Distributions from net realized gains............
Total distributions..............................
Net asset value, end of period........................
Total return (b).................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).............
Ratio of operating expenses to average net
assets...........................................
Ratio of net investment income/(loss) to
average net assets...............................
Portfolio turnover rate..........................
Ratio of operating expenses to average net
assets w/o waivers...............................
Average commission rate (g)......................
</TABLE>
_______________
(a) The Munder Accelerating Growth Fund Class A Shares, Class B Shares and Class
C Shares commenced operations on November 23, 1992, April 25, 1994 and September
26, 1995, respectively.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Fiscal year 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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Amount rounds to less than 0.01%.
(i) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
10
<PAGE>
<TABLE>
<CAPTION>
ACCELERATING GROWTH FUND(A)
- --------------------------------------------------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/94 2/28/93 6/30/98 6/30/97(I) 6/30/96 6/30/95(D) 6/30/97(I) 6/30/96 6/30/95(D)
CLASS A CLASS A CLASS B CLASS B CLASS B CLASS B CLASS B CLASS B CLASS B
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND(A)
----------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(G) 6/30/96(G) 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..................
Income from investment operations:
Net investment income............................
Net realized and unrealized gain/(loss) on
investments......................................
Total from investment operations.................
Less distributions:
Dividends from net investment income.............
Distributions from net realized gains............
Total distributions..............................
Net asset value, end of period........................
Total return (b).................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).............
Ratio of operating expenses to average net
assets...........................................
Ratio of net investment income to average net
assets...........................................
Portfolio turnover rate..........................
Ratio of operating expenses to average net
assets w/o waivers...............................
Average commission rate (f)......................
</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) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
12
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND(A)
- ---------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR PERIOD PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
2/28/94 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 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>
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND(A)
-----------------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 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...................
Income from investment operations:
Net investment income.............................
Net realized and unrealized gain on
investments.......................................
Total from investment operations..................
Less distributions:
Dividends from net investment income..............
Distributions from net realized gains.............
Total distributions...............................
Net asset value, end of period.........................
Total return (b)..................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..............
Ratio of operating expenses to average net
assets............................................
Ratio of net investment income to average net
assets............................................
Portfolio turnover rate...........................
Ratio of operating expenses to average net
assets w/o waivers................................
Average commission rate (g).......................
</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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
14
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND(A)
- -------------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 6/30/95(D) 2/28/95(E) 6/30/98 6/30/97(H) 6/30/96(H)
CLASS B CLASS B CLASS B CLASS B CLASS B CLASS C CLASS C CLASS C
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <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...............
Income from investment operations:
Net investment income.........................
Net realized and unrealized gain on
investments...................................
Total from investment operations..............
Less distributions:
Dividends from net investment income..........
Distributions from net realized gains.........
Distributions from capital....................
Total distributions...........................
Net asset value, end of period.....................
Total return (b)..............................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)..........
Ratio of operating expenses to average
net assets....................................
Ratio of net investment income to
average net assets............................
Portfolio turnover rate.......................
Ratio of operating expenses to average
net assets w/o waivers........................
Average commission rate (h)...................
</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.
(h) Average commission rate paid per share of securities purchased and sold by
the Fund.
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>
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
MICRO-CAP EQUITY FUND(A)
------------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/98 6/30/97(E) 6/30/98 6/30/97(E)
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.............
Income from investment operations:
Net investment income.......................
Net realized and unrealized gain on
investments.................................
Total from investment operations............
Less distributions:
Dividends from net investment income
Distributions from net realized gains.......
Total distributions.........................
Net asset value, end of period...................
Total return (b)............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)........
Ratio of operating expenses to average net
assets......................................
Ratio of net investment income to average net
assets......................................
Portfolio turnover rate.....................
Ratio of operating expenses to average net assets
w/o waivers.................................
Average commission rate (d).................
</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.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
18
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(A)
------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 6/30/95(D,E,F) 12/31/94 12/31/93
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............
Income from investment operations:
Net investment income......................
Net realized and unrealized gain on
investments...............................
Total from investment operations...........
Less distributions:
Dividends from net investment income.......
Distributions from net realized gains......
Total distributions........................
Net asset value, end of period..................
Total return (b)...........................
Ratios to average net assets/supplemental data:.
Net assets, end of period (in 000's).......
Ratio of operating expenses to average net
assets....................................
Ratio of net investment income to average
net assets................................
Portfolio turnover rate....................
Ratio of operating expenses to average net
assets w/o waivers........................
Average commission rate (g)................
</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 June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(f) On February 1, 1995, Munder Capital Management replaced 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.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
19
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(A)
----------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 6/30/95(D,E,F) 12/31/94 12/31/93
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............
Income from investment operations:
Net investment income......................
Net realized and unrealized gain on
investments...............................
Total from investment operations...........
Less distributions:
Dividends from net investment income.......
Distributions from net realized gains......
Total distributions........................
Net asset value, end of period..................
Total return (b)...........................
Ratios to average net assets/supplemental data:.
Net assets, end of period (in 000's).......
Ratio of operating expenses to average net
assets....................................
Ratio of net investment income to average
net assets................................
Portfolio turnover rate....................
Ratio of operating expenses to average net
assets w/o waivers........................
Average commission rate (g)................
</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 June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(f) On February 1, 1995, Munder Capital Management replaced 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.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
20
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH (A)
-------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 6/30/95(D,E,F) 12/31/94 12/31/93
CLASS C CLASS C CLASS C CLASS C CLASS C CLASS C
------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
NET NET FUND
-------------------------------------------------
YEAR PERIOD PERIOD
ENDED ENDED ENDED
6/30/98 6/30/97(A) 6/30/98
CLASS A CLASS A CLASS B
---------------- ------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period..............
Income from investment operations:
Net investment loss.............................
Net realized and unrealized gain on investments.
Total from investment operations................
Less distributions:
Distributions from net realized gains...........
Total distributions.............................
Net asset value, end of period....................
Total return (b)................................
Ratio to average net assets/supplemental data:
Net assets, end of period (in 000's)............
Ratio of operating expenses to average net
assets.........................................
Ratio of net investment loss to average net
assets.........................................
Portfolio turnover rate.........................
Ratio of operating expenses to average net
assets without waivers and expenses reimbursed.
Average commission rate(d)........................
</TABLE>
___________________
(a) The Munder NetNet Fund commenced operations on August 16, 1996.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
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 6/30/97 6/30/96(F) 6/30/95(D) 6/30/98 6/30/97
CLASS A CLASS A CLASS A CLASS A CLASS B CLASS B
--------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............
Income from investment operations:
Net investment income......................
Net realized and unrealized gain on
investments................................
Total from investment operations...........
Less distributions:
Dividends from net investment income.......
Distributions from net realized gains......
Total distributions........................
Net asset value, end of period..................
Total return (b)...........................
Ratios to average net assets/supplemental data:.
Net assets, end of period (in 000's).......
Ratio of operating expenses to average net
assets.....................................
Ratio of net investment income to average
net assets.................................
Portfolio turnover rate....................
Ratio of operating expenses to average net
assets w/o waivers and/or expenses
reimbursed.................................
Average commission rate (c)................
</TABLE>
________________
(a) 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 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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
23
<PAGE>
<TABLE>
<CAPTION>
REAL ESTATE EQUITY INVESTMENT FUND (A)
---------------------------------------------------------------
YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/96(F) 6/30/95(D) 6/30/98 6/30/97 6/30/96(F)
CLASS B CLASS B CLASS C CLASS C CLASS C
------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............
Income from investment operations:
Net investment income......................
Net realized and unrealized gain on
investments................................
Total from investment operations...........
Less distributions:
Dividends from net investment income.......
Distributions from net realized gains......
Total distributions........................
Net asset value, end of period..................
Total return (b)...........................
Ratios to average net assets/supplemental data:.
Net assets, end of period (in 000's).......
Ratio of operating expenses to average net
assets.....................................
Ratio of net investment income to average
net assets.................................
Portfolio turnover rate....................
Ratio of operating expenses to average net
assets w/o waivers and/or expenses
reimbursed.................................
Average commission rate (e)................
</TABLE>
__________
(a) 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 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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
24
<PAGE>
<TABLE>
<CAPTION>
SMALL-CAP VALUE FUND (A)
------------------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(F) 6/30/98 6/30/97(F) 6/30/98 6/30/96(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............
Income from investment operations:
Net investment income......................
Net realized and unrealized gain on
investments................................
Total from investment operations...........
Less distributions:
Dividends from net investment income.......
Distributions from net realized gains......
Total distributions........................
Net asset value, end of period..................
Total return (b)...........................
Ratios to average net assets/supplemental data:.
Net assets, end of period (in 000's).......
Ratio of operating expenses to average net
assets.....................................
Ratio of net investment income to average
net assets.................................
Portfolio turnover rate....................
Ratio of operating expenses to average net
assets w/o waivers and/or expenses
reimbursed.................................
Average commission rate (e)................
</TABLE>
______________
(a) 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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
25
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH FUND (A)
----------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 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............
Income from investment operations:
Net investment income......................
Net realized and unrealized gain on
investments...............................
Total from investment operations...........
Less distributions:
Dividends from net investment income.......
Distributions from net realized gains......
Total distributions........................
Net asset value, end of period..................
Total return (b)...........................
Ratios to average net assets/supplemental data:.
Net assets, end of period (in 000's).......
Ratio of operating expenses to average net
assets....................................
Ratio of net investment income to average
net assets................................
Portfolio turnover rate....................
Ratio of operating expenses to average net
assets w/o waivers........................
Average commission rate (g)................
</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,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
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 6/30/97(F) 6/30/96(F) 6/30/95(E) 2/28/95(D) 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> <C>
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND (A)
-------------------------------------------------------------------------------
YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E) 6/30/98 6/30/97(E) 6/30/96(E)
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............
Income from investment operations:
Net investment income......................
Net realized and unrealized gain on
investments...............................
Total from investment operations...........
Less distributions:
Dividends from net investment income.......
Distributions from net realized gains......
Total distributions........................
Net asset value, end of period..................
Total return (b)...........................
Ratios to average net assets/supplemental data:.
Net assets, end of period (in 000's).......
Ratio of operating expenses to average net
assets....................................
Ratio of net investment income to average
net assets................................
Portfolio turnover rate....................
Ratio of operating expenses to average net
assets w/o waivers and expenses reimbursed.
Average commission rate (d)................
</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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
28
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND (A)
----------------------------------------------------
YEAR YEAR YEAR
ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E)
CLASS C CLASS C CLASS C
------- ------- -------
<S> <C> <C> <C>
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON EMERGING MARKETS FUND (A)
---------------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/98 6/30/97(E) 6/30/98 6/30/97(E)
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...............
Income from investment operations:
Net investment income............................
Net realized and unrealized gain on investments..
Total from investment operations.................
Less distributions:
Dividends from net investment income.............
Distributions from net realized gains............
Total distributions..............................
Net asset value, end of period.....................
Total return (b).................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).............
Ratio of operating expenses to average net
assets..........................................
Ratio of net investment income to average net
assets..........................................
Portfolio turnover rate..........................
Ratio of operating expenses to average net
assets w/o expenses reimbursed..................
Average commission rate (d)......................
</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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) Amount represents less than $0.01 per share.
30
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON HEALTHCARE FUND (A)
------------------------------------------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/98 6/30/97 6/30/98 6/30/97
Class A Class A Class B Class B Class C CLASS C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON INTERNATIONAL GROWTH FUND (A)
---------------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/98 6/30/97(E) 6/30/98 6/30/97(E)
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...............
Income from investment operations:
Net investment income............................
Net realized and unrealized gain on investments..
Total from investment operations.................
Less distributions:............
Dividends from net investment income.............
Distributions from net realized gains............
Total distributions..............................
Net asset value, end of period.....................
Total return (b).................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).............
Ratio of operating expenses to average net
assets..........................................
Ratio of net investment income to average net
assets..........................................
Portfolio turnover rate..........................
Ratio of operating expenses to average net
assets w/o expenses reimbursed..................
Average commission rate (d)......................
</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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) Amount represents less than $0.01 per share.
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 "What are the Funds' Investments and
Investment Practices?"
ACCELERATING GROWTH FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
long-term capital appreciation; its secondary goal is to provide income. Under
normal conditions, the Fund will invest at least 65% of its assets in Equity
Securities.
In choosing Equity Securities the Advisor considers, among other factors:
. the potential for accelerated earnings growth
. the maintenance of a substantial competitive advantage
. a focused management team
. a stable balance team.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
The Fund is closed to new investments.
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.
33
<PAGE>
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.
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 $5
billion. Its style, which focuses on both growth prospects and valuation, is
known as GARP (Growth at a Reasonable Price) and seeks to produce attractive
returns during various market environments.
The Advisor chooses the Fund's investments as follows: The Advisor reviews
the earnings growth of approximately 10,000 companies over the past three years.
It invests in approximately 50 to 100 companies based on:
. superior earnings growth
. financial stability
. relative market value
. price changes compared to the Standard & Poor's 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,
American Depositary Receipts ("ADRs") and European Depositary Receipts ("EDRs").
At least once a quarter, the Advisor creates a list of Foreign Securities, ADRs
and EDRs (the "Securities List") which the Fund may purchase based on the
country where the company is
34
<PAGE>
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 80% of the Fund's assets
in first section securities. When the Advisor identifies strong potential for
specific securities to perform well, the Fund may invest up to 50% of its assets
in second section securities.
. Under normal market conditions, at least 65% of the Fund's assets are
invested in Equity Securities in at least three foreign countries.
. The Fund emphasizes companies with a market capitalization of at least
$100 million.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Theodore Miller jointly manage
the Fund. Mr. Johnson, a Chief Investment Officer of the Advisor, and Mr.
Miller, senior portfolio manager of the Fund, have managed the Fund since July
1992 and October 1996, respectively. Mr. Miller previously worked as the
primary analyst for the Fund (1996) and for Interacciones Global Inc. (1993-
1995) and McDonald & Co. Securities Inc. (1991-1993).
MICRO-CAP EQUITY FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. It invests primarily in Equity Securities of smaller
capitalization companies. The Fund attempts to provide investors with
potentially higher returns than a fund that invests primarily in larger more
established companies. Since smaller capitalization companies are generally not
as well known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
. Under normal market conditions, the Fund will invest at least 65% of
its assets in Equity Securities of companies having a market
capitalization of $200 million or less, which is considerably less
than the market capitalization of S&P 500 companies.
The Advisor will choose companies that:
. present the ability to grow significantly over the next several years
. may benefit from changes in technology, regulations and industry
sector trends
. are still in the developmental stage and may have limited product
lines.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
MULTI-SEASON GROWTH FUND
GOAL AND OBJECTIVES. The Fund's goal is to provide long-term capital
appreciation. This goal is "fundamental" and cannot be changed without
shareholder approval. Its style, which focuses on both growth prospects and
valuation, is known as GARP (Growth at a Reasonable Price) and seeks to produce
attractive returns during various market environments. The Fund invests at
least 65% of its assets in Equity Securities. The Fund generally invests in
Equity Securities with market capitalizations over $1 billion.
The Advisor chooses the Fund's investments as follows: The Advisor reviews
the earnings growth of approximately 5,500 companies over the past five years.
It invests in approximately 50 to 100 companies based on:
. superior earnings growth
35
<PAGE>
. financial stability
. relative market value
. price changes compared to the S&P 500.
PORTFOLIO MANAGEMENT. The portfolio managers of the Fund, Leonard J. Barr
II and Lee P. Munder, have managed the Fund since its inception in 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. Mr. Munder is
the Chairman of the Advisor.
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.
36
<PAGE>
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 was formerly 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 $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.
37
<PAGE>
. Under normal market conditions, the Fund will invest at least 65% of
the Fund's assets in Equity Securities of companies with market
capitalizations below $750 million, which is less than the market
capitalization of S&P 500 companies.
The Advisor considers these factors, among others, in choosing companies:
. above-average growth prospects
. participation in a fast-growing industry
. strategic niche position in a specialized market
. adequate capitalization.
PORTFOLIO MANAGEMENT. Carl Wilk and Michael P. Gura jointly manage the
Fund. Mr. Wilk, a Senior Portfolio Manager of the Advisor, has managed the Fund
since October 1996 and was the Fund's primary analyst from 1995 to 1996. Prior
to joining the Advisor in 1995, Mr. Wilk was a Senior Equity Research Analyst
for the Fund at Woodbridge. Mr. Gura has managed the Fund since March 1997.
Prior to joining the Advisor in 1995, Mr. Gura was a Vice President and Senior
Equity Analyst for the Fund at Woodbridge (1994-1995) and an investment officer
for Manufacturers National Bank Trust Department (1989-1994).
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).
38
<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.
39
<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.
WHO MAY WANT TO INVEST IN THE FUNDS?
The Funds are designed for investors who desire potentially high capital
appreciation and who can accept short-term variations in return for potentially
greater returns over the long term. In general, the greater the risk, the
greater the potential reward. Investors who have a short time horizon, who
desire a high level of income or who are conservative in their investment
approach may wish to invest in other portfolios offered by the Trust and the
Company.
WHAT ARE THE FUNDS' INVESTMENTS AND INVESTMENT PRACTICES?
Each Fund will invest in EQUITY SECURITIES, which 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 Fund. The
value of Equity Securities will fluctuate due to many
40
<PAGE>
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 MONEY MARKET INSTRUMENTS, 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, EDRs and GLOBAL DEPOSITORY RECEIPTS ("GDRs").
ADRs are issued by U.S. financial institutions and EDRs and GDRs are issued by
European financial institutions. They are receipts evidencing ownership of
underlying Foreign Securities.
The Funds may buy shares of registered MONEY MARKET FUNDS. The Funds will
bear a portion of the expenses of any investment company whose shares they
purchase, including operating costs and investment advisory, distribution and
administration fees. These expenses would be in addition to a Fund's own
expenses. Each Fund may invest up to 10% of its assets in other investment
companies and no more than 5% of its assets in any one investment company.
The Funds may purchase FIXED INCOME SECURITIES. Fixed Income Securities
are securities which either pay interest at set times at either fixed or
variable rates, or which realize a discount upon maturity. Fixed Income
Securities include corporate bonds, debentures, notes and other similar
corporate debt instruments, zero coupon bonds (discount debt obligations that do
not make interest payments) and variable amount master demand notes that permit
the amount of indebtedness to vary in addition to providing for periodic
adjustments in the interest rate. Each Fund may purchase U.S. GOVERNMENT
SECURITIES, which are securities issued by, or guaranteed by, the U.S.
Government or its agencies or instrumentalities. Such securities include U.S.
Treasury bills, which have initial maturities of less than one year, U.S.
Treasury notes, which have initial maturities of one to ten years, U.S. Treasury
bonds, which generally have initial maturities of greater than ten years, and
obligations of the Federal Home Loan Mortgage Corporation, Federal National
Mortgage Association and Government National Mortgage Association. 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 Equity 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 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>
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INTERNATIONAL MICRO-CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES EQUITY EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES. Includes
securities issued by non-U.S.
companies. Present more risks than
U.S. securities. 25% 25% 25% 25% Y 25%
- ------------------------------------------------------------------------------------------------------------------------------------
LOWER-RATED DEBT 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. Y Y 20% Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT-GRADE ASSET BACKED
SECURITIES. Includes debt securities
backed by mortgages, installment sales
contracts and credit card receivables.
N Y N N N N
- ------------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. 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.
N Y N N N N
- ------------------------------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE
CONTRACTS. Obligations of a Fund to
purchase or sell a specific currency
at a future date at a set price. May
decrease a Fund's loss due to a change
in a currency value, but also limits
gains from currency changes.
Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES 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.
Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
FUTURES AND OPTIONS ON 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.
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.
(2) BASED ON NET ASSETS.
42
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMILINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH NETNET INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
25% Y N 25% 25% 25% Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------------
Y N 5% Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ---------------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ---------------------------------------------------------------------------------------------------------------------------------
Y Y N Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INTERNATIONAL MICRO-CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES EQUITY EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPTIONS. A Fund may buy options
giving it the right to require a
buyer to buy a security held by the
Fund (put options), buy options
giving it the right to require a
seller to sell securities to the
Fund (call options), sell (write)
options giving a buyer the right to
require the Fund to buy securities
from the buyer or write options
giving a buyer the right to require
the Fund to sell securities to the
buyer during a set time at a set
price. Options may relate to
securities indices, individual Y Y Y Y Y Y
securities, foreign currencies or
futures contracts. See the SAI for
more details and additional
limitations.
- ------------------------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund
sells securities and agrees to buy
them back later at an agreed upon
time and price. A method to borrow Y Y Y Y Y Y
money for temporary purposes.
- ------------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT 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 N N N N N N
new construction rates.
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT SALES. A 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 N N N N N N
intend to deliver to the buyer, a
practice known as selling short
"against the box."
- ------------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. 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 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend
securities to financial institutions
which pay for the use of the
securities. May increase return.
Slight risk of borrower failing 25% 25% 25% 25% 25% 25%
financially.
- ------------------------------------------------------------------------------------------------------------------------------------
</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.
44
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMILINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH NETNET INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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
- ------------------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ------------------------------------------------------------------------------------------------------------------------------------
N 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) 15%(2)
- ------------------------------------------------------------------------------------------------------------------------------------
25% 25% 25% 25% 25% 25% 25% 25% 25% 25%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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, 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.
47
<PAGE>
One method is to show a Fund's total return. Cumulative total return is
the percentage change in the value of an amount invested in a class of shares of
a Fund over a stated period of time and takes into account reinvested dividends
plus in the case of Class A Shares, the payment of the maximum sales charge and,
in the case of Class B and Class C Shares, the maximum CDSC. Cumulative total
return most closely reflects the actual performance of a Fund. However, a
shareholder who opts to receive dividends in cash, a Class A shareholder who
paid a sales charge lower than 5.5%, or a Class B or C shareholder who paid
lower than the maximum CDSC will have a different return than the reported
performance.
Average annual total return refers to the average annual compounded rates
of return over a specified period on an investment in shares of a Fund
determined by comparing the initial amount invested to the ending redeemable
value of the amount, taking into account reinvested dividends, the payment of
the maximum sales charge on Class A Shares, and the payment of the maximum CDSC
on Class B and Class C Shares.
Each Fund may also publish its current yield. Yield is the net investment
income generated by a share of a Fund during a 30-day period divided by the
maximum offering price on the 30th day. "Maximum offering price" includes the
sales charge for Class A Shares.
The Funds may sometimes publish total returns that do not take into account
sales charges and such returns will be higher than returns which include sales
charges. You should be aware that (i) past performance does not indicate how a
Fund will perform in the future; and (ii) each Fund's return and net asset value
will fluctuate, so you cannot necessarily use a Fund's performance data to
compare it to investment in certificates of deposit, savings accounts or other
investments that provide a fixed or guaranteed yield.
Each Fund may compare its performance to that of other mutual funds, such
as the performance of similar funds reported by Lipper Analytical Services, Inc.
or information reported in national financial publications (such as Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times) or
in local or regional publications. Each Fund may also compare its total return
to other broad-based indices. These indices show the value of selected
portfolios of securities (assuming reinvestment of interest and dividends) which
are not managed by a portfolio manager. The Funds may report how they are
performing in comparison to the Consumer Price Index, an indication of inflation
reported by the U.S. Government.
WHERE CAN I OBTAIN PERFORMANCE DATA?
The Wall Street Journal and certain local newspapers report information on
the performance of mutual funds. In addition, performance information is
contained in the Funds' annual report dated June 30 of each year and semi-annual
report dated December 31 of each year, which will automatically be mailed to
shareholders. To obtain copies of financial reports or performance information,
call (800) 438-5789.
PURCHASES AND EXCHANGES OF SHARES
WHICH SHARE CLASS SHOULD I CHOOSE FOR MY INVESTMENT?
Each of the Funds offers Class A, Class B and Class C Shares. Each Class
has its own cost structure, allowing you to choose the one that best meets your
requirements given the amount of your purchase and the intended length of your
investment. You should consider both ongoing annual expenses and initial or
contingent deferred sales charges in estimating the costs of investing in a
particular class of shares.
48
<PAGE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C>
. Front end sales charge. . No front end sales charge. All . No front end sales charge or
There are several ways to your money goes to work for you right CDSC, except for a CDSC for
reduce these sale charges. away. redemptions made within the first
. Lower annual expenses than . Higher annual expenses than Class A year after investing. All your
Class B and Class C Shares. Shares. money goes to work for you right
. A CDSC on shares you sell within away.
six years of purchase. . Shares do not convert to another
. Automatic conversion to Class A class.
Shares approximately six years after . Higher annual expenses than Class
issuance, thus reducing future annual A Shares.
expenses.
. CDSC is waived for certain
redemptions.
</TABLE>
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. 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 (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 DEALER REALLOWANCE
AS A PERCENTAGE OF AS A PERCENTAGE
------------------
YOUR INVESTMENT NET ASSET 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.
49
<PAGE>
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);
(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";
(11) individuals who reinvest proceeds of redemptions from Class A, Class B
or Class C Shares of the Short Term Treasury Fund, provided such
individuals were shareholders of the Short Term Treasury Fund on June
2, 1998; and
(12) 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") and UPI Plans are not considered to be Qualified Employee
Benefit Plans.
We also will waive (i) the initial sales charge on Class A Shares on
purchases by UPI 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
50
<PAGE>
the plan sponsor (the "Plan Sponsor") signs the Merrill Lynch Recordkeeping
Service Agreement, the Plan has $3 million or more in assets invested in
broker/dealer funds not advised or managed by Merrill Lynch Asset Management,
L.P. ("MLAM") that are made available pursuant to a Services Agreement between
Merrill Lynch and the Funds' principal underwriter or distributor and in funds
advised or managed by MLAM (collectively, the "Applicable Investments"); or (ii)
the Plan is recordkept on a daily valuation basis by an independent recordkeeper
whose services are provided through a contract or alliance arrangement with
Merrill Lynch, and on the date the Plan Sponsor signs the Merrill Lynch
Recordkeeping Service Agreement, the Plan has $3 million or more in assets,
excluding money market funds, invested in Applicable Investments; or (iii) the
Plan has 500 or more eligible employees, as determined by the Merrill Lynch plan
conversion manager, on the date the Plan Sponsor signs the Merrill Lynch
Recordkeeping Service Agreement.
SALES CHARGE REDUCTIONS. You may qualify for reduced sales charges in the
following cases:
. LETTER OF INTENT. If you intend to purchase at least $25,000 of Class
A, Class B and Class C Shares of the Funds you may wish to complete
the Letter of Intent Section of your Account Application Form. By
doing so, you agree to invest a certain amount over a 13-month period.
You would pay a sales charge on any Class A Shares you purchase during
the 13 months based on the total amount to be invested under the
Letter of Intent. You can apply any investments you made in any of the
funds during the preceding 90-day period toward fulfillment of the
Letter of Intent (although there will be no refund of sales charges
you paid during the 90-day period). You should inform the Transfer
Agent that you have a Letter of Intent each time you make an
investment.
You are not obligated to purchase the amount specified in the
Letter of Intent. If you purchase less than the amount specified,
however, you must pay the difference between the sales charge paid and
the sales charge applicable to the purchases actually made. The
Custodian will hold such amount in escrow. The Custodian will pay the
escrowed funds to your account at the end of the 13 months unless you
do not complete your intended investment.
. 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.
51
<PAGE>
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 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.
52
<PAGE>
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 acquired through an exchange 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.
. 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, PO 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 order. We will reduce the amount you receive by
the amount of any applicable CDSC. See "Purchases of Shares--What Price Do I Pay
for Shares?" for an explanation of how the net asset value next determined is
calculated.
CONTINGENT DEFERRED SALES CHARGES. You pay a CDSC when you redeem:
. Class A Shares that are part of an investment of at least $1 million
within one year of buying them
. Class B Shares within six years of buying them
. Class C Shares within one year of buying them.
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.
53
<PAGE>
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.
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.
54
<PAGE>
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
stock certificate has been issued to you, you must endorse the stock
certificate and return it together with the written redemption request.
A SIGNATURE GUARANTEE is required for the following redemption
requests: (a) redemptions proceeds greater than $50,000; (b) redemption
proceeds not being made payable to the owner of the account; (c)
redemption proceeds not being mailed to the address of record on the
account or (d) if the redemption proceeds are being transferred to
another Munder Funds account with a different registration. You can
obtain a signature guarantee from a financial institution such as a
commercial bank, trust company, savings association or from a securities
firm having membership on a recognized securities exchange.
. BY TELEPHONE. You can redeem your shares by calling your broker or the
Funds at (800) 438-5789. There is no minimum requirement for telephone
redemptions paid by check. The Transfer Agent may deduct a wire fee
(currently $7.50) for wire redemptions under $5,000.
If you are redeeming at least $1,000 of shares and you have
authorized expedited redemption on your Account Application Form, simply
call the Fund prior to 4:00 p.m. (Eastern Time), and request the funds
be mailed to the commercial bank or registered broker-dealer you
designated on your Account Application Form. We will send your
redemption amount to you on the next Business Day. We reserve the right
at any time to change or impose fees for this expedited redemption
procedure.
We record all telephone calls for your protection and take measures
to identify the caller. If the Transfer Agent properly acts on telephone
instructions and follows the reasonable procedures to ensure against
unauthorized transactions, neither the Trust, the Company, the
Distributor nor the Transfer Agent will be responsible for any losses.
If these procedures are not followed, the Transfer Agent may be liable
to you for losses resulting from unauthorized instructions.
During periods of unusual economic or market activity, you may
experience difficulties or delays in effecting telephone redemptions. In
such cases you should consider placing your redemption request by mail.
. AUTOMATIC WITHDRAWAL PLAN ("AWP"). If you have an account value of
$2,500 or more in a Fund, you may redeem shares on a monthly, quarterly,
semi-annual or annual basis. The minimum withdrawal is $50. We usually
process withdrawals on the 20th day of the month and promptly send you
your redemption amount. You may enroll in the AWP by completing the AWP
Application Form available through the Transfer Agent. To participate in
the AWP you must have your dividends automatically reinvested and may
not hold share certificates. You may change or cancel the AWP at any
time upon notice to the Transfer Agent. You should not buy Class A
Shares (and pay a sales charge) while you participate in the AWP and you
must pay any applicable 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.
55
<PAGE>
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 and WAM Holdings, Inc.
("WAM"). MCM was founded in April, 1985 as a Delaware corporation and was a
registered investment advisor. WAM is an indirect, wholly-owned subsidiary of
Comerica Incorporated 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 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>
Accelerating Growth Fund..........................0.75% Growth & Income Fund ..........................0.75%
Balanced Fund.....................................0.65% Growth Opportunities Fund.................... .0.75%
Framlington Emerging Markets Fund.................1.25% International Equity Fund .....................0.75%
Framlington Global Financial Services Fund........0.75% Micro-Cap Equity Fund .........................1.00%
Framlington International Growth Fund.............1.00% Multi-Season Growth Fund ......................0.75%
Framlington Healthcare Fund.......................1.00% NetNet Fund....................................1.00%
</TABLE>
56
<PAGE>
<TABLE>
<S> <C>
Real Estate Equity Investment Fund................0.74% Small Company Growth Fund .....................0.75%
Small-Cap Value Fund .............................0.75% Value Fund.....................................0.74%
</TABLE>
The Advisor waived advisory fees during the past fiscal year for the Multi-
Season Growth Fund. The Advisor is entitled to receive an annual fee equal to
1.00% of the first $500 million of the Multi-Season Growth Fund's average daily
net assets and .75% of the Fund's average daily net assets over $500 million.
The Sub-Advisor is entitled to receive an advisory fee equal to one half of
the fee paid to the Advisor by each of the Framlington Funds as compensation for
its services as Sub-Advisor. The Advisor pays fees to the Sub-Advisor and the
Framlington Funds pay no fees directly to the Sub-Advisor.
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Funds and/or their
shareholders, including sub-administration, sub-transfer agency and shareholder
servicing. The Advisor makes such payments out of its own resources and there
are no additional costs to the Funds or their shareholders.
The Advisor selects broker-dealers to execute portfolio transactions for
the Funds based on best price and execution terms. The Advisor may consider as
a factor the number of shares sold by the broker-dealer.
PERFORMANCE OF FRAMLINGTON FUNDS MANAGED BY THE SUB-ADVISOR
The tables below contain certain performance information provided by the
Sub-Advisor relating to accounts managed by the Sub-Advisor and which have
investment objectives and policies similar to those of the corresponding
Framlington Funds. See "Fund Choices" and "What are the Funds' Investments and
Investment Practices?" In the case of the Healthcare portfolio performance, the
data relates to a unit trust organized under the laws of the United Kingdom
managed by the same personnel of the Sub-Advisor with similar investment
objectives and policies to the Framlington Healthcare Fund. In the case of
Emerging Markets portfolio performance, the data relates to a Canadian-based
institutional emerging markets portfolio managed by the same personnel of the
Sub-Advisor with similar investment objectives and policies to the Framlington
Emerging Markets Fund.
The trust account performance is provided by Micropal, an independent
research organization that is a recognized source of performance data in the UK
unit trust industry. The data is U.S. dollar adjusted on the basis of exchange
rates provided by Datastream using WM/Reuters closing rates. The performance
figures are net of brokerage commissions, actual investment advisory fees and
initial sales charges. The data assume the reinvestment of net income and
capital gain distributions. The trust account returns are calculated using
beginning offer and ending bid prices for periods ended December 31, 1996.
You should not rely on the following performance data of the Sub-Advisor's
client accounts as an indication of future performance of the Framlington Funds.
It should be noted that the management of the Funds will be affected by
regulatory requirements under the Investment Company Act of 1940, 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>
PERIOD ENDED UK S&P HEALTHCARE
DECEMBER 31, 1996 HEALTH COMPOSITE INDEX
-----------------
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: Micropal.
57
<PAGE>
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 MARKETS
DECEMBER 31, 1996 MARKETS ACCOUNT 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.
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 53 State Street, Boston, Massachusetts 02109.
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 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.
58
<PAGE>
DISTRIBUTOR. Funds Distributor, Inc. is the distributor of the Funds'
shares and is located at 60 State Street, Boston, Massachusetts 02109. It
markets and sells the Funds' shares.
For an additional description of the services performed by the
Administrator, the Transfer Agent, the Custodian, the Sub-Custodian and the
Distributor, see the SAI.
DISTRIBUTION SERVICES ARRANGEMENT
Under Rule 12b-1 of the 1940 Act, the Funds have adopted Service Plans with
respect to their Class A Shares and Service and Distribution Plans with respect
to their Class B and Class C Shares. Under the Plans, each Fund uses its assets
to finance activities relating to the distribution of its shares to investors
and the provision of certain shareholder services. The Distributor is paid a
service fee at an annual rate of up to 0.25% of the value of average daily net
assets of the Funds' Class A Shares. The Distributor also is paid a service fee
at an annual rate of 0.25% and a distribution fee at an annual rate of up to
0.75% of the value of the average daily net assets of the Funds' Class B and
Class C Shares. The Distributor uses the service fees primarily to pay ongoing
trail commissions to securities dealers (which may include the Distributor
itself) and other financial organizations which provide shareholder services for
the Funds. These services include, among other things, processing new
shareholder account applications, reporting to the Fund's Transfer Agent all
transactions by customers and serving as the primary information source to
customers concerning the Funds.
WHAT ARE MY RIGHTS AS A SHAREHOLDER?
All shareholders have equal voting, liquidation and other rights. You are
entitled to one vote for each share you hold and a fractional vote for each
fraction of a share you hold. You will be asked to vote on matters affecting
the Trust, the Company or Framlington as a whole and affecting your particular
Fund. You will not vote by Class unless expressly required by law or when the
Trustees or Directors determine the matter to be voted on affects only the
interests of the holders of a particular class of shares. The Trust, the
Company and Framlington will not hold annual shareholder meetings, but special
meetings may be held at the written request of shareholders owning more than 10%
of outstanding shares for the purpose of removing a Trustee or Director. Under
Massachusetts law, it is possible that a shareholder may be personally liable
for the Trust's or Framlington's obligations. If a shareholder were required to
pay a debt of a Fund, however, the Trust and Framlington have committed to
reimburse the shareholder in full from their assets. The SAI contains more
information regarding voting rights.
Comerica currently has the right to vote a majority of the outstanding
shares of the Funds as agent, custodian or trustee for its customers and
therefore it is considered to be a controlling person of the Trust, the Company
and Framlington.
DIVIDENDS, DISTRIBUTIONS AND TAXES
WHEN WILL I RECEIVE DISTRIBUTIONS FROM THE FUNDS?
As a shareholder, you are entitled to your share of net income and capital
gains, if any, on a Fund's investments. The Funds pass their earnings along to
investors in the form of dividends. Dividend distributions are the dividends or
interest earned on investments after expenses. The Accelerating Growth Fund,
Balanced Fund, Growth & Income Fund, 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
59
<PAGE>
in your shares. You will treat the excess of any such distribution over your
basis in your shares as gain from a sale or exchange of the shares.
HOW WILL DISTRIBUTIONS BE MADE?
The Funds will pay dividend and capital gains distributions in additional
shares of the same class of a Fund. If you wish to receive distributions in
cash, either indicate this request on your Account Application Form or notify
the Funds at (800) 438-5789.
ARE THERE TAX IMPLICATIONS OF MY INVESTMENTS IN THE FUNDS?
This section contains a brief summary of the tax implications of ownership
in the Funds' shares. A more detailed discussion of Federal income tax
considerations is contained in the SAI. You should consult your tax advisor
regarding the impact of owning the Funds' shares on your own personal tax
situation including the applicability of any state and local taxes.
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 an 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 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
60
<PAGE>
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.
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.
61
<PAGE>
CLASS K SHARES
Prospectus
OCTOBER 27, 1998
THE MUNDER EQUITY FUNDS
Accelerating Growth
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 Triple 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"):
<TABLE>
<S> <C>
Munder Accelerating Growth Fund* Munder Framlington Global Financial Services Fund
Munder Balanced Fund Munder Framlington Healthcare Fund
Munder Growth & Income Fund Munder Framlington International Growth Fund
Munder Growth Opportunities Fund Munder Bond Fund
Munder Index 500 Fund Munder Intermediate Bond Fund
Munder International Equity Fund Munder International Bond Fund
Munder Micro-Cap Equity Fund Munder U.S. Government Income Fund
Munder Multi-Season Growth Fund Munder Michigan Triple Tax-Free Bond Fund**
Munder Real Estate Equity Investment Fund Munder Tax-Free Bond Fund
Munder Small-Cap Value Fund Munder Tax-Free Intermediate Bond Fund
Munder Small Company Growth Fund Munder Cash Investment Fund
Munder Value Fund Munder Tax-Free Money Market Fund
Munder Framlington Emerging Markets Fund Munder U.S. Treasury Money Market Fund
</TABLE>
* The Accelerating Growth Fund is closed to new investors.
** 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............................................ 6
Fund Choices
What Funds are offered?..................................... 31
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?............... 51
Performance
How is the Funds' performance calculated?................... 53
Where can I obtain performance data?........................ 54
Purchases of Shares
What price do I pay for shares?............................. 54
When can I purchase shares?................................. 54
How can I purchase shares?.................................. 54
Redemptions of Shares
What price do I receive for redeemed shares?................ 55
When can I redeem shares?................................... 55
How can I redeem shares?.................................... 55
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?........................ 61
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?.. 62
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 Accelerating Growth Fund, 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 Triple Tax-Free Bond Fund seeks to provide as high a
level of current interest income exempt from regular Federal income
taxes, Michigan state income tax and Michigan intangibles tax as is
consistent with prudent investment management and preservation of
capital.
. 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.
3
<PAGE>
ACCELERATING GROWTH FUND, 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.
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 TRIPLE 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 Triple Tax-Free Bond Fund invests primarily in Michigan
Municipal Obligations. "Michigan Municipal Obligations" are municipal
obligations issued by the State of Michigan and its political
subdivisions, the interest on which is exempt from Federal income
taxes, Michigan state income tax and Michigan intangibles tax.
CASH INVESTMENT FUND, TAX-FREE MONEY MARKET FUND AND U.S. TREASURY MONEY MARKET
FUND (THE "MONEY MARKET FUNDS")
. 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 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.
- -------------------------------------------------------------------------------------------------------------------
Framlington Emerging Markets Fund, Framlington Because of large investments in foreign securities, the Funds
Global Financial Services Fund, Framlington are riskier than domestic funds due to factors such as freezes
International Growth Fund, International Bond on convertibility of currency, changes in exchange rates,
Fund and International Equity Fund political instability and differences in accounting and
reporting standards.
- -------------------------------------------------------------------------------------------------------------------
Growth Opportunities Fund, Micro-Cap Equity Fund, Because of large investments in mid-capitalization,
Small Company Growth Fund and Small-Cap Value small-capitalization and/or emerging growth companies, the
Fund 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, Framlington These Funds concentrate their investments in single industries
Global Financial Services Fund and Framlington and could experience larger price fluctuations than funds
Healthcare Fund invested in a broader range of industries.
- -------------------------------------------------------------------------------------------------------------------
International Bond Fund, Michigan Triple Tax-Free These "non-diversified" Funds concentrate their investments in
Bond Fund and 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): Accelerating
Growth Fund, 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 Triple 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 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, Healthcare and
International Growth Funds. The Advisor is responsible for purchases and sales
of domestic securities and the Sub-Advisor is responsible for sales of foreign
securities for the Framlington Global Financial Services Fund.
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.
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
- ------------------------
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.
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)
and registration fees. The fees shown below are based on fees for the Funds'
past fiscal year, except (i) the fees for the Index 500 Fund, Mid- Cap Growth
Fund, Real Estate Equity Investment Fund and Value Fund have been restated to
reflect the discontinuation of voluntary expense reimbursements effective as of
the date of this Prospectus, (ii) the fees for the Index 500 Fund and the Multi-
Season Growth Fund reflect an anticipated voluntary advisory fee waiver for the
current fiscal year and (iii) the fees for the Micro-Cap Equity Fund, Small-Cap
Value Fund, Growth Opportunities Fund, International Bond Fund and the
Framlington Funds are based on estimated operating expenses for the current
fiscal year and reflect anticipated voluntary expense reimbursements for the
Micro-Cap Equity Fund , Framlington Healthcare Fund, Growth Opportunities Fund
and Framlington Global Financial Services Fund. [UPDATE]
<TABLE>
<CAPTION>
ACCELERATING GROWTH & GROWTH INDEX
ANNUAL FUND OPERATING EXPENSES GROWTH BALANCED INCOME OPPORTUNITIES 500
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND FUND FUND
- ------------------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Advisory Fees............................. .75% .65% .75% .75% .07%*
Shareholder Servicing Fees................ .25% .25% .25% .25% .25%
Other Expenses+........................... .20% .32% .20% .40%++ .22%
----- ----- ----- ----- -----
Total Fund Operating Expenses+............ 1.20% 1.22% 1.30% 1.40%++ .54%*
----- ----- ----- ----- -----
MICRO- MULTI- REAL ESTATE SMALL-
INTERNATIONAL CAP SEASON EQUITY CAP
ANNUAL FUND OPERATING EXPENSES EQUITY EQUITY GROWTH INVESTMENT VALUE
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND FUND FUND
- ------------------------------ ---- ---- ---- ---- ----
Advisory Fees............................ .75% 1.00% .75%* .74% .75%
Shareholder Servicing Fees................ .25% .25% .25% .25% .25%
Other Expenses+........................... .26% .25%++ .25% .11% .38%
----- ----- ----- ----- -----
Total Fund Operating Expenses+............ 1.26% 1.50%++ 1.25%* 1.10% 1.38%
===== ===== ===== ===== =====
FRAMLINGTON
SMALL FRAMLINGTON GLOBAL
COMPANY EMERGING FINANCIAL FRAMLINGTON
ANNUAL FUND OPERATING EXPENSES GROWTH VALUE MARKETS SERVICES HEALTHCARE
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND FUND FUND
- ------------------------------ ---- ---- ---- ---- ----
Advisory Fees............................ .75% .74% 1.25% .75% 1.00%
Shareholder Servicing Fees................ .25% .25% .25% .25% .25%
Other Expenses+........................... .22% .28% .29% .50%++ .30%++
----- ----- ----- ----- -----
Total Fund Operating Expenses+............ 1.22% 1.27% 1.79% 1.50%++ 1.55%++
===== ===== ===== ===== =====
FRAMLINGTON U.S.
INTERNATIONAL INTERMEDIATE INTERNATIONAL GOVERNMENT
ANNUAL FUND OPERATING EXPENSES GROWTH BOND BOND BOND INCOME
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND FUND FUND
- ------------------------------ ---- ---- ---- ---- ----
Advisory Fees............................. 1.00% .50% .50% .50% .50%
Shareholder Servicing Fees................ .25% .25% .25% .25% .25%
Other Expenses............................ .30% .21% .18% .35% .21%
----- ----- ----- ----- -----
Total Fund Operating Expenses............. 1.55% .96% .93% 1.10% .96%
===== ===== ===== ===== =====
MICHIGAN TAX-FREE TAX-FREE
TRIPLE TAX- TAX-FREE INTERMEDIATE CASH MONEY
ANNUAL FUND OPERATING EXPENSES FREE BOND BOND INVESTMENT MARKET
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND FUND FUND
- ------------------------------ ---- ---- ---- ---- ----
Advisory Fees............................. .50% .50% .50% .35% .35%
Shareholder Servicing Fees................ .25% .25% .25% .15% .15%
Other Expenses............................ .13% .20% .18% .20% .18%
----- ----- ----- ----- -----
Total Fund Operating Expenses............. .88% .95% .93% .70% .68%
===== ===== ===== ===== =====
</TABLE>
7
<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............................ .19%
----
Total Fund Operating Expenses............. .69%
====
</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 1.00% for the Multi-Season Growth Fund and .15%
for the Index 500 Fund and total fund operating expenses would be at 1.50%
for the Multi-Season Growth Fund and .62% for the Index 500 Fund.
+ After expense reimbursements, if any.
++ The Advisor expects to voluntarily reimburse the Funds for certain
operating expenses. In the absence of such expense reimbursements, it is
estimated that total fund operating expenses would be as follows: 1.76% for
the Framlington Healthcare Fund, 1.67% for the Framlington Global Financial
Services Fund, 1.53% for the Growth Opportunities Fund and 1.60% for the
Micro-Cap Equity Fund.
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>
Accelerating Growth Fund $12 $38 $66 $145
Balanced Fund $12 $39 $67 $148
Growth & Income Fund $12 $38 $66 $145
Growth Opportunities Fund $14 $45
Index 500 Fund $ 6 $17 $30 $ 68
International Equity Fund $13 $40 $69 $152
Micro-Cap Equity Fund $15 $47 $82 $179
Multi-Season Growth Fund $13 $40 $69 $151
Real Estate Equity Investment Fund $14 $43 $74 $162
Small-Cap Value Fund $14 $44 $76 $166
Small Company Growth Fund $12 $39 $67 $148
Value Fund $13 $40 $70 $153
Framlington Emerging Markets Fund $18 $56 $97 $211
Framlington Global Financial Services Fund $15 $48
Framlington Healthcare Fund $16 $49 $84 $185
Framlington International Growth Fund $16 $49 $84 $185
Bond Fund $10 $31 $53 $118
Intermediate Bond Fund $ 9 $30 $51 $114
International Bond Fund $11 $35 $61 $134
U.S. Government Income Fund $10 $31 $53 $118
Michigan Triple Tax-Free Bond Fund $ 9 $28 $49 $108
Tax-Free Bond Fund $10 $30 $53 $117
Tax-Free Intermediate Bond Fund. $ 9 $30 $51 $114
Cash Investment Fund $ 7 $22 $39 $ 87
Tax-Free Money Market Fund $ 7 $22 $38 $ 85
U.S. Treasury Money Market Fund $ 7 $22 $38 $ 86
</TABLE>
8
<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. 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>
ACCELERATING GROWTH FUND(A)
-------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(h) 6/30/96 6/30/95(d) 2/28/95(d) 2/28/94 2/28/93
------- ---------- ------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period..........
Income from investment operations:
Net investment income/(loss)................
Net realized and unrealized gain/(loss) on
investments................................
Total from investment operations...........
Less distributions:
Dividends from net investment income........
Distributions from net realized gains.......
Total distributions.........................
Net asset value, end of period................
Total return (b)............................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)........
Ratio of operating expenses to average net
assets.....................................
Ratio of net investment income/(loss) to
average net assets.........................
Portfolio turnover rate.....................
Ratio of operating expenses to average net
assets w/o waivers.........................
Average commission rate paid(f).............
</TABLE>
_________________________________________
(a) The Munder Accelerating 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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Amount represents less than $0.01 per share.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately represents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
9
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND(A)
-----------------------------------------------------------------------------
YEAR YEAR PERIOD PERIOD YEAR 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) 2/28/94
--------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............
Income from investment operations:
Net investment income.......................
Net realized and unrealized gain/(loss) on
investments................................
Total from investment operations............
Less distributions:
Dividends from net investment income........
Distributions from net realized gains.......
Total distributions.........................
Net asset value, end of period...................
Total return (b)............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)........
Ratio of operating expenses to average net
assets ....................................
Ratio of net investment income to average
net assets.................................
Portfolio turnover rate.....................
Ratio of operating expenses to average net
assets w/o waivers.........................
Average commission paid rate(f).............
</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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
10
<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................
Income from investment operations:
Net investment income.............................
Net realized and unrealized gain on investments...
Total from investment operations..................
Less distributions:
Dividends from net investment income..............
Distributions from net realized gains.............
Total distributions...............................
Net asset value, end of period......................
Total return (b)..................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..............
Ratio of operating expenses to average net assets.
Ratio of net investment income to average net
asset............................................
Portfolio turnover rate...........................
Ratio of operating expenses to average net assets
w/o waivers......................................
Average commission rate paid(g)...................
</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,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Amount represents less than $0.01 per share.
11
<PAGE>
<TABLE>
<CAPTION>
GROWTH
OPPORTUNITIES FUND(A)
---------------------------
PERIOD
ENDED
6/30/98
---------------------------
<S> <C>
Net asset value, beginning of period................
Income from investment operations:
Net investment income.............................
Net realized and unrealized gain on investments...
Total from investment operations..................
Less distributions:
Dividends from net investment income..............
Distributions from net realized gains.............
Total distributions...............................
Net asset value, end of period......................
Total return (b)..................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..............
Ratio of operating expenses to average net assets.
Ratio of net investment income to average net
asset............................................
Portfolio turnover rate...........................
Ratio of operating expenses to average net assets
w/o waivers and/or expenses reimbursed...........
Average commission rate paid(g)...................
</TABLE>
__________________________
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...........
Income from investment operations:
Net investment income........................
Net realized and unrealized gain on
investments.................................
Total from investment operations.............
Less distributions:
Dividends from net investment income.........
Distributions from net realized gains........
Total distributions..........................
Net asset value, end of period.................
Total return (b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).........
Ratio of operating expenses to average net
assets......................................
Ratio of net investment income to average net
asset.......................................
Portfolio turnover rate......................
Ratio of operating expenses to average net
assets w/o waivers and/or expenses
reimbursed..................................
Average commission rate paid(g)...............
</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,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Average commission rate paid per share of securities purchased and sold by
the fund.
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.....
Income from investment operations:
Net investment income...................
Net realized and unrealized gain/(loss)
on investments.........................
Total from investment operations........
Less distributions:
Dividends from net investment income....
Distributions from net realized gains...
Total distributions.....................
Net asset value, end of period...........
Total return (b)........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)....
Ratio of operating expenses to average
net assets.............................
Ratio of net investment income/(loss) to
average net assets.....................
Portfolio turnover rate.................
Ratio of operating expenses to average
net assets w/o waivers.................
Average commission rate paid(g).........
</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,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
14
<PAGE>
<TABLE>
<CAPTION>
MICRO-CAP
EQUITY FUND
------------------------
YEAR PERIOD
ENDED ENDED
6/30/98 6/30/97
----------- ----------
<S> <C> <C>
Net asset value, beginning of period........................................
Income from investment operation:
Net investment loss.......................................................
Net realized and unrealized gain on investments...........................
Total from investment operations..........................................
Less distributions:
Dividends from net investment income......................................
Distributions from net realized gains.....................................
Total distributions.......................................................
Net asset value, end of period..............................................
Total return (b)..........................................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)......................................
Ratio of operating expenses to average net assets ........................
Ratio of net investment loss to average net assets........................
Portfolio turnover rate...................................................
Ratio of operating expenses to average net assets w/o
expenses reimbursed.......................................................
Average commission rate paid(d)...........................................
</TABLE>
_______________________________
(a) The Munder Micro-Cap Equity Fund Class K Shares commenced operations on
December 31, 1996. The Munder Mid-Cap Growth Fund Class K Shares commenced
operations on October 2, 1995.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
15
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(A)
------------------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E) 6/30/95(D,G)
------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period..........................
Income from investment operations:
Net investment income.......................................
Net realized and unrealized gain/(loss) on
investments.................................................
Total from investment operations............................
Less distributions:
Dividends from net investment income........................
Distributions from net realized gains.......................
Total distributions.........................................
Net asset value, end of period................................
Total return (b)............................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)........................
Ratio of operating expenses to average net assets...........
Ratio of net investment income to average net assets........
Portfolio turnover rate.....................................
Ratio of operating expenses to average net assets
w/o waivers.................................................
Average commission rate paid(f).............................
</TABLE>
________________________________________
(a) 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,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(h) Amount represents less than $0.01 per share.
16
<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 6/30/97 6/30/98 6/30/97(E)
------- ------- ------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period..........................
Income from investment operations:
Net investment income.......................................
Net realized and unrealized gain on investments.............
Total from investment operations............................
Less distributions:
Dividends from net investment income........................
Distributions from net realized gains.......................
Distributions from paid-in capital..........................
Total distributions.........................................
Net asset value, end of period................................
Total return (b)............................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)........................
Ratio of operating expenses to average net assets ..........
Ratio of net investment income to average net assets........
Portfolio turnover rate.....................................
Ratio of operating expenses to average net assets w/o
waivers and/or expenses reimbursed..........................
Average commission rate paid(g).............................
</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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
17
<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 6/30/97(G) 6/30/96(G) 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.........
Income from investment operations:
Net investment loss.........................
Net realized and unrealized gain/(loss) on
investments................................
Total from investment operations...........
Less distributions:
Dividends from net investment income.......
Distributions from net realized gains......
Total distributions........................
Net asset value, end of period...............
Total return (b)..........................
Ratios to average net assets/supplemental
data:
Ratio of net investment loss to average
net assets Portfolio turnover rate........
Ratio of operating expenses to average
net assets w/o waivers....................
Average commission rate paid(f)...........
</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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
18
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND(A)
-------------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E)
------- --------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period..................................
Income from investment operations:
Net investment income...............................................
Net realized and unrealized gain on investments.....................
Total from investment operations....................................
Less distributions:
Dividends from net investment income................................
Distributions from net realized gains...............................
Total distributions.................................................
Net asset value, end of period........................................
Total return (b)....................................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)................................
Ratio of operating expenses to average net assets...................
Ratio of net investment income to average net assets................
Portfolio turnover rate.............................................
Ratio of operating expenses to average net assets w/o waivers and/or
expenses reimbursed.................................................
Average commission rate paid(d).....................................
</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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
19
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON FRAMLINGTON FRAMLINGTON FRAMLINGTON
EMERGING HEALTHCARE INTERNATIONAL GROWTH GLOBAL FINANCIAL
MARKETS FUND(A) FUND(A) FUND(A) SERVICES FUND
-------------------------------------------------------------------------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/98 6/30/97 6/30/98 6/30/97(E) 6/30/98
------- ---------- ------- ------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........
Income from investment operations:
Net investment income/(loss)..............
Net realized and unrealized gain on
investments...............................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Distributions from net realized gains.....
Total distributions.......................
Net asset value, end of period..............
Total return (b)..........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)......
Ratio of operating expenses to
average net assets.
Ratio of net investment income/(loss)
to average net assets.....................
Portfolio turnover rate...................
Ratio of operating expenses to
average net assets w/o expenses reimbursed
Average commission rate paid(d)...........
</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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
20
<PAGE>
<TABLE>
<CAPTION>
BOND 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(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........
Income from investment operations:
Net investment income.....................
Net realized and unrealized gain/loss on
investments...............................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Distributions from net realized gains.....
Total distributions.......................
Net asset value, end of period..............
Total return (b)..........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)......
Ratio of operating expenses to
average net assets........................
Ratio of net investment income
to average net assets.....................
Portfolio turnover rate...................
Ratio of operating expenses to
average net assets w/o waivers............
</TABLE>
______________________________
(a) The Munder Bond Fund Class K Share commenced operations on November 23 1992.
(b) Total return represents aggregate total return for the period indicated.
(c) Annualized.
(d) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
21
<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........
Income from investment operations:
Net investment income.....................
Net realized and unrealized gain/loss on
investments...............................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Distributions from net realized gains.....
Total distributions.......................
Net asset value, end of period..............
Total return (b)..........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)......
Ratio of operating expenses to
average net assets........................
Ratio of net investment income
to average net assets.....................
Portfolio turnover rate...................
Ratio of operating expenses to
average net assets w/o waivers............
</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,
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.
22
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL US GOVERNMENT
BOND FUND(A) INCOME FUND(A)
----------------------------------------------------------------------------------
YEAR YEAR 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........
Income from investment operations:
Net investment income.....................
Net realized and unrealized gain/loss on
investments...............................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Distributions from net realized gains.....
Total distributions.......................
Net asset value, end of period..............
Total return (b)..........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)......
Ratio of operating expenses to
average net assets........................
Ratio of net investment income
to average net assets.....................
Portfolio turnover rate...................
Ratio of operating expenses to
average net assets w/o waivers............
</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,
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.
23
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN TRIPLE TAX-FREE BOND FUND(A)
----------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED 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........
Income from investment operations:
Net investment income.....................
Net realized and unrealized gain/loss on
investments...............................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Distributions from net realized gains.....
Total distributions.......................
Net asset value, end of period..............
Total return (b)..........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)......
Ratio of operating expenses to
average net assets........................
Ratio of net investment income
to average net assets.....................
Portfolio turnover rate...................
Ratio of operating expenses to
average net assets w/o waivers and/or
expenses reimbursed.......................
</TABLE>
____________________________________________
(a) 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,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(e) Fiscal year end changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Amount represents less than $0.01 per share.
24
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE BOND FUND(A)
------------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED PERIOD 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........
Income from investment operations:
Net investment income....................
Net realized and unrealized gain on
investments..............................
Total from investment operations.........
Less distributions:
Dividends from net investment income.....
Distributions from net realized gains....
Total distributions......................
Net asset value, end of period..............
Total return (b).........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's).....
Ratio of operating expenses to
average net assets.......................
Ratio of net investment income
to average net assets....................
Portfolio turnover rate..................
Ratio of operating expenses to
average net assets w/o waivers and/or
expenses reimbursed......................
</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, 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.
25
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE 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(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........
Income from investment operations:
Net investment income.....................
Net realized and unrealized gain/loss on
investments...............................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Distributions from net realized gains.....
Total distributions.......................
Net asset value, end of period..............
Total return (b)..........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)......
Ratio of operating expenses to
average net assets........................
Ratio of net investment income
to average net assets.....................
Portfolio turnover rate...................
Ratio of operating expenses to
average net assets w/o waivers............
</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,
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
26
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(A)
-----------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
7/31/92(g) 7/31/91(g) 7/31/90(g) 7/31/89(g) 7/31/88(g) 7/31/87(g)
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............
Income from investment operations:
Net investment income..........................
Net realized and unrealized gain/(loss) on
investments....................................
Total from investment operations...............
Less distributions:
Dividends from net investment income...........
Distributions from net realized gains..........
Total distributions............................
Net asset value, end of period..................
Total return (b)...............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)...........
Ratio of operating expenses to average net
assets ........................................
Ratio of net investment income to average net
assets.........................................
Portfolio turnover rate........................
Ratio of operating expenses to average net
assets w/o waivers.............................
</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,
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.
27
<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...................
Income from investment operations:
Net investment income.................................
Total from investment operations......................
Less distributions:
Dividends from net investment income..................
Total distributions...................................
Net asset value, end of period.........................
Total return (b)......................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..................
Ratio of operating expenses to average net
assets................................................
Ratio of net investment income to average net
assets...............................................
Ratio of operating expenses to average net assets
w/o waivers..........................................
</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.
28
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET 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
-------- ------- ------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period....................
Income from investment operations:
Net investment income..................................
Total from investment operations.......................
Less distributions:
Dividends from net investment income...................
Total distributions....................................
Net asset value, end of period..........................
Total return (b).......................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)...................
Ratio of operating expenses to average net
assets.................................................
Ratio of net investment income to average net
assets.................................................
Ratio of operating expenses to average net assets
w/o waivers...........................................
</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.
29
<PAGE>
<TABLE>
<CAPTION>
US TREASURY MONEY MARKET 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
-------- ------- ------- ---------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................
Income from investment operations:
Net investment income...............................
Total from investment operations....................
Less distributions:
Dividends from net investment income................
Total distributions.................................
Net asset value, end of period.......................
Total return (b)....................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)................
Ratio of operating expenses to average net
assets..............................................
Ratio of net investment income to average net
assets..............................................
Ratio of operating expenses to average net assets
w/o waivers.........................................
</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.
30
<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?"
ACCELERATING GROWTH FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
long-term capital appreciation; its secondary goal is to provide income. Under
normal conditions, the Fund will invest at least 65% of its assets in Equity
Securities.
In choosing Equity Securities, the Advisor considers, among other factors:
. the potential for accelerated earnings growth
. the maintenance of a substantial competitive advantage
. a focused management team
. a stable balance sheet.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
The Fund is closed to new investments.
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.
31
<PAGE>
GROWTH & INCOME FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide capital
appreciation and current income. It primarily invests in dividend-paying Equity
Securities and is designed for investors seeking current income and capital
appreciation from the equity markets.
. Under normal circumstances, the Fund will invest at least 65% of its
assets in income-producing common stocks and convertible preferred
stocks.
. The Fund may also purchase Fixed Income Securities which are
convertible into or exchangeable for common stock.
. The Fund may invest up to 35% of its assets in Fixed Income
Securities, including 20% of its assets in Fixed Income Securities
that are rated below investment grade.
The Advisor generally selects large, well-known companies that it believes
have favorable prospects for dividend growth and capital appreciation. The Fund
will seek to produce a current yield greater than the S&P 500.
The Fund focuses on dividend-paying Equity Securities because, over time,
dividend income has accounted for a significant portion of the total return of
the S&P 500. In addition, dividends are usually a more stable and predictable
source of return than capital appreciation. The Advisor believes that stocks
which distribute a high level of current income 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 $5
billion. Its style, which focuses on both growth prospects and valuation, is
known as GARP (Growth at a Reasonable Price) and seeks to produce attractive
returns during various market environments.
The Advisor chooses the Fund's investments as follows: The Advisor reviews
the earnings growth of approximately 10,000 companies over the past three years.
It invests in approximately 50 to 100 companies based on:
. superior earnings growth
. financial stability
. relative market value
. price changes compared to the Standard & Poor's 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.
32
<PAGE>
The Fund will try to achieve a correlation between the performance of its
portfolio and that of the S&P 500 of at least .95. A correlation of 1.0 would
mean that changes in the Fund's price mirror exactly changes in the S&P 500. The
timing of purchases and redemptions, changes in securities markets, level of the
Fund's assets and other factors affect the Fund's ability to exactly track the
S&P 500's performance.
The Fund is managed through the use of a "quantitative" investment approach
and tries to mirror the composition and performance of the S&P 500 through
statistical procedures. The Advisor does not use traditional methods of fund
investment management, i.e., it does not select stocks on the basis of economic,
financial and market analysis. Because the Fund pays brokerage costs and other
fees, its return may be lower than that of the S&P 500.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Kenneth A. Schluchter III
jointly manage the Fund. Mr. Johnson, a Chief Investment Officer of the
Advisor, has served as the portfolio manager of the Fund since July 1992. Mr.
Schluchter, who has managed the Fund since June 1997, was previously a Systems
Developer and Data Analyst for Compuware Incorporated (1993-1995) and a Business
Analyst for Central Transport Incorporated (1989-1993).
INTERNATIONAL EQUITY FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. The Fund invests primarily in Foreign Securities, American
Depositary Receipts ("ADRs") and European Depositary Receipts ("EDRs"). At least
once a quarter, the Advisor creates a list of Foreign Securities, ADRs and EDRs
(the "Securities List") which the Fund may purchase based on the country where
the company is located, its competitive advantages, its past financial record,
its future prospects for growth and the market for its securities. The Advisor
updates the Securities List frequently (at least quarterly), adds new securities
to the Securities List if they are eligible and sells securities not on the
updated Securities List as soon as practicable.
After the Advisor creates the Securities List, it divides the list into two
sections. The first section is designed to provide broad coverage of
international markets. The second section increases exposure to securities that
the Advisor expects will perform better than other stocks in their industry
sectors and their markets as a whole. When the Advisor believes broader market
exposure will benefit the Fund, it will allocate up to 80% of the Fund's assets
in first section securities. When the Advisor identifies strong potential for
specific securities to perform well, the Fund may invest up to 50% of its assets
in second section securities.
. Under normal market conditions, at least 65% of the Fund's assets are
invested in Equity Securities in at least three foreign countries.
. The Fund emphasizes companies with a market capitalization of at least
$100 million.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Theodore Miller jointly manage
the Fund. Mr. Johnson, a Chief Investment Officer of the Advisor, and Mr.
Miller, senior portfolio manager of the Fund, have managed the Fund since July
1992 and October 1996, respectively. Mr. Miller previously worked as the primary
analyst for the Fund (1996) and for Interacciones Global Inc. (1993-1995) and
McDonald & Co. Securities Inc. (1991-1993).
MICRO-CAP EQUITY FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. It invests primarily in Equity Securities of smaller
capitalization companies. The Fund attempts to provide investors with
potentially higher returns than a fund that invests primarily in larger more
established companies. Since smaller capitalization companies are generally not
as well known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
. Under normal market conditions, the Fund will invest at least 65% of
its assets in Equity Securities of companies having a market
capitalization of $200 million or less, which is considerably less
than the market capitalization of S&P 500 companies.
33
<PAGE>
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 OBJECTIVES. The Fund's goal is to provide long-term capital
appreciation. This goal is "fundamental" and cannot be changed without
shareholder approval. Its style, which focuses on both growth prospects and
valuation, is known as GARP (Growth at a Reasonable Price) and seeks to produce
attractive returns during various market environments. The Fund invests at least
65% of its assets in Equity Securities. The Fund generally invests in Equity
Securities 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. The portfolio managers of the Fund, Leonard J. Barr
II and Lee P. Munder, have managed the Fund since its 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. Mr. Munder is
the Chairman of the Advisor.
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
34
<PAGE>
. 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 (1996-1998). 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 $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
35
<PAGE>
established companies. Since smaller capitalization companies are generally not
as well-known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
. Under normal market conditions, the Fund will invest at least 65% of
the Fund's assets in Equity Securities of companies with market
capitalizations below $750 million, which is less than the market
capitalization of S&P 500 companies.
The Advisor considers these factors, among others, in choosing companies:
. above-average growth prospects
. participation in a fast-growing industry
. strategic niche position in a specialized market
. adequate capitalization.
PORTFOLIO MANAGEMENT. Carl Wilk and Michael P. Gura jointly manage the
Fund. Mr. Wilk, a Senior Portfolio Manager of the Advisor, has managed the Fund
since October 1996 and was the Fund's primary analyst from 1995 to 1996. Prior
to joining the Advisor in 1995, Mr. Wilk was a Senior Equity Research Analyst
for the Fund at Woodbridge. Mr. Gura has managed the Fund since March 1997.
Prior to joining the Advisor in 1995, Mr. Gura was a Vice President and Senior
Equity Analyst for the Fund at Woodbridge (1994-1995) and an investment officer
for Manufacturers National Bank Trust Department (1989-1994).
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).
36
<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.
37
<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.
38
<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.
MICHIGAN TRIPLE TAX-FREE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide as high a
level of current interest income exempt from regular Federal income taxes,
Michigan state income and Michigan intangibles tax as is consistent with prudent
investment management and preservation of capital.
39
<PAGE>
. 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 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
assets will be invested in Municipal Obligations whose interest is
exempt from regular Federal income tax.
. The Fund invests in Michigan Municipal Obligations from time to time.
. The Fund generally buys obligations with remaining maturities of ten
years or less.
. The Fund's dollar-weighted average maturity will generally be between
three and eight years, but may be up to ten years.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank
(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.
40
<PAGE>
. 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.
WHAT ARE THE FUNDS' INVESTMENTS AND INVESTMENTS 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
41
<PAGE>
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 MONEY MARKET INSTRUMENTS, 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, 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.
All of the Funds, other than the International Bond Fund, the Michigan
Triple Tax-Free Bond Fund and the Tax-Free Intermediate Bond Fund, are
classified as "diversified funds." With respect to 75% of each diversified
Fund's assets, each diversified fund cannot invest more than 5% of its assets in
one issuer (other than the U.S. Government and its agencies and
instrumentalities). In addition, each diversified fund cannot invest more than
25% of its assets in a single issuer. These restrictions do not apply to the
non-diversified funds.
The Tax-Free Funds will acquire long-term instruments only 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
42
<PAGE>
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 Triple Tax-Free Bond Fund's and the Tax-
Free Intermediate Bond Fund's assets in Michigan Municipal Obligations.
Each Tax-Free Fund may invest in short-term money market instruments on a
temporary basis or for temporary investment purposes. Short-term money market
instruments include U.S. government obligations, debt securities of issuers
having a rating within the two highest categories of either S&P or Moody's, and
certificates of deposit or bankers' acceptances of domestic branches of U.S.
banks with at least $1 billion in assets.
Each Money Market Fund will invest primarily in ELIGIBLE SECURITIES (as
defined by the SEC) with remaining maturities of 397 days or less as defined by
the SEC (although securities subject to repurchase agreements, variable and
floating rate securities and certain other securities may bear longer
maturities), and the dollar-weighted average portfolio maturity of each Money
Market Fund will not exceed 90 days. Eligible Securities consist of securities
that are determined by the Advisor, under guidelines established by the Boards
of Trustees and Directors, to present minimal credit risk. Each Money Market
Fund may also hold uninvested cash pending investment of late payments for
purchase orders or during temporary defensive periods.
INVESTMENT CHARTS
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>
- ------------------------------------------------------------------------------------------------------------------------------------
INTER- MICRO-
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INDEX NATIONAL CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES 500 EQUITY EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES. Includes securities 25% 25% 25% 25% 25% Y 25%
issued by non-U.S. companies. Present more
risks than U.S. securities.
- ------------------------------------------------------------------------------------------------------------------------------------
LOWER-RATED DEBT SECURITIES. Fixed Income Y Y 20% Y Y Y Y
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 BACKED SECURITIES. N Y N N N N N
Includes debt securities backed by mortgages,
installment sales contracts and credit card
receivables.
- ------------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Includes participations N Y N N N N N
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 EXCHANGE CONTRACTS. Y Y Y 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.
- ------------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Y Y Y Y Y Y Y
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 FUTURES. (1) Contracts Y Y Y 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 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.
- ------------------------------------------------------------------------------------------------------------------------------------
</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.
44
<PAGE>
EQUITY FUNDS (CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMLINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- -----------------------------------------------------------------------------------------------------------------------------------
<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
- -----------------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
EQUITY FUNDS (CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND INTER- MICRO-
INVESTMENT PRACTICES ACCELERATING GROWTH & GROWTH INDEX NATIONAL CAP
GROWTH BALANCED INCOME OPPORTUNITIES 500 EQUITY EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVERSE REPURCHASE AGREEMENTS. A Fund sells Y Y Y 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.
- ------------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS. Companies, N N N N N N N
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 transaction in which the Fund N N N N N N N
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. Typically there is no 15%(2) 15%(2) 15%(2) 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.
- ------------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend 25% 25% 25% 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) THE LIMITATION ON MARGINS AND PREMIUMS FOR FUTURES AND OPTIONS ON FUTURES
IS 5% OF A FUND'S ASSETS.
(2) BASED ON NET ASSETS.
46
<PAGE>
EQUITY FUNDS (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMLINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Y Y Y Y Y Y Y Y Y
- ----------------------------------------------------------------------------------------------------------------------------------
N N N N N N N N N
- ----------------------------------------------------------------------------------------------------------------------------------
N N N N N N N N N
- ----------------------------------------------------------------------------------------------------------------------------------
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>
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 and their 25% 25% Y 25%
agencies, instrumentalities or political subdivisions, supranational
organizations, and foreign corporations. Does not include Bank obligations.
- ------------------------------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES. Includes debt securities backed by mortgages, Y Y Y Y
installment sales contracts and credit card receivables.
- ------------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE AND CURRENCY SWAPS. Agreement to exchange payments calculated on Y(1) Y(1) Y Y(1)
the basis of relative interest or currency rates. Derivative instruments used
solely for hedging.
- ------------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE CAPS AND FLOORS. Entitle purchaser to receive payments of N N Y N
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 guaranteed by, Y Y Y Y
the U.S. Government or its agencies or instrumentalities.
- ------------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Include participations in trusts that hold U.S. Treasury Y Y Y Y
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 agrees to buy them Y Y Y Y
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 Fund to purchase Y Y Y Y
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, including Y Y Y Y
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 Securities issued or N N Y N
guaranteed by supranational organizations such as the World Bank.
- ------------------------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a Fund to make payments to an Y Y Y Y
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 Fund to purchase [25%] [25%] [25%] [25%]
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 these securities, 15%(2) 15%(2) 15%(2) 15%(2)
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 in which a Fund has the right or Y Y Y Y
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 a buyer to buy a Y Y Y Y
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 institutions which 25% 25% 25% 25%
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.
48
<PAGE>
TAX-FREE FUNDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND MICHIGAN TRIPLE TAX-FREE OND FUND TAX-FREE INTERMEDIATE
INVESTMENT PRACTICES TAX-FREE BOND FUND BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUNICIPAL OBLIGATIONS. Payable from the issuer's y y y
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 foreign 10% 10% 10%
governments and their agencies, instrumentalities
or political subdivisions, supranational
organizations, and foreign corporations. Does not
include Bank Obligations.
- ----------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. [25%] [25%] [25%]
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 ready 15%(1) 15%(1) 15%(1)
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 securities to 25% 25% 25%
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. Treasury y y y
bills, notes and bonds.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y = INVESTMENT ALLOWED WITHOUT RESTRICTION
N = INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
49
<PAGE>
MONEY MARKET FUNDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND CASH TAX-FREE U.S. TREASURY
INVESTMENT PRACTICES INVESTMENT MONEY MONEY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE OBLIGATIONS:
. Commercial paper (including paper of Canadian companies, Canadian Y N N
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 securities backed by mortgages, Y N N
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 Agencies and Y N N
instrumentalities
- ------------------------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar denominated bank obligations, including Y N N
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 N
. U.S. Treasury-issued receipts Y Y 35%
. Non-U.S. Treasury receipts. Y Y N
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL REVENUE OBLIGATIONS. Obligations the interest on which is N Y N
paid solely from the revenues of similar projects.
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS. Payable from the issuer's general revenue, the 5% No more than 25% N
revenue of a specific project, current revenues or a reserve fund. in any one state
- ------------------------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells securities and agrees to Y N Y
buy them back later at an agreed upon time and price. A method to
borrow money for temporary purposes.
- ------------------------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a Fund to make payments
to an insurance company's general account in exchange for a minimum Y N N
level of interest based on an index.
- ------------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Agreements by a Fund to
purchase securities at a set price, with delivery and payment in the [25%] [25%] [25%]
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 by foreign governments, 25% N N
and their agencies, instrumentalities or political subdivisions,
supranational organizations and foreign corporations. Does not
include Bank Obligations.
- ------------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for these 10%(1) 10%(1) 10%(1)
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 securities to financial 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) BASED ON NET ASSETS.
50
<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.
<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-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, 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,
<PAGE>
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.
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 Triple Tax-Free Bond Fund and Tax-Free
Intermediate Bond Fund
These Funds are non-diversified and hold securities of a limited number of
issuers. The Funds may, therefore, pose a greater risk to investors than an
investment in a diversified fund. The Michigan Triple Tax-Free Bond Fund invests
primarily in Michigan Municipal Obligations. If Michigan issuers suffer serious
financial difficulties jeopardizing their ability to pay their obligations, the
value of such Fund may decline.
PERFORMANCE
HOW IS THE 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
<PAGE>
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 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 (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.
<PAGE>
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.
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
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<PAGE>
principal partners of the Advisor are MCM, Munder Group LLC and WAM Holdings,
Inc. ("WAM"). MCM was founded in April, 1985 as a Delaware corporation and was a
registered investment advisor. WAM is an indirect, wholly-owned subsidiary of
Comerica Incorporated 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.
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> <C> <C>
Accelerating Growth Fund 0.75% Framlington Global Financial Services Fund 0.75%
Balanced Fund 0.65% Framlington Healthcare Fund 1.00%
Growth & Income Fund 0.75% Framlington International Growth Fund 1.00%
Growth Opportunities 0.75% Bond Fund 0.50%
Index 500 Fund 0.07% Intermediate Bond Fund 0.50%
International Equity Fund 0.75% International Bond Fund 0.50%
Micro-Cap Equity Fund 1.00% U.S. Government Income Fund 0.50%
Multi-Season Growth Fund 0.75% Michigan Triple Tax-Free Bond Fund 0.50%
Real Estate Equity Investment Fund 0.74% Tax-Free Bond Fund 0.50%
Small-Cap Value Fund 0.75% Tax-Free Intermediate Bond Fund 0.50%
Small Company Growth Fund 0.75% Cash Investment Fund 0.35%
Value Fund 0.74% Tax-Free Money Market Fund 0.35%
Framlington Emerging Markets Fund 1.25% U.S. Treasury Money Market Fund 0.35%
</TABLE>
The Advisor waived advisory fees during the past fiscal year for the Index
500 Fund and the Multi-Season Growth Fund. The Advisor is entitled to receive
an annual fee equal to .20% of the first $250 million of the Index 500 Fund's
average daily net assets, .12% of the next $250 million of the Fund's average
daily net assets and .07% of the Fund's average daily net assets over $500
million. The Advisor is also entitled to receive an annual fee equal to 1.00%
of the first $500 million of the Multi-Season Growth Fund's average daily net
assets and .75% of the Fund's average daily net assets over $500 million.
The Sub-Advisor is entitled to receive an advisory fee equal to one-half of
the fee paid to the Advisor by each of the Framlington Funds as compensation for
its services as Sub-Advisor. The Advisor pays fees to the Sub-Advisor and the
Framlington Funds pay no fees directly to the Sub-Advisor.
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Funds and/or their
shareholders, including sub-administration, sub-transfer agency and
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<PAGE>
shareholder servicing. The Advisor may make such payments out of its own
resources and there are no additional costs to the Funds or their shareholders.
The Advisor selects broker-dealers to execute portfolio transactions for
the Funds based on best price and execution terms. The Advisor may consider as
a factor the number of shares sold by the broker-dealer.
PERFORMANCE INFORMATION. The tables below contain performance information
for certain Funds created through the conversion of a common or collective trust
fund which had investment objectives and policies 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.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER ACCELERATING GROWTH
JUNE 30, 1998 FUND (CLASS K )* S&P 500**
------------- --------------- -------
<S> <C> <C>
1 Year...................................................... % %
3 Years..................................................... % %
5 Years..................................................... % %
Inception on January 1, 1990................................ % %
</TABLE>
- -------------------
* Converted from collective trust fund to mutual fund on November 23, 1992.
** S&P 500 performance shows total return in U.S. dollars but does not reflect
the deduction of fees, expenses and taxes. Source: Lipper Analytical Services,
Inc.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER SMALL COMPANY RUSSELL 2000
JUNE 30, 1998 GROWTH FUND (CLASS K )* INDEX**
------------- --------------------- -----
<S> <C> <C>
1 Year...................................................... % %
3 Years..................................................... % %
5 Years..................................................... % %
10 Years.................................................... % %
Inception on December 31, 1982.............................. % %
</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. US**
------------- ---------------------- ------------
<S> <C> <C>
1 Year................................................ % %
3 Years............................................... % %
5 Years............................................... % %
Inception on September 30, 1990....................... % %
</TABLE>
- ------------------
57
<PAGE>
* 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...................................................... % %
3 Years..................................................... % %
5 Years..................................................... % %
10 Years.................................................... % %
Inception on January 27, 1988............................... % %
</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
PERIOD ENDED MUNDER BOND FUND GOV'T/CORP. BOND
JUNE 30, 1998 (CLASS K )* INDEX**
------------- ---------- -----
<S> <C> <C>
1 Year...................................................... % %
3 Years..................................................... % %
5 Years..................................................... % %
10 Years.................................................... % %
</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.
<TABLE>
<CAPTION>
MUNDER US LEHAMN BROTHERS
GOVERNMENT GOV'T/CORP.
PERIOD ENDED INCOME FUND BOND
JUNE 30, 1998 (CLASS K)* INDEX**
------------- --------- -----
<S> <C> <C>
1 Year...................................................... % %
3 Years..................................................... % %
5 Years..................................................... % %
10 Years.................................................... % %
</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 GOV'T/BOND
JUNE 30, 1998 (CLASS K)* INDEX**
------------- --------- -----
<S> <C> <C>
1 Year...................................................... % %
3 Years..................................................... % %
5 Years..................................................... % %
10 Years.................................................... % %
Inception on March 31, 1982................................. % %
</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.
58
<PAGE>
<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...................................................... % %
3 Years..................................................... % %
5 Years..................................................... % %
10 Years.................................................... % %
</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.
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 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
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<PAGE>
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: 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.
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 53 State Street, Boston, Massachusetts 02109.
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%
60
<PAGE>
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.
The Funds have adopted a Shareholder Servicing Plan (the "Class K Plan")
under which Class K Shares are sold through institutions which enter into
shareholder servicing agreements with the Funds. The agreements require the
institutions to provide shareholder services to their Customers who from time to
time own of record or beneficially Class K Shares in return for payment by a
Fund at a rate not exceeding .25% (on an annualized basis) of the average daily
net asset value of the Class K Shares beneficially owned by the Customers. Class
K Shares bear all fees paid to institutions under the Class K Plan. Payments
under the Class K Plan are not tied exclusively to the shareholder expenses
actually incurred by the institutions and the payments may exceed service
expenses actually incurred.
The services provided by institutions under the Class K Plan may include
processing purchase, exchange and redemption requests from Customers and placing
orders with the Transfer Agent; processing dividend and distribution payments
from the Funds on behalf of Customers; providing information periodically to
Customers showing their positions in Class K Shares; providing sub-accounting
with respect to Class K Shares beneficially owned by Customers or the
information necessary for sub-accounting; responding to inquires from customers
concerning their investment in Class K Shares; arranging for bank wires; and
providing such other similar services as may be reasonably requested.
For an additional description of the services performed by the
Administrator, the Transfer Agent, the Custodian, the Sub-Custodian and the
Distributor, see the SAI.
WHAT ARE MY RIGHTS AS A SHAREHOLDER?
All shareholders have equal voting, liquidation and other rights. You are
entitled to one vote for each share you hold and a fractional vote for each
fraction of a share you hold. You will be asked to vote on matters affecting the
Trust, the Company or Framlington as a whole and affecting your particular Fund.
You will not vote by Class unless expressly required by law or when the Trustees
or Directors determine the matter to be voted on affects only the interests of
the holders of a particular class of shares. The Trust, the Company and
Framlington will not hold annual shareholder meetings, but special meetings may
be held at the written request of shareholders owning more than 10% of
outstanding shares for the purpose of removing a Trustee or Director. Under
Massachusetts law, it is possible that a shareholder may be personally liable
for the Trust's or Framlington's obligations. If a shareholder were required to
pay a debt of a Fund, however, the Trust and Framlington have committed to
reimburse the shareholder in full from their assets. The SAI contains more
information regarding voting rights.
61
<PAGE>
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 Accelerating Growth Fund,
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.
ARE THERE TAX IMPLICATIONS OF MY INVESTMENTS IN THE FUNDS?
This section contains a brief summary of the tax implications of ownership
in the Funds' shares. A more detailed discussion of Federal income tax
considerations is contained in the SAI. You should consult your tax advisor
regarding the impact of owning the Funds' shares on your own personal tax
situation including the applicability of any state and local taxes.
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.
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<PAGE>
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.
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.
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<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
Accelerating Growth
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 Triple 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"):
<TABLE>
<S> <C>
Munder Accelerating Growth Fund* Munder Framlington Healthcare Fund
Munder Balanced Fund Munder Framlington International Growth Fund
Munder Growth & Income Fund Munder Bond Fund
Munder Growth Opportunities Fund Munder Intermediate Bond Fund
Munder International Equity Fund Munder International Bond Fund
Munder Micro-Cap Equity Fund Munder U.S. Government Income Fund
Munder Multi-Season Growth Fund Munder Michigan Triple Tax-Free Bond Fund**
Munder NetNet Fund Munder Tax-Free Bond Fund
Munder Real Estate Equity Investment Fund Munder Tax-Free Intermediate Bond Fund
Munder Small-Cap Value Fund Munder Short Term Treasury Fund
Munder Small Company Growth Fund Munder Cash Investment Fund
Munder Value 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>
* The Accelerating Growth Fund is closed to new investors.
** 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?..................................... 36
Who may want to invest in the Funds?........................ 46
What are the Funds' investments and investment practices?... 47
What are the risks of investing in the Funds?............... 57
Performance
How is the Funds' performance calculated?................... 59
Where can I obtain performance data?........................ 60
Purchases of Shares
What price do I pay for shares?............................. 61
When can I purchase shares?................................. 61
What is the minimum required investment?.................... 61
How can I purchase shares?.................................. 61
How can I exchange shares?.................................. 62
Redemptions of Shares
What price do I receive for redeemed shares?................ 62
When can I redeem shares?................................... 62
How can I redeem shares?.................................... 62
When will I receive redemption amounts?..................... 63
Structure and Management of the Funds
How are the Funds structured?............................... 63
Who manages and services the Funds?......................... 63
What are my rights as a shareholder?........................ 68
Dividends, Distributions and Taxes
When will I receive distributions from the Funds?........... 69
How will distributions be made?............................. 69
Are there tax implications of my investments in the Funds?.. 69
Additional Information........................................... 70
</TABLE>
2
<PAGE>
FUND HIGHLIGHTS
WHAT ARE THE KEY FACTS REGARDING THE FUNDS?
Q: What are the Funds' goals?
A:
. The Accelerating Growth Fund, 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 Triple Tax-Free Bond Fund seeks to provide as high a
level of current interest income exempt from regular Federal
income taxes, Michigan state income tax and Michigan intangibles
tax as is consistent with prudent investment management and
preservation of capital.
. 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>
ACCELERATING GROWTH FUND, 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 TRIPLE 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 Triple Tax-Free Bond Fund invests primarily in
Michigan Municipal Obligations. "Michigan Municipal Obligations"
are municipal obligations issued by the State of Michigan and its
political subdivisions, the interest on which is exempt from
Federal income taxes, Michigan state income tax and Michigan
intangibles tax.
CASH INVESTMENT FUND, MONEY MARKET FUND, TAX-FREE MONEY MARKET FUND AND U.S.
TREASURY MONEY MARKET FUND (THE "MONEY MARKET FUNDS")
. 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 Term Treasury Potential loss of investment due to changes in the bond
Fund 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, Framlington Because of large investments in foreign securities, the
Global Financial Services Fund, Framlington Funds are riskier than domestic funds due to factors such as
International Growth Fund, International Bond freezes on convertibility of currency, changes in exchange
Fund and International Equity Fund rates, political instability and differences in accounting
and reporting standards.
- ------------------------------------------------------------------------------------------------------------------
Growth Opportunities Fund, Micro-Cap Equity Fund, Because of large investments in mid-capitalization,
NetNet Fund, Small Company Growth Fund and small-capitalization and/or emerging growth companies, the
Small-Cap Value Fund 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, Framlington These Funds concentrate their investments in single
Global Financial Services Fund, Framlington industries and could experience larger price fluctuations
Healthcare Fund and NetNet Fund than funds invested in a broader range of industries.
- ------------------------------------------------------------------------------------------------------------------
International Bond Fund, Michigan Triple Tax-Free These "non-diversified" Funds concentrate their investments
Bond Fund and Tax-Free Intermediate Bond Fund in 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 League 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.
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
5
<PAGE>
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): Accelerating
Growth Fund, 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 Triple 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 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, Healthcare and
International Growth Funds. The Advisor is responsible for purchases and sales
of domestic securities and the Sub-Advisor is responsible for 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 fees shown below are based on fees
for the Funds' past fiscal year, except (i) the fees for the Multi-Season Growth
Fund reflect an anticipated voluntary advisory fee waiver for the current fiscal
year and (ii) the fees for the Framlington Global Financial Services Fund, the
Growth Opportunities Fund, NetNet Fund, (Micro-Cap Equity Fund and Framlington
Healthcare Fund) are based on estimated operating expenses for the current
fiscal year and reflect anticipated voluntary expense reimbursements for the
Growth Opportunities Fund, NetNet Fund, Framlington Global Financial Services
Fund, (Micro-Cap Equity Fund and Framlington Healthcare Fund).
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES ACCELERATING BALANCED GROWTH & GROWTH INTERNATIONAL
(AS A % OF AVERAGE NET ASSETS) GROWTH FUND FUND INCOME FUND OPPORTUNITIES FUND EQUITY FUND
- ------------------------------ ----------- ---- ----------- ------------------ -----------
<S> <C> <C> <C> <C> <C>
Advisory Fees........................... .75% .65% .75% .75% .75%
Other Expenses+......................... .20% .32% .20% .40%++ .26%
--- --- --- ------ ----
Total Fund Operating Expenses+...... .95% .97% .95% .15%++ 1.01%
=== === === ====== ====
<CAPTION>
SMALL
MICRO-CAP REAL ESTATE SMALL-CAP COMPANY
ANNUAL FUND OPERATING EXPENSES EQUITY MULTI-SEASON EQUITY NETNET VALUE GROWTH
(AS A % OF AVERAGE NET ASSETS) FUND GROWTH FUND INVESTMENT FUND FUND FUND FUND
- ------------------------------ ---- ----------- --------------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees................. 1.00% .75%* .74% 1.00% .75% .75%
Other Expenses+............... .25%++ .25% .11% .28%++ .38% .22%
------- ------ --- ------- --- ---
Total Fund Operating Expenses+ 1.25%++ 1.00%* .85% 1.28%++ .13% .97%
======= ====== === ======= === ===
<CAPTION>
FRAMLINGTON FRAMLINGTON FRAMLINGTON FRAMLINGTON
ANNUAL FUND OPERATING EXPENSES VALUE GLOBAL FINANCIAL EMERGING HEALTHCARE INTERNATIONAL
(AS A % OF AVERAGE NET ASSETS) FUND SERVICES FUND MARKETS FUND FUND GROWTH FUND
- ------------------------------ ---- ----------------- ------------ ---- -----------
<S> <C> <C> <C> <C> <C>
Advisory Fees...................... .74% .75% 1.25% 1.00% 1.00%
Other Expenses+..................... .28% .50%++ .29% .30%++ .30%
---- ------ ---- ------- ----
Total Fund Operating Expenses+....... 1.02% .25%++ 1.54% 1.30%++ 1.30%
==== ====== ==== ======= ====
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING INTERMEDIATE INTERNATIONAL U.S.
EXPENSES BOND BOND BOND GOVERNMENT MICHIGAN TRIPLE
(AS A % OF AVERAGE NET ASSETS) FUND FUND FUND INCOME FUND TAX-FREE BOND FUND
- ------------------------------ ---- ---- ---- ----------- ------------------
<S> <C> <C> <C> <C> <C>
Advisory .50% .50% .50% .50% .50%
Fees...........................
Other .21% .18% .35% .21% .13%
Expenses......................... --- --- --- --- ---
Total Fund Operating Expenses...... .71% .68% .85% .71% .63%
=== === === === ===
<CAPTION>
SHORT TAX-FREE
TAX-FREE TAX-FREE TERM CASH MONEY MONEY
ANNUAL FUND OPERATING EXPENSES BOND INTERMEDIATE TREASURY INVESTMENT MARKET MARKET
(AS A % OF AVERAGE NET ASSETS) FUND BOND FUND FUND FUND FUND FUND
- ------------------------------ ---- --------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees........................ .50% .50% .25% .35% .40% .35%
Other .20% .18% .27% .20% .24% .18%
Expenses........................ --- --- --- --- --- ---
Total Fund Operating Expenses...... .70% .68% .52% .55% .64% .53%
=== === === === === ===
<CAPTION>
ANNUAL FUND OPERATING EXPENSES U.S. TREASURY
(AS A % OF AVERAGE NET ASSETS) MONEY MARKET FUND
- ------------------------------ -----------------
<S> <C>
Advisory .35%
Fees...........................
Other .19%
Expenses............................ ---
Total Fund Operating Expenses...... .54%
===
</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 1.00% and total fund operating expenses would be at 1.25%.
+ After expense reimbursements, if any.
++ The Advisor expects to voluntarily reimburse the Funds for certain operating
expenses. In the absence of such expense reimbursements, it is estimated that
total fund operating expenses would be 1.28% for Growth Opportunities Fund,
1.42% for the Framlington Global Financial Services Fund, 1.51% for the
Framlington Healthcare Fund, 1.35% for the Micro-Cap Equity Fund and 2.09% for
the NetNet Fund.
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 YEAR 5 YEAR 10 YEARS
------ ------ ------ --------
<S> <C> <C> <C> <C>
Accelerating Growth Fund $10 $30 $53 $117
Balanced Fund $10 $31 $54 $119
Growth & Income Fund $10 $30 $53 $117
Growth Opportunities Fund $14 $45
International Equity Fund $10 $32 $56 $124
Micro-Cap Equity Fund $13 $40 $69 $151
Multi-Season Growth Fund $10 $32 $55 $122
NetNet Fund $13 $41 $71 $155
Real Estate Equity Investment Fund $11 $35 $61 $134
Small-Cap Value Fund $12 $36 $62 $137
Small Company Growth Fund $10 $31 $54 $119
Value Fund $10 $32 $56 $125
Framlington Emerging Markets Fund $16 $49 $84 $183
Framlington Global Financial Services Fund $15 $48
Framlington Healthcare Fund $13 $41 $71 $157
Framlington International Growth Fund $13 $41 $71 $157
Bond Fund $ 7 $23 $40 $ 88
Intermediate Bond Fund $ 7 $22 $38 $ 85
International Bond Fund $ 9 $27 $47 $105
U.S. Government Income Fund $ 7 $23 $40 $ 88
Michigan Triple Tax-Free Bond Fund $ 6 $20 $35 $ 79
Tax-Free Bond Fund $ 7 $22 $39 $ 87
Tax-Free Intermediate Bond Fund. $ 7 $22 $39 $ 85
Short Term Treasury Fund $ 5 $17 $29 $ 65
Cash Investment Fund $ 6 $18 $31 $ 69
Money Market Fund $ 7 $20 $36 $ 80
Tax-Free Money Market Fund $ 5 $17 $30 $ 66
U.S. Treasury Money Market Fund $ 6 $17 $30 $ 68
</TABLE>
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 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>
ACCELERATING GROWTH FUND(A)
-------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(I) 6/30/96 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93 2/29/92
------- --------- ------- ---------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........
Income from investment operations:
Net investment income.....................
Net realized and unrealized gain on
investments...............................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Distributions from net realized gains.....
Total distributions.......................
Net asset value, end of period..............
Total return (b)..........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)......
Ratio of operating expenses to average
net assets................................
Ratio of net investment income/loss to
average net assets........................
Portfolio turnover rate...................
Ratio of operating expenses to average
net assets w/o waivers....................
Average commission rate (g)...............
</TABLE>
____________________
(a) The Munder Accelerating 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) 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
(f) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Amount rounds to less than 0.01%. (i) Per share numbers have been calculated
using the average shares method, which more appropriately presents the per share
data for the period since the use of the undistributed net investment income
method did not accord with the results of operations.
10
<PAGE>
<TABLE>
<CAPTION>
BALANCED FUND(A)
-------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR 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) 2/28/94
------- --------- ---------- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........
Income from investment operations:
Net investment income.....................
Net realized and unrealized gain/(loss)
on investments............................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Distributions from net realized gains.....
Total distributions.......................
Net asset value at end of period............
Total return (b)..........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)......
Ratio of operating expenses to average
net assets................................
Ratio of net investment income to
average net assets........................
Portfolio turnover rate...................
Ratio of operating expenses to average
net assets w/o waivers....................
Average commission rate (f)...............
</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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(g) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
11
<PAGE>
<TABLE>
<CAPTION>
GROWTH & INCOME FUND(A)
---------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 6/30/95(D) 2/28/95(E)
------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........
Income from investment operations:
Net investment income.....................
Net realized and unrealized gain on
investments...............................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Distributions from net realized gains.....
Total distributions.......................
Net asset value at end of period............
Total return (b)..........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)......
Ratio of operating expenses to average net
assets....................................
Ratio of net investment income to average
net assets................................
Portfolio turnover rate...................
Ratio of operating expenses to average
net assets w/o waivers....................
Average commission rate (g)...............
</TABLE>
________________________
(a) The Munder Growth & 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) Amount represents less than $0.01 per share.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
12
<PAGE>
<TABLE>
<CAPTION>
GROWTH
OPPORTUNITIES FUND(A)
---------------------
PERIOD
ENDED
6/30/98
---------------------
<S> <C>
Net asset value, beginning of period........................................
Income from investment operations:
Net investment income.....................................................
Net realized and unrealized gain on investments..........................
Total from investment operations..........................................
Less distributions:
Dividends from net investment income......................................
Distributions from net realized gains.....................................
Total distributions.......................................................
Net asset value at end of period............................................
Total return (b)..........................................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)......................................
Ratio of operating expenses to average net assets.........................
Ratio of net investment income to average net assets......................
Portfolio turnover rate...................................................
Ratio of operating expenses to average net assets w/o waivers.............
Average commission rate (d)...............................................
</TABLE>
_________________________
(a) The Growth Opportunities Fund commenced operations on June 3, 1998.
13
<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........
Income from investment operations:
Net investment income.....................
Net realized and unrealized gain/(loss)
on investments............................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Distributions from net realized gains.....
Distributions from capital................
Total distributions.......................
Net asset value at end ofperiod.............
Total return(b)...........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)......
Ratio of operating expenses to average
net assets................................
Ratio of net investment
loss to average net assets.................
Portfolio turnover rate....................
Ratio of operating expenses
to average net assets w/o waivers..........
Average commission rate (h)................
</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,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Amount represents less than $0.01 per share.
(h) Average commission rate paid per share of securities purchased and sold by
the Fund.
14
<PAGE>
<TABLE>
<CAPTION>
MICRO-CAP
EQUITY FUND(A)
----------------
YEAR Period
ENDED ENDED
6/30/98 6/30/97(e)
------- ---------
<S> <C> <C>
Net asset value, beginning of period..................................
Income from investment operations:
Net investment loss.................................................
Net realized and unrealized gain on investments....................
Total from investment operations....................................
Less distributions:
Dividends from net investment income................................
Total distributions.................................................
Net asset value, end of period........................................
Total return (b)....................................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)................................
Ratio of operating expenses to average net assets...................
Ratio of net investment loss to average net assets..................
Portfolio turnover rate.............................................
Ratio of operating expenses to average net assets w/o waivers.......
Average commission rate (d).........................................
</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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
15
<PAGE>
<TABLE>
<CAPTION>
MULTI-SEASON GROWTH FUND(A)
-----------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(H) 6/30/96(H) 6/30/95(D,E,F) 12/31/94 12/31/93
------- ---------- ---------- -------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........
Income from investment operations:
Net investment income.....................
Net realized and unrealized gain/(loss)
on investments............................
Total from investment operations..........
Less distributions:
Dividends from net investment income......
Distributions from net realized gains.....
Total distributions.......................
Net asset value at end of period..........
Total return (b)..........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's).......
Ratio of operating expenses to average net
assets.....................................
Ratio of net investment income to
average net assets.........................
Portfolio turnover rate....................
Ratio of operating expenses to average
net assets w/o waivers.....................
Average commission rate (g)................
</TABLE>
___________________________
(a) The Munder Multi-Season Growth Fund Class Y Shares commenced operations on
August 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
December 31.
(e) On June 23, 1995, the Munder Multi-Season Growth Fund acquired the assets
and certain liabilities of the Ambassador Established Company Growth Fund.
(f) 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.
(g) Average commission rate paid per share of securities purchased and sold by
the Fund.
(h) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(i) Amount represents less than $0.01 per share.
16
<PAGE>
<TABLE>
<CAPTION>
NETNET FUND(A)
--------------
PERIOD
ENDED
6/30/98
--------------
<S> <C>
Net asset value, beginning of period..................................
Income from investment operations:
Net investment income...............................................
Net realized and unrealized gain on nvestments.....................
Total from investment operations....................................
Less distributions:
Dividends from net investment income................................
Distributions from net realized gains...............................
Total distributions.................................................
Net asset value at end of period......................................
Total return (b)....................................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)................................
Ratio of operating expenses to average net assets...................
Ratio of net investment income to average net assets................
Portfolio turnover rate.............................................
Ratio of operating expenses to average net assets w/o waivers.......
Average commission rate (d).........................................
</TABLE>
___________________
(a) The NetNet Fund commenced operations on June 1, 1998.
17
<PAGE>
<TABLE>
<CAPTION>
SMALL-CAP VALUE
REAL ESTATE EQUITY INVESTMENT FUND(A) FUND(A)
---------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96(F) 6/30/95(D) 6/30/98 6/30/97(F)
------- ------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.............................
Income from investment operations:
Net investment income.........
Net realized and unrealized
gain on investments...........
Total from investment
operations....................
Less distributions:
Dividends from net investment
income........................
Distributions in excess of net
investment income.............
Distributions from paid-in
capital.......................
Total distributions...........
Net asset value at end of period...
Total return (b)..............
Ratios to average net
assets/supplemental data:
Net assets, end of period (in
000's)........................
Ratio of operating expenses to
average net assets............
Ratio of net investment income
to average net assets.........
Portfolio turnover rate.......
Ratio of operating expenses to
average net assets w/o waivers
and/or expenses reimbursed....
Average commission rate (e)...
</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) Average commission rate paid per share of securities purchased and sold by
the Fund.
(f) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
18
<PAGE>
<TABLE>
<CAPTION>
SMALL COMPANY GROWTH 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(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..............................
Income from investment operations:
Net investment loss.............
Net realized and unrealized
gain/(loss) on investments.....
Total from investment
operations .....................
Less distributions:
Dividends from net investment
income.........................
Distributions from net
realized gains..................
Total distributions.............
Net asset value at end of
period..............................
Total return(b).................
Ratios to average net assets/
supplemental data:
Net assets, end of period (in
000's)..........................
Ratio of operating expenses to
average net assets..............
Ratio of net investment loss to
average net assets..............
Portfolio turnover rate.........
Ratio of operating expenses to
average net assets w/o waivers..
Average commission rate (g).....
</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,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(g) Average commissions rate paid per share of securities purchased and sold by
the Fund.
19
<PAGE>
<TABLE>
<CAPTION>
VALUE FUND(A)
------------------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/96(E)
----------- ------------ ------------
<S> <C> <C> <C>
Net asset value, beginning of period......................
Income from investment operations:
Net investment income.................................
Net realized and unrealized gain on investments.......
Total from investment operations......................
Less distributions:
Dividends from net investment income..................
Distributions from net realized gains.................
Total distributions...................................
Net asset value at end of period..........................
Total return(b).......................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)..................
Ratio of operating expenses to average net
assets ...............................................
Ratio of net investment income/(loss) to
average net assets....................................
Portfolio turnover rate...............................
Ratio of operating expenses to average net
assets w/o waivers and expenses reimbursed............
Average commission rate(d)............................
</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.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
20
<PAGE>
<TABLE>
<CAPTION>
FRAMLINGTON
GLOBAL
FRAMLINGTON FINANCIAL FRAMLINGTON FRAMLINGTON
EMERGING MARKETS SERVICES HEALTHCARE INTERNATIONAL GROWTH
FUND(A) FUND(A) FUND(A) FUND(A)
------------------------------------------------------------------------------
YEAR PERIOD PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97(E) 6/30/98 6/30/98 6/30/97 6/30/98 6/30/97(E)
-------- ---------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...........
Income from investment operations:
Net investment income.......................
Net realized and unrealized
gain on investments.........................
Total from investment operations ...........
Less distributions:
Dividends from net investment
income......................................
Distributions from net realized
gains.......................................
Total Distributions.........................
Net asset value at end of period................
Total Return(b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)........
Ratio of operating expenses to
average net assets..........................
Ratio of net investment income
to average net assets.......................
Portfolio turnover rate.....................
Ratio of operating expenses to
average net assets w/o expenses
reimbursed .................................
Average commission rate(d)..................
</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 15, 1998.
(b) Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges.
(c) Annualized.
(d) Average commission rate paid per share of securities purchased and sold by
the Fund.
(e) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
21
<PAGE>
<TABLE>
<CAPTION>
BOND FUND(A)
-------------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
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,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......................................
Income from investment operations:
Net investment income...................
Net realized and unrealized
gain/(loss) on investments..............
Total from investment operations........
Less distributions:
Dividends from net investment
income..................................
Distributions from net realized
gains...................................
Total distributions.....................
Net asset value at end of period............
Total return(b).........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)....
Ratio of operating expenses to
average net assets......................
Ratio of net investment income to
average net assets......................
Portfolio turnover rate.................
Ratio of operating expenses to
average net assets w/o waivers..........
</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,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
22
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND 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 6/30/95(D) 2/28/95(E) 2/28/94 2/28/93 2/29/92
------- ---------- ------- --------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period......................................
Income from investment operations:
Net investment income...................
Net realized and unrealized
gain/(loss) on investments..............
Total from investment operations........
Less distributions:
Dividends from net investment
income..................................
Distributions from net realized
gains...................................
Total distributions.....................
Net asset value at end of period............
Total return(b).........................
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's)....
Ratio of operating expenses to
average net assets......................
Ratio of net investment income to
average net assets......................
Portfolio turnover rate.................
Ratio of operating expenses to
average net assets w/o waivers..........
</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,
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.
23
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL US GOVERNMENT INCOME FUND(A)
BOND FUND(A)
----------------------------------------------------------------------------
YEAR PERIOD YEAR YEAR YEAR PERIOD YEAR
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 ...............
Income from investment operations:
Net investment income...........................
Net realized and unrealized
gain/(loss) on investments......................
Total from investment operations................
Less distributions:
Dividends from net investment income ...........
Distributions from net realized gains...........
Total distributions.............................
Net asset value at end of period....................
Total return(b).................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) ...........
Ratio of operating expenses to
average net assets..............................
Ratio of net investment income to
average net assets..............................
Portfolio turnover rate.........................
Ratio of operating expenses to average net
assets w/o waivers..............................
</TABLE>
_________________________________
(a) The Munder International Bond Fund Class Y Shares commenced operations on
October 2, 1996 and the U.S. Government Income Fund Class Y Shares commenced
operations on July 5, 1994.
(b) Total return represents aggregate total return for the period indicated 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.
24
<PAGE>
<TABLE>
<CAPTION>
MICHIGAN TRIPLE-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,E) 2/28/95(E,F) 2/28/94
------- --------- --------- ----------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................
Income from investment operations:
Net investment income............................
Net realized and unrealized gain/(loss) on
investments......................................
Total from investment operations.................
Less distributions:
Dividends from net investment income............
Distributions from net realized gains...........
Total distributions.............................
Net asset value at end of period.....................
Total return(b)..................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).............
Ratio of operating expenses to average net
assets...........................................
Ratio of net investment income to
average net assets...............................
Portfolio turnover rate..........................
Ratio of operating expenses to average
net assets w/o waivers...........................
</TABLE>
_____________________________
(a) 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,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
(g) Amount represents less than $0.01 per share.
25
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE BOND FUND(A)
------------------------------------------------------------------
YEAR YEAR YEAR PERIOD PERIOD
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)
------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................
Income from investment operations:
Net investment income.....................................
Net realized and unrealized gain on investments...........
Total from investment operations..........................
Less distributions:
Dividends from net investment income......................
Distributions from net realized gains.....................
Total distributions.......................................
Net asset value at end of period............................
Total return(b)...........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)......................
Ratio of operating expenses to average net assets.........
Ratio of net investment income to average net assets......
Portfolio turnover rate...................................
Ratio of operating expenses to average net assets w/o
waivers..................................................
</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,
which more appropriately presents the per share data for the period since the
use of the undistributed net investment income method did not accord with the
results of operations.
(f) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
26
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE INTERMEDIATE BOND FUND(A)
--------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR YEAR
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) 2/28/94 2/28/93
------- --------- ---------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............
Income from investment operations:
Net investment income.......................
Net realized and unrealized gain/(loss) on
investments.................................
Total from investment operations............
Less distributions:
Dividends from net investment
income......................................
Distributions from net realized
gains.......................................
Total distributions.........................
Net asset value at end of period................
Total return(b).............................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)........
Ratio of operating expenses
to average net assets.......................
Ratio of net investment
income to average net assets................
Portfolio turnover rate.....................
Ratio of operating expenses to average net
assets w/o waivers..........................
</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,
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.
27
<PAGE>
<TABLE>
<CAPTION>
SHORT TERM TREASURY FUND(A)
-----------------------------
YEAR YEAR
ENDED ENDED
6/30/98 6/30/97
------------ -------------
<S> <C> <C>
Net asset value, beginning of period........................
Income from investment operations:
Net investment income...................................
Net realized and unrealized gain/(loss) on
investments.............................................
Total from investment operations........................
Less distributions:
Dividends from net investment income....................
Distributions from net realized gains...................
Total distributions.....................................
Net asset value at end of period............................
Total return(b).........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)....................
Ratio of operating expenses to average net assets.......
Ratio of net investment income to average net
assets..................................................
Portfolio turnover rate.................................
Ratio of operating expenses to average net assets
w/o waivers.............................................
</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) 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.
28
<PAGE>
<TABLE>
<CAPTION>
CASH INVESTMENT FUND(A)
------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(d) 2/28/95(e)
------- ------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.........................
Income from investment operations:
Net investment
income.....................................................
Total from investment
operations.................................................
Less distributions:
Dividends from net investment
income.....................................................
Total distributions........................................
Net asset value at end of period.............................
Total return (b)...........................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).......................
Ratio of operating expenses to
average net assets.........................................
Ratio of net investment income to
average net assets.........................................
Ratio of operating expenses to
average net assets w/o waivers.............................
</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.
29
<PAGE>
<TABLE>
<CAPTION>
CASH INVESTMENT FUND(A)
-------------------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
2/28/94 2/28/93 2/29/92 2/28/91
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period..........................
Income from investment operations:
Net investment income.......................................
Total from investment operations............................
Less distributions:
Dividends from net investment
income......................................................
Total distributions.........................................
Net asset value at end of period..............................
Total return (b)............................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)........................
Ratio of operating expenses to
average net assets .........................................
Ratio of net investment income
to average net assets.......................................
Ratio of operating expenses to
average net assets w/o waivers..............................
</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.
30
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND(A)
--------------------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED 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.............
Income from investment operations:
Net investment income..........................
Total from investment operations...............
Less distributions:
Dividends from net investment income.............
Total distributions..............................
Net asset value at end of period.................
Total return (b).................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's).............
Ratio of operating expenses to average net
assets ..........................................
Ratio of net investment income to average net
assets...........................................
Ratio of operating expenses to average net
assets w/o waivers...............................
</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.
31
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND(A)
------------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(D,E) 2/28/95(E)
------- ------- ------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............................
Income from investment operations:
Net investment income..........................................
Total from investment operations...............................
Less distributions:
Dividends from net investment income...........................
Total Distributions............................................
Net asset value at end of period.................................
Total Return (b)...............................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)...........................
Ratio of operating expenses to average net assets .............
Ratio of net investment income to average net assets...........
Ratio of operating expenses to average net assets w/o
waivers........................................................
_______________________________
(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 the period indicated.
(c) Annualized.
(d) Fiscal year changed to June 30. Prior to this, the fiscal year end was
the last day of February.
(e) On February 1, 1995, Munder Capital Management replaced Woodbridge Capital
Management, Inc. as investment advisor for the Fund as a result of the
consolidation of the investment advisory businesses of Woodbridge Capital
Management, Inc. and Munder Capital Management, Inc.
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
TAX-FREE MONEY MARKET FUND(A)
- ----------------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
2/28/94 2/28/93 2/29/92 2/28/91
- ------- ------- ------- -------
<S> <C> <C> <C>
</TABLE>
33
<PAGE>
PAGE>
<TABLE>
<CAPTION>
US TREASURY MONEY MARKET FUND(A)
------------------------------------------------------------
YEAR YEAR YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96 6/30/95(d) 2/28/95(e)
------- ------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.....................
Income from investment operations:
Net investment income..................................
Total from investment operations.......................
Less distributions:
Dividends from net investment income...................
Total distributions....................................
Net asset value at end of period.........................
Total return (b).......................................
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's)...................
Ratio of operating expenses to average net assets .....
Ratio of net investment income to average net assets...
Ratio of operating expenses to average net assets w/o
waivers................................................
</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.
34
<PAGE>
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND(A)
-------------------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
2/28/94 2/28/93 2/29/92 2/28/91
------- ------- ------- -------
<S> <C> <C> <C>
</TABLE>
35
<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?"
ACCELERATING GROWTH FUND
GOALS AND PRINCIPAL INVESTMENTS. The Fund's primary goal is to provide
long-term capital appreciation; its secondary goal is to provide income. Under
normal conditions, the Fund will invest at least 65% of its assets in Equity
Securities.
In choosing Equity Securities, the Advisor considers, among other factors:
. the potential for accelerated earnings growth
. the maintenance of a substantial competitive advantage
. a focused management team
. a stable balance sheet.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
The Fund is closed to new investments.
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.
36
<PAGE>
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").
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 $5
billion. Its style, which focuses on both growth prospects and valuation, is
known as GARP (Growth at a Reasonable Price) and seeks to produce attractive
returns during various market environments.
The Advisor chooses the Fund's investments as follows: The Advisor reviews
the earnings growth of approximately 10,000 companies over the past three years.
It invests in approximately 50 to 100 companies based on:
. superior earnings growth
. financial stability
. relative market value
. price changes compared to the Standard & Poor's 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,
American Depositary Receipts ("ADRs") and
37
<PAGE>
European Depositary Receipts ("EDRs"). At least once a quarter, the Advisor
creates a list of Foreign Securities, ADRs and EDRs (the "Securities List")
which the Fund may purchase based on the country where the company is located,
its competitive advantages, its past financial record, its future prospects for
growth and the market for its securities. The Advisor updates the Securities
List frequently (at least quarterly), adds new securities to the Securities List
if they are eligible and sells securities not on the updated Securities List as
soon as practicable.
After the Advisor creates the Securities List, it divides the list into two
sections. The first section is designed to provide broad coverage of
international markets. The second section increases exposure to securities that
the Advisor expects will perform better than other stocks in their industry
sectors and their markets as a whole. When the Advisor believes broader market
exposure will benefit the Fund, it will allocate up to 80% of the Fund's assets
in first section securities. When the Advisor identifies strong potential for
specific securities to perform well, the Fund may invest up to 50% of its assets
in second section securities.
. Under normal market conditions, at least 65% of the Fund's assets are
invested in Equity Securities in at least three foreign countries.
. The Fund emphasizes companies with a market capitalization of at least
$100 million.
PORTFOLIO MANAGEMENT. Todd B. Johnson and Theodore Miller jointly manage
the Fund. Mr. Johnson, a Chief Investment Officer of the Advisor, and Mr.
Miller, senior portfolio manager of the Fund, have managed the Fund since July
1992 and October 1996, respectively. Mr. Miller previously worked as the
primary analyst for the Fund (1996) and for Interacciones Global Inc. (1993-
1995) and McDonald & Co. Securities Inc. (1991-1993).
MICRO-CAP EQUITY FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide long-term
capital appreciation. It invests primarily in Equity Securities of smaller
capitalization companies. The Fund attempts to provide investors with
potentially higher returns than a fund that invests primarily in larger more
established companies. Since smaller capitalization companies are generally not
as well known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
. Under normal market conditions, the Fund will invest at least 65% of
its assets in Equity Securities of companies having a market
capitalization of $200 million or less, which is considerably less
than the market capitalization of S&P 500 companies.
The Advisor will choose companies that:
. present the ability to grow significantly over the next several years
. may benefit from changes in technology, regulations and industry
sector trends
. are still in the developmental stage and may have limited product
lines.
PORTFOLIO MANAGEMENT. A committee of professional portfolio managers
employed by the Advisor makes investment decisions for the Fund.
MULTI-SEASON GROWTH FUND
GOAL AND OBJECTIVES. The Fund's goal is to provide long-term capital
appreciation. This goal is "fundamental" and cannot be changed without
shareholder approval. Its style, which focuses on both growth prospects and
valuation, is known as GARP (Growth at a Reasonable Price) and seeks to produce
attractive returns during various market environments. The Fund invests at
least 65% of its assets in Equity Securities. The Fund generally invests in
Equity Securities of companies with market capitalizations of over $1 billion.
38
<PAGE>
The Advisor chooses the Fund's investments as follows: The Advisor reviews
the earnings growth of approximately 5,500 companies over the past five years.
It invests in approximately 50 to 100 companies based on:
. superior earnings growth
. financial stability
. relative market value
. price changes compared to the S&P 500.
PORTFOLIO MANAGEMENT. The portfolio managers of the Fund, Leonard J. Barr
II and Lee P. Munder, have managed the Fund since its inception in 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. Mr. Munder is
the Chairman of the Advisor.
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
39
<PAGE>
. 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 was
formerly the primary analyst of the Fund (October 1994 to October 1996). Mr.
Crosby has managed the Fund since March 1998. Mr. Crosby was formerly 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 $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
40
<PAGE>
established companies. Since smaller capitalization companies are generally not
as well-known to investors and have less of an investor following than larger
companies, they may provide higher returns due to inefficiencies in the
marketplace.
. Under normal market conditions, the Fund will invest at least 65% of
the Fund's assets in Equity Securities of companies with market
capitalizations below $750 million, which is less than the market
capitalization of S&P 500 companies.
The Advisor considers these factors, among others, in choosing companies:
. above-average growth prospects
. participation in a fast-growing industry
. strategic niche position in a specialized market
. adequate capitalization.
PORTFOLIO MANAGEMENT. Carl Wilk and Michael P. Gura jointly manage the
Fund. Mr. Wilk, a Senior Portfolio Manager of the Advisor, has managed the Fund
since October 1996 and was the Fund's primary analyst from 1995 to 1996. Prior
to joining the Advisor in 1995, Mr. Wilk was a Senior Equity Research Analyst
for the Fund at Woodbridge. Mr. Gura has managed the Fund since March 1997.
Prior to joining the Advisor in 1995, Mr. Gura was a Vice President and Senior
Equity Analyst for the Fund at Woodbridge (1994-1995) and an investment officer
for Manufacturers National Bank Trust Department (1989-1994).
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).
41
<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.
42
<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.
43
<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.
MICHIGAN TRIPLE TAX-FREE BOND FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide as high a
level of current interest income exempt from regular Federal income taxes,
Michigan state income and Michigan intangibles tax as is consistent with prudent
investment management and preservation of capital.
44
<PAGE>
. 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 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.
PORTFOLIO MANAGEMENT. Talmadge D. Gunn, Vice President and Director of
Tax-Exempt Trading of the Advisor since 1993, manages the Fund. Mr. Gunn
formerly was an Assistant Vice President and Securities Trader at Comerica Bank.
SHORT TERM TREASURY FUND
GOAL AND PRINCIPAL INVESTMENTS. The Fund's goal is to provide investors
with an enhanced money market return consistent with capital preservation.
Under normal conditions, the Fund invests all of its assets
45
<PAGE>
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.
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.
46
<PAGE>
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 INVESTMENTS 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 MONEY
MARKET INSTRUMENTS, 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, 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 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 (other than the Short Term Treasury 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.
47
<PAGE>
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
Triple Tax-Free Bond Fund and the Tax-Free Intermediate Bond Fund, are
classified as "diversified funds." With respect to 75% of each diversified
Fund's assets, each diversified fund cannot invest more than 5% of its assets in
one issuer (other than the U.S. Government and its agencies and
instrumentalities). In addition, each diversified fund cannot invest more than
25% of its assets in a single issuer. These restrictions do not apply to the
non-diversified funds.
The Tax-Free Funds will acquire long-term instruments only 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 Triple Tax-Free Bond Fund's and the Tax-
Free Intermediate Bond Fund's assets in Michigan Municipal Obligations.
Each Tax-Free Fund may invest in short-term money market instruments on a
temporary basis or for temporary investment purposes. Short-term money market
instruments include U.S. government obligations, debt securities of issuers
having a rating within the two highest categories of either S&P or Moody's, and
certificates of deposit or bankers' acceptances of domestic branches of U.S.
banks with at least $1 billion in assets.
Each Money Market Fund will invest primarily in ELIGIBLE SECURITIES (as
defined by the SEC) with remaining maturities of 397 days or less as defined by
the SEC (although securities subject to repurchase agreements, variable and
floating rate securities and certain other securities may bear longer
maturities), and the dollar-weighted average portfolio maturity of each Money
Market Fund will not exceed 90 days. Eligible Securities consist of securities
that are determined by the Advisor, under guidelines established by the Boards
of Trustees and Directors, to present minimal credit risk. Each Money Market
Fund may also hold uninvested cash pending investment of late payments for
purchase orders or during temporary defensive periods.
INVESTMENT CHARTS
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.
48
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
49
<PAGE>
EQUITY FUNDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INTERNATIONAL MICRO-CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES EQUITY EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES. Includes securities issued by
non-U.S. companies. Present more risks than U.S. 25% 25% 25% 25% Y 25%
securities
- ------------------------------------------------------------------------------------------------------------------------------------
LOWER-RATED DEBT 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. Y Y 20% Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT-GRADE ASSET BACKED SECURITIES. Includes
debt securities backed by mortgages, installment
sales contracts and credit card receivables. N Y N N N N
- ------------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. 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 N Y N N N N
of both.
- ------------------------------------------------------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS.
Obligations of a Fund to purchase or sell a specific
currency at a future date at a set price. May
decrease a Fund's loss due to a change in a currency
value, but also limits gains from currency changes. Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES 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 Y Y Y Y Y Y
speculation.
- ------------------------------------------------------------------------------------------------------------------------------------
FUTURES AND OPTIONS ON 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 Y Y Y Y Y Y
liquidity.
- ------------------------------------------------------------------------------------------------------------------------------------
OPTIONS. A Fund may buy options giving it the right
to require a buyer to buy a security held by the
fund (put options), buy options giving it the right
to require a seller to sell securities to the Fund
(call options), sell (write) options giving a buyer
the right to require the Fund to buy securities from
the buyer or write options giving a buyer the right
to require the Fund to sell securities to the buyer,
during a set time at a set price. Options may
relate to securities indices, individual securities,
foreign currencies, or futures contracts. See the Y Y Y Y Y Y
SAI for more details and additional limitations.
- ------------------------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells
securities and agrees to buy them back later at an
agreed upon time and price. A method to borrow
money for temporary purposes. Y Y Y Y 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.
(2) BASED ON NET ASSETS.
50
<PAGE>
EQUITY FUNDS (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMLINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH NETNET INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
25% Y N 25% 25% 25% Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
Y N 5% Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ------------------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ------------------------------------------------------------------------------------------------------------------------------------
Y Y N Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
Y Y Y Y Y Y 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>
51
<PAGE>
EQUITY FUNDS (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MICRO-
INVESTMENTS AND ACCELERATING GROWTH & GROWTH INTERNATIONAL CAP
INVESTMENT PRACTICES GROWTH BALANCED INCOME OPPORTUNITIES EQUITY EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REAL ESTATE INVESTMENT 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 . N N N N N N
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT SALES. A 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." N N N N N N
- ------------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. 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. 15%(2) 15%(2) 15%(2) 15%(2) 15%(2) 15%(2)
- ------------------------------------------------------------------------------------------------------------------------------------
LENDING SECURITIES. A Fund may lend
securities to financial institutions
which pay for the use of the
securities. May increase return.
Slight risk of borrower failing
financially. 25% 25% 25% 25% 25% 25%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE>
EQUITY FUNDS (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MULTI- REAL ESTATE SMALL- SMALL FRAMLINGTON FRAMLINGTON FRAMLINGTON
SEASON EQUITY CAP COMPANY EMERGING GLOBAL FINANCIAL FRAMLINGTON INTERNATIONAL
GROWTH NETNET INVESTMENT VALUE GROWTH VALUE MARKETS SERVICES HEALTHCARE GROWTH
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Y Y Y Y Y Y Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
N N N N N N N Y N N
- ------------------------------------------------------------------------------------------------------------------------------------
N 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) 15%(2)
- ------------------------------------------------------------------------------------------------------------------------------------
25% 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.
53
<PAGE>
BOND FUNDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
U.S.
GOVERNMENT
INVESTMENTS AND BOND INTERMEDIATE INTERNATIONAL INCOME
INVESTMENT PRACTICES FUND BOND FUND BOND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOREIGN SECURITIES. Securities issued by foreign governments
and their agencies, instrumentalities or political 25% 25% Y 25%
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 N N Y N
receive payments of interest to the extent that a
specified reference rate exceeds or falls below a
predetermined level.
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS. Include securities Y Y Y Y
issued by, or guaranteed by, the U.S. Government
or its agencies or instrumentalities.
- ------------------------------------------------------------------------------------------------------------------------------------
STRIPPED SECURITIES. Include participations in Y Y Y Y
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 bank Y Y Y Y
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 N N Y N
Income Securities issued or guaranteed by
supranational organizations such as the World
Bank.
- ------------------------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. 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. Y Y Y Y
- ------------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. [25%] [25%] [25%] [25%]
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 ready 15%(2) 15%(2) 15%(2) 15%(2)
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 in Y Y Y Y
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 securities to 25% 25% 25% 25%
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.
54
<PAGE>
TAX-FREE FUNDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN SHORT
TRIPLE TERM TAX-FREE
INVESTMENTS AND TAX-FREE TAX-FREE TREASURY INTERMEDIATE
INVESTMENT PRACTICES BOND FUND BOND FUND FUND BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL OBLIGATIONS. Payable from the issuer's general Y Y N Y
revenue, the revenue of a specific project, current revenues
or a reserve fund.
- ------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN MUNICIPAL OBLIGATIONS. Municipal Obligations issued by Y Y N Y
the State of Michigan and its political subdivisions.
- ------------------------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Securities issued by foreign governments 10% 10% N 10%
and their agencies, instrumentalities or political
subdivisions, supranational organizations, and foreign
corporations. Does not include Bank Obligations.
- ------------------------------------------------------------------------------------------------------------------------------------
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. Agreements by a [25%] [25%] N [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%(1) 15%(1) N 15%(1)
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 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.
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES. Includes U.S. Treasury bills, notes Y Y Y Y
and bonds.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
KEY:
Y= INVESTMENT ALLOWED WITHOUT RESTRICTION
N= INVESTMENT NOT ALLOWED
(1) BASED ON NET ASSETS.
55
<PAGE>
MONEY MARKET FUNDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
U.S.
INVESTMENTS CASH MONEY TAX-FREE TREASURY
AND INVESTMENT PRACTICES INVESTMENT MARKET MONEY MONEY
- ------------------------------------------------------------------------------------------------------------------------------------
<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 securities backed by Y Y N N
mortgages, installment sales contracts and credit card receivables.
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS:
. Issued or guaranteed by U.S. Government Y Y N Y
. Issued or guaranteed by U.S. Government Agencies and
instrumentalities. Y Y N N
- ------------------------------------------------------------------------------------------------------------------------------------
BANK OBLIGATIONS. U.S. dollar-denominated bank obligations, Y Y N N
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. Obligations the interest on which N N Y N
is paid solely from the revenues of similar projects.
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS. Payable from the issuer's general revenue, 5% 5% no more than N
the revenue of a specific project, current revenues or a reserve 25% in any
fund. one state
- ------------------------------------------------------------------------------------------------------------------------------------
REVERSE REPURCHASE AGREEMENTS. A Fund sells securities and agrees Y Y N Y
to buy them back later at an agreed upon time and price. A method
to borrow money for temporary purposes.
- ------------------------------------------------------------------------------------------------------------------------------------
GUARANTEED INVESTMENT CONTRACTS. Agreements by a Fund to make Y Y N N
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.
- ------------------------------------------------------------------------------------------------------------------------------------
FOREIGN SECURITIES. Debt obligations issued by foreign governments, 25% 25% N N
and their agencies, instrumentalities or political subdivisions,
supranational organizations and foreign corporations. Does not
include Bank Obligations.
- ------------------------------------------------------------------------------------------------------------------------------------
ILLIQUID SECURITIES. Typically there is no ready market for these 10%(1) 10%(1) 10%(1) 10%(1)
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 securities to financial 25% 33 1/3% 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) BASED ON NET ASSETS.
56
<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
57
<PAGE>
coupon bonds are subject to greater market fluctuations from changing interest
rates than debt obligations of comparable maturities which make current
distributions of interest.
Money Market Funds
Each Money Market Fund attempts to maintain a constant net asset value of
$1.00 per share. However, your investment in 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, 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
58
<PAGE>
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 Triple Tax-Free Bond Fund and Tax-Free
Intermediate Bond Fund
These Funds are non-diversified and hold securities of a limited number of
issuers. The Funds may, therefore, pose a greater risk to investors than an
investment in a diversified fund. The Michigan Triple Tax-Free Bond Fund
invests primarily in Michigan Municipal Obligations. If Michigan issuers suffer
serious financial difficulties jeopardizing their ability to pay their
obligations, the value of such Fund may decline.
PERFORMANCE
HOW IS THE 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.
59
<PAGE>
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
. 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.
60
<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 (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.
61
<PAGE>
. 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.
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?
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.
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<PAGE>
. 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 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 and WAM Holdings, Inc.
("WAM"). MCM was founded in April, 1985 as a Delaware corporation and was a
registered investment advisor. WAM is an indirect, wholly-owned subsidiary of
Comerica Incorporated 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.
63
<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> <C> <C>
Accelerating Growth Fund 0.75% Framlington Healthcare Fund 1.00%
Balanced Fund 0.65% Framlington International Growth Fund 1.00%
Growth & Income Fund 0.75% Bond Fund 0.50%
Growth Opportunities 0.75% Intermediate Bond Fund 0.50%
International Equity Fund 0.75% International Bond Fund 0.50%
Micro-Cap Equity Fund 1.00% U.S. Government Income Fund 0.50%
Multi-Season Growth Fund 0.75% Michigan Triple Tax-Free Bond Fund 0.50%
NetNet 1.00% Tax-Free Bond Fund 0.50%
Real Estate Equity Investment Fund 0.74% Tax-Free Intermediate Bond Fund 0.50%
Small-Cap Value Fund 0.75% Short Term Treasury Fund 0.25%
Small Company Growth Fund 0.75% Money Market Fund 0.40%
Value Fund 0.74% Cash Investment Fund 0.35%
Framlington Emerging Markets Fund 1.25% Tax-Free Money Market Fund 0.35%
Framlington Global Financial Services Fund 0.75% U.S. Treasury Money Market Fund 0.35%
</TABLE>
The Advisor waived advisory fees during the past fiscal year for the Multi-
Season Growth Fund. The Advisor is also entitled to receive an annual fee equal
to 1.00% of the first $500 million of the Multi-Season Growth Fund's average
daily net assets and .75% of the Fund's average daily net assets over $500
million.
The Sub-Advisor is entitled to receive an advisory fee equal to one-half of
the fee paid to the Advisor by each of the Framlington Funds as compensation for
its services as Sub-Advisor. The Advisor pays fees to the Sub-Advisor and the
Framlington Funds pay no fees directly to the Sub-Advisor.
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Funds and/or their
shareholders, including sub-administration, sub-transfer agency and shareholder
servicing. The Advisor may make such payments out of its own resources and
there are no additional costs to the Funds or their shareholders.
The Advisor selects broker-dealers to execute portfolio transactions for
the Funds based on best price and execution terms. The Advisor may consider as
a factor the number of shares sold by the broker-dealer.
PERFORMANCE INFORMATION. The tables below contain performance information
for certain Funds created through the conversion of a common or collective trust
fund which had investment objectives and policies 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.
64
<PAGE>
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER ACCELERATING GROWTH FUND
JUNE 30, 1998 (CLASS Y )* S&P 500**
------------- ----------- ---------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
Inception on January 1, 1990% %
</TABLE>
_______________________________________
* Converted from collective trust fund to mutual fund on December 1, 1991.
** S&P 500 performance shows total return in U.S. dollars but does not reflect
the deduction of fees, expenses and taxes. Source: Lipper Analytical Services,
Inc.
<TABLE>
<CAPTION>
PERIOD ENDED MUNDER SMALL COMPANY RUSSELL 2000
JUNE 30, 1998 GROWTH FUND (CLASS Y )* INDEX**
------------- ----------------------- -------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
Inception on December 31, 1982% %
</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>
PERIOD ENDED MUNDER INTERNATIONAL EQUITY FUND FT/S&P ACTUARIES
JUNE 30, 1998 (CLASS Y )* WORLD INDEX EX. U.S.**
------------- ----------- ----------------------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
Inception on September 30, 1990% %
</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 % %
3 Years % %
5 Years % %
10 Years % %
Inception on January 27, 1988% %
</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>
PERIOD ENDED MUNDER BOND FUND LEHMAN BROTHERS
JUNE 30, 1998 (CLASS Y )* GOV'T/CORP. BOND INDEX**
---------------- ------------------- -------------------------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
</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.
65
<PAGE>
<TABLE>
<CAPTION>
MUNDER U.S. GOVERNMENT
PERIOD ENDED INCOME FUND LEHMAN BROTHERS
JUNE 30, 1998 (CLASS Y)* GOV'T/CORP. BOND INDEX**
--------------- ----------------------- -------------------------
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
</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 GOV'T/BOND
JUNE 30, 1998 (CLASS Y)* INDEX**
-------------- ----------- -----
<S> <C> <C>
1 Year % %
3 Years % %
5 Years % %
10 Years % %
Inception on March 31, 1982% %
</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 % %
3 Years % %
5 Years % %
10 Years % %
</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.
66
<PAGE>
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 the laws of the United Kingdom
managed by the same personnel of the Sub-Advisor with similar investment
objectives and policies to the Framlington Healthcare Fund. In the case of
Emerging Markets portfolio performance, the data relates to a Canadian-based
institutional emerging markets portfolio managed by the same personnel of the
Sub-Advisor with similar investment objectives and policies to the Framlington
Emerging Markets Fund.
The trust account performance is provided by Micropal, an independent
research organization that is a recognized source of performance data in the UK
unit trust industry. The data is U.S. dollar adjusted on the basis of exchange
rates provided by Datastream using WM/Reuters closing rates. The performance
figures are net of brokerage commissions, actual investment advisory fees and
initial sales charges. The data assume the reinvestment of net income and
capital gain distributions. The trust account returns are calculated using
beginning offer and ending bid prices for periods ended December 31, 1996.
You should not rely on the following performance data of the Sub-Advisor's
client accounts as an indication of future performance of the Framlington Funds.
It should be noted that the management of the Funds will be affected by
regulatory requirements under the 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 COMPOSITE INDEX CAPITAL
DECEMBER 31, 1996 U.K. HEALTH 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: 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
PERIOD ENDED CANADIAN EMERGING MARKETS FREE TOTAL
DECEMBER 31, 1996 MARKETS 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.
67
<PAGE>
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 53 State Street, Boston, Massachusetts 02109.
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.
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
68
<PAGE>
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 Accelerating Growth Fund,
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 of Federal income
tax considerations is contained in the SAI. You should consult your tax advisor
regarding the impact of owning the Funds' shares on your own personal tax
situation including the applicability of any state and local taxes.
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.
69
<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 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.
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.
70
<PAGE>
<TABLE>
<S> <C>
Munder Accelerating Growth Fund* Munder Framlington Healthcare Fund
Munder Balanced 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 Triple Tax-Free Bond Fund
Munder Real Estate Equity Investment Fund Munder Tax-Free Bond Fund
Munder Small-Cap Value Fund Munder Tax-Free Intermediate Bond Fund
Munder Small Company Growth Fund Munder Cash Investment Fund
Munder Value Fund Munder Money Market Fund
Munder NetNet Fund Munder Tax-Free Money Market Fund
Munder Framlington Emerging Markets Fund Munder U.S. Treasury Money Market Fund
Munder Framlington Global Financial Services Fund
</TABLE>
* The Munder Accelerating Growth Fund is close to new investments.
(collectively, the "Funds")
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information, which has been filed with
the Securities and Exchange Commission (the "SEC"), provides supplementary
information pertaining to all classes of shares representing interests in each
of the investment portfolios listed above. The Munder Funds, Inc. (the
"Company") currently offers a selection of fourteen investment portfolios, ten
of which are described in this Statement of Additional Information; The Munder
Funds Trust (the "Trust") currently offers a selection of fifteen investment
portfolios, each of which is 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 Triple Tax-Free Bond Fund and Tax-Free Intermediate Bond Fund.. 21
Investment Limitations............................................................................................. 23
Trustees, Directors and Officers................................................................................... 27
Investment Advisory and Other Service Arrangements................................................................. 32
Portfolio Transactions............................................................................................. 47
Additional Purchase and Redemption Information..................................................................... 50
Net Asset Value.................................................................................................... 52
Performance Information............................................................................................ 53
Taxes.............................................................................................................. 63
Additional Information Concerning Shares........................................................................... 70
Miscellaneous...................................................................................................... 72
Registration Statement............................................................................................. 72
Financial Statements............................................................................................... 73
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 Accelerating Growth Fund ("Accelerating Growth Fund")*
Munder Balanced Fund ("Balanced Fund")
Munder Growth & Income Fund ("Growth & Income Fund")
Munder Index 500 Fund ("Index 500 Fund")
Munder International Equity Fund ("International Equity Fund")
Munder Small Company Growth Fund ("Small Company Growth Fund")
Munder Bond Fund ("Bond Fund")
Munder Intermediate Bond Fund ("Intermediate Bond Fund")
Munder U.S. Government Income Fund ("U.S. Income Fund")
Munder Michigan Triple Tax-Free Bond Fund ("Michigan Bond Fund")
Munder Tax-Free Bond Fund ("Tax-Free Bond Fund")
Munder Tax-Free Intermediate Bond Fund ("Tax-Free Intermediate Bond Fund")
Munder Cash Investment Fund ("Cash Investment Fund")
Munder Tax-Free Money Market Fund ("Tax-Free Money Market Fund")
Munder U.S. Treasury Money Market Fund ("U.S. Treasury Money Market Fund")
THE MUNDER FUNDS, INC.
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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
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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 Accelerating Growth Fund is closed to new investors.
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 and WAM
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Holdings, Inc. ("WAM"). MCM was founded in April 1985 as a Delaware
corporation and was a registered investment advisor. WAM is an indirect, wholly-
owned subsidiary 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 four 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 Accelerating Growth 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,
Tax-Free Intermediate Bond Fund and Short Term Treasury 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. The Funds are authorized to borrow money in amounts up to 5% of
the value of their total assets at the time of such borrowings for temporary
purposes, and are authorized to borrow money in excess of the 5% limit as
permitted by the Investment Company Act of 1940, as amended (the "1940 Act"), to
meet redemption requests. This borrowing may be unsecured. The 1940 Act
requires the Funds to maintain continuous asset coverage of 300% of the amount
borrowed. If the 300% asset coverage should decline as a result of market
fluctuations or other reasons, the Funds may be required to sell some of their
portfolio holdings within three days to reduce the debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at that time. Borrowed funds are subject to
interest costs that may or may not be offset by amounts earned on the borrowed
funds. A Fund may also be required to maintain minimum average balances in
connection with such borrowing or to pay a commitment or other fees to maintain
a line of credit; either of these requirements would increase the cost of
borrowing over the stated interest rate. Each Fund may, in connection with
permissible borrowings, transfer as collateral securities owned by the Funds.
FOREIGN SECURITIES. Each Equity Fund (except 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
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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 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 Funds may also purchase Global Depositary Receipts ("GDRs") or European
Depositary Receipts ("EDRs"), which are receipts issued by European financial
institutions evidencing ownership of the underlying foreign securities.
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.
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The Advisor (Sub-Advisor with respect to the Framlington Funds) endeavors
to buy and sell foreign currencies on as favorable a basis as practicable. Some
price spread on currency exchange (to cover service charges) may be incurred,
particularly when the Fund changes investments from one country to another or
when proceeds of the sale of Fund shares in U.S. dollars are used for the
purchase of securities in foreign countries. Also, some countries may adopt
policies which would prevent the Fund from transferring cash out of the country
or withhold portions of interest and dividends at the source. There is the
possibility of expropriation, nationalization or confiscatory taxation,
withholding and other foreign taxes on income or other amounts, foreign exchange
controls (which may include suspension of the ability to transfer currency from
a given country), default in foreign government securities, political or social
instability or diplomatic developments that could affect investments in
securities of issuers in foreign nations.
Foreign securities markets have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when assets of a Fund are uninvested and no return is earned
thereon. The inability of a Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of portfolio securities due to settlement
problems could result either in losses to a Fund due to subsequent declines in
value of the portfolio security or, if the fund has entered into a contract to
sell the security, could result in possible liability to the purchaser.
A Fund may be affected either unfavorably or favorably by fluctuations in
the relative rates of exchange between the currencies of different nations, by
exchange control regulations and by indigenous economic and political
developments. Changes in foreign currency exchange rates will influence values
within a Fund from the perspective of U.S. investors, and may also affect the
value of dividends and interest earned, gains and losses realized on the sale of
securities, and net investment income and gains, if any, to be distributed to
shareholders by a Fund. The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand in the foreign
exchange markets. These forces are affected by the international balance of
payments and other economic and financial conditions, government intervention,
speculation and other factors. The Advisor (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
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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 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
securities in the account, the deposited securities will be valued at market or
fair value. If the market or fair value of such securities declines, additional
cash or securities will be placed in the account daily so that the value of the
account will equal the amount of such commitments by the Fund. A forward
contract to sell a foreign currency is "covered" if a Fund owns the currency (or
securities denominated in the currency) underlying the contract, or holds a
forward contract (or call option) permitting the Fund to buy the same currency
at a price no higher than the Fund's price to sell the currency. A forward
contract to buy a foreign currency is "covered" if a Fund holds a forward
contract (or 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. Each of the Equity Funds and the Bond Funds (except
Short Term Treasury Fund) 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
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the Funds than if the Funds had invested directly in an instrument that yielded
that desired return. Interest rate swap transactions involve the exchange by a
Bond Fund or the International Bond Fund with another party of its commitments
to pay or receive interest, such as an exchange of fixed rate payments for
floating rate payments. Typically, the parties with which the Bond Funds and
the International Bond Fund will enter into interest rate swap transactions will
be brokers, dealers or other financial institutions known as "counterparties."
Certain Federal income tax requirements may, however, limit the Bond Funds' and
the International Bond Fund's ability to engage in certain interest rate
transactions. Gains from transaction in interest rate swaps distributed to
shareholders of the Bond Funds and the International Bond Fund will be taxable
as ordinary income or, in certain circumstances, as long-term capital gains to
the shareholders.
Each of the Bond Funds' and the International Bond Fund's obligations (or
rights) under a swap agreement will generally be equal only to the net amount to
be paid or received under the agreement based on the relative values of the
positions held by each party to the agreement (the "net amount"). Each of the
Bond Funds' and the International Bond Fund's obligations under a swap agreement
will be accrued daily (offset against any amounts owed to the Fund). Accrued
but unpaid net amounts owed to a swap counterparty will be covered by 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 Bond Funds and the International Bond Fund will not enter into any
interest rate swap transaction unless the credit quality of the unsecured senior
debt or the claims-paying ability of the other party to the transaction is rated
in one of the highest four rating categories by at least one nationally-
recognized statistical rating organization ("NRSRO") or is believed by the
Advisor to be equivalent to that rating. If the other party to a transaction
defaults, the Bond Funds and the International Bond Fund will have contractual
remedies pursuant to the agreements related to the transactions.
The use of interest rate swaps is a highly specialized activity that
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If the Advisor is incorrect in its
forecasts of market values, interest rates and other applicable factors, the
investment performance of each of the Bond Funds and the International Bond Fund
would be lower than it would have been if interest rate swaps were not used.
The swaps market has grown substantially in recent years with a large number of
banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swaps market has
become relatively liquid in comparison with other similar instruments traded in
the interbank market. The swaps market is a relatively new market and is
largely unregulated. It is possible that developments in the swaps market,
including potential government regulation, could adversely affect the Bond
Funds' and the International Bond Fund's ability to terminate existing swap
agreements or to realize amounts to be received under such agreements.
INVESTMENT COMPANY SECURITIES. The Funds (other than the Short Term
Treasury Fund) may invest in securities issued by other investment companies.
As a shareholder of another investment company, a Fund would bear its pro rata
portion of the other investment company's expenses, including advisory fees.
These expenses would be in addition to the expenses each Fund bears directly in
connection with its own operations. Each Fund currently intends to limit its
investments in securities issued by other investment companies so that, as
determined immediately after a purchase of such securities is made: (i) not more
than 5% of the value of the Fund's total assets will be invested in the
securities of any one investment company; (ii) not more than 10% of the value of
its total assets will be invested in the aggregate in securities of investment
companies as a group; and (iii) not more than 3% of the outstanding voting stock
of any one investment company will be owned by the Fund.
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
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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 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. 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
hereto.
MONEY MARKET INSTRUMENTS. As described in their Prospectuses, the Equity
Funds, the Balanced Fund, the Bond Funds, the International Bond Fund, the Tax-
Free Bond Funds, and the Money Market Funds may invest from time to time in
"money market instruments," a term that includes, among other things, bank
obligations, commercial paper, variable amount master demand notes and corporate
bonds with remaining maturities of 397 days or less.
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Bank obligations include bankers' acceptances, negotiable certificates of
deposit and non-negotiable time deposits, including U.S. dollar-denominated
instruments issued or supported by the credit of U.S. or foreign banks or
savings institutions. Although the Funds will invest in obligations of foreign
banks or foreign branches of U.S. banks only where the Advisor (Sub-Advisor with
respect to the Framlington Funds) deems the instrument to present minimal credit
risks, such investments may nevertheless entail risks that are different from
those of investments in domestic obligations of U.S. banks due to differences in
political, regulatory and economic systems and conditions. All investments in
bank obligations are limited to the obligations of financial institutions having
more than $1 billion in total assets at the time of purchase.
Investments by a Fund in commercial paper will consist of issues rated at
the time A-1 and/or P-1 by S&P or Moody's. In addition, the Funds may acquire
unrated commercial paper and corporate bonds that are determined by the Advisor
(Sub-Advisor with respect to the Framlington Funds) at the time of purchase to
be of comparable quality to rated instruments that may be acquired by such Fund
as previously described.
The Funds may also purchase variable amount master demand notes which are
unsecured instruments that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate. Although the notes are
not normally traded and there may be no secondary market in the notes, a Fund
may demand payment of the principal of the instrument at any time. The notes
are not typically rated by credit rating agencies, but issuers of variable
amount master demand notes must satisfy the same criteria as set forth above for
issuers of commercial paper. If an issuer of a variable amount master demand
note defaulted on its payment obligation, a Fund might be unable to dispose of
the note because of the absence of a secondary market and might, for this or
other reasons, suffer a loss to the extent of the default. The Funds invest in
variable amount master notes only when the Advisor deems the investment to
involve minimal credit risk.
MORTGAGE-RELATED SECURITIES. There are a number of important differences
among the agencies and instrumentalities of the U.S. Government that issue
mortgage-related securities and among the securities that they issue. Mortgage-
related securities guaranteed by the Government National Mortgage Association
("GNMA") include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie
Maes") which are guaranteed as to the timely payment of principal and interest
by GNMA and such guarantee is backed by the full faith and credit of the United
States. GNMA is a wholly-owned U.S. Government corporation within the
Department of Housing and Urban Development. GNMA certificates also are
supported by the authority of GNMA to borrow funds from the U.S. Treasury to
make payments under its guarantee. Mortgage-related securities issued by the
Federal National Mortgage Association ("FNMA") include FNMA Guaranteed Mortgage
Pass-Through Certificates (also known as "Fannie Maes") which are solely the
obligations of the FNMA and are not backed by or entitled to the full faith and
credit of the United States, but are supported by the right of the issuer to
borrow from the Treasury. FNMA is a government-sponsored organization owned
entirely by private stockholders. Fannie Maes are guaranteed as to timely
payment of the principal and interest by FNMA. Mortgage-related securities
issued by the Federal Home Loan Mortgage Corporation ("FHLMC") include FHLMC
Mortgage Participation Certificates (also known as "Freddie Macs" or "PCs").
FHLMC is a corporate instrumentality of the United States, created pursuant to
an Act of Congress, which is owned entirely by Federal Home Loan Banks. Freddie
Macs are not guaranteed by the United States or by any Federal Home Loan Banks
and do not constitute a debt or obligation of the United States or of any
Federal Home Loan Bank. Freddie Macs entitle the holder to timely payment of
interest, which is guaranteed by the FHLMC. FHLMC guarantees either ultimate
collection or timely payment of all principal payments on the underlying
mortgage loans. When FHLMC does not guarantee timely payment of principal,
FHLMC may remit the amount due on account of its guarantee of ultimate payment
of principal at any time after default on an underlying mortgage, but in no
event later than one year after it becomes payable.
MUNICIPAL OBLIGATIONS. Opinions relating to the validity of municipal
obligations and to the exemption of interest thereon from regular Federal income
tax are rendered by bond counsel or counsel to the respective issuers at the
time of issuance. Neither the Trust nor the Advisor will review the proceedings
relating to the issuance of municipal obligations or the bases for such
opinions.
An issuer's obligations under its municipal obligations are subject to the
provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and
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laws, if any, which may be enacted by Federal or state legislatures extending
the time for payment of principal or interest, or both, or imposing other
constraints upon enforcement of such obligations or upon the ability of
municipalities to levy taxes. The power or ability of an issuer to meet its
obligations for the payment of interest on and principal of its municipal
obligations may be materially adversely affected by litigation or other
conditions.
From time to time proposals have been introduced before Congress for the
purpose of restricting or eliminating the Federal income tax exemption for
interest on municipal obligations. For example, under the Tax Reform Act of
1986 interest on certain private activity bonds must be included in an
investor's Federal alternative minimum taxable income, and corporate investors
must include all tax-exempt interest in their Federal alternative minimum
taxable income. The Trust cannot predict what legislation, if any, may be
proposed in Congress in the future as regards the Federal income tax status of
interest on municipal obligations in general, or which proposals, if any, might
be enacted. Such proposals, if enacted, might materially adversely affect the
availability of municipal obligations for investment by the Tax-Free Bond Funds
and the Tax-Free Money Market Fund and the liquidity and value of such Funds.
In such an event the Board of Trustees would reevaluate the Fund's investment
objective and policies and consider changes in its structure or possible
dissolution.
The Cash Investment Fund and the Money Market Fund each may, when deemed
appropriate by the Advisor in light of the Fund's investment objective, invest
in high quality municipal obligations issued by state and local governmental
issuers, the interest on which may be taxable or tax-exempt for Federal income
tax purposes, provided that such obligations carry yields that are competitive
with those of other types of money market instruments of comparable quality.
The Cash Investment Fund and the Money Market Fund each do not expect to invest
more than 5% of its net assets in such municipal obligations during the current
fiscal year.
NON-DOMESTIC BANK OBLIGATIONS. Non-domestic bank obligations include
Eurodollar Certificates of Deposit ("ECDs"), which are U.S. dollar-denominated
certificates of deposit issued by offices of foreign and domestic banks located
outside the United States; Eurodollar Time Deposits ("ETDs"), which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank; Canadian Time Deposits ("CTDs"), which are essentially the same as ETDs
except they are issued by Canadian offices of major Canadian banks; Schedule Bs
which are obligations issued by Canadian branches of foreign or domestic banks;
Yankee Certificates of Deposit ("Yankee CDs"), which are U.S. dollar-denominated
certificates of deposit issued by a U.S. branch of a foreign bank and held in
the United States; and Yankee Bankers' Acceptances ("Yankee BAs"), which are
U.S. dollar denominated bankers' acceptances issued by a U.S. branch of a
foreign bank and held in the United States.
OPTIONS. The Equity Funds, Balanced Fund, Bond Funds, International Bond
Fund and Tax-Free Bond Funds (other than Tax-Free Intermediate Bond Fund) may
write covered call options, buy put options, buy call options and write secured
put options. Such options may relate to particular securities and may or may
not be listed on a national securities exchange and issued by the Options
Clearing Corporation. Options trading is a highly specialized activity which
entails greater than ordinary investment risk. Options on particular securities
may be more volatile than the underlying securities, and therefore, on a
percentage basis, an investment in options may be subject to greater fluctuation
than an investment in the underlying securities themselves. For risks
associated with options on foreign currencies, see Appendix B to this Statement
of Additional Information.
A call option for a particular security gives the purchaser of the option
the right to buy, and a writer the obligation to sell, the underlying security
at the stated exercise price at any time prior to the expiration of the option,
regardless of the market price of the security. The premium paid to the writer
is in consideration for undertaking the obligations under the option contract.
A put option for a particular security gives the purchaser the right to sell the
underlying security at the stated exercise price at any time prior to the
expiration date of the option, regardless of the market price of the security.
The writer of an option that 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
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purchase plus transaction costs may be greater than the premium received upon
the original option, in which event each Fund will have incurred a loss in the
transaction. There is no guarantee that either a closing purchase or a closing
sale transaction can be effected.
Effecting a closing transaction in the case of a written call option will
permit the Funds to write another call option on the underlying security with
either a different exercise price or expiration date or both, or in the case of
a written put option, will permit the Funds to write another put option to the
extent that the exercise price thereof is secured by deposited cash or short-
term securities. Also, effecting a closing transaction will permit the cash or
proceeds from the concurrent sale of any securities subject to the option to be
used for other Fund investments. If a Fund desires to sell a particular
security from its portfolio on which it has written a call option, it will
effect a closing transaction prior to or concurrent with the sale of the
security.
The Equity Funds, Balanced Fund, Bond Funds, Tax-Free Bond Funds (other
than the Tax-Free Intermediate Bond Fund) and International Bond Fund may write
options in connection with buy-and-write transactions; that is, the Funds may
purchase a security and then write a call option against that security. The
exercise price of the call the Funds determine to write will depend upon the
expected price movement of the underlying security. The exercise price of a
call option may be below ("in-the-money"), equal to ("at-the-money") or above
("out-of-the-money") the current value of the underlying security at the time
the option is written. Buy-and-write transactions using in-the-money call
options may be used when it is expected that the price of the underlying
security will remain flat or decline moderately during the option period. Buy-
and-write transactions using out-of-the-money call options may be used when it
is expected that the premiums received from writing the call option plus the
appreciation in the market price of the underlying security up to the exercise
price will be greater than the appreciation in the price of the underlying
security alone. If the call options are exercised in such transactions, the
maximum gain to the relevant Fund will be the premium received by it for writing
the option, adjusted upwards or downwards by the difference between the Fund's
purchase price of the security and the exercise price. If the options are not
exercised and the price of the underlying security declines, the amount of such
decline will be offset in part, or entirely, by the premium received.
In the case of a call option on a security, the option is "covered" if a
Fund owns the security underlying the call or has an absolute and immediate
right to acquire that security without additional cash consideration (or, if
additional cash consideration is required, cash or 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 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. Each of the Funds will limit
its investment in uncovered call options purchased or written by the Fund to 33
1/3% of the Fund's total assets. Each of the Funds 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.
Each of the Funds may purchase put options to hedge against a decline in
the value of its portfolio. By using put options in this way, each Fund will
reduce any profit it might otherwise have realized in the underlying security by
the amount of the premium paid for the put option and by transaction costs.
Each of the Funds may purchase call options to hedge against an increase in the
price of securities that it anticipates purchasing in the future. The premium
paid for the call option plus any transaction costs will reduce the benefit, if
any, realized by
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the Funds upon exercise of the option, and, unless the price of the underlying
security rises sufficiently, the option may expire worthless to the Fund.
When a Fund purchases an option, the premium paid by it is recorded as an
asset of the Fund. When the Fund writes an option, an amount equal to the net
premium (the premium less the commission) received by the Fund is included in
the liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of this asset or deferred credit will be
subsequently marked-to-market to reflect the current value of the option
purchased or written. The current value of the traded option is the last sale
price or, in the absence of a sale, the average of the closing bid and asked
prices. If an option purchased by the Fund expires unexercised the Fund
realizes a loss equal to the premium paid. If the Fund enters into a closing
sale transaction on an option purchased by it, the Fund will realize a gain if
the premium received by the Fund on the closing transaction is more than the
premium paid to purchase the option, or a loss if it is less. If an option
written by the Fund expires on the stipulated expiration date or if the Fund
enters into a closing purchase transaction, it will realize a gain (or loss if
the cost of a closing purchase transaction exceeds the net premium received when
the option is sold) and the deferred credit related to such option will be
eliminated. If an option written by the Fund is exercised, the proceeds of the
sale will be increased by the net premium originally received and the Fund will
realize a gain or loss.
There are several risks associated with transactions in options on
securities and indices. For example, there are significant differences between
the securities and options markets that could result in an imperfect correlation
between these markets, causing a given transaction not to achieve its
objectives. An option writer, unable to effect a closing purchase transaction,
will not be able to sell the underlying security (in the case of a covered call
option) or liquidate the 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 value; or one or more Exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that Exchange (or in that class or series of options)
would cease to exist, although outstanding options that had been issued by the
Options Clearing Corporation as a result of trades on that Exchange would
continue to be exercisable in accordance with their terms.
Currency transactions, including options on currencies and currency
futures, are subject to risks different from those of other portfolio
transactions. Because currency control is of great importance to the issuing
governments and influences economic planning and policy, purchases and sales of
currency and related instruments can be negatively affected by government
exchange controls, blockages, and manipulations or exchange restrictions imposed
by governments. These can result in losses to the Fund if it is unable to
deliver or receive currency or funds in settlement of obligations and could also
cause hedges it has entered into to be rendered useless, resulting in full
currency exposure as well as the incurring of transaction costs. Buyers and
sellers of currency futures are subject to the same risks that apply to the use
of futures generally. Further, settlement of a currency futures contract for
the purchase of most currencies must occur at a bank based in the issuing
nation. Trading options on currency futures is relatively new, and the ability
to establish and close out positions on such options is subject to the
maintenance of a liquid market which may not always be available. Currency
exchange rates may fluctuate based on factors extrinsic to that country's
economy.
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REAL ESTATE SECURITIES. The Real Estate Fund may invest without limit in
shares of real estate investment trusts ("REITs"). REITs pool investors' funds
for investment primarily in income producing real estate or real estate loans or
interests. A REIT is not taxed on income distributed to shareholders if it
complies with several requirements relating to its organization, ownership,
assets, and income and a requirement that it distribute to its shareholders at
least 95% of it taxable income (other than net capital gains) for each taxable
year. REITs can generally be classified as Equity REITs, Mortgage REITs and
Hybrid REITs. Equity REITs, which invest the majority of their assets directly
in real property, derive their income primarily from rents. Equity REITs can
also realize capital gains by selling properties that have appreciated in value.
Mortgage REITs, which invest the majority of their assets in real estate
mortgages, derive their income primarily from interest payments. Hybrid REITs
combine the characteristics of both Equity REITs and Mortgage REITs. The Real
Estate Fund will not invest in real estate directly, but only in securities
issued by real estate companies. However, the Real Estate Fund may be subject
to risks similar to those associated with the direct ownership of real estate
(in addition to securities markets risks) because of its policy of concentration
in the securities of companies in the real estate industry. These include
declines in the value of real estate, risks related to general and local
economic conditions, dependency on management skill, heavy cash flow dependency,
possible lack of availability of mortgage funds, overbuilding, extended
vacancies of properties, increased competition, increases in property taxes and
operating expenses, changes in zoning laws, losses due to costs resulting from
the clean-up of environmental problems, liability to third parties for damages
resulting from environmental problems, casualty or condemnation losses,
limitations on rents, changes in neighborhood values, the appeal of properties
to tenants and changes in interest rates.
In addition to these risks, Equity REITs may be affected by changes in the
value of the underlying property owned by the trusts, while Mortgage REITs may
be affected by the quality of any credit extended. Further, Equity and Mortgage
REITs are dependent upon management skills and generally may not be diversified.
Equity and Mortgage REITs are also subject to heavy cash flow dependency,
defaults by borrowers and self-liquidation. In addition, Equity and Mortgage
REITs could possibly fail to qualify for the beneficial tax treatment available
to real estate investment trusts under the Internal Revenue Code of 1986, as
amended (the "Code"), or to maintain their exemptions from registration under
the 1940 Act. The above factors may also adversely affect a borrower's or a
lessee's ability to meet its obligations to the REIT. In the event of a default
by a borrower or lessee, the REIT may experience delays in enforcing its rights
as a mortgagee or lessor and may incur substantial costs associated with
protecting investments.
REPURCHASE AGREEMENTS. The Funds may agree to purchase securities from
financial institutions such as member banks of the Federal Reserve System, any
foreign bank or any domestic or foreign broker/dealer that is recognized as a
reporting government securities dealer, subject to the seller's agreement to
repurchase them at an agreed-upon time and price ("repurchase agreements"). The
Short Term Treasury Fund will only invest in repurchase agreements fully
collateralized by U.S. Treasury securities. The Advisor (Sub-Advisor with
respect to the Framlington Funds) will review and continuously monitor the
creditworthiness of the seller under a repurchase agreement, and will require
the seller to maintain liquid assets earmarked on the books of the Fund or the
Fund's sub-custodian 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 and Tax-Free Bond Funds) may borrow funds for temporary or emergency
purposes by selling portfolio securities to financial
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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 high-grade securities earmarked 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 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, the Cash Investment Fund, the
Money Market Fund, the Tax-Free Bond Funds and the Tax-Free Money Market Fund
may each enter into stand-by commitments with respect to municipal obligations
held by it. Under a stand-by commitment, a dealer agrees to purchase at the
Fund's option a specified municipal obligation at its amortized cost value to
the Fund plus accrued interest, if any. Stand-by commitments may be exercisable
by a Fund at any time before the maturity of the underlying municipal
obligations and may be sold, transferred or assigned only with the instruments
involved.
The Trust expects that stand-by commitments will generally be available
without the payment of any direct or indirect consideration. However, if
necessary or advisable, a Fund may pay for a stand-by commitment either
separately in cash or by paying a higher price for municipal obligations which
are acquired subject to the commitment (thus reducing the yield to maturity
otherwise available for the same securities). The total amount paid in either
manner for outstanding stand-by commitments held by a Fund will not exceed 1/2
of 1% of the value of such Fund's total assets calculated immediately after each
stand-by commitment is acquired.
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The Balanced Fund, Cash Investment Fund, Money Market Fund, Tax-Free Bond
Funds and the Tax-Free Money Market Fund intend to enter into stand-by
commitments only with dealers, banks and broker/dealers which, in the Advisor's
opinion, present minimal credit risks. The Tax-Free Bond Funds and the Tax-Free
Money Market Fund will acquire stand-by commitments solely to facilitate
portfolio liquidity and do not intend to exercise their rights thereunder for
trading purposes. The acquisition of a stand-by commitment will not affect the
valuation of the underlying municipal obligation. The actual stand-by
commitment will be valued at zero in determining net asset value. Accordingly,
where a Fund pays directly or indirectly for a stand-by commitment, its cost
will be reflected as an unrealized loss for the period during which the
commitment is held by such Fund and will be reflected in realized gain or loss
when the commitment is exercised or expires.
STOCK INDEX FUTURES, OPTIONS ON STOCK AND BOND INDICES AND OPTIONS ON STOCK
AND BOND INDEX FUTURES CONTRACTS. The Equity Funds, the Balanced Fund, the Bond
Funds and 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 index futures contracts as a hedge against
movements in the equity and bond markets. The Tax-Free Intermediate Bond Fund
may purchase and sell bond index futures contracts. The International Bond Fund
may purchase and sell options on bond index futures contracts as a hedge against
movements in the bond markets.
A stock index futures contract is an agreement in which one party agrees to
deliver to the other an amount of cash equal to a specific dollar amount times
the difference between the value of a specific stock index at the close of the
last trading day of the contract and the price at which the agreement is made.
No physical delivery of securities is made.
Options on stock and bond indices are similar to options on specific
securities, described above, except that, rather than the right to take or make
delivery of the specific security at a specific price, an option on a stock or
bond index gives the holder the right to receive, upon exercise of the option,
an amount of cash if the closing level of that stock or bond index is greater
than, in the case of a call option, or less than, in the case of a put option,
the exercise price of the option. This amount of cash is equal to such
difference between the closing price of the index and the exercise price of the
option expressed in dollars times a specified multiple. The writer of the
option is obligated, in return for the premium received, to make delivery of
this amount. Unlike options on specific securities, all settlements of options
on stock or bond indices are in cash, and gain or loss depends on general
movements in the stocks included in the index rather than price movements in
particular stocks.
If the Advisor (Sub-Advisor with respect to the Framlington Funds) expects
general stock or bond market prices to rise, it might purchase a stock index
futures contract, or a call option on that index, as a hedge against an increase
in prices of particular securities it ultimately wants to buy. If in fact the
index does rise, the price of the particular securities intended to be purchased
may also increase, but that increase would be offset in part by the increase in
the value of the futures contract or index option resulting from the increase in
the index. If, on the other hand, the Advisor 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.
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In connection with transactions in stock or bond index futures, stock or
bond index options and options on stock or bond index futures, such Funds will
be required to deposit as "initial margin" an amount of cash and short-term U.S.
Government securities equal to between 5% to 8% of the contract amount.
Thereafter, subsequent payments (referred to as "variation margin") are made to
and from the broker to reflect changes in the value of the option or futures
contract. No such Fund may at any time commit more than 5% of its total assets
to initial margin deposits on futures contracts, index options and options on
futures contracts.
STRIPPED SECURITIES. 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 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 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
Treasury securities through the Federal Reserve book-entry record-keeping
system. The Federal Reserve program as established by the Treasury Department
is known as "STRIPS" or "Separate Trading of Registered Interest and Principal
of Securities." Under the STRIPS program, a Fund is able to have its beneficial
ownership of zero coupon securities recorded directly in the book-entry record-
keeping system in lieu of having to hold certificates or other evidences of
ownership of the underlying U.S. Treasury securities.
In addition, the Bond Fund, Intermediate Bond Fund, International Bond Fund
and U.S. Government Income Fund may invest in stripped mortgage-backed
securities ("SMBS"), which represent beneficial ownership interests in the
principal distributions and/or the interest distributions on mortgage assets.
SMBS are usually structured with two classes that receive different proportions
of the interest and principal distributions on a pool of mortgage assets. One
type of SMBS will have one class receiving some of the interest and most of the
principal from the mortgage assets, while the other class will receive most of
the interest and the remainder of the principal. In the most common case, one
class of SMBS will receive all of the interest (the interest-only or "IO"
class), while the other class will receive all of the principal (the principal-
only or "PO" class). SMBS may be issued by FNMA or FHLMC.
The original principal amount, if any, of each SMBS class represents the
amount payable to the holder thereof over the life of such SMBS class from
principal distributions of the underlying mortgage assets, which will be zero in
the case of an IO class. Interest distributions allocable to a class of SMBS,
if any, consist of interest at a specified rate on its principal amount, if any,
or its notional principal amount in the case of an IO class. The notional
principal amount is used solely for purposes of the determination of interest
distributions and certain other rights of holders of such IO class and does not
represent an interest in principal distributions of the mortgage assets.
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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 the GNMA, are supported by the full faith and credit of the U.S. Treasury.
Others, such as those of the Export-Import Bank of the United States, are
supported by the right of the issuer to borrow from the U.S. Treasury; and still
others, such as those of the Student Loan Marketing Association, are supported
only by the credit of the agency or instrumentality issuing the obligation. No
assurance can be given that the U.S. Government would provide financial support
to U.S. government-sponsored instrumentalities if it is not obligated to do so
by law. Examples of the types of U.S. Government obligations that may be
acquired by the Funds include U.S. Treasury Bills, Treasury Notes and Treasury
Bonds and the obligations of Federal Home Loan Banks, Federal Farm Credit Banks,
Federal Land Banks, the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, FNMA, Government National Mortgage Association, General Services
Administration, Student Loan Marketing Association, Central Bank for
Cooperatives, FHLMC, Federal Intermediate Credit Banks and Maritime
Administration.
VARIABLE AND FLOATING RATE INSTRUMENTS. Debt instruments may be structured
to have variable or floating interest rates. Variable and floating rate
obligations purchased by a Fund may have stated maturities in excess of a Fund's
maturity limitation if the Fund can demand payment of the principal of the
instrument at least once during such period on not more than thirty days' notice
(this demand feature is not required if the instrument is guaranteed by the U.S.
Government or an agency thereof). These instruments may include variable amount
master demand notes that permit the indebtedness to vary in addition to
providing for periodic adjustments in the interest rates. The Advisor 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.
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Variable and floating rate instruments held by a Fund will be subject to
the Fund's limitation on illiquid investments when the Fund may not demand
payment of the principal amount within seven days absent a reliable trading
market.
GUARANTEED INVESTMENT CONTRACTS. The Bond Funds, the International Bond
Fund, the Cash Investment Fund and the Money Market Fund may make limited
investments in guaranteed investment contracts ("GICs") issued by U.S. insurance
companies. Pursuant to such contracts, a Fund makes cash contributions to a
deposit fund of the insurance company's general account. The insurance company
then credits to the Fund on a monthly basis interest which is based on an index
(in most cases this index is expected to be the Salomon Brothers CD Index), but
is guaranteed not to be less than a certain minimum rate. A GIC is normally a
general obligation of the issuing insurance company and not funded by a separate
account. The purchase price paid for a GIC becomes part of the general assets
of the insurance company, and the contract is paid from the company's general
assets. A Fund will only purchase GICs from insurance companies which, at the
time of purchase, have assets of $1 billion or more and meet quality and credit
standards established by the Advisor pursuant to guidelines approved by the
Boards of Directors/Trustees. Generally, GICs are not assignable or
transferable without the permission of the issuing insurance companies, and an
active secondary market in GICs does not currently exist. Therefore, GICs will
normally be considered illiquid investments, and will be acquired subject to the
limitation on illiquid investments.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS (DELAYED-DELIVERY
TRANSACTIONS). When-issued purchases and forward commitments (delayed-delivery
transactions) are commitments by a Fund to purchase or sell particular
securities with payment and delivery to occur at a future date (perhaps one or
two months later). These transactions permit the Fund to lock-in a price or
yield on a security, regardless of future changes in interest rates.
When a Fund agrees to purchase securities on a when-issued or forward
commitment basis, the 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 nationally
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recognized statistical rating organizations ("NRSROs") represent their
respective opinions as to the quality of the obligations they undertake to rate.
Ratings, however, are general and are not absolute standards of quality.
Consequently, obligations with the same rating, maturity and interest rate may
have different market prices.
With respect to each of the Money Market Funds, securities (other than U.S.
Government securities) must be rated (generally, by at least two NRSROs) within
the two highest rating categories assigned to short-term debt securities. In
addition, each of the Cash Investment Fund and the Money Market Fund 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 the Cash Investment
Fund, the Money Market Fund and the 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 Boards of Trustees and Directors, that the unrated and single
rated securities are of comparable quality to the appropriate rated securities.
OTHER. Subsequent to its purchase by a Fund, a rated security may cease to
be rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. The Boards of Trustees and Directors or the Advisor (Sub-
Advisor with respect to the Framlington Funds), pursuant to guidelines
established by the Boards, will consider such an event in determining whether
the Fund involved should continue to hold the security in accordance with the
interests of the Fund and applicable regulations of the SEC.
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.
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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 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
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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.
Expenditures are not permitted by the State Constitution to exceed
available revenues. The State Constitution requires that the Governor, with the
approval of the appropriating committees of the State House and Senate, reduce
expenditures whenever it appears that the actual revenues will be less than the
originally projected revenues upon which the budget was based.
In 1994, a ballot proposal ("Proposal A") to implement extensive property
tax and school finance reform measures was subject to voter approval and in fact
approved on March 15, 1994. Under Proposal A as approved, effective May 1, 1994,
the State sales and use tax increased from 4% to 6%, the State income tax
decreased from 4.6% to 4.4%, the cigarette tax increased from $.25 to $.75 per
pack, and an additional tax of 16% of the wholesale price is imposed on certain
other tobacco products. As of January 1, 1995, a 0.75% real estate transfer tax
also became effective. In 1994, a State education property tax of 6 mills was
imposed on all real property and personal property currently subject to the
general property tax. In addition, all school boards can now, with voter
approval, levy up to the lesser of 18 mills or the number of mills levied in
1993 for school operating purposes, on non-homestead property. Proposal A
contained additional provisions regarding the ability of local school districts
to levy taxes as well as a limit on assessment increases for each parcel of
property, beginning in 1995 to the lesser of 5% or the rate of inflation. When
property is subsequently sold, its assessed value is adjusted equal to 50% of
true cash value. Under Proposal A, much of the additional revenue generated by
these taxes is dedicated to the State School Aid Fund.
Proposal A shifts significant portions of the cost of local school
operations from local school districts to the State and raises additional State
revenues to fund these additional State expenses. These additional revenues
will be included within the State's constitutional revenue limitations and may
impact the State's ability to raise additional revenues in the future.
The State is a party to various legal proceedings seeking damages or
injunctive or other relief. In addition to routine litigation, certain of these
proceedings could, if unfavorably resolved from the point of view of the State,
substantially affect State programs or finances. These lawsuits involve programs
generally in the areas of corrections, highway maintenance, social services, tax
collection, commerce and budgetary reductions to school districts and
governmental units and court funding.
The principal sectors of Michigan's diversified economy are manufacturing
of durable goods (including automobiles and components and office equipment),
tourism and agriculture. The health of the State's economy, and in particular
its durable goods manufacturing industry, is susceptible to a long-term increase
in the cost of energy and energy related products. As reflected in historical
employment figures, the State's economy has lessened its dependence upon durable
foods manufacturing. In 1960, employment in such industry accounted for 33% of
the State's work force. By 1996, this figure had fallen to 15%. However,
manufacturing (including auto-
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related manufacturing) continues to be an important part of the State's economy.
The particular industries are highly cyclical and in the period 1996-1997 are
expected to operate at somewhat less than full capacity, but at higher levels
than in the immediate prior years. This factor can usually adversely affect the
revenue streams of the State and its political subdivisions because it adversely
impacts tax sources, particularly sales, income taxes and single business taxes.
As of the date of this Statement of Additional Information, the State's
general obligation bonds are rated "A2" by Moody's and "AA" by Fitch. To the
extent that either the Michigan Bond Fund or the Tax-Free Intermediate Bond Fund
is comprised of revenue or general obligations of local governments or
authorities, rather than general obligations of the State of Michigan itself,
ratings on such Michigan obligations will be different from those given to the
State of Michigan and their value may be independently affected by economic
matters not directly impacting the State.
INVESTMENT LIMITATIONS
Each Fund is subject to the investment limitations enumerated in this
section which may be changed with respect to a particular Fund only by a vote of
the holders of a majority of such Fund's outstanding shares (as defined under
"Miscellaneous Shareholder Approvals").
No Fund of the Trust may:
1. Purchase securities of any one issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities
or certificates of deposit for any such securities) if more than 5% of
the value of the Fund's total assets (taken at current value) would be
invested in the securities of such issuer, or more than 10% of the
issuer's outstanding voting securities would be owned by the Fund or
the Trust, except that (a) with respect to each Fund, other than the
Michigan Bond Fund and the Tax-Free Intermediate Bond Fund, up to 25%
of the value of the Fund's total assets (taken at current value) may
be invested without regard to these limitations and (b) with respect
to the Michigan Bond Fund and the Tax-Free Intermediate Bond Fund, up
to 50% of the value of the Fund's total assets may be invested without
regard to these limitations so long as no more than 25% of the value
of the Fund's total assets are invested in the securities of any one
issuer. For purposes of this limitation, a security is considered to
be issued by the entity (or entities) whose assets and revenues back
the security. A guarantee of a security is not deemed to be a
security issued by the guarantor when the value of all securities
issued and guaranteed by the guarantor, and owned by the Fund, does
not exceed 10% of the value of the Fund's total assets;
2. Borrow money or issue senior securities except that each Fund may
borrow from banks and enter into reverse repurchase agreements for
temporary purposes in amounts up to one-third of the value of its
total assets at the time of such borrowing; or mortgage, pledge or
hypothecate any assets, except in connection with any such borrowing
and then in amounts not in excess of one-third of the value of the
Fund's total assets at the time of such borrowing. No Fund will
purchase securities while its aggregate borrowings (including reverse
repurchase agreements and borrowing from banks) in excess of 5% of its
total assets are outstanding. Securities held in escrow or earmarked
on the books of the Fund or the Fund's sub-custodian 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,
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with respect to the Money Market Funds, (ii); (b) wholly-
owned finance companies will be considered to be in the industries of
their parents if their activities are primarily related to financing
the activities of the parents; and (c) utilities will be divided
according to their services, for example, gas, gas transmission,
electric and gas, electric and telephone will each be considered a
separate industry;
4. Purchase or sell real estate, except that each Fund may purchase
securities of issuers which deal in real estate and may purchase
securities which are secured by interests in real estate;
5. Acquire any other investment company or investment company security
except in connection with a merger, consolidation, reorganization or
acquisition of assets or where otherwise permitted by the 1940 Act;
6. Act as an underwriter of securities within the meaning of the
Securities Act of 1933, as amended, except to the extent that the
purchase of obligations directly from the issuer thereof, or the
disposition of securities, in accordance with the Fund's investment
objective, policies and limitations may be deemed to be underwriting;
7. Write or sell put options, call options, straddles, spreads, or any
combination thereof except for transactions in options on securities,
securities indices, futures contracts, options on futures contracts
and transactions in securities on a when-issued or forward commitment
basis, and except that each Equity and Bond Fund may enter into
forward currency contracts in accordance with its investment
objectives and policies. Notwithstanding the above, the Tax-Free
Intermediate Bond Fund may not write or purchase options, including
puts, calls, straddles, spreads, or any combination thereof;
8. Purchase securities of companies for the purpose of exercising
control;
9. Purchase securities on margin, make short sales of securities or
maintain a short position, except that (a) this investment limitation
shall not apply to a Fund's transactions in futures contracts and
related options, a Fund's sale of securities short against the box or
a Fund's transactions in securities on a when-issued or forward
commitment basis, and (b) a Fund may obtain short-term credit as may
be necessary for the clearance of purchases and sales of portfolio
securities;
10. Purchase or sell commodity contracts, or invest in oil, gas or mineral
exploration or development programs, except that each Fund may, to the
extent appropriate to its investment policies, purchase publicly
traded securities of companies engaging in whole or in part in such
activities, may enter into futures contracts and related options, and
may engage in transactions in securities on a when-issued or forward
commitment basis, and except that each Equity and Bond Fund may enter
into forward currency contracts in accordance with its investment
objectives and policies; 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
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3. Participate on a joint or joint and several basis in any securities
trading account.
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);
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:
25
<PAGE>
1. Invest more than 15% of its net assets in illiquid securities;
2. Own more than 10% (taken at market value at the time of purchase) of
the outstanding voting securities of any single issuer; or
3. Invest in other investment companies except as permitted under the
1940 Act.
No Fund of the Company may:
1. Invest more than 25% of its total assets in any one industry
(securities issued or guaranteed by the United States Government, its
agencies or instrumentalities are not considered to represent
industries) (except that the Real Estate Fund will invest more than
25% of its assets in securities of issuers in the real estate
industry);
2. (For each Fund except the International Bond Fund) with respect to 75%
of the Fund's assets, invest more than 5% of the Fund's assets (taken
at a market value at the time of purchase) in the outstanding
securities of any single issuer or own more than 10% of the
outstanding voting securities of any one issuer, in each case other
than securities issued or guaranteed by the United States Government,
its agencies or instrumentalities;
3. (For each Fund except Short Term Treasury Fund) borrow money or issue
senior securities (as defined in the 1940 Act) except that the Funds
may borrow (i) for temporary purposes in amounts not exceeding 5% of
its total assets and (ii) to meet redemption requests, in amounts
(when aggregated with amounts borrowed under clause (i)) not exceeding
33 1/3% of its total assets;
4. Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by 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
26
<PAGE>
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 foreign currency exchange
contracts, financial futures contracts and options on financial
futures contracts, and options on securities and on securities,
foreign currencies and on securities indices, as permitted by each
Fund's prospectus.
In addition, the Short Term Treasury Fund may not:
1. Borrow money or enter into reverse repurchase agreements except that
the Fund may (i) borrow money or enter into reverse repurchase
agreements for temporary purposes in amounts exceeding 5% of its total
assets and (ii) borrow money for the purpose of meeting redemption
requests, in amounts (when aggregated with amounts borrowed under
clause (i)) not exceeding 33 1/3% of its total assets;
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 United States
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 and principal occupations during
the past five years, are:
<TABLE>
<CAPTION>
POSITIONS WITH TRUST, COMPANY PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE AND FRAMLINGTON DURING PAST FIVE YEARS
- --------------------- --------------- ----------------------
<S> <C> <C>
Charles W. Elliott Chairman of the Board of Senior Advisor to the President -
1024 Essex Circle Trustees and Directors Western Michigan University since July
Kalamazoo, MI 49008 1995; Executive Vice President -
Age: 66 Administration & Chief Financial
Officer, Kellogg Company from January
1987 through June 1995; before that
Price Waterhouse. Board of Directors,
Steelcase Financial Corporation; and
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 Investment Advisor, Financial &
7 Wood Ridge Road Investment Management Group (since
Glen Arbor, MI 49636 April, 1991).
Age: 65
David J. Brophy Trustee/Director Professor, University of Michigan;
1025 Martin Place Director, River Place Financial Corporation.
Ann Arbor, MI 48104
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; prior to that
Chancellor Lamar University from
September 1994 until September 1995;
before that Consultant to Management;
President and Chief Executive Officer,
Crittenton Corporation (holding
company that owns healthcare
facilities) and Crittenton Development
Corporation
until August 1993; before that
President, Oakland University of
Rochester, MI, until August 1991;
Chairman, Board of Directors Ross
Operating Valve of Troy, MI.
</TABLE>
28
<PAGE>
<TABLE>
<S> <C> <C>
Thomas D. Eckert Trustee/Director President and Chief Executive Officer,
10726 Falls Pointe Drive Capital Automotive REIT from November
Great Falls, VA 22066 1997 to present (real estate
Age: 51 investment trust specializing in
retail automotive properties); prior
to that President and COO,
Mid-Atlantic Group of Pulte Home
Corporation (developer of residential
land and construction of housing
units) from 1983 until 1997.
Lee P. Munder/*/ Trustee/Director and President Chairman of the Advisor since February
1029 N. Ocean Blvd. 1998; Chief Executive Officer of
Palm Beach, FL 33480 World Asset Management since January
Age: 53 1995; Chief Executive Officer of Old
MCM (predecessor of Advisor) since
1985; and Director, LPM Investment
Services, Inc. ("LPM").
Terry H. Gardner Vice President, Vice President and Chief Financial
480 Pierce Street Chief Financial Officer Officer of the Advisor, Vice President
Suite 300 and Treasurer and Chief Financial Officer of Old MCM
Birmingham, MI 48009 (February 1993 to present); Secretary
Age: 38 of 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 (April
Age: 46 1995 to February 1998) and Executive
Vice President of Comercia, Inc.
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: 45 Vice President (April 1995 to February
1998); Managing Director (1991-1995),
Director (1992-1995) and Vice
President (1984-1991) of Loomis,
Sayles and Company, L.P.
Elyse G. Essick Vice President Vice President and Director of
480 Pierce Street Marketing for the Advisor; Vice
Suite 300 President and Director of Client
Birmingham, MI 48009 Services of Old MCM (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 for the Advisor;
Suite 300 Vice President and Director of Fixed
Birmingham, MI 48009 Income of Old MCM (1987-1994).
Age: 36
Leonard J. Barr Vice President Vice President and Director of Core
480 Pierce Street Equity Research of the Advisor;
Suite 300 Director and Senior Vice President of
Birmingham, MI 48009 Old MCM (since 1988); Director of LPM.
Age: 53
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: 52 Woodbridge.
Lisa A. Rosen Secretary, Assistant Treasurer General Counsel of the Advisor (since
480 Pierce Street May, 1996); formerly, Counsel, First
Suite 300 Data Investor Services Group, Inc.;
Birmingham, MI 48009 Assistant Vice President and Counsel
Age: 31 with The Boston Company Advisors,
Inc.; Associate with Hutchins, Wheeler
& Dittmar.
Therese Hogan Assistant Secretary Director, State Regulation Department,
53 State Street First Data Investor Services Group
Boston, MA 02109 (June 1994-present); formerly Senior
Age: 36 Legal Assistant, Palmer & Dodge
(October 1993-June 1994); Blue Sky
Paralegal, Robinson & Cole (February
1984-October 1993).
</TABLE>
* Trustee/Director is an "Interested person" of the Trust, Framlington or the
Company as defined in the 1940 Act.
Trustees of the Trust and Framlington and Directors of the Company receive
an aggregate fee from the Trust, Framlington the Company and St. Clair Funds,
Inc. ("St. Clair") for service on those organizations' respective Boards,
comprised of an annual retainer fee of $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 meetings.
The following table summarizes the compensation paid by the Trust,
Framlington, the Company and St. Clair to their respective Trustees/Directors
for the year ended June 30, 1998.
30
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
DR. JOSEPH E.
AGGREGATE JOHN RAKOLTA, THOMAS B. BENDER, CHAMPAGNE, THOMAS D. ECKERT,
COMPENSATION CHARLES W. ELLIOT, JR., TRUSTEE AND TRUSTEE AND TRUSTEE AND
FROM A FUND CHAIRMAN VICE CHAIRMAN DIRECTOR DIRECTOR DIRECTOR
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Accelerating
Growth Fund
- -----------------------------------------------------------------------------------------------------------------
Balanced Fund
- -----------------------------------------------------------------------------------------------------------------
Index 500 Fund
- -----------------------------------------------------------------------------------------------------------------
Growth &
Income Fund
- -----------------------------------------------------------------------------------------------------------------
International
Equity Fund
- -----------------------------------------------------------------------------------------------------------------
Small Company
Growth Fund
- -----------------------------------------------------------------------------------------------------------------
Bond Fund
- -----------------------------------------------------------------------------------------------------------------
Intermediate
Bond Fund
- -----------------------------------------------------------------------------------------------------------------
U.S. Income
Fund
- -----------------------------------------------------------------------------------------------------------------
Michigan Bond
Fund
- -----------------------------------------------------------------------------------------------------------------
Tax-Free Bond
Fund
- -----------------------------------------------------------------------------------------------------------------
Cash
Investment
Fund
- -----------------------------------------------------------------------------------------------------------------
Tax-Free
Money Market
Fund
- -----------------------------------------------------------------------------------------------------------------
U.S. Treasury
Money Market
Fund
- -----------------------------------------------------------------------------------------------------------------
Growth
Opportunities Fund
- -----------------------------------------------------------------------------------------------------------------
Micro-Cap
Equity Fund
- -----------------------------------------------------------------------------------------------------------------
Multi-Season
Growth Fund
- -----------------------------------------------------------------------------------------------------------------
NetNet Fund
- -----------------------------------------------------------------------------------------------------------------
Real Estate
Equity
Investment
Fund
- -----------------------------------------------------------------------------------------------------------------
Small-Cap
Value Fund
- -----------------------------------------------------------------------------------------------------------------
Value Fund
- -----------------------------------------------------------------------------------------------------------------
International
Bond Fund
- -----------------------------------------------------------------------------------------------------------------
Short Term
Treasury Fund
- -----------------------------------------------------------------------------------------------------------------
Money Market
Fund
- -----------------------------------------------------------------------------------------------------------------
Emerging
Markets Fund
- -----------------------------------------------------------------------------------------------------------------
Global
Financial
Services Fund
- -----------------------------------------------------------------------------------------------------------------
Healthcare Fund
- -----------------------------------------------------------------------------------------------------------------
All-Season
Conservative Fund
- -----------------------------------------------------------------------------------------------------------------
All-Season Moderate
Fund
- -----------------------------------------------------------------------------------------------------------------
All-Season
Aggressive Fund
- -----------------------------------------------------------------------------------------------------------------
TOTAL COMPENSATION
FROM THE FUND
COMPLEX
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
No officer, director or employee of the Advisor, Sub-Advisor, Comerica
Incorporated ("Comerica"), the Sub-Custodian, the Distributor, the Administrator
or the Transfer Agent currently receives any compensation from the Trust,
Framlington or the Company. As of October __, 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 Healthcare Fund in which Trustees and officers, as a
group, owned ________% of Class _________. [Update]
Gerald Seizert, Paul Tobias and Terry H. Gardner are administrators of a
pension plan for employees of Munder Capital Management, which as of October
__, 1998, owned ____________ Class ___ shares [update].
As of October __, 1998, Munder Capital Management and affiliates of Munder
Capital Management, through common ownership, owned beneficially ________ Class
____ shares of ________. [Update]
SHAREHOLDER AND TRUSTEE LIABILITY. Under Massachusetts law, shareholders
of a business trust may, under certain circumstances, be held personally liable
as partners for the obligations of the trust. However, the Trust's and
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
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, MCM and Munder Group LLC.
WAM is a wholly-owned subsidiary of Comerica Bank - Ann Arbor, which in turn is
a wholly-owned subsidiary of Comerica Incorporated, a publicly-held bank holding
company.
32
<PAGE>
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 Securities and Exchange
Commission. 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,
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
and/or the Board of Trustees will consider appropriate action.
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 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 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 Sub-Advisory Agreements between Advisor and the Sub-Advisor on behalf
of the Emerging Markets Fund, the Healthcare Fund and the International Growth
Fund were approved by the Board of Trustees of Framlington on November 7, 1996
and by shareholders on December 31, 1996. The Sub-Advisory Agreement between
the Advisor and the Sub-Advisor on behalf of the Global Financial Services Fund
was approved by the Board of Trustees of Framlington on February 24, 1998.
Under the terms of the Sub-Advisory Agreement, the Sub-Advisor provides sub-
advisory services to the International Growth, Emerging Markets, Global
Financial Services and Healthcare Funds. Subject to 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
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 brokerage commissions in connection therewith.
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).
33
<PAGE>
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:
<TABLE>
<CAPTION>
FUND MANAGEMENT FEE
- ---- ------------------
<S> <C>
Accelerating Growth Fund .75% of average daily net assets
Balanced Fund .65% of average daily net assets
Bond Fund .50% of average daily net assets
Cash Investment Fund .25% of average daily net assets
Emerging Markets Fund 1.25% of average daily net assets
Global Financial Services Fund .75% of average daily net assets
Growth & Income Fund .75% of average daily net assets
Growth Opportunities Fund .75% of average daily net assets
Income Fund .50% of average daily net assets
Index 500 Fund/*/ .20% of the first $250 million of average daily net
assets; .12% of the next $250 million of net assets and
.07% of net assets in excess of $500
Intermediate Bond Fund .50% of average daily net assets
International Bond Fund .50% of average daily net assets
International Equity Fund .75% of average daily net assets
International Growth Fund 1.00% of the first $250 million of average daily net
assets and .75% of net assets in excess of $250 million
Healthcare Fund/**/ 1.00% of the first $250 million of average daily net
assets and .75% of net assets in excess of $250 million
Michigan Bond Fund .50% of average daily net assets
Micro-Cap Fund 1.00% of average daily net assets
Money Market Fund .40% of average daily net assets
Multi-Season Fund 1.00% of the first $500 million of average daily net
assets and .75% of net assets in excess of $500 million
NetNet Fund 1.00% of average daily net assets
Real Estate Fund .74% of average daily net assets
Small-Cap Value Fund .75% of average daily net assets
Small Company Growth Fund .75% of average daily net assets
Short Term Treasury Fund .25% of average daily net assets
Tax-Free Bond Fund .50% of average daily net assets
Tax-Free Intermediate Bond Fund .50% of average daily net assets
Tax-Free Money Market Fund .40% of average daily net assets
Treasury Fund .35% of average daily net assets
Value Fund .74% of average daily net assets
</TABLE>
_________________________________
/*/ 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 and the Healthcare 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 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.
34
<PAGE>
For the fiscal year ended June 30, 1998 (and for the period from
commencement of operations to June 30, 1998 for the Global Financial Services
Fund, Growth Opportunities Fund and NetNet Fund), the Advisor received fees
after waivers, if any, of $____________ for the Accelerating Growth Fund,
$_____________ for the Balanced Fund, $_____________ for the Growth & Income
Fund, $_____________ for the Index 500 Fund, $_____________ for the
International Equity Fund, $_____________ for the Small Company Growth Fund,
$_____________ for the Bond Fund, $_____________ for the Intermediate Bond Fund,
$_____________ for the U.S. Government Fund, $_____________ for the Michigan
Bond Fund, $_____________ for the Tax-Free Bond Fund, $_____________ for the
Tax-Free Intermediate Fund, $_____________ for the Cash Investment Fund,
$_____________ for the Tax-Free Money Market Fund, $_____________ for the U.S.
Treasury Money Market Fund, $_____________ for the Multi-Season Fund,
$_____________ for the Real Estate Fund, $_____________ for the Money Market
Fund, $_____________ for the Value Fund, $_____________ for the International
Growth Fund, $_____________ for the Emerging Markets Fund, $_____________ for
the Healthcare Fund, $_____________ for the Micro-Cap Equity Fund,
$_____________ for the Small-Cap Value Fund, $_____________ for the Short Term
Treasury Fund, $_____________ for the International Bond Fund, $_____________
for NetNet Fund, $_____________ for the Global Financial Services Fund and
$_____________ for the Growth Opportunities Fund.
For the fiscal year ended June 30, 1997 (and for the period from
commencement of operations to June 30, 1997 for the International Growth,
Emerging Markets, Healthcare, Micro-Cap, Small-Cap Value, Short Term Treasury
and International Bond Funds), the Advisor received fees after waivers, if any,
of $2,040,543 for the Accelerating Growth Fund, $445,259 for the Balanced Fund,
$1,650,704 for the Growth & Income Fund, $249,764 for the Index 500 Fund,
$1,720,496 for the International Equity Fund, $1,884,242 for the Small Company
Growth Fund, $751,954 for the Bond Fund, $2,554,647 for the Intermediate Bond
Fund, $1,175,733 for the U.S. Government Fund, $132,451 for the Michigan Bond
Fund, $1,006,688 for the Tax-Free Bond Fund, $1,584,769 for the Tax-Free
Intermediate Fund, $3,454,159 for the Cash Investment Fund, $879,155 for the
Tax-Free Money Market Fund, $1,101,183 for the U.S. Treasury Money Market Fund,
$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 to 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 period ended June 30, 1998, the Advisor voluntarily reimbursed
expenses in the amounts of $_____________ for the ________ Fund. [Update]
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 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.
35
<PAGE>
DISTRIBUTION SERVICES ARRANGEMENTS - CLASS A, CLASS B AND CLASS C SHARES.
Each Fund has adopted a Service and Distribution Plan with respect to its Class
A Shares pursuant to which it uses its assets to finance activities relating to
the provision of certain shareholder services. Under the Service and
Distribution Plans for Class A Shares, the Distributor is paid an annual service
fee at the rate of up to 0.25% of the value of average daily net assets of the
Class A Shares of each Fund. Each Fund has also adopted a Service and
Distribution Plan with respect to its Class B and Class C Shares, pursuant to
which it uses its assets to finance activities relating to the distribution of
its shares to investors and provision of certain shareholder services. Under
the Service and Distribution Plans for Class B and Class C Shares, the
Distributor is paid an annual service fee of up to 0.25% of the value of average
daily net assets of the Class B and Class C Shares of each Fund and an annual
distribution fee at the rate of up to 0.75% of the value of average daily net
assets of the Class B and Class C Shares of each Fund.
Under the terms of the Service and Distribution Plans (collectively, the
"Plans"), each Plan continues from year to year, provided such continuance is
approved annually by vote of the Boards of Directors/Trustees, including a
majority of the Boards of 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 Trustees/Directors
in the manner described above. Each Plan may be terminated at any time, without
penalty, by vote of a majority of the Non-Interested Plan Directors or by a vote
of a majority of the outstanding voting securities of the relevant class of the
respective Fund (as defined in the 1940 Act) on not more than 30 days' written
notice to any other party to the Plan. Pursuant to each Plan, the Distributor
will provide the Boards of Trustees and Directors periodic reports of amounts
expended under the Plan and the purpose for which such expenditures were made.
The Trustees/Directors have determined that the Plans will benefit the
Trust, Framlington, the Company and their respective shareholders by (i)
providing an incentive for broker or bank personnel to provide continuous
shareholder servicing after the time of sale; (ii) retention of existing
accounts; (iii) facilitating portfolio management flexibility through continued
cash flow into the Funds; and (iv) maintaining a competitive sales structure in
the mutual fund industry.
With respect to Class B and Class C Shares of each Fund, the Distributor
expects to pay sales commissions to dealers authorized to sell a Fund's Class B
and Class C Shares at the time of sale. The Distributor will use its own funds
(which may be borrowed) to pay such commissions pending reimbursement by the
relevant Service and Distribution Plan. In addition, the Advisor may use its
own resources to make payments to the Distributor or dealers authorized to sell
the Funds' shares to support their sales efforts.
36
<PAGE>
FEES PAID TO THE DISTRIBUTOR PURSUANT TO CLASS A SERVICE PLANS
<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
YEAR YEAR YEAR
ENDED ENDED ENDED
6/30/98 6/30/97 6/30/96
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Accelerating Growth Fund $ $ 16,419 $ 1,916.29
Balanced Fund $ $ 981 $ 136.95
Growth & Income Fund $ $ 5,324 $ 268.00
Index 500 Fund $ $ 48,763 $ 23,640.4
International Equity Fund $ $ 13,505 $ 1,946.82
Small Company Growth Fund $ $ 17,843 $ 1,158.43
Bond Fund $ $ 2,203 $ 29.40
Intermediate Bond Fund $ $ 13,919 $ 345.66
Michigan Triple Tax-Free Bond Fund $ $ 1,206 $ 23.32
Tax-Free Bond Fund $ $ 4,973 $ 0.03
Tax-Free Intermediate Bond Fund $ $ 14,678 85.26
Growth Opportunities Fund $ /+/ N/A N/A
Multi-Season Fund $ $ 30,811 $ 1,945.49
Real Estate Fund $ $ 1,559 $ 179.10
Value Fund $ $ 2,347 $ 41.77
Money Market Fund $ $ 1,198* N/A
NetNet Fund $ /+/ N/A N/A
Micro-Cap Fund $ $ 79* N/A
Small-Cap Value Fund $ $ 558* N/A
International Bond Fund $ $ 39* N/A
International Growth Fund $ $ 759 N/A
Emerging Markets Fund $ $ 285 N/A
Global Financial Services Fund $$ /+/ N/A N/A
Healthcare Fund $ $ 241 N/A
</TABLE>
____________________________________
* Figures reflect period from commencement of operations to June 30, 1997.
/+/ Figures reflect period from commencement of operations to June 30, 1998.
37
<PAGE>
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 CDSC'S
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Accelerating Growth Fund $ $
Balanced Fund $ $
Growth Opportunities Fund $ /+/ $ /+/
Growth & Income 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 $ $
Global Financial Services Fund $ /+/ $ /+/
International Growth Fund* $ $
Emerging Markets Fund* $ $
Healthcare Fund* $ $
Bond Fund $ $
International Bond Fund* $ $
Intermediate Bond Fund $ $
Short Term Treasury Fund*/++/ $ $
US Government Income Fund $ $
Michigan Bond Fund $ $
Tax-Free Bond Fund $ $
Tax-Free Intermediate Bond Fund $ $
Money Market Fund $ $
</TABLE>
_____________________________________
* Figures reflect period from commencement of operations to June 30, 1997.
/+/ Figures reflect period from commencement of operations to June 30, 1998.
/++/ As of June 2, 1998 Class A, Class B and Class C Shares of Short Term
Treasury Fund were closed to all investments.
38
<PAGE>
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>
Accelerating Growth Fund $ 3,607 $ 150.00
Balanced Fund $ 1,249 $ 0.00
Growth & Income Fund $ 3,519 $ 535.41
Index 500 Fund $153,426 $ 0.00
International Equity Fund $ 10,398 $ 318.86
Micro-Cap Fund* $ 513 $ 0.00
Multi-Season Fund $731,958 $26,020.64
Real Estate Fund $ 27,446 $ 0.00
Small-Cap Value Fund* $ 648 $ 0.00
Small Company Growth Fund $ 21,679 $ 930.13
Value Fund $ 2,689 $ 0.00
International Growth Fund* $ 175 $ 0.00
Emerging Markets Fund* $ 95 $ 0.00
Healthcare Fund* $ 1,240 $ 0.00
Bond Fund $ 5,482 $ 447.26
International Bond Fund* $ 11 $ 0.00
Intermediate Bond Fund $ 2,627 $ 0.00
Short Term Treasury Fund* $ 116 $ 0.00
US Government Income Fund $ 13,452 $ 0.00
Michigan Bond Fund $ 2,779 $ 0.00
Tax-Free Bond Fund $ 566 $ 0.00
Tax-Free Intermediate Bond Fund $ 1,782 $ 0.00
Money Market Fund $ 1,925 $ 711.20
</TABLE>
_____________________________________
* Figures reflect period from commencement of operations to June 30, 1997.
39
<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>
Accelerating Growth Fund $ 1,268.42 $ 422.83 $ 238.16
Balanced Fund $ 400.45 $ 133.48 $ 199.11
Growth & Income Fund $ 1,147.15 $ 382.37 $ 300.00
Index 500 Fund $ 15,750.66 $ 4,500.20 $ 1,207.75
International Equity Fund $ 3,131.06 $ 1,043.68 $ 1,008.01
Mid-Cap Growth Fund $ 88.71 $ 29.54 $ 0.00
Multi-Season Fund $454,197.35 $151,399.12 $155,014.33
Real Estate Fund $ 12,014.27 $ 4,004.75 $ 4,278.33
Small Company Growth Fund $ 2,247.94 $ 749.31 $ 100.00
Value Fund $ 424.07 $ 141.36 $ 181.56
Bond Fund $ 590.01 $ 196.67 $ 861.49
Intermediate Bond Fund $ 206.34 $ 68.79 $ 0.00
US Government Income Fund $ 3,656.37 $ 1,218.79 $ 199.27
Michigan Bond Fund $ 1,923.70 $ 641.24 $ 405.63
Tax-Free Bond Fund $ 131.90 $ 43.96 $ 979.34
Tax-Free Intermediate Bond Fund $ 298.44 $ 99.48 $ 0.53
Money Market Fund $ 1,496.13 $ 498.72 $ 0.00
</TABLE>
40
<PAGE>
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>
Accelerating Growth Fund $ $
Balanced Fund $ $
Growth & Income Fund $ $
Growth Opportunities Fund $ /+/ $ /+/
Global Financial Services Fund $ /+/ $ /+/
International Growth Fund $ $
Emerging Markets Fund $ $
Healthcare Fund $ $
International Equity Fund $ $
Index 500* N/A N/A
Multi-Season Fund $ $
Real Estate Fund $ $
Micro-Cap Fund $ /+/ $ /+/
NetNet Fund* N/A N/A
Small-Cap Value Fund $ $
Small Company Growth Fund $ $
Value Fund $ $
Bond Fund $ $
Intermediate Bond Fund $ $
US Government Income Fund $ $
Michigan Bond Fund $ $
Money Market Fund
</TABLE>
___________________________________
* As of June 30, 1998 the following funds had not commenced selling Class C
shares: NetNet Fund and Index 500. As of June 2, 1998, Class C Shares of
Short Term Treasury were closed to all investments.
/+/ Figures reflect period from commencement of operations to June 30, 1998.
41
<PAGE>
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>
Accelerating Growth Fund $ 2,146 $ 0.00
Balanced Fund $ 337 $ 0.00
Growth & Income Fund $ 2,683 $ 0.00
International Growth Fund** $ 63 $ 0.00
Emerging Markets Fund** $ 49 $ 0.00
Healthcare Fund** $ 125 $ 0.00
International Equity Fund $18,452 $ 0.00
Multi-Season Fund $73,808 $391.84
Real Estate Fund $ 1,829 $ 2.38
Micro-Cap Fund** $ 48 $ 0.00
Small-Cap Value Fund** $ 223 $ 0.00
Small Company Growth Fund $13,938 $212.00
Value Fund $ 4,397 $ 0.00
Bond Fund $ 787 $ 0.00
Intermediate Bond Fund $ 1,136 $ 0.00
US Government Income Fund $ 93 $ 0.00
Michigan Bond Fund $ 568 $ 0.00
Money Market Fund $ 5,932 $ 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 to 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>
Accelerating Growth Fund $ 351.28 $188.66
Balanced Fund $ 4.9 $100.01
Growth & Income Fund $ 119.64 $ 0.00
International Equity Fund $ 4,780.52 $293.87
Multi-Season Fund $42,836.64 $798.25
Real Estate Fund $ 17.76 $ 7.50
Small Company Growth Fund $ 228.27 $149.87
Value Fund $ 1,141.17 $ 0.00
Bond Fund $ 123.26 $ 0.00
Intermediate Bond Fund $ 98.38 $ 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
42
<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
MAILING OF INTEREST
PROSPECTUSES TO CARRYING
OTHER THAN OR OTHER
CURRENT COMPENSATION COMPENSATION COMPENSATION FINANCING
ADVERTISING SHAREHOLDERS TO UNDERWRITERS TO DEALERS TO PERSONNEL CHARGES
----------- ------------ --------------- ---------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Accelerating Growth Fund $ $ $ $ $ $
Balanced Fund $ $ $ $ $ $
Index 500 Fund $ $ $ $ $ $
Global Financial Services $ $ $ $ $ $
Fund*
International Growth Fund $ $ $ $ $ $
Emerging Markets Fund $ $ $ $ $ $
Healthcare 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
Short Term Treasury Fund/+/ $ $ $ $ $ $
Small-Cap Value Fund $ $ $ $ $ $
Small Company Growth Fund $ $ $ $ $ $
Value Fund $ $ $ $ $ $
Bond Fund $ $ $ $ $ $
Intermediate Bond Fund $ $ $ $ $ $
International Bond Fund $ $ $ $ $ $
U.S. Government Income Fund $ $ $ $ $ $
Michigan Bond Fund $ $ $ $ $ $
Tax-Free Bond Fund $ $ $ $ $ $
Tax-Free Intermediate Bond $ $ $ $ $ $
Fund
Money Market Fund $ $ $ $ $ $
</TABLE>
_________________________________________
* Figures reflect period from commencement of operations to June 30, 1998.
/+/ As of June 2, 1998 Class A, Class B and Class C Shares of Short Term
Treasury Fund were closed to all investments.
43
<PAGE>
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 CARRYING OR
TO OTHER THAN COMPENSATION OTHER
CURRENT TO COMPENSATION COMPENSATION FINANCING
ADVERTISING SHAREHOLDERS UNDERWRITERS TO DEALERS TO PERSONNEL CHARGES
----------- ------------ ------------ ---------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Accelerating Growth Fund $ $ $ $ $ $
Fund
Balanced Fund $ $ $ $ $ $
Index 500 Fund $ $ $ $ $ $
Global Financial $ $ $ $ $ $
Services Fund*
International Growth $ $ $ $ $ $
Fund
Emerging Markets Fund $ $ $ $ $ $
Healthcare Fund $ $ $ $ $ $
Growth & Income Fund $ $ $ $ $ $
Growth Opportunities $ $ $ $ $ $
Fund*
International Equity $ $ $ $ $ $
Fund
Micro-Cap Equity Fund $ $ $ $ $ $
Multi-Season Growth $ $ $ $ $ $
Fund
NetNet Fund** N/A N/A N/A N/A N/A N/A
Real Estate Equity $ $ $ $ $ $
Investment Fund
Short Term Treasury $ $ $ $ $ $
Fund/+/
Small-Cap Value Fund $ $ $ $ $ $
Small Company Growth $ $ $ $ $ $
Fund
Value Fund $ $ $ $ $ $
Bond Fund $ $ $ $ $ $
Intermediate Bond Fund $ $ $ $ $ $
International Bond Fund $ $ $ $ $ $
U.S. Government Income $ $ $ $ $ $
Fund
Michigan Bond Fund $ $ $ $ $ $
Tax-Free Bond Fund $ $ $ $ $ $
Tax-Free Intermediate $ $ $ $ $ $
Bond Fund
Money Market Fund $ $ $ $ $ $
</TABLE>
_________________________________________
* Figures reflect period from commencement of operations to June 30, 1998.
** As of June 30, 1998, the fund had not commenced selling Class C Shares.
/+/ As of June 2, 1998 Class A, Class B and 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,
44
<PAGE>
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 asset value of
the Class K Shares beneficially owned by the Customers.
Services provided by institutions under their service agreements may
include: (i) aggregating and processing purchase and redemption requests for
Class K Shares from Customers and placing net purchase and redemption orders
with the Distributor; (ii) providing Customers with a service that invests the
assets of their accounts in Class K Shares pursuant to specific or pre-
authorized instructions; (iii) processing dividend payments on behalf of
Customers; (iv) providing information periodically to Customers showing their
positions in Class K Shares; (v) arranging for bank wires; (vi) responding to
Customer inquiries relating to the services performed by the institutions; (vii)
providing subaccounting with respect to Class K Shares beneficially owned by
Customers or the information necessary for subaccounting; (viii) if required by
law, forwarding shareholder communications from the Trust, the Framlington Trust
or the Company (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to Customers;
(ix) forwarding to Customers proxy statements and proxies containing any
proposals regarding the Trust's or Framlington's or the Company's arrangements
with institutions; and (x) providing such other similar services as the Trust,
Framlington or the Company may reasonably request to the extent the institutions
are permitted to do so under applicable statutes, rules and regulations.
Pursuant to the Trust's, Framlington's and the Company's agreements with
such institutions, the Boards of Trustees and Directors will review, at least
quarterly, a written report of the amounts expended under Trust's, the
Framlington's and the Company's agreements with Institutions and the purposes
for which the expenditures were made. In addition, the arrangements with
Institutions must be approved annually by a majority of the Boards of Trustees
and Directors, including a majority of the Trustees/Directors who are not
"interested persons" as defined in the 1940 Act, and have no direct or indirect
financial interest in such arrangements.
The Boards of Trustees and Directors have approved the arrangements with
Institutions based on information provided by the service contractors that there
is a reasonable likelihood that the arrangements will benefit the Funds and
their shareholders by affording the Funds greater flexibility in connection with
the servicing of the accounts of the beneficial owners of their shares in an
efficient manner.
ADMINISTRATION AGREEMENT. State Street Bank and Trust Company ("State
Street"), whose principal business address is 225 Franklin Street, Boston,
Massachusetts, 02110, serves as administrator for the Trust, Framlington and the
Company pursuant to administration agreements (each, an "Administration
Agreement"). State Street has agreed to maintain office facilities for the
Trust, Framlington and the Company; 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: $--------------- [list all funds].
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 of July 1, 1997 through October 31, 1997, administration
fees to Investor Services Group accrued were: $_____________ (list funds)
45
<PAGE>
For the fiscal years ended June 30, 1997, the administration fees of
Investor Services Group accrued as follows: Accelerating Growth Fund - $307,521;
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.
Government 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 ended 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: $322,120 - Accelerating Growth Fund, $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.
Government 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 ended June 30, 1996, administration fees of the
Administrator 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 (each, a "Custody Agreement") with each of 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 a
sub-custodian agreements (each a "Sub-Custodian Contract") among the Company,
Trust, Framlington, Comerica Bank and State Street. 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,
the Sub-Custodian (i) maintains a separate account in the name of each Fund,
(ii) holds and transfers portfolio securities on account of each Fund, (iii)
accepts receipts and makes disbursements of money on behalf of each Fund, (iv)
collects and receives all income and other payments and distributions on account
of each Fund's securities and (v) makes periodic reports to the Board of
Directors 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 $___________.
For the fiscal year ended June 30, 1998, the Sub-Custodian earned
$__________.
Investor Services Group serves as the transfer and dividend disbursing
agent for the Funds pursuant to transfer agency agreements (the "Transfer Agency
Agreement") with each of the Trust, Framlington and the Company, under which
Investor Services Group (i) issues and redeems shares of each Fund, (ii)
addresses and mails all communications by each Fund to its record owners,
including reports to shareholders, dividend and distribution notices and proxy
materials for its meetings of shareholders, (iii) maintains shareholder
accounts, (iv) responds to correspondence by shareholders of the Funds and (v)
makes periodic reports to the Boards of Trustees and Directors concerning the
operations of each Fund.
COMERICA. As stated in the Funds' Class K Shares Prospectus, Class K
Shares of the Funds are sold to customers of banks and other institutions. Such
banks and institutions may include Comerica Incorporated (a publicly-held bank
holding company), its affiliates and subsidiaries ("Comerica") and other
institutions that have
46
<PAGE>
entered into agreements with the Company, the Trust and Framlington providing
for shareholder services for their customers.
Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from underwriting securities, but such banking laws and regulations do not
prohibit such a holding company or affiliate or banks generally from acting as
investment advisor, administrator, transfer agent or custodian to such an
investment company, or from purchasing shares of such a company as agent for and
upon the order of customers. The Advisor and the Custodian are subject to such
banking laws and regulations.
The Advisor and the Custodian believe they may perform the services for the
Trust, Framlington and the Company contemplated by their respective agreements
with each of them without violation of applicable banking laws and regulations.
It should be noted, however, that there have been no cases deciding whether bank
and non-bank subsidiaries of a registered bank holding company may perform
services comparable to those that are to be performed by these companies, and
future changes in either Federal or state statutes and regulations relating to
permissible activities of banks and their subsidiaries or affiliates, as well as
future judicial or administrative decisions or interpretations of current and
future statutes and regulations, could prevent these companies from continuing
to perform certain services for the Funds.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of such companies in connection with the provision of
services on behalf of the Trust, Framlington or the Company, the Trust,
Framlington or the Company might be required to alter materially or discontinue
the arrangements with the institutions and change the method of operations. It
is not anticipated, however, that any change in the Funds' method of operations
would affect the net asset value per share of the Funds or result in a financial
loss to any shareholder of the Funds.
It should be noted that future changes in either Federal or state statutes
and regulations relating to permissible activities of banks and their
subsidiaries or affiliates, as well as future judicial or administrative
decisions or interpretations of current and future statutes and regulations,
could prevent Comerica and certain other institutions from continuing to perform
certain services for Class K shares of the Funds.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of Comerica and/or other institutions in connection with
the provision of services on behalf of Class K shares of the Fund, the Trust,
Framlington or the Company might be required to alter materially or discontinue
the arrangements with the institutions and change the method of operations with
respect to Comerica and certain other institutions. It is not anticipated,
however, that any change in the Funds' method of operations would affect the net
asset value per share of the Funds or result in a financial loss to any holder
of Class K shares of the Funds.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board Members, the Advisor or the
Sub-Advisor, as the case may be, makes decisions with respect to and places
orders for all purchases and sales of portfolio securities for the Funds.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. Transactions on foreign
stock exchanges involve payment for brokerage commissions which are generally
fixed.
For the fiscal year ended June 30, 1996, the Funds paid brokerage
commissions as follows: $474,252 - Accelerating Growth Fund, $52,376-Balanced
Fund, $202,292 - Growth & Income Fund, $41,009 - Index 500 Fund, $428,699 -
International Equity Fund, $424,580 - Multi-Season Fund, $40,182 - Real Estate
Fund and
47
<PAGE>
$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 ended June 30, 1996, the Value Fund paid brokerage
commissions of $169,335.
For the fiscal year ended June 30, 1997, the Funds paid brokerage
commissions as follows: $506,861-Accelerating Growth Fund, $54,221-Balanced
Fund, $336,161-Growth & Income Fund, $61,393 - Index 500 Fund,
$155,081-International Equity Fund, $366,346-Multi-Season Fund, $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 ended 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, 1998, the Funds paid brokerage
commission as follows: $_______.
For the period ended June 30, 1998, the Funds paid brokerage commission as
follows: $___________.
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 Equity
and Bond Funds may engage in short-term trading to achieve their investment
objectives. Portfolio turnover may vary greatly from year to year as well as
within a particular year.
Each Fund's portfolio turnover rate is included in the prospectuses under
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 ____% and ____%, respectively. The portfolio turnover of the Bond Fund
and the Intermediate Bond Fund was affected by fluctuating interest rate
conditions which at times required increased dispositions and acquisitions of
securities to maintain each Fund's maturity structure.
In its Advisory Agreements, the Advisor (and, in the case of the Funds of
Framlington, the Sub-Advisor pursuant to the Sub-Advisory Agreement) agrees to
select broker-dealers in accordance with guidelines established by the Boards of
Trustees and Directors from time to time and in accordance with applicable law.
In assessing the terms available for any transaction, the Advisor or Sub-
Advisor, as the case may be, shall consider all factors it deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker-dealer, and the
reasonableness of the commission, if any, both for the specific
48
<PAGE>
transaction and on a continuing basis. In addition, the Advisory and Sub-
Advisory Agreements authorize the Advisor or Sub-Advisor, as the case may be,
subject to the prior approval of the Boards of Trustees and Directors, to cause
the Funds to pay a broker-dealer which furnishes brokerage and research services
a higher commission than that which might be charged by another broker-dealer
for effecting the same transaction, provided that the Advisor or Sub-Advisor, as
the case may be, determines in good faith that such commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either the particular transaction or the
overall responsibilities of the Advisor to the Funds. Such brokerage and
research services might consist of reports and statistics on specific companies
or industries, general summaries of groups of bonds and their comparative
earnings and yields, or broad overviews of the securities markets and the
economy.
Supplementary research information so received is in addition to, and not
in lieu of, services required to be performed by the Advisor or Sub-Advisor, as
the case may be, and does not reduce the advisory fees payable to the Advisor or
Sub-Advisor by the Funds. It is possible that certain of the supplementary
research or other services received will primarily benefit one or more other
investment companies or other accounts for which investment discretion is
exercised. Conversely, a Fund may be the primary beneficiary of the research or
services received as a result of portfolio transactions effected for such other
account or investment company.
Portfolio securities will not be purchased from or sold to the Advisor,
Sub-Advisor, Distributor or any affiliated person (as defined in the 1940 Act)
of the foregoing entities except to the extent permitted by SEC exemptive order
or by applicable law.
Investment decisions for each Fund and for other investment accounts
managed by the Advisor and Sub-Advisor are made independently of each other in
the light of differing conditions. However, the same investment decision may be
made for two or more of such accounts. In such cases, simultaneous transactions
are inevitable. Purchases or sales are then averaged as to price and allocated
as to amount in a manner deemed equitable to each such account. While in some
cases this practice could have a detrimental effect on the price or value of the
security as far as a Fund is concerned, in other cases it is believed to be
beneficial to a Fund. To the extent permitted by law, the Advisor or Sub-
Advisor, as the case may be, may aggregate the securities to be sold or
purchased for a Fund with those to be sold or purchased for other investment
companies or accounts in executing transactions.
A Fund will not purchase securities during the existence of any
underwriting or selling group relating to such securities of which the Advisor,
Sub-Advisor or any affiliated person (as defined in the 1940 Act) thereof is a
member except pursuant to procedures adopted by the Trust's or Framlington Board
of Trustees and the Company's Board of Directors in accordance with Rule 10f-3
under the 1940 Act.
[UPDATE The Trust and the Company are required to identify the securities
of their regular brokers or dealers (as defined in Rule 10b-1 under the 1940)
Act or their 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, ________
Fund held securities of _______________ [list all brokers holdings]
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; the expense of using independent pricing services; and other
expenses which are not assumed by the Administrator. Any general expenses of
the Trust, Framlington or the Company that are not readily identifiable as
belonging to a particular investment portfolio of the Trust, Framlington or the
Company are allocated among all investment portfolios of the Trust, Framlington
or the Company by or under the direction of the Boards of Trustees and Directors
in a manner that the Boards of Trustees and Directors determine to be fair and
equitable.
49
<PAGE>
The Advisor, Sub-Advisor, Administrator, Custodian, Sub-Custodian and Transfer
Agent may voluntarily waive all or a portion of their respective fees from time
to time.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Purchases and redemptions are discussed in the Funds' Prospectuses and such
information is incorporated herein by reference.
PURCHASES. As described in the Prospectuses, shares of the Funds may be
purchased in a number of different ways. Such alternative sales arrangements
permit an investor to choose the method of purchasing shares that is more
beneficial depending on the amount of the purchase, the length of time the
investor expects to hold shares and other relevant circumstances. An investor
may place orders directly through the Transfer Agent or the Distributor or
through arrangements with his/her authorized broker.
RETIREMENT PLANS. Shares of any of the Funds may be purchased in
connection with various types of tax deferred retirement plans, including
individual retirement accounts ("IRAs"), qualified plans, deferred compensation
for public schools and charitable organizations (403(b) plans) and simplified
employee pension IRAs. An individual or organization considering the
establishment of a retirement plan should consult with an attorney and/or an
accountant with respect to the terms and tax aspects of the plan. A $10.00
annual custodial fee is also charged on IRAs. This custodial fee is due by
December 15 of each year and may be paid by check or shares liquidated from a
shareholder's account.
REDEMPTIONS. As described in the Fund's Prospectuses, shares of the Funds
may be redeemed in a number of different ways:
. 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.
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>
1/st/ Year Since Purchase........................................................................ 4.00%
2/nd/ Year Since Purchase........................................................................ 4.00%
3/rd/ Year Since Purchase........................................................................ 3.00%
4/th/ Year Since Purchase........................................................................ 3.00%
5/th/ Yaer Since Purchase........................................................................ 2.00%
6/th/ Year Since Purchase........................................................................ 1.00%
</TABLE>
50
<PAGE>
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.
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 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.
51
<PAGE>
OTHER INFORMATION. Redemption proceeds are normally paid in cash; however,
each Fund may pay the redemption price in whole or part by a distribution in
kind of securities from the portfolio of the particular Fund, in lieu of cash,
in conformity with applicable rules of the SEC. If shares are redeemed in kind,
the redeeming shareholder might incur transaction costs in converting the assets
into cash. The Funds are obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of its net assets during any 90-day period for any one
shareholder.
The Funds reserve the right to suspend or postpone redemptions during any
period when: (i) trading on the New York Stock Exchange (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.
NET ASSET VALUE
MONEY MARKET FUNDS. The value of the portfolio securities of the Money
Market Funds is calculated using the amortized cost method of valuation. Under
this method the market value of an instrument is approximated by amortizing the
difference between the acquisition cost and value at maturity of the instrument
on a straight-line basis over the remaining life of the instrument. The effect
of changes in the market value of a security as a result of fluctuating interest
rates is not taken into account. The market value of debt securities usually
reflects yields generally available on securities of similar quality. When such
yields decline, market values can be expected to increase, and when yields
increase, market values can be expected to decline.
As indicated, the amortized cost method of valuation may result in the
value of a security being higher or lower than its market price, the price a
Fund would receive if the security were sold prior to maturity. The Boards of
Trustees and Directors have established procedures reasonably designed, taking
into account current market conditions and the Funds' investment objectives, for
the purpose of maintaining a stable net asset value of $1.00 per share for each
Fund for purposes of sales and redemptions. These procedures include a review
by the 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 Trustees and Directors will
promptly consider whether any and, if any, what
52
<PAGE>
action should be initiated. If the Board of Trustees or Directors believes that
the extent of any deviation from a Fund's $1.00 amortized cost price per share
may result in material dilution of other unfair results to new or existing
investors, it will take such steps as it considers appropriate to eliminate or
reduce any such dilution or unfair results to the extent reasonably practicable.
Such action may include redeeming shares in kind, selling portfolio securities
prior to maturity, reducing or withholding dividends, shortening the average
portfolio maturity, reducing the number of outstanding shares without monetary
consideration, and utilizing a net asset value per share as determined by using
available market quotations.
Pursuant to Rule 2a-7, each of the Money Market Funds will maintain a
dollar-weighted average portfolio maturity appropriate to its objective of
maintaining a stable net asset value per share, provided that such Funds will
not purchase any security with a remaining maturity (within the meaning of Rule
2a-7 under the 1940 Act) greater than 397 days (securities subject to repurchase
agreements, variable and floating rate securities, and certain other securities
may bear longer maturities), nor maintain a dollar-weighted average portfolio
maturity which exceeds 90 days. In addition, the Funds may acquire only U.S.
dollar denominated obligations that present minimal credit risks and that are
"First Tier Securities" at the time of investment. First Tier Securities are
those that are rated in the highest rating category by at least two nationally
recognized security rating organizations NRSROs or by one if it is the only
NRSRO rating such obligation or, if unrated, determined to be of comparable
quality. A security is deemed to be rated if the issuer has any security
outstanding of comparable priority and security which has received a short-term
rating by an NRSRO. The Advisor will determine that an obligation presents
minimal credit risks or that unrated investments are of comparable quality, in
accordance with guidelines established by the Board of Directors or Trustees.
There can be no assurance that a constant net asset value will be maintained for
each Money Market Fund.
ALL FUNDS. In determining the approximate market value of portfolio
investments, the Trust, Framlington or the Company may employ outside
organizations, which may use matrix or formula methods that take into
consideration market indices, matrices, yield curves and other specific
adjustments. This may result in the securities being valued at a price
different from the price that would have been determined had the matrix or
formula methods not been used. All cash, receivables and current payables are
carried on the Trust's, Framlington's or the Company's books at their face
value. Other assets, if any, are valued at fair value as determined in good
faith under the supervision of the Board Members.
IN-KIND PURCHASES
With the exception of the Real Estate Fund, payment for shares may, in the
discretion of the Advisor, be made in the form of securities that are
permissible investments for the Funds as described in the Prospectuses. Shares
of the Real Estate Fund will not be issued for consideration other than cash.
For further information about this form of payment please contact the Transfer
Agent. In connection with an in-kind securities payment, a Fund will require,
among other things, that the securities (a) meet the investment objectives and
policies of the Funds; (b) are acquired for investment and not for resale; (c)
are liquid securities that are not restricted as to transfer either by law or
liquidity of markets; (d) have a value that is readily ascertainable by a
listing on a nationally recognized securities exchange; and (e) are valued on
the day of purchase in accordance with the pricing methods used by the Fund and
that the Fund receive satisfactory assurances that (i) it will have good and
marketable title to the securities received by it; (ii) that the securities are
in proper form for transfer to the Fund; and (iii) adequate information will be
provided concerning the basis and other tax matters relating to the securities.
PERFORMANCE INFORMATION
YIELD OF THE MONEY MARKET FUNDS
The Money Market Funds' current and effective yields are computed using
standardized methods required by the SEC. The annualized yield is computed by:
(a) determining the net change in the value of a hypothetical account having a
balance of one share at the beginning of a seven-calendar day period; (b)
dividing the net change by the value of the account at the beginning of the
period to obtain the base period return; and (c) annualizing the results (i.e.,
multiplying the base period return by 365/7). The net change in the value of
the account reflects the
53
<PAGE>
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 adding1 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 K CLASS Y
- --------------------------------------------------------------------------------------------------------------------------
Tax- Tax- Tax- Tax-
Equivalent Equivalent Equivalent Equivalent
Yield Yield Yield Yield Yield Yield Yield Yield
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash Investment
Fund
- --------------------------------------------------------------------------------------------------------------------------
Money Market
Fund
- --------------------------------------------------------------------------------------------------------------------------
Tax-Free Money
Market Fund
- --------------------------------------------------------------------------------------------------------------------------
U.S. Treasury
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
one minus a stated Federal income tax rate; and (b) adding the figure resulting
from (a) above to that portion, if any, of the yield that is not exempt from
Federal income tax. For the seven-day period ended June 30, 1998, the tax-
equivalent yield for Class Y, Class K and Class A Shares of the Tax-Free Money
Market Fund was ______% (Class Y), ______% (Class K) and _____% (Class A)
calculated for all share classes based on a stated tax rate of 31%. The fees
which may be imposed by institutions on their Customers are not reflected in the
calculations of yields for the Funds.
Yield may fluctuate daily and does not provide a basis for determining
future yields. Because the yields of each Fund will fluctuate, they cannot be
compared with yields on savings accounts or other investment alternatives that
provide an agreed to or guaranteed fixed yield for a stated period of time.
However, yield information may be useful to an investor considering temporary
investments in money market instruments. In comparing the yield of one money
market fund to another, consideration should be given to each Fund's investment
policies including the types of investments made, lengths of maturities of the
portfolio securities, and whether there are any special account charges which
may reduce the effective yield.
YIELD AND PERFORMANCE OF THE NON-MONEY MARKET FUNDS
The Bond Funds', International Bond Fund's and Short Term Treasury Fund's
30-day (or one month) standard yield described in the applicable Prospectus is
calculated for each Fund in accordance with the method prescribed by the SEC for
mutual funds:
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
54
<PAGE>
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 Fund below is based on a stated
federal tax rate of 31% and, with respect to Michigan Bond Fund, a Michigan
state tax rate of 4%.
CLASS A SHARES
- --------------
The standard yields and/or tax-equivalent yields of the Class A Shares of
the following Funds for the 30-day period ended June 30, 1998 were:
<TABLE>
<CAPTION>
30-DAY YIELD TAX-EQUIVALENT 30-DAY YIELD
------------ ---------------------------
<S> <C> <C>
Bond Fund % %
Intermediate Bond Fund % %
US Government Income Fund % %
International Bond Fund % %
Short Term Treasury Fund/+/ % %
Michigan Bond Fund % %
Tax-Free Bond Fund % %
Tax-Free Intermediate Bond Fund % %
</TABLE>
/+/ As of June 2, 1998, Class A, Class B and Class C Shares of Short Term
Treasury Fund were closed to all investments.
55
<PAGE>
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 % %
Intermediate Bond Fund % %
US Government Income Fund % %
International Bond Fund % %
Short Term Treasury Fund/+/ % %
Michigan Bond Fund % %
Tax-Free Bond Fund % %
Tax-Free Intermediate Bond Fund % %
</TABLE>
/+/ As of June 2, 1998, Class A, Class B and Class C Shares of Short Term
Treasury Fund were closed to all investments.
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 % %
Intermediate Bond Fund % %
US Government Income Fund % %
International Bond Fund % %
Short Term Treasury Fund/+/ % %
Michigan Bond Fund % %
Tax-Free Bond Fund % %
Tax-Free Intermediate Bond Fund % %
</TABLE>
/+/ As of June 2, 1998, Class A, Class B and Class C Shares of Short Term
Treasury Fund were closed to all investments.
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 % %
Intermediate Bond Fund % %
US Government Income Fund % %
International Bond Fund % %
Short Term Treasury Fund/+/ % %
Michigan Bond Fund % %
Tax-Free Bond Fund % %
Tax-Free Intermediate Bond Fund % %
</TABLE>
/+/ As of June 15, 1998, Class K Shares of Short Term Treasury Fund were renamed
the Michigan Municipal Shares and the 0.25% shareholder servicing fee was
terminated.
56
<PAGE>
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 % %
Intermediate Bond Fund % %
US Government Income Fund % %
International Bond Fund % %
Short Term Treasury Fund % %
Michigan Bond Fund % %
Tax-Free Bond Fund % %
Tax-Free Intermediate Bond Fund % %
</TABLE>
Each Fund that advertises its "average annual total return" computes such
return by determining the average annual compounded rate of return during
specified periods that equates the initial amount invested to the ending
redeemable value of such investment according to the following formula:
P (1 + T)/n/ = ERV
Where:
T = average annual total return
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1, 5 or 10 year (or other) periods at the end of the
applicable period (or a fractional portion thereof)
P = hypothetical initial payment of $1,000
n = period covered by the computation, expressed in years.
Each Fund that advertises its "aggregate total return" computes such
returns by determining the aggregate compounded rates of return during specified
periods that likewise equate the initial amount invested to the ending
redeemable value of such investment. The formula for calculating aggregate
total return is as follows:
(ERV) - 1
-----
Aggregate Total Return = P
The calculations are made assuming that (1) all dividends and capital gain
distributions are reinvested on the reinvestment dates at the price per share
existing on the reinvestment date, (2) all recurring fees charged to all
shareholder accounts are included, and (3) for any account fees that vary with
the size of the account, a mean (or median) account size in the Fund during the
periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all non-recurring charges at the end of the
measuring period. The Funds' average annual total return and load adjusted
aggregate total return quotations for Class A Shares will reflect the deduction
of the maximum sales charge charged in connection with the purchase of such
shares - 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.
57
<PAGE>
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.
FUND-INCEPTION DATE
- -------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ACCELERATING 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
GROWTH FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-11/23/92
Class B-4/25/94
Class C-9/26/95
Class K-11/23/92
Class Y-12/1/91
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-4/30/93
Class B-6/21/94
Class C-1/24/96
Class K-4/16/93
Class Y-4/13/93
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GROWTH & INCOME 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-8/8/94
Class B-8/9/94
Class C-12/5/95
Class K-7/5/94
Class Y-7/5/94
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INDEX 500 FUND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-12/9/92
Class B-10/31/95
Class C/+/ N/A N/A N/A N/A N/A N/A
Class K12/7/92
Class Y-12/1/91
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/+/ As of June 30, 1998, Class C had not commenced operations.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
EQUITY PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
FUND 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>
Class A-11/30/92
Class B-3/9/94
Class C-9/29/95
Class K-11/23/92
Class Y-12/1/91
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
GROWTH FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-2/20/97
Class B-3/19/97
Class C-2/13/97
Class K-1/10/97
Class Y-12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
EMERGING 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
MARKETS FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-1/14/97
Class B-2/25/97
Class C-3/3/97
Class K-1/10/97
Class Y-12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE FUND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-2/14/97
Class B-1/31/97
Class C-1/13/97
Class K-4/1/97
Class Y-12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MICRO-CAP FUND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-12/26/96
Class B-2/24/97
Class C-3/31/97
Class K-12//31/96
Class Y-12/26/96
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SMALL-CAP FUND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-1/10/97
Class B-2/11/97
Class C-1/13/97
Class K-12/31/96
Class Y-12/26/96
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NETNET FUND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-8/19/96 N/A N/A N/A N/A
Class B-6/1/98 N/A N/A N/A N/A
Class C/+/ N/A N/A N/A N/A N/A N/A
Class Y-6/1/98 N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/+/ As of June 30, 1998, Class C had not commenced operations.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GROWTH 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
OPPORTUNITES PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
FUND 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>
Class A/++/ N/A N/A N/A N/A
Class B/++/ N/A N/A N/A N/A
Class C/++/ N/A N/A N/A N/A
Class K/++/ N/A N/A N/A N/A
Class Y-6/24/98 N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/++/ As of June 30, 1998, Class A, B, C and K had not commenced operations.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GLOBAL FINANCIAL 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
SERVICES FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A/#/ N/A N/A N/A N/A
Class B/#/ N/A N/A N/A N/A
Class C/#/ N/A N/A N/A N/A
Class K/#/ N/A N/A N/A N/A
Class Y-6/24/98 N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/#/ As of June 30, 1998, Class A, B, C and K had not commenced operations.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
BOND FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-10/17/96
Class B-6/9/97
Class C-6/3/98
Class K-3/24/97
Class Y-10/2/96
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MULTI-SEASON 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-8/4/93
Class B-4/29/93
Class C-9/20/93
Class K-6/23/95
Class Y-8/16/93
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
60
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE FUND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-9/30/94
Class B-10/3/94
Class C-1/5/96
Class K-10/3/96
Class Y-10/3/94
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SMALL COMPANY 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
GROWTH FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-11/23/92
Class B-4/28/94
Class C-9/26/95
Class K-11/23/92
Class Y-12/1/91
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
VALUE FUND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-9/14/95
Class B-9/19/95
Class C-2/9/96
Class K-11/30/95
Class Y-8/18/95
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
BOND FUND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-12/9/92
Class B-3/13/96
Class C-3/25/96
Class K-11/23/92
Class Y-12/1/91
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
BOND FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-11/24/92
Class B-10/25/94
Class C-4/19/96
Class K-11/20/92
Class Y-12/1/91
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
INCOME BOND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-7/28/94
Class B-9/6/95
Class C-8/12/96
Class K-7/5/94
Class Y-7/5/94
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SHORT TERM 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
TREASURY FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class B/+/-4/4/97
Michigan
Municipal
Shares++-4/2/97
Class Y-1/29/97
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/+/ As of June 2, 1998, Class B Shares of Short Term Treasury Fund were
closed to all investments.
/++/ As of June 15, 1998, Class K Shares of Short Term Treasury Fund were
renamed the Michigan Municipal Shares.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MICHIGAN BOND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-2/15/94
Class B-7/5/94
Class C-10/4/96
Class K-1/3/94
Class Y-1/3/94
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TAX-FREE BOND 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
FUND PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
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>
Class A-10/9/95
Class B-12/6/94
Class C-7/7/97
Class K-7/5/94
Class Y-7/21/94
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TAX-FREE 12 MONTH 5 YEAR INCEPTION 12 MONTH 5 YEAR INCEPTION
INTERMEDIATE PERIOD ENDED PERIOD ENDED THROUGH PERIOD ENDED PERIOD ENDED THROUGH
BOND FREE 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>
Class A-11/30/92
Class B-5/16/96
Class C-7/8/98
Class K-2/9/87
Class Y-12/17/92
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
____________________________________________________________
* Figures do not include the effect of the sales charge.
** Figures include the effect of the applicable sales charge.
62
<PAGE>
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, Global Financial Services Fund,
Growth Opportunities 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 and 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 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 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 Code. As a regulated investment
company, each Fund generally is exempt from federal income tax on its net
investment income and realized capital gains which it distributes to
shareholders, provided that it distributes an amount equal to the sum of (a) at
least 90% of its investment company taxable income (net investment income and
the excess of net short-term capital gain over net long-term capital loss), if
any, for the year and (b) at least 90% of its net tax-exempt interest income, if
any, for the year (the "Distribution Requirement") and satisfies certain other
requirements of the Code that are described below. Distributions of investment
company taxable income and net tax-exempt interest income made during the
taxable year or, under specified circumstances, within twelve months after the
close of the taxable year will satisfy the Distribution Requirement.
In addition to satisfaction of the Distribution Requirement, each Fund must
derive with respect to a taxable year at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans and gains
from the sale or other disposition of stock or securities or foreign currencies,
or from other income derived
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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
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.
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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 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
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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.
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, Michigan Intangibles Tax and Michigan Single
Business Tax. Conversely, to the extent that the Fund's dividends are derived
from interest on obligations other than Michigan Municipal Obligations, such
dividends will be subject to Michigan Income, Intangibles and Michigan Single
Business Taxes, even though the dividends may be exempt for federal Income Tax
purposes.
In particular, gross interest income and dividends derived from obligations
or securities of the State of Michigan and its political subdivisions, exempt
from federal Income Tax, are exempt from Michigan Income Tax under Act No. 281,
Public Acts of Michigan, 1967, as amended, and are exempt from Michigan Single
Business Tax under Act No. 228, Public Acts of Michigan, 1975, as amended. The
Michigan Income Tax act levies a flat-rate income tax on individuals, estates,
and trusts. The Single Business Tax Act levies a tax upon the "adjusted tax
base" of most individuals, corporations, financial organizations, partnerships,
joint ventures, estates, and trusts with "business activity" in Michigan.
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Bonds or other similar obligations of the State of Michigan or of a
political subdivision of the State of Michigan are exempt from Michigan
Intangibles Tax under Act No. 301, Public Acts of Michigan, 1939, as amended.
In 1986, the Michigan Department of Treasury issued a Bulletin stating that
holders of interests in investment companies who are subject to the Michigan
intangibles tax will be exempt from the tax to the extent that the investment
portfolio consists of items such as Michigan Municipal Obligations.
The transfer of obligations or securities of the State of Michigan and its
political subdivisions by the Fund, as well as the transfer of Fund shares by a
shareholder, is subject to Michigan taxes measured by gain on the sale, payment,
or other disposition thereof.]
INTERNATIONAL EQUITY FUND, INTERNATIONAL GROWTH FUND, GLOBAL FINANCIAL
SERVICES FUND, EMERGING MARKETS 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 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
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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 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.
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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 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.
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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 transferable shares. The
Company is a Maryland corporation. The Trust's and Framlington's Declaration of
Trust and the Company's Articles of Incorporation authorize the Boards of
Trustees and Directors to classify or reclassify any unissued shares of the
Trust, Framlington and the Company into one or more classes by setting or
changing, in any one or more respects, their respective designations,
preferences, conversion or other rights, voting powers, restrictions,
limitations, qualifications and terms and conditions of redemption. Pursuant to
such authority, the Trust's Board of Trustees has authorized the issuance of an
unlimited number of shares of beneficial interest in the Trust, representing
interests in the Accelerating Growth, Balanced, Growth & Income, Index 500,
International Equity, Small Company Growth, Bond, Intermediate Bond, U.S.
Government Income, Michigan Bond, Tax-Free Bond, Tax-Free Intermediate Bond,
Cash Investment, Tax-Free Money Market and U.S. Treasury Money Market Funds. The
shares of each Fund (other than the Cash Investment Fund, Tax-Free Money Market
Fund and U.S. Treasury Money Market Fund) are offered in five separate classes:
Class A, Class B, Class C, Class K and Class Y Shares. The Cash Investment Fund,
Tax-Free Money Market Fund and U.S. Treasury Money Market Fund offer only Class
Y Shares, Class K Shares and Class A Shares. Pursuant to the authority of
Framlington's Declaration of Trust, the Trustees have authorized the issuance of
an unlimited number of shares of beneficial interest in Framlington representing
interests in the International Growth Fund, Emerging Markets Fund, 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 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 and
All-Season Aggressive Fund, Short Term Treasury Fund and NetNet Fund,
respectively. The shares of each Fund (other than the Money Market Fund, All-
Season Conservative Fund, All-Season Moderate Fund and All-Season Aggressive
Fund, 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 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
70
<PAGE>
K Shares). The NetNet Fund offers only Class A, Class B, Class C and Class Y
Shares.
At a meeting on April 25 and 26, 1995, the Boards of the Trust and the
Company, and at a meeting on November 7, 1996, the Board of Framlington Trust
adopted plans pursuant to Rule 18f-3 under the 1940 Act ("Multi-Class Plans") on
behalf of each Fund At a meeting on February 4, 1997, the Trust, Framlington
and the Company adopted Amended and Restated Multi-Class Plans on behalf of each
Fund. At a meeting on May 5, 1998, the Company adopted a Second Amended and
Restated Multi-Class Plan on behalf of each Fund. At a meeting on August 4,
1998, the Company adopted a Third Amended Restated Multi-Class Plan on behalf of
each Fund. Each Multi-Class Plan provides that shares of each class of a Fund
are identical, except for one or more expense variables, certain related rights,
exchange privileges, class designation and sales loads assessed due to differing
distribution methods.
In the event of a liquidation or dissolution of each of the Trust,
Framlington or the Company or an individual Fund, shareholders of a particular
Fund would be entitled to receive the assets available for distribution
belonging to such Fund, and a proportionate distribution, based upon the
relative net asset values of the Trust's, Framlington Trust's or the Company's
respective Funds, of any general assets not belonging to any particular Fund
which are available for distribution. Shareholders of a Fund are entitled to
participate in the net distributable assets of the particular Fund involved on
liquidation, based on the number of shares of the Fund that are held by each
shareholder.
Holders of all outstanding shares of a particular Fund will vote together
in the aggregate and not by class on all matters, except that only Class A
Shares of a Fund will be entitled to vote on matters submitted to a vote of
shareholders pertaining to the Fund's Class A Plan, only Class B Shares will be
entitled to vote on matters submitted to a vote of shareholders pertaining to
the Fund's Class B Plan, only Class C Shares of a Fund will be entitled to vote
on matters submitted to a vote of shareholders pertaining to the Fund's Class C
Plan, and only Class K Shares of a Fund will be entitled to vote on matters
submitted to a vote of shareholders pertaining to the Class K Plan. Further,
shareholders of all of the Funds, as well as those of any other investment
portfolio now or hereafter offered by the Trust, Framlington or the Company,
will vote together in the aggregate and not separately on a Fund-by-Fund basis,
except as otherwise required by law or when permitted by the Boards of Trustees
and Directors. Rule 18f-2 under the 1940 Act provides that any matter required
to be submitted to the holders of the outstanding voting securities of an
investment company such as the Trust, Framlington or the Company shall not be
deemed to have been effectively acted upon unless approved by the holders of a
majority of the outstanding shares of each Fund affected by the matter. A Fund
is affected by a matter, (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.
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.
71
<PAGE>
The Trust's and Framlington's Declaration of Trust, as amended, authorizes
the Board of Trustees, without shareholder approval (unless otherwise required
by applicable law), to: (i) sell and convey the assets belonging to a class of
shares to another management investment company for consideration which may
include securities issued by the purchaser and, in connection therewith, to
cause all outstanding shares of such class to be redeemed at a price which is
equal to their net asset value and which may be paid in cash or by distribution
of the securities or other consideration received from the sale and conveyance;
(ii) sell and convert the assets belonging to one or more classes of shares into
money and, in connection therewith, to cause all outstanding shares of such
class to be redeemed at their net asset value; or (iii) combine the assets
belonging to a class of shares with the assets belonging to one or more other
classes of shares if the Board of Trustees reasonably determines that such
combination will not have a material adverse effect on the shareholders of any
class participating in such combination and, in connection therewith, to cause
all outstanding shares of any such class to be redeemed or converted into shares
of another class of shares at their net asset value. However, the exercise of
such authority may be subject to certain restrictions under the 1940 Act. The
Trust's and Framlington's Board of Trustees may authorize the termination of any
class of shares after the assets belonging to such class have been distributed
to its shareholders.
MISCELLANEOUS
COUNSEL. The law firm of Dechert Price & Rhoads, 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 __,
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:
<TABLE>
<CAPTION>
NAME OF FUND NAME AND ADDRESS PERCENT OF TOTAL SHARES OUTSTANDING
- ------------ ---------------- -----------------------------------
<S> <C> <C>
[UPDATE ] As of October __, 1998, Munder Capital Management, on behalf of
their clients owned % _________________________. [Update]
The Munder All-Season Aggressive Fund, as of October __, 1998, held the
following positions in ______________________________. [Update]
The Munder All-Season Conservative Fund, as of October __, 1998, held the
following positions in ______________________________. [Update]
The Munder All-Season Moderate Fund, as of October __, 1998, held the
following positions in ______________________________. [Update]
</TABLE>
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.
72
<PAGE>
REGISTRATION STATEMENT
This Statement of Additional Information and each of the Fund's
Prospectuses do not contain all the information included in the Fund's
registration statement filed with the SEC under the 1933 Act with respect to the
securities offered hereby, certain portions of which have been omitted pursuant
to the rules and regulations of the SEC. The registration statement, including
the exhibits filed therewith, may be examined at the offices of the SEC in
Washington, D.C.
Statements contained herein and in each of the Fund's Prospectuses as to
the contents of any contract of other documents referred to are not necessarily
complete, and, in such instance, reference is made to the copy of such contract
or other documents filed as an exhibit to the Fund's registration statement,
each such statement being qualified in all respects by such reference.
FINANCIAL STATEMENTS
(update)
73
<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 adviser could be wrong in its forecast of interest rates and the
equivalent futures market price could rise above 98. In this case, the market
value of the portfolio securities, including the portfolio security being
protected, would increase. The benefit of this increase would be reduced by the
loss realized on closing out the futures contract sale.
If interest rate levels did not change, the Fund in the above example might
incur a loss of 2 points (which might be reduced by an offsetting transaction
prior to the settlement date). In each transaction, transaction expenses would
also be incurred.
EXAMPLE OF FUTURES CONTRACT PURCHASE. The Funds would engage in an
-------------------------------------
interest rate futures contract purchase when they are not fully invested in
long-term bonds but wish to defer for a time the purchase of long-term bonds in
light of the availability of advantageous interim investments, e.g., shorter
term securities whose yields are greater than those available on long-term
bonds. A Fund's basic motivation would be to maintain for a time the income
advantage from investing in the short-term securities; the Fund would be
endeavoring at the same time to eliminate the effect of all or part of an
expected increase in market price of the long-term bonds that the Fund may
purchase.
For example, assume that the market price of a long-term bond that the Fund
may purchase, currently yielding 10% , tends to move in concert with futures
market prices of Treasury bonds. The adviser wishes to fix the current market
price (and thus 10% yield) of the long-term bond until the time (four months
away in this example) when it may purchase the bond. Assume the long-term bond
has a market price of 100, and the adviser believes that, because of an
anticipated fall in interest rates, the price will have risen to 105 (and the
yield will have dropped to about 91/2%) in four months. The Fund might enter
into futures contracts purchases of Treasury bonds for an equivalent price of
98. At the same time, the Fund would assign a pool of investments in short-term
securities that are either maturing in four months or earmarked 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 adviser could be wrong in its forecast of interest rates; long-term
interest rates might rise to above 10%; and the equivalent futures market price
could fall below 98. If short-term rates at the same time fall to 10% or below,
it is possible that the Fund would continue with its purchase program for long-
term bonds. The market price
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).
<TABLE>
<CAPTION>
ANTICIPATORY PURCHASE HEDGE: Buy the Future
Hedge Objective: Protect Against Increasing Price
- ---------------------------------------------------------------------------------------------------------
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
</TABLE>
B-3
<PAGE>
<TABLE>
<S> <C>
Buy Equity Securities with Actual Cost = $65,000 Day Hedge is Lifted-
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
$62,500 Portfolio Beta Relative to the Index = 1.0
- ---------------------------------------------------------------------------------------------------------
PORTFOLIO FUTURES
- ---------------------------------------------------------------------------------------------------------
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 earmarked on the books
of the Fund or 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
Adviser or Sub-Advisor may elect to close the position by taking an opposite
position, subject to the availability of a secondary market, which will operate
to terminate the Fund's position in the futures contract. A final determination
of variation margin is then made, additional cash is required to be paid by or
released to the Fund, and the Fund realizes a loss or gain.
IV. RISKS OF TRANSACTIONS IN FUTURES CONTRACTS
------------------------------------------
There are several risks in connection with the use of futures by the Funds
as hedging devices. One risk arises because of the imperfect correlation
between movements in the price of the futures and movements in the price of the
instruments which are the subject of the hedge. The price of the future may
move more than or less than the price of the instruments being hedged. If the
price of the futures moves less than the price of the
B-4
<PAGE>
instruments which are the subject of the hedge, the hedge will not be fully
effective but, if the price of the instruments being hedged has moved in an
unfavorable direction, the Fund would be in a better position than if it had not
hedged at all. If the price of the instruments being hedged has moved in a
favorable direction, this advantage will be partially offset by the loss on the
futures. If the price of the futures moves more than the price of the hedged
instruments, the Fund involved will experience either a loss or gain on the
futures which will not be completely offset by movements in the price of the
instruments which are the subject of the hedge. To compensate for the imperfect
correlation of movements in the price of instruments being hedged and movements
in the price of futures contracts, the Fund may buy or sell futures contracts in
a greater dollar amount than the dollar amount of instruments being hedged if
the volatility over a particular time period of the prices of such instruments
has been greater than the volatility over such time period of the futures, or if
otherwise deemed to be appropriate by the Adviser or Sub-Advisor. Conversely,
the Funds may buy or sell fewer futures contracts if the volatility over a
particular time period of the prices of the instruments being hedged is less
than the volatility over such time period of the futures contract being used, or
if otherwise deemed to be appropriate by the Adviser or Sub-Advisor. It is also
possible that, when the Fund had sold futures to hedge its portfolio against a
decline in the market, the market may advance and the value of instruments held
in the Fund may decline. If this occurred, the Fund would lose money on the
futures and also experience a decline in value in its portfolio securities.
Where futures are purchased to hedge against a possible increase in the
price of securities before a Fund is able to invest its cash (or cash
equivalents) in an orderly fashion, it is possible that the market may decline
instead; if the Fund then concludes not to invest its cash at that time because
of concern as to possible further market decline or for other reasons, the Funds
will realize a loss on the futures contract that is not offset by a reduction in
the price of the instruments that were to be purchased.
In instances involving the purchase of futures contracts by the Funds, an
amount of cash and cash equivalents, equal to the market value of the futures
contracts, will be earmarked on the books of the Fund or the Fund's sub-
custodian to collateralize the position and thereby insure that the use of such
futures is unleveraged.
In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the futures and the instruments
being hedged, the price of futures may not correlate perfectly with movement in
the cash market due to certain market distortions. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through off-setting transactions which could distort the normal relationship
between the cash and futures markets. Second, with respect to financial futures
contracts, the liquidity of the futures market depends on participants entering
into off-setting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the futures
market could be reduced thus producing distortions. Third, from the point of
view of speculators, the deposit requirements in the futures market are less
onerous than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions. Due to the possibility of price distortion in the futures
market, and because of the imperfect correlation between the movements in the
cash market and movements in the price of futures, a correct forecast of general
market trends or interest rate movements by the Adviser or Sub-Advisor may still
not result in a successful hedging transaction over a short time frame.
Positions in futures may be closed out only on an exchange or board of
trade which provides a secondary market for such futures. Although the Funds
intend to purchase or sell futures only on exchanges or boards of trade where
there appear to be active secondary markets, there is no assurance that a liquid
secondary market on any exchange or board of trade will exist for any particular
contract or at any particular time. In such event, it may not be possible to
close a futures investment position, and in the event of adverse price
movements, the Funds would continue to be required to make daily cash payments
of variation margin. However, in the event futures contracts have been used to
hedge portfolio securities, such securities will not be sold until the futures
contract can be terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee that the price of
the securities will in fact correlate with the price movements in the futures
contract and thus provide an offset on a futures contract.
B-5
<PAGE>
Further, it should be noted that the liquidity of a secondary market in a
futures contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation in a
futures contract price during a single trading day. Once the daily limit has
been reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions. The
trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal activity, which could at times make it difficult or
impossible to liquidate existing positions or to recover excess variation margin
payments.
Successful use of futures by the Funds is also subject to the Adviser's or
Sub-Advisor's ability to predict correctly movements in the direction of the
market. For example, if a particular Fund has hedged against the possibility of
a decline in the market adversely affecting securities held by it and securities
prices increase instead, the Fund will lose part or all of the benefit to the
increased value of its securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
the Fund has insufficient cash, it may have to sell securities to meet daily
variation margin requirements. Such sales of securities may be, but will not
necessarily be, at increased prices which reflect the rising market. The Funds
may have to sell securities at a time when they may be disadvantageous to do so.
V. OPTIONS ON FUTURES CONTRACTS
----------------------------
The Funds may purchase and write options on the futures contracts described
above. A futures option gives the holder, in return for the premium paid, the
right to buy (call) from or sell (put) to the writer of the option a futures
contract at a specified price at any time during the period of the option. Upon
exercise, the writer of, the option is obligated to pay the difference between
the cash value of the futures contract and the exercise price. Like the buyer
or seller of a futures contract, the holder, or writer, of an option has the
right to terminate its position prior to the scheduled expiration of the option
by selling, or purchasing an option of the same series, at which time the person
entering into the closing transaction will realize a gain or loss. A Fund will
be required to deposit initial margin and variation margin with respect to put
and call options on futures contracts written by it pursuant to brokers'
requirements similar to those described above. Net option premiums received
will be included as initial margin deposits.
Investments in futures options involve some of the same considerations that
are involved in connection with investments in future contracts (for example,
the existence of a liquid secondary market). In addition, the purchase or sale
of an option also entails the risk that changes in the value of the underlying
futures contract will not correspond to changes in the value of the option
purchased. Depending on the pricing of the option compared to either the
futures contract upon which it is based, or upon the price of the securities
being hedged, an option may or may not be less risky than ownership of the
futures contract or such securities. In general, the market prices of options
can be expected to be more volatile than the market prices on underlying futures
contract. Compared to the purchase or sale of futures contracts, however, the
purchase of call or put options on futures contracts may frequently involve less
potential risk to the Fund because the maximum amount at risk is the premium
paid for the options (plus transaction costs). The writing of an option on a
futures contract involves risks similar to those risks relating to the sale of
futures contracts.
VI. CURRENCY TRANSACTIONS
---------------------
The Fund may engage in currency transactions in order to hedge the value of
portfolio holdings denominated in particular currencies against fluctuations in
relative value. Currency transactions include forward currency contracts,
currency futures, options on currencies, and currency swaps. A forward currency
contract involves a privately negotiated obligation to purchase or sell (with
delivery generally required) a specific currency at a future date, which may be
any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. A currency swap is an
agreement to exchange cash flows based on the notional difference among two or
more currencies and operates similarly to an interest rate swap as described in
the Statement of Additional Information. The Fund may enter into currency
transactions with counterparties which have received (or the guarantors of the
obligations which have received) a credit rating of A-1 or P-1 by S&P or
B-6
<PAGE>
Moody's, respectively, or that have an equivalent rating from a NRSRO or are
determined to be of equivalent credit quality by the Advisor.
The Fund's dealings in forward currency contracts and other currency
transactions such as futures, options, options on futures and swaps will be
limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is entering into a currency transaction with
respect to specific assets or liabilities of the Fund, which will generally
arise in connection with the purchase or sale of its portfolio securities or the
receipt of income therefrom. Position hedging is entering into a currency
transaction with respect to portfolio security positions denominated or
generally quoted in that currency.
The Fund will not enter into a transaction to hedge currency exposure to an
extent greater after netting all transactions intended wholly or partially to
offset other transactions, than the aggregate market value (at the time of
entering into the transaction) of the securities held in its portfolio that are
denominated or generally quoted in or currently convertible into such currency,
other than with respect to proxy hedging as described below.
The Fund may also cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.
To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings of portfolio securities, the Fund may also engage proxy
hedging. Proxy hedging is often used when the currency to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar.
Proxy hedging entails entering into a commitment or option to sell a currency
whose changes in value are generally considered to be correlated to a currency
or currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, in exchange for U.S. dollars. The amount of the
commitment or option would not exceed the value of the Fund's securities
denominated in correlated currencies. For example, if the Advisor or Sub-
Advisor considers that the Austrian schilling is correlated to the German mark
(the "D-mark"), the Fund holds securities denominated in shillings and the
Advisor or Sub-Advisor believes that the value of the schillings will decline
against the U.S. dollar, the Advisor or Sub-Advisor may enter into a commitment
or option to sell D-marks and buy dollars. Currency hedging involves some of
the same risks and considerations as other transactions with similar
instruments. Currency transactions can result in losses to the Fund if the
currency being hedged fluctuates in value to a degree or in a direction that is
not anticipated. Further, there is the risk that the perceived correlation
between various currencies may not be present or may not be present during the
particular time that the Fund is engaging in proxy hedging. If a Fund enters
into a currency hedging transaction, the Fund will 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 to be filed by amendment.
Included in Part B:
Audited Financial Statements as of June 30, 1998 to be filed by
amendment.
Included in Part C:
Consent of Independent Public Accountants to be filed by amendment.
(b) Exhibits:
(1) (a) Declaration of Trust is incorporated herein by reference to Pre-
Effective Amendment No. 1 to Registrant's 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 filed herein.
(2) By-Laws are incorporated herein by reference to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A
filed with the Commission on December 19, 1996.
(3) Not Applicable.
(4) Not Applicable.
(5) (a) Investment Advisory Agreement between Registrant and Munder
Capital Management dated July 2, 1998 is filed herein.
(b) Investment Sub-Advisory Agreement between Registrant, Munder
Capital Management and Framlington Overseas Investment Management
Limited dated November 6, 1996 with respect to the Munder
Framlington Emerging Markets Fund, Munder Framlington Healthcare
Fund and Munder Framlington International Growth Fund is filed
herein.
(c) Investment Sub-Advisory Agreement between Registrant, Munder
Capital Management and Framlington Overseas Investment Management
Limited dated February 24, 1998 with respect to the Munder
Framlington Global Financial Services Fund is filed herein.
<PAGE>
(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 filed
herein.
(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 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 filed herein.
(b) Form of Amendment to Custodian Agreement between Registrant and
Comerica Bank is incorporated herein by reference to Post-
Effective Amendment No. 1 to Registrant's Registration Statement
on Form N-1A filed with the Commission on June 27, 1997.
(c) Notice to Custodian Agreement between Registrant and Comerica
Bank dated February 24, 1998 with respect to the Munder
Framlington Global Financial Services Fund is filed herein.
(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 filed 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 filed herein.
(f) Form of Amendment to Sub-Custodian Agreement between Registrant,
State Street Bank and Trust Company and Comerica Bank is filed
herein.
(9) (a) Transfer Agency and Registrar Agreement between Registrant and
First Data Investor Services Group, Inc. dated December 31, 1996
with respect to Munder Framlington Emerging Markets Fund, Munder
Framlington Healthcare Fund and Munder Framlington International
Growth Fund is filed herein.
2
<PAGE>
(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 filed with the Commission on March 30,
1998.
(c) Amendment to Transfer Agency and Registrar Agreement between
Registrant and First Data Investor Services Group, Inc. dated
June 1, 1998 is filed herein.
(d) Amendment No. 2 to Transfer Agency and Registrar Agreement
between Registrant and First Data Investor Services Group, Inc.
dated June 1, 1998 is filed herein.
(e) Amendment No. 3 to Transfer Agency and Registrar Agreement
between Registrant and First Data Investor Services Group, Inc.
dated June 1, 1998 is filed herein.
(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 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 filed herein.
(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 to be filed by
amendment.
(11) (a) Consent of Independent Public Accountants to be filed by
amendment.
(b) Powers of Attorney on behalf of the Registrant are incorporated
by reference to Post-Effective Amendment No. 4 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 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
Registrant's Registration Statement on Form N-1A filed with the
Commission on December 19, 1996.
3
<PAGE>
(b) Purchase Agreement between Registrant and Funds Distributor, Inc.
with respect to the Munder Framlington Global Financial Services
Fund is filed herein.
(14) Not Applicable.
(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 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 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 filed with the
Commission on March 30, 1998.
(d) Form of 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 filed with the
Commission on March 30, 1998.
(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 Registrant's Registration Statement on Form N-
1A filed with the Commission on December 19, 1996.
(f) Form of 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 filed with the Commission on March 30, 1998.
(16) Schedule for Computation of Performance Quotations is to be filed by
amendment.
(17) Financial Data Schedule is to be filed by amendment.
4
<PAGE>
(18) (a) Form of 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 Registrant's
Registration Statement on Form N-1A filed with the Commission on
June 27, 1997.
(b) Form of Amended and Restated Multi-Class Plan on behalf of the
Registrant with respect to the Munder Framlington Global
Financial Services Fund is filed herein.
Item 25. Persons Controlled by or Under Common Control with Registrant.
--------------------------------------------------------------
Not Applicable.
Item 26. Number of Holders of Securities.
--------------------------------
As of July 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 A Class B Class C Class K Class Y
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Munder Framlington International Growth Fund 29 8 8 2 37
- -------------------------------------------------------------------------------------------------------------------------------
Munder Framlington Emerging Markets Fund 63 22 11 4 46
- -------------------------------------------------------------------------------------------------------------------------------
Munder Framlington Global Financial Services Fund 0 0 0 13 13
- -------------------------------------------------------------------------------------------------------------------------------
Munder Framlington Healthcare Fund 187 510 65 2 34
- -------------------------------------------------------------------------------------------------------------------------------
</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
5
<PAGE>
the settlement or other disposition; or (B) based upon a review of readily
available facts (as opposed to a full trial-type inquiry) by (x) vote of a
majority of the Non-interested Trustees acting on the matter (provided that a
majority of the Non-interested Trustees then in office act on the matter) or (y)
written opinion of independent legal counsel.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding of the character described in paragraph (a) of this Section
4.3 may be advanced by the Trust or a Series thereof prior to final disposition
thereof upon receipt of an undertaking by or on behalf of the recipient to repay
such amount if it is ultimately determined that a Trustee or Officer is not
entitled to indemnification under this Section 4.3, provided that either: (i)
such undertaking is secured by surety bond or some other appropriate security
provided by the recipient, or the Trust or Series thereof shall be insured
against losses arising out of any such advances; or (ii) a majority of the Non-
interested Trustees acting on the matter (provided that a majority of the Non-
interested Trustees act on the matter) or an independent legal counsel in a
written opinion shall determine, based upon a review of readily available facts
(as opposed to a full trial-type inquiry) that there is reason to believe that
the recipient ultimately will be found entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to Trustees, Officers and controlling
persons of the Registrant by the Registrant pursuant to the Trust's Declaration
of Trust, its By-Laws or otherwise, the Registrant is aware that in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act and, therefore, is unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by Trustees, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such Trustees, officers or
controlling persons in connection with shares being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
Item 28. Business and Other Connections of Investment Advisor and
--------------------------------------------------------
Sub-Advisor.
-----------
Munder Capital Management
-------------------------
<TABLE>
<CAPTION>
Name Position with Advisor
- ---- ---------------------
<S> <C>
Old MCM, Inc. Partner
Munder Group LLC Partner
WAM Holdings, Inc. Partner
Lee P. Munder President and 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
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
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>
For more information relating to the Sub-Advisor's officers, reference is made
to Form ADV filed under the Investment Advisers Act of 1940 by Framlington
Overseas Investment Management Limited, SEC File No. 801-42074.
Item 29. Principal Underwriters.
-----------------------
(a) Funds Distributor, Inc. ("FDI"), located at 60 State Street, 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 Institutional Funds
American Century Capital Portfolios, Inc. JP Morgan Funds
American Century Government Income Trust JPM Series Trust
American Century International Bond Funds JPM Series Trust II
American Century Investment Trust LaSalle Partners Funds, Inc.
American Century Municipal Trust Monetta Fund, Inc.
American Century Mutual Funds, Inc. Monetta Trust
American Century Premium Reserves, Inc. The Montgomery Funds
The Montgomery Funds II
American Century Quantitative Equity Funds The Munder Framlington Funds Trust
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
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 St. Clair Funds, Inc.
The Brinson Funds The Skyline Funds
Dresdner RCM Capital Funds, Inc. Waterhouse Investor Family of Funds, Inc.
Dresdner RCM Equity Funds, Inc. WEBS Index Fund, Inc.
Founders Funds, Inc.
Harris Insight Funds Trust
HT Insight Funds, Inc. d/b/a Harris Insight Funds
</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 -Richard W. Ingram
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, -Margaret W. Chambers
Secretary and Clerk
Director, Senior Vice President, Treasurer and Chief Financial Officer -Joseph F. Tower, III
Senior Vice President -Paula R. David
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);
8
<PAGE>
(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 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.
(d) 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>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Post-Effective Amendment No. 5 to its 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 28th day of August, 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, this Post-
Effective Amendment No. 5 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 August 28, 1998
Lee P. Munder President
*_____________________ Trustee August 28, 1998
Charles W. Elliott
*_____________________ Trustee August 28, 1998
Joseph E. Champagne
*_____________________ Trustee August 28, 1998
Thomas B. Bender
*_____________________ Trustee August 28, 1998
Thomas D. Eckert
*_____________________ Trustee August 28, 1998
John Rakolta, Jr.
*_____________________ Trustee August 28, 1998
David J. Brophy
</TABLE>
10
<PAGE>
<TABLE>
<S> <C> <C>
*____________________ Vice President, August 28, 1998
Terry H. Gardner Treasurer and
Chief Financial Officer
</TABLE>
*By: /s/ Cynthia Surprise
--------------------
Cynthia Surprise
as Attorney-in-Fact
11
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
1(b) Certificate of Designation of New Shares and Classification of
Shares on behalf of the Registrant
5(a) Investment Advisory Agreement between Registrant and Munder Capital
Management
5(b) Investment Sub-Advisory Agreement between Registrant, Munder Capital
Management and Framlington Overseas Investment Management Limited
with respect to the Munder Framlington Emerging Markets Fund, Munder
Framlington Healthcare Fund and Munder Framlington International
Growth Fund
5(c) Investment Sub-Advisory Agreement between Registrant, Munder Capital
Management and Framlington Overseas Investment Management Limited
with respect to the Munder Framlington Global Financial Services
Fund
6(a) Distribution Agreement between Registrant and Funds Distributor,
Inc. with respect to the Munder Framlington Emerging Markets Fund,
Munder Framlington Healthcare Fund and Munder Framlington
International Growth Fund
8(a) Custodian Agreement between Registrant and Comerica Bank with
respect to the Munder Framlington Emerging Markets Fund, Munder
Framlington Healthcare Fund and Munder Framlington International
Growth Fund
8(c) Notice to Custodian Agreement between Registrant and Comerica Bank
with respect to the Munder Framlington Global Financial Services
Fund
8(e) Notice to Sub-Custodian Agreement between Registrant, State Street
Bank and Trust Company and Comerica Bank with respect to the Munder
Framlington Global Financial Services Fund
8(f) Form of Amendment to Sub-Custodian Agreement between Registrant,
State Street Bank and Trust Company and Comerica Bank
9(a) Transfer Agency and Registrar Agreement between Registrant and First
Data Investor Services Group, Inc. with respect to the Munder
Framlington Emerging Markets Fund, Munder Framlington Healthcare
Fund and Munder Framlington International Growth Fund
9(c) Amendment to Transfer Agency and Registrar Agreement between
Registrant and First Data Investor Services Group, Inc.
9(d) Amendment No. 2 to Transfer Agency and Registrar Agreement between
Registrant and First Data Investor Services Group, Inc.
9(e) Amendment No. 3 to Transfer Agency and Registrar Agreement between
Registrant and First Data Investor Services Group, Inc.
9(g) Notice to Administration Agreement between Registrant and State
Street Bank and Trust Company with respect the Munder Framlington
Global Financial Services Fund
13(b) Purchase Agreement between Registrant and Funds Distributor, Inc.
with respect to the Munder Framlington Global Financial Services
Fund
18(b) Form of Amended and Restated MultiClass Plan with respect to the
Munder Framlington Global Financial Services Fund
</TABLE>
12
<PAGE>
Exhibit 1(b)
THE MUNDER FRAMLINGTON FUNDS TRUST
(A Massachusetts Business Trust)
CERTIFICATE OF DESIGNATION OF NEW SERIES AND
CLASSIFICATION OF SHARES
I, Terry H. Gardner, do hereby certify as follows:
(1) That I am the duly elected Treasurer of The Munder Framlington Funds
Trust ("Munder Framlington");
(2) That in such capacity I have examined the records of actions taken by
the Board of Trustees of Munder Framlington;
(3) That the following resolutions were duly adopted by the Board of
Trustees of Munder Framlington;
a. Creation of Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5 Shares
---------------------------------------------------------------------------
(Munder Framlington International Growth Fund)
- ----------------------------------------------
RESOLVED, that pursuant to Section 5.11 of Munder Framlington's Declaration
of Trust, an unlimited number of authorized, unissued and unclassified shares of
beneficial interest in the Munder Framlington be, and hereby are, classified and
designated shares of the following classes--A-1, A-2, A-3, A-4 and A-5,
representing interests in the Munder Framlington International Growth Fund of
Munder Framlington; and further
RESOLVED, that the classes of shares established for the Munder Framlington
International Growth Fund with the designation "A" followed by the number 1 is
hereby known as the Class A Shares, the number 2 is hereby known as the Class B
Shares, the number 3 is hereby known as the Class C Shares, the number 4 is
hereby known as the Class K Shares and the number 5 is hereby known as the Class
Y Shares; and further
RESOLVED, that each share of Class A-1, each share of Class A-2, each share
of Class A-3, each share of Class A-4 and each share of Class A-5 created
pursuant to the preceding resolutions shall have all of the preferences,
conversion and other rights, voting powers, restrictions, limitations,
qualifications and terms and conditions of redemption that are set forth in
Munder Framlington's Declaration of Trust with respect to the shares of
beneficial interest.
b. Creation of Class B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Shares
---------------------------------------------------------------------------
(Munder Framlington Emerging Markets Fund)
- ------------------------------------------
RESOLVED, that pursuant to Section 5.11 of Munder Framlington's Declaration
of Trust, an unlimited number of authorized, unissued and unclassified shares of
beneficial interest in the Munder Framlington be, and hereby are, classified and
designated shares of the following
<PAGE>
classes--B-1, B-2, B-3, B-4 and B-5, representing interests in the Munder
Framlington Emerging Markets Fund of Munder Framlington; and further
RESOLVED, that the classes of shares established for the Munder Framlington
International Growth Fund with the designation "B" followed by the number 1 is
hereby known as the Class A Shares, the number 2 is hereby known as the Class B
Shares, the number 3 is hereby known as the Class C Shares, the number 4 is
hereby known as the Class K Shares and the number 5 is hereby known as the Class
Y Shares; and further
RESOLVED, that each share of Class B-1, each share of Class B-2, each share
of Class B-3, each share of Class B-4 and each share of Class B-5 created
pursuant to the preceding resolutions shall have all of the preferences,
conversion and other rights, voting powers, restrictions, limitations,
qualifications and terms and conditions of redemption that are set forth in
Munder Framlington's Declaration of Trust with respect to the shares of
beneficial interest.
c. Creation of Class C-1, Class C-2, Class C-3, Class C-4 and Class C-5 Shares
---------------------------------------------------------------------------
(Munder Framlington Healthcare Fund)
- ------------------------------------
RESOLVED, that pursuant to Section 5.11 of Munder Framlington's Declaration
of Trust, an unlimited number of authorized, unissued and unclassified shares of
beneficial interest in the Munder Framlington be, and hereby are, classified and
designated shares of the following classes--C-1, C-2, C-3, C-4 and C-5,
representing interests in the Munder Framlington Healthcare Fund of Munder
Framlington; and further
RESOLVED, that the classes of shares established for the Munder Framlington
International Growth Fund with the designation "C" followed by the number 1 is
hereby known as the Class A Shares, the number 2 is hereby known as the Class B
Shares, the number 3 is hereby known as the Class C Shares, the number 4 is
hereby known as the Class K Shares and the number 5 is hereby known as the Class
Y Shares; and further
RESOLVED, that each share of Class C-1, each share of Class C-2, each share
of Class C-3, each share of Class C-4 and each share of Class C-5 created
pursuant to the preceding resolutions shall have all of the preferences,
conversion and other rights, voting powers, restrictions, limitations,
qualifications and terms and conditions of redemption that are set forth in
Munder Framlington's Declaration of Trust with respect to the shares of
beneficial interest.
d. Creation of Class D-1, D-2, D-3, D-4 and D-5 Shares (Munder Framlington
-----------------------------------------------------------------------
Global Financial Services Fund)
- -------------------------------
RESOLVED, that pursuant to Section 5.11 of Munder Framlington's Declaration
of Trust, an unlimited number of authorized, unissued and unclassified shares of
beneficial interest in the Munder Framlington be, and hereby are, classified and
designated shares of the following classes--D-1, D-2, D-3, D-4 and D-5,
representing interests in the Munder Framlington Global Financial Services Fund
of Munder Framlington; and further
RESOLVED, that the classes of shares established for the Munder Framlington
Global Financial Services Fund with the designation "D" followed by the number 1
is hereby known as
<PAGE>
the Class A Shares, the number 2 is hereby known as the Class B Shares, the
number 3 is hereby known as the Class C Shares, the number 4 is hereby known as
the Class K Shares and the number 5 is hereby known as the Class Y Shares; and
further
RESOLVED, that each share of Class D-1, each share of Class D-2, each share
of Class D-3, each share of Class D-4 and each share of Class D-5 created
pursuant to the preceding resolutions shall have all of the preferences,
conversion and other rights, voting powers, restrictions, limitations,
qualifications and terms and conditions of redemption that are set forth in
Munder Framlington's Declaration of Trust with respect to the shares of
beneficial interest.
e. Authorization of Documents and Other Acts
-----------------------------------------
RESOLVED, that the officers of Munder Framlington be, and each of them
hereby is, authorized and empowered to execute, seal and deliver any and all
documents, instruments, papers, writings, including but not limited to any
instrument filed with the Secretary of State of The Commonwealth of
Massachusetts or the Boston City Clerk, and to do any and all other acts in the
name of Munder Framlington and on its behalf, as may be necessary or desirable
in connection with or in furtherance of the preceding resolutions.
(4) That the preceding resolutions remain in full force and effect on the
date hereof.
/s/ Terry H. Gardner
-------------------------
Terry H. Gardner
Treasurer
Date: 4/28/98
Commonwealth of Massachusetts )
County of Norfolk )
)
Subscribed and sworn to
before me this 28th day
of April, 1998.
Anne E. Sexton
- --------------
Notary Public
My commission expires: 5/14/04
<PAGE>
Exhibit 5(a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made this 2nd day of July, 1998, between The Munder Framlington
Funds Trust (the "Trust") on behalf of each Fund (collectively, the "Funds") set
forth on Schedule A attached hereto, and Munder Capital Management (the
"Advisor"), a Delaware partnership.
WHEREAS, the Trust is a Massachusetts business trust authorized to issue
shares in series and is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and each
Fund is a series of the Trust;
WHEREAS, the Advisor is registered as an investment advisor under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Trust wishes to retain the Advisor to render investment
advisory services to the Funds, and the Advisor is willing to furnish such
services to the Funds;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Trust and the Advisor as follows:
1. APPOINTMENT
(a) The Trust hereby appoints the Advisor to act as investment advisor to
the Funds for the periods and on the terms set forth herein. The Advisor
accepts the appointment and agrees to furnish the services set forth herein for
the compensation provided herein.
(b) In the event that the Trust establishes one or more portfolios other
than the Funds listed on Schedule A attached hereto, with respect to which it
desires to retain the Investment Advisor to act as investment advisor hereunder,
it shall notify the Investment Advisor in writing. If the Investment Advisor is
willing to render such services under this Agreement it shall notify the Trust
in writing whereupon such portfolio shall become a Fund hereunder and shall be
subject to the provisions of this Agreement to the same extent as the Fund named
above except to the extent that said provisions (including those relating to the
compensation payable by the Fund to the Investment Advisor) are modified with
respect to such Fund in writing by the Trust and the Investment Advisor at the
that time.
2. SERVICES AS INVESTMENT ADVISOR
Subject to the general supervision and direction of the Board of Trustees
of the Trust, the Advisor will (a) provide overall management to the Funds in
accordance with each Fund's investment objective and policies as stated in the
Fund's Prospectus 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 the Funds; (c) oversee the placement of
purchase and sale orders on behalf of the Funds; (d) employ professional
portfolio managers and securities analysts to provide research services to the
Funds; (e) maintain books and records with respect to each Fund's securities
transactions; and (f) provide periodic and special reports to the Board of
Trustees of the Trust, as requested. In providing those services, the Advisor
will provide the Funds with ongoing research, analysis, advice and judgments
regarding individual investments, general economic conditions and trends and
long-range investment policy. In addition, the Advisor will furnish the Funds
with whatever
<PAGE>
statistical information the Funds may reasonably request with respect to the
securities that the Funds may hold or contemplate purchasing.
The Advisor further agrees that, in performing its duties hereunder, it
will:
(a) comply with the 1940 Act and all rules and regulations thereunder and
under the Advisers Act, the Internal Revenue Code of 1986, as amended (the
"Code"), and all other applicable federal and state law and regulations, and
with any applicable procedures adopted by the Trustees;
(b) use reasonable efforts to manage each Fund so that it will qualify, and
continue to qualify, as a regulated investment company under Subchapter M of the
Code and regulations issued thereunder;
(c) maintain books and records with respect to each Fund's securities
transactions, render to the Board of Trustees of the Trust such periodic and
special reports as the Board may reasonably request, and keep the Trustees
informed of developments materially affecting each Fund's portfolio;
(d) make available to the Funds' administrator and the Trust, promptly upon
their request, such copies of its 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. The Advisor will furnish the
Trustees with such periodic and special reports regarding the Funds as they may
reasonably request; and
(e) immediately notify the Trust in the event that the Advisor or any of
its affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Advisor from serving as investment advisor
pursuant to this Agreement; or (2) becomes aware that it is the subject of an
administrative proceeding or enforcement action by the Securities and Exchange
Commission or other regulatory authority. The Advisor further agrees to notify
the Trust immediately of any material fact known to the Advisor respecting or
relating to the Advisor that is not contained in the Trust's Registration
Statement regarding the Funds, or any amendment or supplement thereto, but that
is required to be disclosed therein, and of any statement contained therein that
becomes untrue in any material respect.
3. DOCUMENTS
The Trust has delivered properly certified or authenticated copies of each
of the following documents to the Advisor and will deliver to it all future
amendments and supplements thereto, if any:
(a) certified resolution of the Board of Trustees of the Trust authorizing
the appointment of the Advisor and approving the form of this Agreement;
(b) the Registration Statement describing the Fund 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.
2
<PAGE>
4. BROKERAGE
In selecting brokers or dealers to execute transactions on behalf of the
Funds, the Advisor will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any Fund
transaction, the Advisor will consider all factors it deems relevant, including,
but not limited to, the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. In selecting brokers-dealers to execute
a particular transaction, and in evaluating the best overall terms available,
the Advisor is authorized to consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934,
as amended (the "1934 Act")) provided to the Funds and/or other accounts over
which the Advisor or its affiliates exercise investment discretion. The parties
hereto acknowledge that it is desirable for the Trust that the Advisor have
access to supplemental investment and market research and security and economic
analysis provided by brokers-dealers who may execute brokerage transactions at a
higher cost to the Trust than may result when allocating brokerage to other
brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, the Advisor may cause the Fund to pay a broker-dealer
which furnishes brokerage and research services a higher commission than that
which might be charged by another broker-dealer for effecting the same
transaction, provided that the Advisor determines in good faith that such
commission is reasonable in relation the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of either the
particular transaction or the overall responsibilities of the Advisor to the
Fund. It is understood that the services provided by such brokers may be useful
to the Advisor in connection with the Advisor's services to other clients. In
accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder and
subject to any other applicable laws and regulations, the Advisor and its
affiliates are authorized to effect portfolio transactions for the Funds and to
retain brokerage commissions on such transactions.
5. RECORDS
The Advisor agrees to maintain and to preserve for the periods prescribed
under the 1940 Act any such records as are required to be maintained by the
Advisor with respect to the Funds by the 1940 Act. The Advisor further agrees
that all records which it maintains for the Funds are the property of the Funds
and it will promptly surrender any of such records upon request.
6. STANDARD OF CARE
The Advisor shall exercise its best judgment in rendering the services
under this Agreement. The Advisor shall not be liable for any error of judgment
or mistake of law or for any loss suffered by a Fund or the Funds' shareholders
in connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect the Advisor
against any liability to a Fund or to its shareholders to which the Advisor
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or by reason of the
Advisor's reckless disregard of its obligations and duties under this Agreement.
As used in this Section 6, the term "Advisor" shall include any officers,
Trustees, employees, or other affiliates of the Advisor performing services with
respect to a Fund.
3
<PAGE>
7. COMPENSATION
In consideration of the services rendered pursuant to this Agreement, each
Fund will pay the Advisor a fee as set forth on Schedule B attached hereto.
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 Advisor, the
value of a Fund's average daily net assets shall be computed at the times and in
the manner specified in the Fund's Prospectus or Statement of Additional
Information.
8. EXPENSES
The Advisor will bear all expenses in connection with the performance of
its services under this Agreement and will bear the costs and expenses payable
to Sub-Advisors under the Sub-Advisory Agreements. 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, Trustees or employees of the Advisor or any Sub-Advisor;
Securities and Exchange Commission fees and state blue sky 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 of Board of
Trustees of the Trust; and any extraordinary expenses.
9. SERVICES TO OTHER COMPANIES OR ACCOUNTS
The investment advisory services of the Advisor to the Funds under this
Agreement are not to be deemed exclusive, and the Advisor, or any affiliate
thereof, shall be free to render similar services to other investment companies
and clients (whether or not their investment objective and policies are similar
to those of a Fund) and to engage in activities so long as its services
hereunder are not impaired thereby.
10. DURATION AND TERMINATION
This Agreement shall become effective on the date of this Agreement
provided that with respect to any Fund, this Agreement shall not take effect
unless it has been approved (a) by a vote of a majority of the Board of Trustees
of the Trust, including a majority of those Trustees who are not "interested
persons" (as defined in the 1940 Act) of any party to this Agreement cast in
person at a meeting called for the purpose of voting on such approval and (b) by
vote of a majority of that Fund's outstanding securities and shall continue in
effect with respect to the Fund, 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 the 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
4
<PAGE>
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable with respect to the Funds, or any
Fund, without penalty, on sixty (60) days' written notice by the Board of
Trustees of the Trust or by vote of the holders of a "majority" (as defined in
the 1940 Act) of the shares of the affected Funds or upon ninety (90) days'
written notice by the Advisor. Termination of this Agreement with respect to any
given Fund, shall in no way affect the continued validity of this Agreement or
the performance thereunder with respect to any other Fund. This Agreement will
be terminated automatically in the event of its "assignment" (as defined in the
1940 Act).
11. AMENDMENT
No provision of this Agreement may be changed, waived or 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 with respect to any Fund shall be
effective until approved by an affirmative vote of (i) a majority of the
outstanding voting securities of that Fund, and (ii) a majority of the Trustees
of the Trust, including a majority of Trustees who are not "interested persons"
(as defined in the 1940 Act) 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. USE OF NAME
It is understood that the name of Munder Capital Management or any
derivative thereof or logo associated with that name is the valuable property of
the Advisor and its affiliates, and that the Trust and each Fund have the right
to use such name (or derivable or logo) only so long as this Agreement shall
continue with respect to a given Fund. Upon termination of this Agreement, or
upon termination of this Agreement with respect to a given Fund, the Trust and
the Fund shall forthwith cease to use such name (or derivable or logo) and the
Trust shall promptly amend its Articles of Incorporation to change the Fund name
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 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 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.
5
<PAGE>
(c) This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all the
parties.
(d) This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in accordance with
the laws of the State of Michigan.
(e) If any provisions of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person circumstance,
other than these as to which it so determined to be invalid or unenforceable,
shall not be affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
(f) Notices of any kind to be given to the Advisor by the Trust shall be in
writing and shall be duly given if mailed or delivered to the Advisor at 480
Pierce Street, Birmingham, Michigan 48009, or at such other address or to such
individual as shall be specified by the Advisor to the Trust. Notices of any
kind to be given to the Trust by the Advisor shall be in writing and shall be
duly given if mailed or delivered to 480 Pierce Street, Birmingham, Michigan
48009, or at such the address to such individual as shall be specified by the
Trust to the Advisor.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
THE MUNDER FRAMLINGTON FUNDS TRUST
By: /s/Lisa A. Rosen
-----------------------------
MUNDER CAPITAL MANAGEMENT
By: /s/ Terry H. Gardner
-----------------------------
7
<PAGE>
SCHEDULE A
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
Munder Framlington Global Financial Services Fund
8
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
FUND ANNUAL FEES (AS A PERCENTAGE OF
AVERAGE DAILY NET ASSETS)
<S> <C>
Munder Framlington Global Financial Services Fund 0.75%
Munder Framlington Emerging Markets Fund 1.25%
Munder Framlington Healthcare Fund and 1.00% of net assets up to $250 million;
Munder Framlington International Growth Fund plus 0.75% of net assets of $250 million
or more
</TABLE>
9
<PAGE>
Exhibit 5(b)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT, made this 7th day of November, 1996, among Munder Capital
Management (the "Advisor"), a Delaware partnership, Framlington Overseas
Investment Management Limited (the "Sub-Advisor"), a subsidiary of Framlington
Group plc, a public holding company incorporated in England and in Wales and
registered under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and The Munder Framlington Funds Trust (the "Trust"), a Massachusetts
business trust and a diversified open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act").
WHEREAS, the Advisor has entered into an Investment Advisory Agreement,
dated November 7, 1996 with the Trust (the "Investment Advisory Agreement"),
pursuant to which the Advisor will act as investment advisor to the Trust;
WHEREAS, the shares of beneficial interest of the Trust are divided into
more than one separate series; and
WHEREAS, the Advisor wishes to retain the Sub-Advisor to render investment
advisory services to the portfolios of the Trust listed on Appendix A attached
hereto (the "Funds"), and the Sub-Advisor is willing to furnish such services to
the Funds;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed among the Trust, the Advisor and the Sub-Advisor
as follows:
1. APPOINTMENT
The Advisor hereby appoints the Sub-Advisor to act as sub-investment
advisor to the Funds for the periods and on the terms set forth herein. The
Sub-Advisor accepts the appointment and agrees to furnish the services set forth
herein for the compensation provided herein.
2. SERVICES AS SUB-INVESTMENT ADVISOR
Subject to the general supervision and direction of the Board of Trustees
of the Trust and the Advisor, the Sub-Advisor will (a) manage the investments of
each Fund in accordance with the Fund's investment objective and policies as
stated in the Fund's Prospectuses and the Statement of Additional Information
filed with the Securities and Exchange Commission, as they may be amended from
time to time; (b) make investment decisions for each Fund; (c) place purchase
and sale orders on behalf of each Fund; and (d) select brokers-dealers to
execute trades on behalf of the Funds.
The Sub-Advisor further agrees that, in performing its duties hereunder, it
will:
(a) comply with the 1940 Act and all rules and regulations thereunder, the
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 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
2
<PAGE>
transaction, provided that the Sub-Advisor determines in good faith that such
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of either the
particular transaction or the overall responsibilities of the Sub-Advisor to the
Fund. It is understood that the services provided by such brokers may be useful
to the Sub-Advisor in connection with the Sub-Advisor's services to other
clients. In accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T)
thereunder and subject to any other applicable laws and regulations, the Sub-
Advisor and its affiliates are authorized to effect portfolio transactions for
the Funds and to retain brokerage commissions on such transactions.
5. RECORDS
The Sub-Advisor agrees to maintain and to preserve for the periods
prescribed under the 1940 Act any such records as are required to be maintained
by the Sub-Advisor with respect to the Funds by the 1940 Act. The Sub-Advisor
further agrees that all records which it maintains for the Funds are the
property of the Funds and it will promptly surrender any of such records upon
request.
6. STANDARD OF CARE
The Sub-Advisor shall exercise its best judgment in rendering the services
under this Agreement. The Sub-Advisor shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Advisor, the Funds or
the Funds' shareholders in connection with the matters to which this Agreement
relates, provided that nothing herein shall be deemed to protect or purport to
protect the Sub-Advisor against any liability to the Advisor, the Funds or to
the Funds' shareholders to which the Sub-Advisor would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the Sub-Advisor's reckless disregard
of its obligations and duties under this Agreement. As used in this Section 6,
the term "Sub-Advisor" shall include any officers, directors, employees, or
other affiliates of the Sub-Advisor performing services with respect to the
Funds.
7. COMPENSATION
In consideration of the services rendered pursuant to this Agreement, the
Advisor will pay the Sub-Advisor a fee at an annual rate based on the Funds'
average daily net assets as set forth on Appendix A. This fee shall be computed
and accrued daily and payable monthly. For the purpose of determining fees
payable to the Sub-Advisor, the value of the Funds' average daily net assets
shall be computed at the times and in the manner specified in the Funds'
Prospectuses or Statement of Additional Information. As to each Fund, if, in
any fiscal year, the Advisor determines to waive fees payable to it by the Fund
or reimburse expenses to the Fund, the Sub-Advisor will bear that portion of the
fee waiver or expense reimbursement which bears the same relation to such fee
waiver or expense reimbursement as the fee payable by the Fund to the Sub-
Advisor during such year bears to the total of (i) the annual fee payable by the
Fund to the Sub-Advisor plus (ii) the annual fee payable by the Fund to the
Advisor, in each case without giving effect to the fee waiver or expense
reimbursement.
8. EXPENSES
The Sub-Advisor will bear all expenses in connection with the performance
of its services under this Agreement. 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,
3
<PAGE>
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 approve at least annually by (i) the vote of a
majority of the Board of Trustees of the Trust or (ii) a vote of a "majority"
(as defined in the 1940 Act) of each Fund's outstanding voting securities,
provided that in either event the continuance is also approved by a majority of
the Board of Trustees who are not "interested persons" (as defined in the 1940
Act) of any party to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is terminable,
without penalty, (a) on sixty (60) days' written notice by the Board of Trustees
of the Trust or by vote of holders of a "majority" (as defined in the 1940 Act)
of each Fund's shares, (b) on 90 days' written notice by the Advisor or (c) on
ninety (90) days' written notice by the Sub-Advisor. This Agreement will be
terminated automatically in the event of its "assignment" (as defined in the
1940 Act).
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.
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.
4
<PAGE>
12. NAMES
It is understood that the name "Framlington Overseas Investment Management
Limited" or any derivative thereof or logo associated with that name is the
valuable property of the Sub-Advisor and its affiliates, and that each Fund has
the right to use such name (or derivative thereof or associated logo) only so
long as this Agreement shall continue with respect to that Fund. Upon
termination of this Agreement, each Fund shall forthwith cease to use such name
(or derivative thereof or associated logo) and the Trust shall promptly amend
its Declaration of Trust to change its name and the name of each Fund to comply
herewith.
The words "The Munder Framlington Funds Trust" and "Trustees" or "Board of
Trustees" used herein refer respectively to the Trust created and the Trustees,
as trustees of the Trust but not individually or personally acting from time to
time under a Declaration of Trust dated October 30, 1996 which is hereby
referred to and a copy of which is on file at the office of the Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of "The Munder Framlington Funds Trust" entered into in the name or
on behalf thereof by any of the Trustees, officers, representatives or agents of
the Trust are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders, officers, representatives or agents of
the Trust personally, but bind only the Trust Property, and all persons dealing
with any class of shares of the Trust must look solely to the Trust Property
belonging to such class for the enforcement of any claims against the Trust.
13. MISCELLANEOUS
(a) This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
(b) Titles or captions of sections contained in this Agreement are inserted
only as a matter of convenience and for reference, and in no way define, limit,
extend or describe the scope of this Agreement or the intent of any provisions
thereof.
(c) This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all the
parties.
(d) This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in accordance with
the laws of the State of Michigan.
(e) If any provisions of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person or circumstance,
other than these as to which it is so determined to be invalid or unenforceable,
shall not be affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
(f) Notices of any kind to be given to the Sub-Advisor by the Advisor shall
be in writing and shall be duly given if mailed or delivered to the Sub-Advisor
at 155 Bishopsgate, London EC2M 3XJ, England, or at such other address or to
such individual as shall be specified by the Sub-Advisor to the Advisor.
Notices of any kind to be given to the Advisor by the Sub-Advisor shall be in
writing and shall be duly given if mailed or delivered to 480 Pierce Street,
Birmingham, Michigan 48009, or at such the address or to such individual as
shall be specified by the Trust to the Sub-Advisor.
5
<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: April , 1998 By: /s/ Terry H. Gardner
-------------------------------
MUNDER CAPITAL MANAGEMENT
Dated: April , 1998 By: /s/ Terry H. Gardner
-------------------------------
FRAMLINGTON OVERSEAS INVESTMENT
MANAGEMENT LIMITED
Dated: April , 1998 By: /s/ Warren J. Coleman
-------------------------------
6
<PAGE>
APPENDIX A
<TABLE>
<CAPTION>
Annual Fees (as a Percentage of
Funds Average Daily Net Assets
- ----- -------------------------------
<S> <C>
Framlington Emerging Markets Fund 0.625%
Framlington International Growth Fund 0.50% of net assets up to $250 million; plus
0.375% of net assets of $250 million or more
Framlington Healthcare Fund 0.50% of net assets up to $250 million; plus
0.375% of net assets of $250 million or more
</TABLE>
7
<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.
8
<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 in an investment not readily realisable in the
six monthly statements, or as requested by the Advisor.
9
<PAGE>
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.
"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.
10
<PAGE>
Exhibit 5(c)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT, made as of the 24th day of February, 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 private limited 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 February, 24, 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 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
2
<PAGE>
transaction, provided that the Sub-Advisor determines in good faith that such
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of either the
particular transaction or the overall responsibilities of the Sub-Advisor to the
Funds. It is understood that the services provided by such brokers may be useful
to the Sub-Advisor in connection with the Sub-Advisor's services to other
clients. In accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T)
thereunder and subject to any other applicable laws and regulations, the Sub-
Advisor and its affiliates are authorized to effect portfolio transactions for
the Funds and to retain brokerage commissions on such transactions.
5. RECORDS
The Sub-Advisor agrees to maintain and to preserve for the periods
prescribed under the 1940 Act any such records as are required to be maintained
by the Sub-Advisor with respect to the Funds by the 1940 Act. The Sub-Advisor
further agrees that all records which it maintains for the Funds are the
property of the Funds and it will promptly surrender any of such records upon
request.
6. STANDARD OF CARE
The Sub-Advisor shall exercise its best judgment in rendering the services
under this Agreement. The Sub-Advisor shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Advisor, the Funds or
the Funds' shareholders in connection with the matters to which this Agreement
relates, provided that nothing herein shall be deemed to protect or purport to
protect the Sub-Advisor against any liability to the Advisor, the Funds or to
the Funds' shareholders to which the Sub-Advisor would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the Sub-Advisor's reckless disregard
of its obligations and duties under this Agreement. As used in this Section 6,
the term "Sub-Advisor" shall include any officers, directors, employees, or
other affiliates of the Sub-Advisor performing services with respect to the
Funds.
7. COMPENSATION
In consideration of the services rendered pursuant to this Agreement, the
Advisor will pay the Sub-Advisor a fee at an annual rate based on the Funds'
average daily net assets as set forth on Appendix A. This fee shall be computed
and accrued daily and payable monthly. For the purpose of determining fees
payable to the Sub-Advisor, the value of the Funds' average daily net assets
shall be computed at the times and in the manner specified in the Funds'
Prospectuses or Statement of Additional Information. As to each Fund, if, in
any fiscal year, the Advisor determines to waive fees payable to it by the Fund
or reimburse expenses to the Fund, the Sub-Advisor will bear that portion of the
fee waiver or expense reimbursement which bears the same relation to such fee
waiver or expense reimbursement as the fee payable by the Fund to the Sub-
Advisor during such year bears to the total of (i) the annual fee payable by the
Fund to the Sub-Advisor plus (ii) the annual fee payable by the Fund to the
Advisor, in each case without giving effect to the fee waiver or expense
reimbursement.
8. EXPENSES
The Sub-Advisor will bear all expenses in connection with the performance
of its services under this Agreement. 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,
3
<PAGE>
telephone and personal expenses; charges of an independent pricing service;
costs of preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to existing
shareholders; costs of shareholders' reports and meetings of the shareholders of
the Funds and of the officers or Board of Trustees of the Trust; and any
extraordinary expenses.
9. SERVICES TO OTHER COMPANIES OR ACCOUNTS
The investment advisory services of the Sub-Advisor to the Funds under this
Agreement are not to be deemed exclusive, and the Sub-Advisor, or any affiliate
thereof, shall be free to render similar services to other investment companies
and other clients (whether or not their investment objectives and policies are
similar to those of the Funds) and to engage in the activities, so long as its
services hereunder are not impaired thereby.
10. DURATION AND TERMINATION
This Agreement shall become effective on the date 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.
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.
4
<PAGE>
12. NAMES
It is understood that the name "Framlington Overseas Investment Management
Limited" or any derivative thereof or logo associated with that name is the
valuable property of the Sub-Advisor and its affiliates, and that each Fund has
the right to use such name (or derivative thereof or associated logo) only so
long as this Agreement shall continue with respect to that Fund. Upon
termination of this Agreement, each Fund shall forthwith cease to use such name
(or derivative thereof or associated logo) and the Trust shall promptly amend
its Declaration of Trust to change its name and the name of each Fund to comply
herewith.
The words "The Munder Framlington Funds Trust" and "Trustees" or "Board of
Trustees" used herein refer respectively to the Trust created and the Trustees,
as trustees of the Trust but not individually or personally acting from time to
time under a Declaration of Trust dated October 30, 1996 which is hereby
referred to and a copy of which is on file at the office of the Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of "The Munder Framlington Funds Trust" entered into in the name or
on behalf thereof by any of the Trustees, officers, representatives or agents of
the Trust are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders, officers, representatives or agents of
the Trust personally, but bind only the Trust Property, and all persons dealing
with any class of shares of the Trust must look solely to the Trust Property
belonging to such class for the enforcement of any claims against the Trust.
13. Miscellaneous
(a) This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
(b) Titles or captions of sections contained in this Agreement are inserted
only as a matter of convenience and for reference, and in no way define, limit,
extend or describe the scope of this Agreement or the intent of any provisions
thereof.
(c) This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all the
parties.
(d) This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in accordance with
the laws of the State of Michigan.
(e) If any provisions of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person or circumstance,
other than these as to which it is so determined to be invalid or unenforceable,
shall not be affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
(f) Notices of any kind to be given to the Sub-Advisor by the Advisor shall
be in writing and shall be duly given if mailed or delivered to the Sub-Advisor
at 155 Bishopsgate, London EC2M 3XJ, England, or at such other address or to
such individual as shall be specified by the Sub-Advisor to the Advisor.
Notices of any kind to be given to the Advisor by the Sub-Advisor shall be in
writing and shall be duly given if mailed or delivered to 480 Pierce Street,
Birmingham, Michigan 48009, or at such the address or to such individual as
shall be specified by the Trust to the Sub-Advisor.
5
<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: April , 1998 By: /s/ Lisa Anne Rosen
-----------------------------
MUNDER CAPITAL MANAGEMENT
Dated: April , 1998 By: /s/ Terry H. Gardner
-----------------------------
FRAMLINGTON OVERSEAS INVESTMENT
MANAGEMENT LIMITED
Dated: April , 1998 By: /s/ Michael A. Vogel
-----------------------------
6
<PAGE>
APPENDIX A
Annual Fees (as a Percentage of
Funds Average Daily Net Assets)
- ----- -------------------------------
Munder Framlington Global Financial 0.375%
Services Fund
7
<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.
8
<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 in an Investment Not Readily Realisable in the
six monthly statements, or as requested by the Advisor.
9
<PAGE>
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 has the meaning assigned to it by the IMRO Rules and
Readily 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.
10
<PAGE>
Exhibit 6(a)
DISTRIBUTION AGREEMENT
----------------------
This Distribution Agreement is made as of this 7th day of November, 1996 by
and between THE MUNDER FRAMLINGTON FUNDS TRUST, a Massachusetts business trust
(the "Fund"), and FUNDS DISTRIBUTOR, INC., a Massachusetts corporation ("Funds
Distributor").
WHEREAS, the Fund is an open-end management investment company and is so
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Fund desires to retain Funds Distributor as Distributor for
the Fund's shares of beneficial interest in Class A, Class B, Class C, Class K
and Class Y Shares representing interests in the Fund's three separate
portfolios, Framlington Emerging Markets Fund, Framlington Healthcare Fund, and
Framlington International Growth Fund (individually, a "Portfolio" and
collectively, the "Portfolios"), to provide for the sale and distribution of
shares of the Portfolios (the "Shares"), and Funds Distributor is willing to
render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein and intending to be legally bound hereby, the parties hereto agree
as follows:
I. DELIVERY OF DOCUMENTS
---------------------
The Fund has delivered to Funds Distributor copies of each of the following
documents and will deliver to it all future amendments and supplements thereto,
if any:
(a) Resolutions of the Fund's Board of Trustees authorizing the execution
and delivery of this Agreement;
(b) The Fund's Declaration of Trust as filed with the State Secretary of
the Commonwealth of Massachusetts on October 30, 1996, and the Boston
City Clerk on October 30, 1996 (the "Declaration of Trust");
(c) The Fund's By-Laws;
(d) The Fund's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission ("SEC");
(e) The Fund's Registration Statement on Form N-1A (the "Registration
Statement") under the Securities Act of 1933 (the "1933 Act") and the
1940 Act, as filed with the SEC on October 30, 1996, and all
amendments thereto; and
<PAGE>
(f) The Fund's most recent Prospectuses and Statements of Additional
Information and all amendments and supplements thereto (collectively,
the "Prospectuses").
II. DISTRIBUTION
------------
1. Appointment of Distributor. The Fund hereby appoints Funds Distributor
--------------------------
as Distributor of the Portfolios' Shares and Funds Distributor hereby accepts
such appointment and agrees to render the services and duties set forth in this
Section II. In the event that the Fund establishes one or more additional
portfolios or classes of shares other than the Portfolios and the Shares with
respect to which it decides to retain Funds Distributor to act as distributor
hereunder, the Fund shall notify Funds Distributor in writing. If Funds
Distributor is willing to render such services, it shall so notify the Fund in
writing whereupon such portfolio and such shares shall become a Portfolio and
Shares hereunder and shall be subject to the provisions of this Agreement,
except to the extent that said provision is modified with respect to such
portfolio or shares in writing by the Fund and Funds Distributor at the time.
2. Services and Duties.
-------------------
(a) The Fund agrees to sell through Funds Distributor, as agent, from
time to time during the term of this Agreement, Shares (whether authorized but
unissued or treasury shares, in the Fund's sole discretion) upon the terms and
at the current offering price as described in the applicable Prospectus. Funds
Distributor will act only in its own behalf as principal in making agreements
with selected dealers or others for the sale and redemption of Shares, and shall
sell Shares only at the offering price thereof as set forth in the applicable
Prospectus. Funds Distributor shall devote appropriate efforts to effect sales
of Shares of each of the Portfolios, but shall not be obligated to sell any
certain number of Shares.
(b) In all matters relating to the sale and redemption of Shares, Funds
Distributor will act in conformity with the Fund's Declaration of Trust, By-Laws
and applicable Prospectuses and with the instructions and directions of the
Board of Trustees of the Fund and will conform to and comply with the
requirements of the 1933 Act, the 1940 Act, the regulations of the National
Association of Securities Dealers, Inc. and all other applicable Federal or
state laws and regulations.
(c) Funds Distributor will bear the cost of printing and distributing any
Prospectus (including any supplement or amendment thereto), provided, however,
-------- -------
that Funds Distributor shall not be obligated to bear the expenses incurred by
the Fund in connection with (i) the preparation and printing of any supplement
or amendment to a Registration Statement or Prospectus necessary for the
continued effective registration of the Shares under the 1933 Act or state
securities laws; and (ii) the printing and distribution of any Prospectus,
supplement or amendment thereto for existing shareholders of the class ("Class")
of Shares described therein.
2
<PAGE>
(d) All Shares of the Portfolios offered for sale by Funds Distributor
shall be offered for sale to the public at a price per share (the "offering
price") equal to (i) their net asset value (determined in the manner set forth
in the applicable Prospectuses) plus, except to those classes of persons set
forth in the applicable Prospectuses, (ii) a sales charge which shall be the
percentage of the offering price of such Shares as set forth in the applicable
Prospectuses. The offering price, if not an exact multiple of one cent, shall be
adjusted to the nearest cent. Concessions paid by Funds Distributor to broker-
dealers and other persons shall be set forth in either the selling agreements
between Funds Distributor and such broker-dealers and persons or, if such
concessions are described in the applicable Prospectuses, shall be as so set
forth. No broker-dealer or other person who enters into a selling or
distribution and servicing agreement with Funds Distributor shall be authorized
to act as agent for the Fund in connection with the offering or sale of Shares
to the public or otherwise.
(e) If any shares sold by Funds Distributor under the terms of this
Agreement are redeemed or repurchased by the Fund or by Funds Distributor as
agent or are tendered for redemption within seven business days after the date
of confirmation of the original purchase of said Shares, Funds Distributor shall
forfeit the amount above the net asset value received by it with respect to such
Shares, provided that the portion, if any, of such amount re-allowed by Funds
Distributor to broker-dealers or other persons shall be repayable to the Fund
only to the extent recovered by Funds Distributor from the broker-dealer or
other persons concerned. Funds Distributor shall include in the form of
agreement with such broker-dealers and other persons a corresponding provision
for the forfeiture by them of their concession with respect to Shares sold by
them or their principals and redeemed or repurchased by the Fund or by Funds
Distributor as agent (or tendered for redemption) within seven business days
after the date of confirmation of such initial purchases.
(f) Funds Distributor may be reimbursed for all or a portion of the
expenses described above to the extent permitted by one or more distribution
plans adopted by the Fund on behalf of a Portfolio pursuant to Rule 12b-1 under
the 1940 Act. No provision of this Agreement may be deemed to prohibit any
payments by a Portfolio to Funds Distributor or by a Portfolio or Funds
Distributor to investment dealers, banks or other financial institutions through
whom shares of the Fund are sold where such payments are made under a
distribution plan adopted by the Fund on behalf of such Portfolio pursuant to
Rule 12b-1 under the Act (the "Plan"). The Fund agrees that it shall provide
notice to Funds Distributor at least 30 days prior to the effective date of the
elimination of or the decrease in the amount of expenses reimbursable under such
a distribution plan.
(g) With respect to such classes of shares, if any, that are sold with a
contingent deferred sales charge ("CDSC"), Funds Distributor shall impose a CDSC
in connection with the redemption of the Shares of such classes, not to exceed a
specified percentage of the original purchase price of the Shares, as from time
to time set forth in the applicable Prospectuses. Funds Distributor may retain
(or receive from the Fund, as the case may
3
<PAGE>
be) all of any CDSC. Funds Distributor may pay to broker-dealers or other
persons through whom such Shares are sold a commission or other payment to the
extent consistent with the current Prospectuses and applicable rules and
regulations.
3.Sales and Redemptions.
----------------------
(a) The Fund shall pay all costs and expenses in connection with the
registration of the Shares under the 1933 Act, and all expenses in connection
with maintaining facilities for the issue and transfer of the Shares and for
supplying information, prices and other data to be furnished by the Fund
hereunder, and all expenses in connection with preparing, printing and
distributing the Prospectuses except as set forth in subsection 2(c) of Section
II hereof.
(b) The Fund shall execute all documents, furnish all information and
otherwise take all actions which may be reasonably necessary in the discretion
of the Fund's officers in connection with the sale of the Shares in such states
as Funds Distributor may designate to the Fund and the Fund may approve, and the
Fund shall pay all filing fees which may be incurred in connection with such
sale. Funds Distributor shall pay all other expenses incurred by Funds
Distributor in connection with the sale of the Shares, except as otherwise
specifically provided in this Agreement.
(c) The Fund shall have the right to suspend the sale of Shares at any
time in response to conditions in the securities markets or otherwise, and to
suspend the redemption of Shares of any Portfolio at any time permitted by the
1940 Act or the rules of the SEC ("Rules").
(d) The Fund reserves the right to reject any order for Shares, but will
not do so arbitrarily or without reasonable cause.
III. LIMITATIONS OF LIABILITY
------------------------
Funds Distributor shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Fund or any Portfolio in connection with
the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
IV. CONFIDENTIALITY
---------------
Funds Distributor will treat confidentially and as proprietary information
of the Fund all records and other information relative to the Fund, to the
Fund's prior or current shareholders and to those persons or entities who
respond to Funds Distributor's inquiries concerning investment in the Fund, and,
except as provided below, will not use such records and information for any
purpose other than the performance of its responsibilities
4
<PAGE>
and duties hereunder. Any other use by Funds Distributor of the information and
records referred to above may be made only after prior notification to and
approval in writing by the Fund. Such approval shall not be unreasonably
withheld and may not be withheld where: (i) Funds Distributor may be exposed to
civil or criminal contempt proceedings for failure to divulge such information;
(ii) Funds Distributor is requested to divulge such information by duly
constituted authorities; or (iii) Funds Distributor is so requested by the Fund.
V. INDEMNIFICATION
---------------
1. Fund Representation. The Fund represents and warrants to Funds
-------------------
Distributorthat at all times the Registration Statement and Prospectuses will in
all material respects conform to the applicable requirements of the 1933 Act and
the Rules thereunder and will not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, except that no representation or warranty
in this subsection shall apply to statements or omissions made in reliance upon
and in conformity with written information furnished to the Fund by or on behalf
of and with respect to Funds Distributor expressly for use in the Registration
Statement or Prospectuses.
2. Funds Distributor Representation. Funds Distributor represents and
--------------------------------
warrants to the Fund that it is duly organized as a Massachusetts corporation
and is and at all times will remain duly authorized and licensed to carry out
its services as contemplated herein.
3. Fund Indemnification. The Fund, on behalf of each Portfolio, agrees
--------------------
that each Portfolio will indemnify, defend and hold harmless Funds Distributor,
its several officers and directors, and any person who controls Funds
Distributor within the meaning of Section 15 of the 1933 Act, from and against
any losses, claims, damages or liabilities, joint or several, to which any of
them may become subject under the 1933 Act or otherwise, insofar as such losses,
claims damages or liabilities (or actions or proceedings in respect thereof)
arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Prospectuses or in any application or other document executed by or on behalf of
a Portfolio, or arise out of or based upon, information furnished by or on
behalf of a Portfolio, filed in any state in order to sell the Shares under the
securities or blue sky laws thereof ("Blue Sky Application"), or arise out of,
or are based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse Funds Distributor, its several officers and
trustees, and any person who controls Funds Distributor within the meaning of
Section 15 of the 1933 Act, for any legal or other expenses reasonably incurred
by any of them in investigating, defending or preparing to defend any such
action, proceeding or claim; provided, however, that neither the Fund nor any
-------- -------
Portfolio shall be liable in any case to the extent that such loss, claim,
damage or liability arises out of, or is based upon, any untrue statement,
alleged untrue statement, or omission or alleged omission made in the
5
<PAGE>
Registration Statement, the Prospectuses, any Blue Sky Application or any
application or other document executed by or on behalf of the Fund in reliance
upon and in conformity with written information furnished to the Fund by or on
behalf of Funds Distributor specifically for inclusion therein.
A Portfolio shall not indemnify any person pursuant to this subsection 3
unless the court or other body before which the proceeding was brought has
rendered a final decision on the merits that such person was not liable by
reason of his willful misfeasance, bad faith or gross negligence in the
performance of his duties, or his reckless disregard of his obligations and
duties, under this Agreement ("disabling conduct") or, in the absence of such a
decision, a reasonable determination (based upon a review of the facts) that
such person was not liable by reason of disabling conduct has been made by the
vote of a majority of a quorum of trustees of the Fund who are neither
"interested parties" of the Fund (as defined in the 1940 Act) nor parties to the
proceeding, or by an independent legal counsel in a written opinion.
Each Portfolio shall advance attorneys' fees and other expenses incurred by
any person in defending any claim, demand, action or suit which is the subject
of a claim for indemnification pursuant to this subsection 3, so long as: (i)
such person shall undertake to repay all such advances unless it is ultimately
determined that he or she is entitled to indemnification hereunder; and (ii)
such person shall provide security for such undertaking, or the Portfolio shall
be insured against losses arising by reason of any lawful advances, or a
majority of a quorum of the disinterested, non-party trustees of the Fund ( or
an independent legal counsel in a written opinion) shall determine based on a
review of readily available facts (as opposed to a full trial-type inquiry) that
there is reason to believe that such person ultimately will be found entitled to
indemnification hereunder.
The obligations of each portfolio under this subsection 3 shall be the
several (and not joint or joint and several) obligation of each Portfolio.
4. Funds Distributor Indemnification. Funds Distributor will indemnify,
---------------------------------
defend and hold harmless the Fund, each Portfolio, the Fund's several officers
and trustees and any person who controls the Fund or any Portfolio within the
meaning of Section 15 of the 1933 Act, from and against any losses, claims,
damages or liabilities, joint or several, to which any of them may become
subject under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect hereof) arise out of, or
are based upon, any breach of its representations, warranties and agreements
herein, or which arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, the Prospectuses, any Blue Sky Application or any application or
other documents executed by or on behalf of the Fund or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, which statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Fund or any of its several officers and
6
<PAGE>
trustees by or on behalf of Funds Distributor specifically for inclusion
therein, and will reimburse the Fund, each Portfolio, the Fund's several
officers and trustees, and any person who controls the Fund or any Portfolio
within the meaning of Section 15 of the 1933 Act, for any legal or other
expenses reasonably incurred by any of them in investigating, defending or
preparing to defend any such action, proceeding or claim.
5. General Indemnity Provision. No indemnifying party shall be liable
---------------------------
under its indemnity agreement contained in subsection 3 or 4 hereof with respect
to any claim made against such indemnifying party unless the indemnified party
shall have notified the indemnifying party in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon the indemnified party (or after the
indemnified party shall have received notice of such service on any designated
agent), but failure to notify the indemnifying party of any such claim shall not
relieve it from any liability which it may otherwise have to the indemnified
party. The indemnifying party will be entitled to participate at its own expense
in the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, and if the indemnifying party elects to assume the
defense, such defense shall be conducted by counsel chosen by it and reasonably
satisfactory to the indemnified party. In the event the indemnifying party
elects to assume the defense of any such suit and retain such counsel, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by the indemnified party.
VI. DURATION AND TERMINATION
------------------------
This Agreement shall become effective as of the date first above written,
and, unless sooner terminated as provided herein, shall continue until November
7, 1998. Thereafter, if not terminated, this Agreement shall continue
automatically for successive terms of one year, provided that such continuance
is specifically approved at least annually by a vote of the majority of the
Board of Trustees of the Fund, including a majority of the trustees who are not
"interested persons" of the Fund and have no direct or indirect financial
interest in the operation of the Plan, this Agreement, or in any agreement
relating to the Plan, by vote cast in person at a meeting called for the
purpose of voting on such approval; provided, however, that this Agreement may
-------- -------
be terminated with respect to any Portfolio by the Fund at any time, without the
payment of any penalty, by vote of a majority of the Trustees or by a vote of a
"majority of the outstanding voting securities" of such Portfolio on 60 days'
written notice to Funds Distributor, or by Funds Distributor at any time,
without the payment of any penalty, on 60 days' written notice to the Fund.
This Agreement will automatically and immediately terminate in the event of its
`assignment" (As used in this Agreement, the terms "majority of the outstanding
voting securities" "interested person" and "assignment" shall have the same
meanings as such terms have in the 1940 Act.)
7
<PAGE>
VII. AMENDMENT OF THIS AGREEMENT
---------------------------
No provision of this Agreement may be changed, waived, discharged or
terminated except by an instrument in writing signed by the party against which
an enforcement of the change, waiver, discharge or termination is sought.
VIII. NOTICES
-------
Notices of any kind to be given to the Fund hereunder by Funds Distributor
shall be in writing and shall be duly given if mailed or delivered to the Fund
at 480 Pierce Street, Suite 300, Birmingham, Michigan 48009, Attention: Lee
Munder, with a copy to Paul F. Roye, Esq., Dechert Price & Rhoads, 1500 K Street
N.W., Washington, D.C. 20005-1208, or at such other address or to such
individual as shall be so specified by the Fund to Funds Distributor. Notices
of any kind to be given to Funds Distributor hereunder by the Fund shall be in
writing and shall be duly given if mailed or delivered to Funds Distributor at
60 State Street, Suite 1300, Boston, Massachusetts 02109, Attention: Betsy
Connolly or at such other address or to such individual as shall be so specified
by Funds Distributor to the Fund.
IX. MISCELLANEOUS
-------------
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. Subject to the
provisions of Section VI hereof, this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
shall be governed by Massachusetts law; provided, however, that nothing herein
-------- -------
shall be construed in a manner inconsistent with the 1940 Act or any rule or
regulation of the SEC thereunder.
The names "The Munder Framlington Funds Trust" and "Trustees of the Munder
Framlington Funds Trust" refer respectively to the trust created and the
Trustees, as trustees but not individually or personally, acting from time to
time under the Declaration of 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 are made not individually, but in
such capacities, and are not binding upon any of the Trustees, shareholders,
officers, representatives or agents of the Fund personally, but bind only the
Trust Property (as defined in the Declaration of Trust), and all persons dealing
with any class of shares of the Fund must look solely to the Trust Property
belonging to such class for the enforcement of any claims against the Fund.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE MUNDER FRAMLINGTON FUNDS TRUST
By: /s/ Lee P. Munder
-----------------------------
Name: Lee P. Munder
Title: President
Attest: ____________________
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
-----------------------------
Name: Marie Connolly
Title: President
Attest: ____________________
9
<PAGE>
Exhibit 8(a)
CUSTODY AGREEMENT
AGREEMENT dated as of November 7, 1996 between The Munder Framlington Funds
Trust (the "Trust"), a Massachusetts business trust with its principal place of
business at 480 Pierce Street, Birmingham, MI 48009, on behalf of the investment
portfolios of the Trust identified on Schedule A attached hereto, (which may be
amended from time to time by attaching to Schedule A a revised list of
portfolios, dated and signed by an authorized representative of each party
hereto) (individually, a "Fund" and collectively, the "Funds"), and Comercia
bank (the "Custodian"), a Michigan banking corporation and a wholly-owned
subsidiary of Comercia Incorporated, with its principal place of business at One
Detroit Center, 500 Woodward Avenue, Detroit, Michigan.
W I T N E S S E T H:
- - - - - - - - - -
That for and in consideration of the mutual promises hereinafter set forth,
the Trust and the Custodian agree as follows:
1. Definitions.
------------
Whenever used in this Agreement or in any Schedules to this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
(a) "Authorized Person" shall be deemed to include the Chairman of the
Board of Trustees, the President, and any Vice President, the
Secretary, the Treasurer or any other person, whether or not any such
person is an officer or employee of the Trust, duly authorized by the
Board of Trustees of the Trust to give Oral Instructions and Written
Instructions on behalf of a Fund and listed in the certification
annexed hereto as Appendix A or such other certification as may be
received by the Custodian from time to time.
(b) "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successors
or successors and its nominee for nominees.
(c) "Certificate" shall mean any notice, instruction or other instrument
in writing, authorized or required by this Agreement to be given to
the Custodian, which is actually received by the Custodian and signed
on behalf of the Trust by any two Authorized Persons or any two
officers thereof.
(d) "Declaration of trust" shall mean the Declaration of Trust of the
Trust file with the Secretary of State of the Commonwealth of
Massachusetts on
<PAGE>
October 30, 1996, as now in affect and as the same may be amended from
time to time.
(e) "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission
under Section 17(a) of the Securities Exchange Act of 1934, as
amended, its successor or successors and its nominee or nominees, in
which the Custodian is hereby specifically authorized to make
deposits. The Term " Depository" shall further mean and include any
other person to be named in a Certificate authorized to act as a
depository under the 1940 Act, its successor or successors and its
nominee or nominees.
(f) "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and
principal by the Government of the United States or agencies or
instrumentalities thereof, commercial paper, bank certificates of
deposit, bankers' acceptances and short-term corporate obligations,
where the purchase or sale of such securities normally requires
settlement in federal funds on the same day as such purchase or sale,
and repurchase and reverse repurchase agreements with respect to any
of the foregoing types of securities.
(g) "Oral Instructions" shall mean verbal instructions actually received
by the Custodian from a person reasonably believed by the Custodian to
be an Authorized Person.
(h) "Prospectus" shall mean a Fund's current prospectus and statement of
additional information relating to the registration of the Fund's
Shares under the Securities Act of 1933, as amended.
(i) "Shares" refers to the shares of beneficial interest $.001 par value
per share of a Fund, as may be issued by the Fund from time to time.
(j) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, options
and other securities, commodity interests and investments, including
currency, from time to time of a Fund, including futures contracts,
forward contracts and options on futures contracts and forward
contracts.
(k) "Transfer Agent" shall mean the person which performs as the transfer
agent, dividend disbursing agent and shareholder servicing agent
functions for the Trust.
(l) "Written Instructions" shall mean a written communication actually
received by the Custodian signed by two Authorized Persons or form two
persons reasonably believed by the Custodian to be Authorized Persons
by telex or
2
<PAGE>
facsimile machine or any other such system whereby the receiver of
such communication is able to verify through codes or otherwise with a
reasonable degree of certainty the authenticity of the sender of such
communication; however, "Written Instructions" form the Trust's
Administrator, First Data Investor Services Group, Inc., to the
Custodian shall mean an electronic communication transmitted by fund
accountants and their managers (who have been provided an access code
by the Administrator) and actually received by the Custodian.
(m) The "1940 Act" refers to the Investment Company Act of 1940, and
the Rules and Regulations thereunder, all as amended from time to
time.
2. Appointment of Custodian.
-------------------------
(a) The Trust hereby constitutes and appoints the Custodian as custodian
of all the Securities and monies at the time owned by or in the
possession of the Funds during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
(c) The Custodian understands and acknowledges that the Trust intends to
issue Shares of separate series and classes, and may classify and
reclassify Shares of such series and classes. The Custodian shall
identify to each such series or class the property belonging to such
series or class and in such reports, confirmations and notices to the
Trust called for under this Agreement shall identify the series or
class to which such report, confirmation or notice pertains. In the
event the Trust establishes one or more portfolios other than the
Funds with respect to which the Trust wishes to retain the Custodian
to act as custodian, the Trust shall so notify the Custodian in
writing. If the Custodian is willing to render such services, the
Custodian shall notify the Trust in writing whereupon each portfolio
shall be deemed to be a Fund hereunder.
3. Compensation.
-------------
(a) The Trust will compensate the Custodian for its services rendered
under this Agreement in accordance with the fees set forth in the Fee
Schedule annexed hereto as Schedule B and incorporated herein.
(b) Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule B of this Agreement a revised Fee
Schedule, dated and signed by an Authorized Officer or authorized
representative of each party hereto.
3
<PAGE>
(c) The Custodian will bill the trust as soon as practicable after the
end of each calendar month, and said billings will be detailed in
accordance with the Fee Schedule for the Trust. The Trust will
promptly pay to the Custodian the amount of such billing. The
Custodian may charge against any monies held on behalf of a Fund
pursuant to this Agreement such compensation and any expenses incurred
by the Custodian (and reimbursable by the Fund) in the performance of
its duties pursuant to this Agreement. The Custodian shall also be
entitled to charge against any money held on behalf of a Fund pursuant
to this agreement the amount of any loss, damage, liability or expense
incurred with respect to the Fund, including reasonable counsel fees,
for which it shall be entitled to reimbursement under the provisions
of this Agreement.
The expenses which the Custodian may charge against such account
include, but are not limited to, the expenses of Sub-Custodians and
foreign branches of the Custodian incurred in settling transactions
outside of Detroit, Michigan or New York City, New York involving the
purchase and sale of Securities.
(d) Each Fund will use reasonable efforts to avoid cash overdrafts in its
account and will provide offsetting balances with respect to any cash
overdrafts that may occur from time to time.
4. Custody of Cash and Securities.
-------------------------------
(a) Receipt and Holding of Assets.
------------------------------
The Trust will deliver or cause to be delivered to the Custodian all
Securities and monies owned by the Funds, including cash received from the
issuance of Shares, at any time during the period of this Agreement. The
Custodian will not be responsible for such Securities and monies until
actually received by it. The Trust shall instruct the Custodian from time
to time in its sole discretion, by means of Written Instructions, or, in
connection with the purchase or sale of Money Market Securities, by means
of Oral Instructions or Written Instructions, as to the manner in which and
in what amounts Securities and monies are to be deposited on behalf of the
Funds in the Book-Entry System or a Depository and specifically allocated
on the books of the Custodian to the Funds; provided, however, that prior
to the initial deposit of Securities of the Funds in the Book-Entry System
or a Depository, including a deposit connection with the settlement of a
purchase or sale, the Custodian shall have received a Certificate or
Written Instructions specifically approving such deposits by the Custodian
in the Book-Entry System or a Depository. Securities and monies of the
Funds deposited in the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including but not limited to accounts which the Custodian acts
in a fiduciary or representative capacity.
4
<PAGE>
(b) Accounts and Disbursements. The Custodian shall establish and
---------------------------
maintain a separate account for each Fund and shall credit to the
separate account all monies received by it for the account of the
Fund and shall disburse the same only:
1. In payment for Securities purchased for the Fund, as provided in
Section 5 hereof;
2. Pursuant to Written Instructions, for the payment of any expense
or liability incurred by the Fund, including but not limited to
the following payments for the account of the Fund: interest,
taxes, management, accounting, transfer agent and legal fees and
operating expenses of the Fund whether or not such expenses are,
in whole or in part, to be capitalized or treated as deferred
expenses;
3. In payment of dividends or distributions with respect to the
Shares of the Fund, as provided in Section 7 hereof;
4. In payment of original issue or other taxes with respect to the
Shares of the Fund, as provided in Section 8 hereof;
5. In payment for Shares which have been redeemed by the Fund, as
provided in Section 8 hereof;
6. Pursuant to Written Instructions, setting forth the name and
address of the Fund and the person to whom the payment is to be
made, the amount to be paid and the purpose for which payment is
to be made;
7. In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Fund, as provided
in Section 3(a) and Section 11(h) hereof, or
8. To a sub-custodian pursuant to Section 11(f) hereof.
(c) Confirmation and Statements. Promptly after the close of business on
----------------------------
each day, the Custodian shall furnish each Fund with confirmations and
a summary of all transfers to or from the account of the Fund during
said day. Where securities purchased by the Funds are in a tangible
bulk of securities registered in the name of the Custodian (or its
nominee) or shown on the Custodian's account on the books of a
Depository or the Book-Entry System, the Custodian shall by book entry
or otherwise identify the quantity of those securities belonging to
the Funds. At least monthly, the Custodian shall furnish each Fund
with a detailed statement of the Securities and monies held for the
Fund under this Agreement. The Custodian shall also furnish the Trust
with such periodic and special reports as the Trust may reasonably
request, and such other information as may be agreed upon from time to
time.
(d) Registration of Securities and Physical Separation. All Securities
---------------------------------------------------
held for the Funds which are issued or issuable only in bearer form,
except such Securities as are held in the Book-Entry System, shall be
held by the Custodian in that form; all other Securities held for the
Fund may be registered in the name of the Fund, in the name of any
duly appointed registered nominee of the
5
<PAGE>
Custodian as the Custodian may from time to time determine, or in the name
of the Book-Entry System or a Depository or their successor or successors,
or their nominee or nominees. The Trust reserves the right to instruct the
Custodian as to the method of registration and safekeeping of the
Securities of the Funds. The Trust agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in
proper form for transfer, or to register in the name of its registered
nominee or in the name of the Book-Entry System or a Depository, any
Securities which it may hold for the account of the Funds and which may
from time to time be registered in the name of the Funds. The Custodian
shall hold all such Securities specifically allocated to a Fund which are
not held in the Book-Entry System or a Depository in a separate account for
the Fund in the name of the Fund physically segregated at all times from
those of any other person or persons.
(e) Segregated Accounts. Upon receipt of a Written Instruction the Custodian
--------------------
will establish segregated accounts on behalf of the Funds to hold liquid or
other assets as it shall be directed by a Written Instruction and shall
increase or decrease the assets in such segregated accounts only as it
shall be directed by subsequent Written Instruction.
(f) Collection of Income and Other Matters Affecting Securities. Unless
------------------------------------------------------------
otherwise instructed to the contrary by a Written Instruction, the
Custodian by itself, or through the use of the Book-Entry System or a
Depository with respect to Securities therein deposited, shall with respect
to all Securities held for the Funds in accordance with this Agreement:
1. Collect all income due or payable;
2. Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed or retired, or
otherwise become payable. Notwithstanding the foregoing, the
Custodian shall have no responsibility to a Fund for monitoring or
ascertaining any call, redemption or retirement dates with respect
to put bonds which are owned by a Fund and held by the Custodian or
its nominees. Nor shall the Custodian have any responsibility or
liability to a Fund for any loss by a Fund for any missed payment or
other defaults resulting therefrom; unless the Custodian received
timely notification from the Fund specifying the time, place and
manner for the presentment of any such put bond owned by a Fund and
held by the Custodian or its nominee. The Custodian shall not be
responsible and assumes no liability to a Fund for the accuracy or
completeness of any notification the Custodian may furnish to a Fund
with respect to put bonds;
3. Surrender Securities in temporary form for definitive Securities;
6
<PAGE>
4. Execute any necessary declarations or certificates of ownership
under the Federal income tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect;
5. Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of the
Funds all rights and similar Securities issued with respect to any
Securities held by the Custodian hereunder for the Funds;
6. Transmit promptly to the Trust any proxy statement, proxy materials,
notice of a call or conversion or similar communication received by
it as Custodian; and
7. Receive and hold for the account of each Fund all securities
received as a distribution on the Fund's portfolio of securities as
a result of a stock dividend, share split-up or reorganization,
recapitalization, readjustment or other rearrangement or
distribution of rights or similar securities issued with respect to
any portfolio securities belonging to the Fund.
(g) Delivery of Securities and Evidence of Authority. Upon receipt of Written
-------------------------------------------------
Instructions and not otherwise, except for subparagraphs 5, 6, and 7 of
this section 4(g) which may be effected by Oral or Written Instructions,
the Custodian, directly or through the use of the Book-Entry System or a
Depository, shall:
1. Execute and deliver or cause to be executed and delivered to such
persons as may be designated in such Written Instructions, proxies,
consents, authorizations, and any other instruments whereby the
authority of a Fund as owner of any Securities may be exercised;
2. Deliver or cause to be delivered any Securities held for a Fund in
exchange for other Securities or cash issued or paid in connection
with the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the
exercise of any conversion privilege;
3. Deliver or cause to be delivered any Securities held for a Fund to
any protective committee, reorganization committee or other person
in connection with the reorganization, refinancing, merger,
consolidation or recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this Agreement
in the separate account for the Fund certificates of deposit,
interim receipts or other instruments or documents as may be issued
to it to evidence such delivery;
7
<PAGE>
4. Make or cause to be made such transfers or exchanges of the assets
specifically allocated to the separate account of a Fund and take
such longer steps as shall be stated in Written Instructions to be
for the purpose of effecting any duly authorized plan of
liquidation, reorganization, merger, consolidation or
recapitalization of the Fund;
5. Deliver Securities owned by a Fund upon sale of such Securities
for the account of the a Fund pursuant to Section 5;
6. Deliver Securities owned by a Fund upon the receipt of payment in
connection with any repurchase agreement related to such Securities
entered into by the Fund;
7. Deliver Securities owned by a Fund to the issuer thereof, or its
agent, for transfer into the name of the Fund or into the name of
any nominee or nominees of the Custodian or into the name or nominee
name of any agent appointed pursuant to Section 10(f) or into the
name or nominee name of any sub-custodian appointed pursuant to
Section 10(e); or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate face
amount or number of units; provided, however, that in any such case,
the new Securities are to be delivered to the Custodian;
8. Deliver Securities owned by a Fund to the broker for examination in
accordance with "street delivery" custom;
9. Deliver Securities owned by a Fund in accordance with the provisions
of any agreement among the Fund, the Custodian and any broker-dealer
or any similar organization or organizations relating to compliance
with the rules of any options clearing entity or securities or
commodities exchange, regarding escrow or other arrangements in
connection with transactions by the Fund;
10. Deliver Securities owned by a Fund in accordance with the provisions
of any agreement among the Fund, the Custodian, and a futures
commission merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity futures
Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Fund;
11. Deliver Securities owned by a Fund for delivery in connection with
any loans of securities made by the Fund but only against receipt of
adequate collateral as agreed upon form time to time by the
Custodian
8
<PAGE>
and the Fund which may be in the form of cash or obligations issued
by the United States government, its agencies or instrumentalities;
12. Deliver Securities owned by a Fund for delivery as security in
connection with any borrowings by the Fund requiring a pledge of
Fund assets, but only against receipt of amounts borrowed;
13. Deliver Securities owned by a Fund upon receipt of Written
Instructions from the Fund for delivery to the Transfer Agent or to
the holders of Shares in connection with the distributions in kind,
as may be described from time to time in the Fund's Prospectus, in
satisfaction of requests by holders of Shares for repurchase or
redemption;
14. Deliver Securities as collateral in connection with short sales of
securities by a Fund;
15. Deliver Securities for any purpose expressly permitted by and in
accordance with procedures described in a Fund's Prospectus or
resolution adopted by its Board of Trustees signed by an Authorized
Person and certified by the Secretary of the Trust; and
16. Deliver Securities owned by a Fund or any other proper business
purpose, but only upon receipt of, in addition to Written
Instructions, a certified copy of a resolution of the Board of
Trustees signed by an Authorized Person and certified by the
Secretary of the Trust, specifying the Securities to be delivered,
setting forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper business purpose, and naming
the person or persons to whom delivery of such Securities shall be
made.
(h) Endorsement and Collection of Checks, Etc. The Custodian is hereby
------------------------------------------
authorized to endorse and collect all checks, drafts or other orders
for the payment of money received by the Custodian for the account of
a Fund; provided, however, that the Custodian shall not be liable
pursuant to this Agreement for any money, whether or not represented
by check, draft, or other instrument for the payment of money,
received by it on behalf of the Fund until the Custodian actually
receives and collects such money directly or by the final crediting of
the account representing the Fund's interest in the Book-Entry System
or the Depository.
5. Purchase and sale of Investments of a Fund.
------------------------------------------
(a) Promptly after each purchase of Securities for a Fund, the Fund shall
deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, Written Instructions
and (ii) with respect to each
9
<PAGE>
purchase of Money Market Securities, either Written Instructions or
Oral Instructions, in either case specifying with respect to each
purchase: (1) the name of the issuer and the title of the Securities;
(2) the number of shares or the principal amount purchased and accrued
interest, if any; (3) the date of purchase and settlement; (4) the
purchase price per unit; (5) the total amount payable upon such
purchase; (6) the name of the person from whom or the broker through
whom the purchase was made, if any; (7) whether or not such purchase
is to be settled through the Book-Entry System or a Depository; and
(8) whether the Securities purchased are to be deposited in the Book-
Entry System or Depository; and (8) whether the Securities purchased
are to be deposited in the Book-Entry System or a Depository. The
Custodian shall receive the Securities purchased by or for the Fund
and upon receipt of Securities or, as appropriate, a copy of the
broker's or dealer's confirmation or payee's invoice, shall pay out of
the monies held for the account of the Fund the total amount payable
upon such purchase, provided that the same conforms to the total
amount payable as set forth in such Written or Oral Instructions.
(b) Promptly after each sale of Securities of a Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities
which are not Money Market Securities, Written Instructions, and (ii)
with respect to each sale of Money Market Securities, either Written
Instructions or Oral Instructions, in either case specifying with
respect to such sale: (1) the name of the issuer and the title of the
Securities; (2) the number of shares or principal amount sold, and
accrued interest, if any; (3) the date of sale; (4) the sale price per
unit; (5) the total amount payable to the Fund upon such sale; (6) the
name of the broker through whom or the person to whom the sale was
made; and (7) whether or not such sale is to be settled through the
Book-Entry System or a Depository. The Custodian shall deliver or
cause to be delivered the Securities to the broker or other person
designated by the Fund upon receipt for the total amount payable to
the Fund upon such sale, provided that the same conforms to the total
amount payable to the Fund as set forth in such Written or Oral
Instructions. Subject to the foregoing, the Custodian may accept
payment in such form as shall be satisfactory to it, and is customary
among dealers in Securities, and may deliver Securities and arrange
for payment in accordance with the customs prevailing among dealers in
Securities.
6. Lending of Securities.
---------------------
(a) If the Trust is permitted by the terms of its Declaration of Trust
and, as disclosed in its Prospectus to lend Securities, within 24
hours after each loan of Securities, a Fund, shall deliver to the
Custodian Written Instructions specifying with respect to each such
loan: (i) the name of the issuer and the title of the Securities; (ii)
the number of shares or the principal amount loaned;
10
<PAGE>
(iii) the date of loan and delivery; (iv) the total amount to be
delivered to the Custodian and specifically allocated against the loan
of the Securities, including the amount of cash collateral and the
premium, if any, separately identified; (v) the name of the broker,
dealer or financial institution to which the loan was made; and (vi)
whether the Securities loaned are to be delivered through the Book-
Entry System or a Depository.
(b) Promptly after each termination of a loan of Securities, a Fund shall
deliver to the Custodian Written Instructions specifying with respect
to each such loan termination and return of Securities: (i) the name
of the issuer and the title of the Securities to be returned; (ii) the
number of shares or the principal amount to be returned; (iii) the
date of termination; (iv) the total amount to be delivered by the
Custodian (including the cash collateral for such Securities minus any
offsetting credits as described in said Written Instructions); (v) the
name of the broker, dealer or financial institution from which the
Securities will be returned from the broker, dealer or financial
institution to which such Securities were loaned and upon receipt
thereof shall pay the total amount payable upon such return of
Securities as set forth in the Written Instructions. Securities
returned to the Custodian shall be held as they were prior to such
loan.
7. Payment of Dividends or Distributions.
-------------------------------------
(a) The Trust shall furnish to the Custodian Written Instructions (i)
authorizing the declaration of dividends or distributions with respect
to a Fund on a specified periodic basis and specifying the date of the
declaration of such dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to payment
shall be determined, and the total amount payable to the Transfer
Agent on the payment date, or (ii) setting forth the date of
declaration of any distribution by the Fund, the date of payment shall
be determined, and the total amount payable to the Transfer Agent on
the payment date.
(b) Upon the payment specified in such Written Instructions, the Custodian
shall pay to the Transfer Agent out of monies specifically allocated
to and held for the account of a Fund the total amount payable to the
Transfer Agent. In lieu of paying the Transfer Agent cash dividends
and distributions, the Custodian may arrange for the direct payment of
cash dividends and distributions to Shareholders by the Custodian in
accordance with such procedures and controls as are mutually agreed
upon from time to time by and among the Trust, the Custodian and the
Transfer Agent.
8. Sale and Redemption of Shares of the Trust.
------------------------------------------
11
<PAGE>
(a) Whenever a Fund shall sell any Shares, the Fund shall deliver or cause to
be delivered to the Custodian Written Instructions duly specifying:
1. The number of Shares sold, trade date, and price; and
2. The amount of money to be received by the Custodian for the sale of
such Shares.
The Custodian understands and agrees that Written Instructions may be
furnished subsequent to the purchase of Shares of the Fund and that the
information contained therein will be derived from the sales of Shares as
reported to the Fund by the Transfer Agent.
(b) Upon receipt of such money from the Transfer Agent, the Custodian shall
credit such money to the separate account of the Fund.
(c) Upon issuance of any Shares in accordance with the foregoing provisions of
this Section 8, the Custodian shall pay all original issue or other taxes
required to be paid in connection with such issuance upon the receipt of
Written Instructions specifying the amount to be paid.
(d) Except as provided hereafter, whenever any Shares are redeemed, the Fund
shall cause the Transfer Agent to promptly furnish to the Custodian Written
Instructions, specifying:
1. The number of Shares redeemed; and
2. The amount to be paid for the Shares redeemed.
The Custodian further understands that the information contained in such
Written Instructions will be derived from the redemption of Shares as
reported to the Fund by the Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting forth the number of
Shares received by the Transfer Agent for redemption and that such Shares
are valid and in good form for redemption, the Custodian shall make payment
to the Transfer Agent of the total amount specified in Written Instructions
issued pursuant to paragraph (d) of this Section 8. In lieu of paying the
Transfer Agent said redemption proceeds as stated, the Custodian may
arrange for the direct payment of said proceeds to Shareholders by the
Custodian in accordance with such procedures and controls as are mutually
agreed upon from time to time by and among the Trust, the Custodian and the
Transfer Agent.
(f) Notwithstanding the above provision regarding the redemption of Shares,
whenever such Shares are redeemed pursuant to any check redemption
privilege which may from time to time be offered by the Fund, the
Custodian,
12
<PAGE>
unless otherwise instructed by Written Instructions, shall honor the check
presented as part of such check redemption privilege out of the monies
specifically allocated to the Fund in such advice for such purpose.
9. Indebtedness.
------------
(a) The Trust will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which a Fund borrows money, a notice or
undertaking in the form currently employed by any bank setting forth
the amount which such bank will loan to the Fund and the amount of
collateral, if any, required for such loan. The Trust shall promptly
deliver to the Custodian Written Instructions stating with respect to
each such borrowing: (i) the name of the bank; (ii) the amount and
terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the Fund, or
other loan agreement or evidence of indebtedness; (iii) the time and
date, if known, on which the loan is to be entered into (the
"Borrowing date"); (iv) the date on which the loan becomes due and
payable; (v) the total amount payable to the Fund on the Borrowing
Date; (vi) the market value of Securities, if any, to be delivered as
collateral for such loan, including the name of the issuer, the title
and the number of shares or the principal or other amount of any
particular Securities; (vii) whether the Custodian is to deliver such
collateral through the Book-Entry System or a Depository; and (viii) a
statement that such loan is in conformance with the 1940 Act and the
Fund's Prospectus.
(b) Upon receipt of the Written Instructions referred to in subparagraph
(a) above, the Custodian shall deliver on the Borrowing Date the
specified collateral (if any) against delivery by the lending bank of
the total amount of the loan payable, provided that the same conforms
to the total amount payable as set forth in the Written Instructions.
The Custodian may, at the option of the lending bank (unless the
lending bank has not been appointed a custodian or sub-custodian of
the Fund's assets, in which case the Custodian must), keep any such
collateral in its possession, but such collateral shall be subject to
all rights therein given the lending bank by virtue of any promissory
note or loan agreement. The Custodian shall deliver as additional
collateral in the same manner as directed by the Fund from time to
time such Securities specifically allocated to such Fund as may be
specified in Written Instructions to collateralize further any
transaction described in this Section 9. The Fund shall cause all
Securities released from collateral status be returned directly to the
Custodian, and the Custodian shall receive from time to time such
return of collateral as may be tendered to it. In the event that the
Trust fails to specify in Written Instructions all of the information
required by this Section 9, the Custodian shall not be under any
obligation to deliver any Securities. Collateral returned to the
Custodian shall be held hereunder as it was prior to being used as
collateral.
13
<PAGE>
10. Persons Having Access to Assets of the Fund.
-------------------------------------------
(a) No Trustee, officer, employee or agent of the Trust, and no officer,
Director, employee or agent of a Fund's investment advisers, or any
sub-investment adviser of a Fund, or of a Fund's administrator, shall
have physical access to the assets of the Fund held by the Custodian
or be authorized or permitted to withdraw any investments of the Fund,
nor shall the Custodian deliver any assets of the Fund to any such
person. No officer, director, employee or agent of the Custodian who
holds any similar position with a Fund's investment advisers, with any
sub-investment adviser of a Fund or with a Fund's administrator shall
have access to the assets of the Fund.
(b) The individual employees of the Custodian duly authorized by the
Board of Directors of the Custodian to have access to the assets of
the Funds are listed in the certification annexed hereto as Appendix
A. The Custodian shall advise the Funds of any change in the
individuals authorized to have access to the assets of the Fund by
written notice to the Fund accompanied by a certified copy of the
authorizing resolution of the Custodian's Board of Directors approving
such change.
(c) Nothing in this Section 10 shall prohibit any officer, employee or
agent of the Company, or any officer, director, employee or agent of
the investment advisers, of any sub-investment adviser of the Funds or
of the Funds' administrator, form giving Oral Instructions or Written
Instructions to the Custodian or executing a Certificate so long as it
does not result in delivery of or access to assets of a Fund
prohibited by paragraph (a) of this Section 10.
11. Concerning the Custodian.
------------------------
(a) Standard of Conduct. In the performance of its duties hereunder, the
-------------------
Custodian shall be obligated to exercise care and diligence and to act
in good faith and to use its best efforts within reasonable limits to
insure the accuracy and completeness of all services under this
Agreement. Except as otherwise provided herein, neither the Custodian
nor its nominee shall be liable for any loss or damage, including
counsel fees, resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its
negligence, misfeasance or willful misconduct or that of its employees
or agents. The Custodian may, with respect to questions of law, apply
for and obtain the advice and opinion of counsel to the Trust or of
its own counsel, at the expense of the Trust, and shall be fully
protected with respect to anything done or omitted by it in good faith
in conformity with such advice or opinion. The Custodian shall be
liable to the Funds for any loss or damage resulting form the use of
the Book-Entry System or a Depository arising by reason of
14
<PAGE>
any negligence, misfeasance or willful misconduct on the part of the
custodian or any of its employees or agents.
(b) Limit of Duties. Without limiting the generality of the foregoing, the
---------------
Custodian shall be under no duty or obligation to inquire into, and shall
not be liable for:
1. The validity of the issue of any Securities purchased by the Funds,
the legality of the purchase thereof, or the propriety of the amount
paid therefor;
2. The legality of the sale of any Securities by the Funds or the
propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Shares, or the sufficiency
of the amount to be received therefor;
4. The legality of the redemption of any Shares, or the propriety of the
amount to be paid therefor;
5. The legality of the declaration or payment of any distribution of
any Fund; or
6. The legality of any borrowing.
(c) No Liability Until Receipt. The Custodian shall not be liable for, or
--------------------------
considered to be the Custodian of, any money, whether or not represented by
any check, draft, or other instrument for the payment of money, received by
it on behalf of a Fund until the Custodian actually receives and collects
such money directly or by the final crediting of the account representing
the Fund's interest in the Book-Entry System or a Depository.
(d) Amounts Due from Transfer Agent. The Custodian shall not be under any duty
-------------------------------
or obligation to take action to effect collection of any amount due to the
funds from the Transfer Agent nor to take any action to effect payment or
distribution by the Transfer Agent of any amount paid by the Custodian to
the Transfer Agent in accordance with this Agreement.
(e) Collection Where Payment Refused. The Custodian shall not be under any
--------------------------------
duty or obligation to take action to effect collection of any amount, if
the Securities upon which such amount is payable are in default, or if
payment is refused after the due demand or presentation, unless and until
(i) it shall be directed to take such action by a Certificate and (ii) it
shall be assured to its satisfaction of reimbursement of its costs and
expenses in connection with any
15
<PAGE>
such action. The Custodian shall give the Funds prompt notice of each such
event.
(f) Appointment of Sub-Custodians. In connection with its duties under this
-----------------------------
Agreement, the Custodian may, at its own expense, enter into sub-custodian
agreements with other domestic banks or trust companies for the receipt of
certain securities and cash to be held by the Custodian for the accounts of
the Funds pursuant to this Agreement; provided that each such bank or trust
company complies with all relevant provisions of the 1940 Act, applicable
state securities laws and the rules and regulations thereunder. The
custodian shall remain responsible for the performance of all of its duties
under this Agreement and shall hold the Trust harmless from the acts and
omissions, under the standards of care provided for herein, of any domestic
bank or trust company that it might choose pursuant to this Section. The
parties hereto acknowledge that they intend to enter into a Sub-Custodian
Agreement with Morgan Stanley Trust Company or another institution
agreeable to them providing for the custody of certain securities outside
the United States in accordance with Rule 17f-5 under the 1940 Act.
(g) No Duty to Ascertain Authority. The Custodian shall not be under any duty
------------------------------
or obligation to ascertain whether any Securities at any time delivered to
or held by it for the Fund are such as may properly be held by the Fund
under the provisions of the Declaration of Trust and the Prospectus.
(h) Reliance on Certificates and Instructions. The custodian shall be entitled
-----------------------------------------
to rely upon any Certificate, notice or other instrument in writing
received by the Custodian and reasonably believed by the Custodian to be
genuine and to be signed by two officers of the Trust or Authorized
Persons. The Custodian shall be entitled to rely upon any Written or Oral
Instructions actually received by the Custodian pursuant to the applicable
Sections of this Agreement and reasonably believed by the Custodian to be
genuine and to be given by an Authorized Person in the case of Oral
Instructions or two Authorized Persons in the case of Written Instructions.
The Trust agrees to forward the Custodian Written Instructions form two
Authorized Persons confirming such Oral Instructions in such manner so that
such Written Instructions are received by the Custodian, whether by hand or
delivery, telex or otherwise, by the close of business on the same day that
such Oral Instructions are given to the Custodian. The Trust agrees that
the fact that such confirming instructions are not received by the
custodian shall in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the Trust. The
Trust agrees that the Custodian shall incur no liability to the Trust in
acting upon Oral Instructions given to the Custodian hereunder concerning
such transactions provided such instructions reasonably appear to have been
received from a duly Authorized Person.
16
<PAGE>
(i) Books and Records. The books and records pertaining to the Trust
-----------------
which are now or hereafter in the possession of the Custodian shall be
the property of the Trust. Such books and records shall be prepared and
maintained as required by the 1940 Act and other applicable securities
laws and regulations and shall, to the extent practicable, be
maintained separately for each Fund of the Trust. The Trust, the
Trust's authorized representatives and auditors shall have access to
such books and records at all times during the Custodian's normal
business hours. Upon the reasonable request of the Trust, copies of any
such books and records shall be provided by the custodian to the Trust
or the Trust's authorized representatives at the Trust's expense.
The Custodian shall provide the Trust with any report obtained by the
Custodian on the system of internal accounting control of the Book-
Entry System or a Depository and with such reports on its own systems
of internal accounting control in accordance with the requirements of
the 1940 Act and as the Trust may reasonably request from time to time.
(j) Cooperation with Accountants. The Custodian shall cooperate with the
----------------------------
Trust's independent public accountants and shall take all reasonable
action in the performance of its obligations under this Agreement to
assure that the necessary information is made available to such
accountants for the expression of their opinions, as such may be
required from time to time by the Trust.
(k) Compliance with Governmental Rules and Regulations. The Custodian
--------------------------------------------------
shall comply with all applicable requirements of the federal securities
and commodities laws, and any other laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties
to be performed by the custodian hereunder. Except as specifically set
forth herein, the Custodian assumes no responsibility for such
compliance by the Trust.
12. Term and Termination.
--------------------
(a) This Agreement shall become effective on the date first set forth
above (the "Effective Date") and shall continue in effect thereafter
until terminated pursuant to paragraph (b) of this Section 12.
(b) Either of the parties hereto may terminate this Agreement at any time
by giving to the other party a notice in writing specifying the date
of such termination, which shall be not less than 60 days after the
date of receipt of such notice. In the event such notice is given by
the Trust, it shall be accompanied by a certified resolution of the
Board of Trustees of the Trust, electing to terminate this Agreement
and designating a successor custodian or custodians, which shall be a
person qualified to so act under the 1940 Act.
17
<PAGE>
In the event such notice is given by the Custodian, the Trust shall,
on or before the termination date, deliver to the Custodian a
certified resolution of the Board of Trustees of the Trust,
designating a successor custodian or custodians. In the absence of
such designation by the Trust, the Custodian may designate a successor
custodian, which shall be a person qualified to so act under the 1940
Act. If the Trust fails to designate a successor custodian, the Trust
shall upon the specified in the notice of termination of this
Agreement and upon the delivery by the Custodian of all Securities
(other than Securities held in the Book-Entry System and other
securities held in uncertificated form which cannot be delivered to
the Trust) and monies then owned by the Trust, be deemed to be its own
custodian and the Custodian shall thereby be relieved of all duties
and responsibilities pursuant to this Agreement, other than the duty
with respect to Securities held in the Book-Entry System and other
uncertificated securities which cannot be delivered to the Trust.
(c) Upon the date set forth in such notice under paragraph (b) of this
Section 12, this Agreement shall terminate to the extent specified in
such notice, and the Custodian shall upon receipt of a notice of
acceptance by the successor custodian deliver directly to the
successor custodian on that date all Securities and monies then held
by the Custodian on behalf of the Trust, after deducting all fees,
expenses and other amounts the payment or reimbursement of which it
shall then be entitled.
13. Miscellaneous.
-------------
(a) Annexed hereto as Appendix A is a certification signed by two of the
present officers of the Trust setting forth the names and the
signatures of the present Authorized Persons. The Trust agrees to
furnish to the Custodian a new certification in similar form in the
event that any such present Authorized Person ceases to be such an
Authorized Person or in the event that other or additional Authorized
Persons are elected or appointed. Until such new certification shall
be received, the Custodian shall be fully protected in acting under
the provisions of this Agreement upon Oral Instructions or signatures
of the present Authorized Persons as set forth in the last delivered
certification.
(b) Annexed hereto as Appendix B is a certification signed by the present
officers of the Trust setting forth the names and the signatures of
the three present officers of the Trust. The Trust agrees to furnish
to the Custodian a new certification in similar form in the event any
such present officer ceases to be an officer of the Trust or in the
event that other or additional officers are elected or appointed.
Until such new certification shall be received, the Custodian shall be
fully protected in acting under the provisions of this Agreement upon
the signature of the officers as set forth in the last delivered
certification.
18
<PAGE>
(c) Any notice or other instrument in writing, authorized or required by this
Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at
411 West Lafayette, 2nd Floor MasterTrust Mail Code 3438, Detroit, Michigan
48226, Attn: Julie Elya or at such other place as the Custodian may from
time to time designate in writing.
(d) Any notice or other instrument in writing, authorized or required by this
Agreement to be given to the Trust, shall be sufficiently given if
addressed to the Company and mailed or delivered to Lee P. Munder,
President, The Munder Framlington Funds Trust, 480 Pierce Street, Suite
300, Birmingham, Michigan 48009, or to such other place as the Trust may
from time to time designate in writing.
(e) This Agreement may not be amended or modified in any manner except by a
written agreement executed by both parties with the same formality as this
Agreement, (i) authorized and approved by a resolution of the Board of
Trustees of the Trust, including a majority of the members of the Board of
Directors of the Company who are not "interested persons" of the Trust (as
defined in the 1940 Act), or (ii) authorized and approved by such other
procedures as may be permitted or required by the 1940 Act.
(f) This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Trust without the
written consent of the Custodian, or by the Custodian without the written
consent of the Trust authorized or approved by a resolution of the Board of
Trustees of the Trust, and any attempt assignment without such written
consent shall be null and void.
(g) This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts.
(h) The captions of the Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(i) This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective representatives duly authorized as of the day and
years first above written.
THE MUNDER FRAMLINGTON FUNDS TRUST
By: /s/ Lisa Anne Rosen
----------------------------------------
Name: Lisa Anne Rosen
Title: Secretary and Assistant Treasurer
COMERCIA BANK
By: /s/ Julie Elya
----------------------------------------
Name: Julie Elya
Title: Vice President
20
<PAGE>
SCHEDULE A
LIST OF FUNDS
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
COMERCIA BANK
By: /s/ Julie Elya
-----------------------------
Title: Vice President
THE MUNDER FRAMLINGTON FUNDS TRUST
By: /s/ Lisa Anne Rosen
-----------------------------
Title: Secretary and Assistant Treasurer
21
<PAGE>
SCHEDULE B
FEE SCHEDULE
Annual fee
- ----------
Computed daily and payable monthly based on the aggregate average daily net
assets of The Munder Framlington Funds Trust.
<TABLE>
<S> <C>
First $100 million of net assets .03%
Next $500 million of net assets .02%
Over $600 million of net assets .01%
</TABLE>
Transition Charges
- ------------------
<TABLE>
<S> <C>
DTC Trades $2.00 per trade
Fed Book Entry Trade $12.00 per trade
U.S. Physical Trade $25.00 per trade
</TABLE>
22
<PAGE>
APPENDIX A
I, Lisa A. Rosen, Secretary of The Munder Framlington Funds Trust, a
Massachusetts Business Trust (the "Trust") do hereby certify that:
The individuals shown on Exhibit A attached hereto have been duly
authorized as Authorized Persons to give Oral Instructions and Written
Instructions on behalf of the Trust and the signatures set forth opposite their
respective names are their true and correct signatures.
The Munder Framlington Funds Trust
/s/ Lisa A. Rosen
----------------------------------
Lisa A. Rosen, Secretary
23
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
NAME SIGNATURE
<S> <C>
Steven Albrecht /s/ Steven Albrecht
--------------------------------------------
Joseph Aceto
Leonard J. Barr II /s/ Leonard Barr
--------------------------------------------
Kristopher Belken
Stephanie Benson
Chelia Cicione
Ann Conrad /s/ Ann Conrad
--------------------------------------------
Phil Dano
Patti DePace
John E. Dicker
Arnold Douville
Edward Eberle
Sharon Fayolle /s/ Sharon Fayolle
--------------------------------------------
Terry H. Gardner /s/ Terry H. Gardner
--------------------------------------------
Cheryl Z. Germeroth /s/ Cheryl Z. Germeroth
--------------------------------------------
Michael Georgio
Wendy Harries
Allan Harris
Otto G. Hinzmann, Jr. /s/ Otto G. Hinzmann, Jr.
--------------------------------------------
Peter Hoglund /s/ Peter Hoglund
--------------------------------------------
Brian T. Jeffries
Todd Johnson
Anne Kennedy /s/ Anne Kennedy
--------------------------------------------
Richard Merry
Theodore Miller
Lee P. Munder /s/ Lee P. Munder
--------------------------------------------
Greg Prost /s/ Greg Prost
--------------------------------------------
Ronald Reed
David Rever /s/ David Rever
--------------------------------------------
D. Gary Richardson /s/ D. Gary Richardson
--------------------------------------------
James Robinson /s/ James Robinson
--------------------------------------------
Lisa A. Rosen /s/ Lisa A. Rosen
--------------------------------------------
Peter Root /s/ Peter Root
--------------------------------------------
Robert Samrah
Kenneth Schluchter
Gerald Seizert /s/ Gerald Seizert
--------------------------------------------
Kurt Stalzer
Nicola Thompson
Susan Verdun /s/ Susan Verdun
--------------------------------------------
Joseph A. Viselli
Jeffrey A. Wrona
</TABLE>
24
<PAGE>
APPENDIX B
I, Lisa A. Rosen, Secretary of The Munder Framlington Funds Trust, a
Massachusetts Business Trust (the "Trust"), do hereby certify that:
The following individuals serve in the following positions with the Trust
and each individual has been duly elected or appointed to each such position and
qualified therefor in conformity with the Trust's Declaration of Trust and the
signatures set forth opposite their respective names are their true and correct
signatures:
<TABLE>
<CAPTION>
NAME POSITION SIGNATURE
<S> <C> <C>
Charles W. Elliott Chairman of the Board of
Trustees
John D. Rakolta, Jr. Vice Chairman
Lee P. Munder President /s/ Lee P. Munder
-----------------------------
Vice President Chief
Terry H. Gardner Financial Officer and /s/ Terry H. Gardner
-----------------------------
Treasurer
Leonard J. Barr II Vice President /s/ Leonard J. Barr II
-----------------------------
Ann F. Putallaz Vice President /s/ Ann F. Putallaz
-----------------------------
James C. Robinson Vice President /s/ James C. Robinson
-----------------------------
Gerald L. Seizert Vice President /s/ Gerald L. Seizert
-----------------------------
Paul D. Tobias Vice President /s/ Paul D. Tobias
-----------------------------
Elyse G. Essick Vice President /s/ Elyse G. Essick
-----------------------------
Richard H. Rose Assistant Treasurer
Lisa A. Rosen Secretary and Assistant /s/ Lisa A. Rosen
Treasurer -----------------------------
Teresa M.R. Hamlin Assistant Secretary
</TABLE>
25
<PAGE>
Exhibit 8(c)
Comerica Bank
One Detroit Center
500 Woodward Avenue
Detroit, Michigan 48226
Ladies and Gentlemen:
Reference is made to the Custody Agreement between us dated as of November
1, 1996 (the "Agreement").
Pursuant to the Agreement, this letter is to provide notice of the creation
of an additional investment portfolio of The Munder Framlington Funds Trust,
namely the Munder Framlington Global Financial Services Fund (the "New
Portfolio").
We request that you act as Custodian under the Agreement with respect to
the New Portfolio.
Please indicate your acceptance of the foregoing by executing two copies of
this Agreement, returning one to the Fund and retaining one copy for your
records.
Very truly yours,
The Munder Framlington Funds Trust
By: /s/ Terry H. Gardner
------------------------------
Accepted:
Comerica Bank
By: /s/ Scott D. Seibert
------------------------------
Date: February 24, 1998
<PAGE>
Exhibit 8(e)
State Street Bank and Trust Company
1776 Heritage Drive, AFB
North Quincy, MA 02171
Ladies and Gentlemen:
Reference is made to the Sub-Custodian Contract between us dated as of
October 1, 1997 (the "Agreement").
Pursuant to the Agreement, this letter is to provide notice of the creation
of an additional investment portfolio of The Munder Framlington Funds Trust,
namely the Munder Framlington Global Financial Services Fund (the "New
Portfolio").
In accordance with the Additional Portfolios provision of Section 16 of the
Agreement, we request that you act as Sub-Custodian with respect to the New
Portfolio.
Please indicate your acceptance of the foregoing by executing two copies of
this Agreement, returning one to the Fund and retaining one copy for your
records.
Very truly yours,
The Munder Framlington Funds Trust
By: /s/ Terry H. Gardner
-------------------------------
Accepted:
State Street Bank and Trust Company
By: /s/ Nick Bonos
--------------------------------
Comerica Bank
By: /s/ Scott D. Seibert
-------------------------------
Date: February 24, 1998
<PAGE>
Exhibit 8(f)
AMENDMENT TO SUB-CUSTODIAN CONTRACT
This Amendment to the Sub-Custodian Contract is made as of *[date] by and
between The Munder Framlington Funds Trust (the "Fund"), Comerica Bank (the
"Custodian") and State Street Bank and Trust Company (the "Sub-Custodian").
Capitalized terms used in this Amendment without definition shall have the
respective meanings given to such terms in the Sub-Custodian Contract referred
to below.
WHEREAS, the Fund, the Custodian and the Sub-Custodian entered into a Sub-
Custodian Contract dated as of October 1, 1997 (as amended and in effect from
time to time, the "Contract"); and
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets, and the Fund has made Munder Framlington Emerging Markets
Fund, Munder Framlington Healthcare Fund, Munder Framlington International
Growth Fund and Munder Framlington Global Financial Services Fund subject to the
Contract (each such series, together with all other series subsequently
established by the Fund and made subject to the Contract in accordance with the
terms thereof, shall be referred to as a "Portfolio", and, collectively, the
"Portfolios"); and
WHEREAS, the Fund, the Custodian and the Sub-Custodian desire to amend
certain provisions of the Contract to reflect revisions to Rule 17f-5 ("Rule
17f-5") promulgated under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund, the Custodian and the Sub-Custodian desire to amend and
restate certain other provisions of the Contract relating to the custody of
assets of each of the Portfolios held outside of the United States.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter contained, the parties hereby agree to amend the
Contract, pursuant to the terms thereof, as follows:
I. Article 3 of the Contract is hereby deleted, and Articles 4 through 22 of
the Contract are hereby renumbered, as of the effective date of this
Amendment, as Articles 5 through 23, respectively.
II. New Articles 3 and 4 of the Contract are hereby added, as of the effective
date of this Amendment, as set forth below.
1
<PAGE>
3. THE SUB-CUSTODIAN AS FOREIGN CUSTODY MANAGER.
--------------------------------------------
3.1. DEFINITIONS.
-----------
Capitalized terms in this Article 3 shall have the following meanings:
"Country Risk" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's political environment; economic and financial infrastructure
(including any Mandatory Securities Depositories operating in the country);
prevailing or developing custody and settlement practices; and laws and
regulations applicable to the safekeeping and recovery of Foreign Assets held in
custody in that country.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule
17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as
defined in Rule 17f-5), a bank holding company meeting the requirements of an
Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of the U.S. Securities and Exchange Commission (the "SEC")), or a foreign
branch of a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the
requirements of a custodian under Section 17(f) of the 1940 Act, except that the
term does not include Mandatory Securities Depositories.
"Foreign Assets" means any of the Portfolios' investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Portfolios'
transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2) of Rule
17f-5.
"Mandatory Securities Depository" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used if the
Fund determines to place Foreign Assets in a country outside the United States
(i) because required by law or regulation; (ii) because securities cannot be
withdrawn from such foreign securities depository or clearing agency; or (iii)
because maintaining or effecting trades in securities outside the foreign
securities depository or clearing agency is not consistent with prevailing or
developing custodial or market practices.
3.2. DELEGATION TO THE SUB-CUSTODIAN AS FOREIGN CUSTODY MANAGER.
----------------------------------------------------------
The Fund, by resolution adopted by its Board of Trustees (the "Board"), hereby
delegates to the Sub-Custodian, subject to Section (b) of Rule 17f-5, the
responsibilities set forth in this Article 3 with respect to Foreign Assets held
outside the United States, and the Sub-Custodian hereby accepts such delegation,
as Foreign Custody Manager of each Portfolio.
2
<PAGE>
3.3. COUNTRIES COVERED.
-----------------
The Foreign Custody Manager shall be responsible for performing the delegated
responsibilities defined below only with respect to the countries and custody
arrangements for each such country listed on Schedule A to this Contract, which
list of countries may be amended from time to time by the Fund with the
agreement of the Foreign Custody Manager. The Foreign Custody Manager shall
list on Schedule A the Eligible Foreign Custodians selected by the Foreign
Custody Manager to maintain the assets of each Portfolio, which list of Eligible
Foreign Custodians may be amended from time to time in the sole discretion of
the Foreign Custody Manager. Mandatory Securities Depositories are listed on
Schedule B to this Contract, which Schedule B may be amended from time to time
by the Foreign Custody Manager. The Foreign Custody Manager will provide
amended versions of Schedules A and B in accordance with Section 3.7 of this
Article 3.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to open
an account, or to place or maintain Foreign Assets, in a country listed on
Schedule A, and the fulfillment by the Fund of the applicable account opening
requirements for such country, the Foreign Custody Manager shall be deemed to
have been delegated by the Board responsibility as Foreign Custody Manager with
respect to that country and to have accepted such delegation. Execution of this
Amendment by the Fund shall be deemed to be a Proper Instruction to open an
account, or to place or maintain Foreign Assets, in each country listed on
Schedule A in which the Sub-Custodian has previously placed or currently
maintains Foreign Assets pursuant to the terms of the Contract. Following the
receipt of Proper Instructions directing the Foreign Custody Manager to close
the account of a Portfolio with the Eligible Foreign Custodian selected by the
Foreign Custody Manager in a designated country, the delegation by the Board to
the Sub-Custodian as Foreign Custody Manager for that country shall be deemed to
have been withdrawn and the Sub-Custodian shall immediately cease to be the
Foreign Custody Manager of the Portfolio with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice to the
Fund. Thirty days (or such longer period as to which the parties agree in
writing) after receipt of any such notice by the Fund, the Sub-Custodian shall
have no further responsibility as Foreign Custody Manager to a Portfolio with
respect to the country as to which the Sub-Custodian's acceptance of delegation
is withdrawn.
3
<PAGE>
3.4. SCOPE OF DELEGATED RESPONSIBILITIES.
-----------------------------------
3.4.1. SELECTION OF ELIGIBLE FOREIGN CUSTODIANS.
----------------------------------------
Subject to the provisions of this Article 3, the Foreign Custody Manager may
place and maintain the Foreign Assets in the care of the Eligible Foreign
Custodian selected by the Foreign Custody Manager in each country listed on
Schedule A, as amended from time to time.
In performing its delegated responsibilities as Foreign Custody Manager to place
or maintain Foreign Assets with an Eligible Foreign Custodian, the Foreign
Custody Manager shall determine that the Foreign Assets will be subject to
reasonable care, based on the standards applicable to custodians in the country
in which the Foreign Assets will be held by that Eligible Foreign Custodian,
after considering all factors relevant to the safekeeping of such assets,
including, without limitation the factors specified in Rule 17f-5(c)(1).
3.4.2. CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS.
------------------------------------------
The Foreign Custody Manager shall determine that the contract (or the rules or
established practices or procedures in the case of an Eligible Foreign Custodian
that is a foreign securities depository or clearing agency) governing the
foreign custody arrangements with each Eligible Foreign Custodian selected by
the Foreign Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).
3.4.3. MONITORING.
----------
In each case in which the Foreign Custody Manager maintains Foreign Assets with
an Eligible Foreign Custodian selected by the Foreign Custody Manager, the
Foreign Custody Manager shall establish a system to monitor (i) the
appropriateness of maintaining the Foreign Assets with such Eligible Foreign
Custodian and (ii) the contract governing the custody arrangements established
by the Foreign Custody Manager with the Eligible Foreign Custodian (or the rules
or established practices and procedures in the case of an Eligible Foreign
Custodian selected by the Foreign Custody Manager which is a foreign securities
depository or clearing agency that is not a Mandatory Securities Depository).
In the event the Foreign Custody Manager determines that the custody
arrangements with an Eligible Foreign Custodian it has selected are no longer
appropriate, the Foreign Custody Manager shall notify the Board in accordance
with Section 3.7 hereunder.
3.5. GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY.
--------------------------------------------------
For purposes of this Article 3, the Board shall be deemed to have considered and
determined to accept such Country Risk as is incurred by placing and maintaining
the
4
<PAGE>
Foreign Assets in each country for which the Sub-Custodian is serving as
Foreign Custody Manager of a Portfolio, and the Board shall be deemed to be
monitoring on a continuing basis such Country Risk to the extent that the Board
considers necessary or appropriate. The Fund, on behalf of the Portfolios, and
the Sub-Custodian each expressly acknowledge that the Foreign Custody Manager
shall not be delegated any responsibilities under this Article 3 with respect to
Mandatory Securities Depositories.
3.6. STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF A PORTFOLIO.
----------------------------------------------------------
In performing the responsibilities delegated to it, the Foreign Custody Manager
agrees to exercise reasonable care, prudence and diligence such as a person
having responsibility for the safekeeping of assets of management investment
companies registered under the 1940 Act would exercise.
3.7. REPORTING REQUIREMENTS.
----------------------
The Foreign Custody Manager shall report the withdrawal of the Foreign Assets
from an Eligible Foreign Custodian and the placement of such Foreign Assets with
another Eligible Foreign Custodian by providing to the Board amended Schedules A
or B at the end of the calendar quarter in which an amendment to either Schedule
has occurred. The Foreign Custody Manager shall make written reports notifying
the Board of any other material change in the foreign custody arrangements of
the Portfolios described in this Article 3 after the occurrence of the material
change.
3.8. REPRESENTATIONS WITH RESPECT TO RULE 17f-5.
------------------------------------------
The Foreign Custody Manager represents to the Fund that it is a U.S. Bank as
defined in section (a)(7) of Rule 17f-5.
The Fund represents to the Sub-Custodian that the Board has determined that it
is reasonable for the Board to rely on the Sub-Custodian to perform the
responsibilities delegated pursuant to this Contract to the Sub-Custodian as the
Foreign Custody Manager of each Portfolio.
3.9. EFFECTIVE DATE AND TERMINATION OF THE SUB-CUSTODIAN AS FOREIGN CUSTODY
----------------------------------------------------------------------
MANAGER.
-------
The Board's delegation to the Sub-Custodian as Foreign Custody Manager of a
Portfolio shall be effective as of the date hereof and shall remain in effect
until terminated at any time, without penalty, by written notice from the
terminating party to the non-terminating party. Termination will become
effective thirty days after receipt by the non-terminating party of such notice.
The provisions of Section 3.3 hereof shall govern the delegation to and
termination of the Sub-Custodian as Foreign Custody Manager of the Fund with
respect to designated countries.
5
<PAGE>
4. DUTIES OF THE SUB-CUSTODIAN WITH RESPECT TO PROPERTY OF THE PORTFOLIOS
----------------------------------------------------------------------
HELD OUTSIDE THE UNITED STATES.
------------------------------
4.1 DEFINITIONS.
-----------
Capitalized terms in this Article 4 shall have the following meanings:
"Foreign Securities System" means either a clearing agency or a securities
depository listed on Schedule A hereto or a Mandatory Securities Depository
listed on Schedule B hereto.
"Foreign Sub-Sub-Custodian" means a foreign banking institution serving as an
Eligible Foreign Custodian.
4.2. HOLDING SECURITIES.
------------------
The Sub-Custodian shall identify on its books as belonging to the Portfolios the
foreign securities held by each Foreign Sub-Sub-Custodian or Foreign Securities
System. The Sub-Custodian may hold foreign securities for all of its customers,
including the Portfolios, with any Foreign Sub-Sub-Custodian in an account that
is identified as belonging to the Sub-Custodian for the benefit of its
customers, provided however, that (i) the records of the Sub-Custodian with
----------------
respect to foreign securities of the Portfolios which are maintained in such
account shall identify those securities as belonging to the Portfolios and (ii),
to the extent permitted and customary in the market in which the account is
maintained, the Sub-Custodian shall require that securities so held by the
Foreign Sub-Sub-Custodian be held separately from any assets of such Foreign
Sub-Sub-Custodian or of other customers of such Foreign Sub-Sub-Custodian.
4.3. FOREIGN SECURITIES SYSTEMS.
--------------------------
Foreign securities shall be maintained in a Foreign Securities System in a
designated country only through arrangements implemented by the Foreign Sub-Sub-
Custodian in such country pursuant to the terms of this Contract.
4.4. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
---------------------------------------
4.4.1. DELIVERY OF FOREIGN ASSETS.
--------------------------
The Sub-Custodian or a Foreign Sub-Sub-Custodian shall release and deliver
foreign securities of a Portfolio held by such Foreign Sub-Sub-Custodian, or in
a Foreign Securities System account, only upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by the parties, and
only in the following cases:
6
<PAGE>
(i) upon the sale of such foreign securities for the Portfolio in
accordance with commercially reasonable market practice in the country
where such Assets are held or traded, including, without limitation:
(A) delivery against expectation of receiving later payment; or (B) in
the case of a sale effected through a Foreign Securities System, in
accordance with the rules governing the operation of the Foreign
Securities System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other similar
offers for foreign securities of the Portfolio;
(iv) to the issuer thereof or its agent when such foreign securities are
called, redeemed, retired or otherwise become payable;
(v) to the issuer thereof, or its agent, for transfer into the name of the
Sub-Custodian (or the name of the respective Foreign Sub-Sub-Custodian
or of any nominee of the Sub-Custodian or such Foreign Sub-Sub-
Custodian) or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate face
amount or number of units;
(vi) to brokers, clearing banks or other clearing agents for examination or
trade execution in accordance with market custom; provided that in any
--------
such case the Foreign Sub-Sub-Custodian shall have no responsibility
or liability for any loss arising from the delivery of such securities
prior to receiving payment for such securities except as may arise
from the Foreign Sub-Sub-Custodian's own negligence or willful
misconduct;
(vii) for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement;
(viii)in the case of warrants, rights or similar foreign securities, the
surrender thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities;
(ix) for delivery as security in connection with any borrowing by the Fund
requiring a pledge of assets by the Portfolio;
(x) in connection with trading in options and futures contracts, including
delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
7
<PAGE>
(xii) for any other proper purpose, but only upon receipt of, in addition
--- ----
to Proper Instructions, a copy of a resolution of the Board or of an
Executive Committee of the Board so authorized by the Board, signed by
an officer of the Fund and certified by its Secretary or an Assistant
Secretary that the resolution was duly adopted and is in full force
and effect (a "Certified Resolution"), specifying the Foreign Assets
to be delivered, setting forth the purpose for which such delivery is
to be made, declaring such purpose to be a proper corporate purpose,
and naming the person or persons to whom delivery of such Assets shall
be made.
4.4.2. PAYMENT OF PORTFOLIO MONIES.
---------------------------
Upon receipt of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Sub-Custodian shall pay out, or direct
the respective Foreign Sub-Sub-Custodian or the respective Foreign Securities
System to pay out, monies of a Portfolio in the following cases only:
(i) upon the purchase of foreign securities for the Portfolio, unless
otherwise directed by Proper Instructions, by (A) delivering money to
the seller thereof or to a dealer therefor (or an agent for such
seller or dealer) against expectation of receiving later delivery of
such foreign securities; or (B) in the case of a purchase effected
through a Foreign Securities System, in accordance with the rules
governing the operation of such Foreign Securities System;
(ii) in connection with the conversion, exchange or surrender of foreign
securities of the Portfolio;
(iii) for the payment of any expense or liability of the Portfolio
including but not limited to the following payments: interest, taxes,
investment advisory fees, transfer agency fees, fees under this
Contract, legal fees, accounting fees, and other operating expenses;
(iv) for the purchase or sale of foreign exchange or foreign exchange
contracts for the Portfolio, including transactions executed with or
through the Sub-Custodian or its Foreign Sub-Sub-Custodians;
(v) in connection with trading in options and futures contracts, including
delivery as original margin and variation margin;
(vii) in connection with the borrowing or lending of foreign securities;
and
(viii)for any other proper purpose, but only upon receipt of, in addition
--- ----
to Proper Instructions, a Certified Resolution specifying the amount
of such
8
<PAGE>
payment, setting forth the purpose for which such payment is to be
made, declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom such payment is to be made.
4.4.3. MARKET CONDITIONS; MARKET INFORMATION.
-------------------------------------
Notwithstanding any provision of this Contract to the contrary, settlement and
payment for Foreign Assets received for the account of a Portfolio and delivery
of Foreign Assets maintained for the account of a Portfolio may be effected in
accordance with the customary established securities trading or processing
practices and procedures in the country or market in which the transaction
occurs, including, without limitation, delivering Foreign Assets to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser or
dealer) with the expectation of receiving later payment for such Foreign Assets
from such purchaser or dealer.
The Sub-Custodian shall provide to the Board the information with respect to
custody and settlement practices in countries in which the Sub-Custodian employs
a Foreign Sub-Sub-Custodian, including without limitation information relating
to Foreign Securities Systems, described on Schedule C hereto at the time or
times set forth on such Schedule. The Sub-Custodian may revise Schedule C from
time to time, provided that no such revision shall result in the Board being
provided with substantively less information than had been previously provided
hereunder.
4.5. REGISTRATION OF FOREIGN SECURITIES.
----------------------------------
The foreign securities maintained in the custody of a Foreign Custodian (other
than bearer securities) shall be registered in the name of the Fund (on behalf
of the applicable Portfolio) or in the name of the Sub-Custodian or in the name
of any Foreign Sub-Sub-Custodian or in the name of any nominee of the foregoing,
and the Fund agrees to hold any such nominee harmless from any liability as a
holder of record of such foreign securities. The Sub-Custodian or a Foreign
Sub-Sub-Custodian shall not be obligated to accept securities on behalf of the
Fund (on behalf of the applicable Portfolio) under the terms of this Contract
unless the form of such securities and the manner in which they are delivered
are in accordance with reasonable market practice.
4.6. BANK ACCOUNTS.
-------------
The Sub-Custodian shall identify on its books as belonging to a Portfolio cash
(including cash denominated in foreign currencies) deposited with the Sub-
Custodian. Where the Sub-Custodian is unable to maintain, or market practice
does not facilitate the maintenance of, cash on the books of the Sub-Custodian,
a bank account or bank accounts opened and maintained outside the United States
on behalf of a Portfolio with a Foreign Sub-Sub-Custodian shall be subject only
to draft or order by the Sub-Custodian or such Foreign Sub-Sub-Custodian, acting
pursuant to the terms of this Contract to hold cash received by or from or for
the account of the Portfolio.
9
<PAGE>
4.7. COLLECTION OF INCOME.
--------------------
The Sub-Custodian shall use reasonable commercial efforts to collect all income
and other payments with respect to the Foreign Assets held hereunder to which a
Portfolio shall be entitled and shall credit such income, as collected, to the
Portfolio. In the event that extraordinary measures are required to collect such
income, the Fund and the Sub-Custodian shall consult as to such measures and as
to the compensation and expenses of the Sub-Custodian relating to such measures.
4.8. SHAREHOLDER RIGHTS.
------------------
With respect to the foreign securities held under this Article 4, the Sub-
Custodian will use reasonable commercial efforts to facilitate the exercise of
voting and other shareholder rights, subject always to the laws, regulations and
practical constraints that may exist in the country where such securities are
issued. The Fund acknowledges that local conditions, including lack of
regulation, onerous procedural obligations, lack of notice and other factors may
have the effect of severely limiting the ability of the Fund to exercise
shareholder rights.
4.9. COMMUNICATIONS RELATING TO FOREIGN SECURITIES.
---------------------------------------------
The Sub-Custodian shall transmit promptly to the Fund written information
(including, without limitation, pendency of calls and maturities of foreign
securities and expirations of rights in connection therewith) received by the
Sub-Custodian via the Foreign Sub-Sub-Custodians from issuers of the foreign
securities being held for the account of a Portfolio. With respect to tender or
exchange offers, the Sub-Custodian shall transmit promptly to the Fund written
information so received by the Sub-Custodian from issuers of the foreign
securities whose tender or exchange is sought or from the party (or its agents)
making the tender or exchange offer. The Sub-Custodian shall not be liable for
any untimely exercise of any tender, exchange or other right or power in
connection with foreign securities or other property of the Portfolio at any
time held by it unless (i) the Sub-Custodian or the respective Foreign Sub-Sub-
Custodian is in actual possession of such foreign securities or property and
(ii) the Sub-Custodian receives Proper Instructions with regard to the exercise
of any such right or power, and both (i) and (ii) occur at least three business
days prior to the date on which the Sub-Custodian is to take action to exercise
such right or power.
4.10. LIABILITY OF FOREIGN SUB-SUB-CUSTODIANS AND FOREIGN SECURITIES SYSTEMS.
----------------------------------------------------------------------
Each agreement pursuant to which the Sub-Custodian employs a Foreign Sub-Sub-
Custodian shall, to the extent possible, require the Foreign Sub-Sub-Custodian
to exercise reasonable care in the performance of its duties and, to the extent
possible, to indemnify, and hold harmless, the Sub-Custodian from and against
any loss, damage, cost, expense, liability or claim arising out of or in
connection with such Foreign Sub-Sub-Custodian's
10
<PAGE>
performance of such obligations. At the election of the Fund, the Fund shall be
entitled to be subrogated to the rights of the Sub-Custodian with respect to any
claims against a Foreign Sub-Sub-Custodian as a consequence of any such loss,
damage, cost, expense, liability or claim if and to the extent that the Fund and
any applicable Portfolio has not been made whole for any such loss, damage,
cost, expense, liability or claim.
4.11. TAX LAW.
-------
The Sub-Custodian shall have no responsibility or liability for any obligations
now or hereafter imposed on the Fund or the Sub-Custodian as custodian of the
Portfolios by the tax law of the United States or of any state or political
subdivision thereof. It shall be the responsibility of the Fund to notify the
Sub-Custodian of the obligations imposed on the Fund with respect to the
Portfolios or the Sub-Custodian as custodian of such Portfolios by the tax law
of countries other than those mentioned in the above sentence, including
responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting. The sole
responsibility of the Sub-Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with respect to any claim for exemption or
refund under the tax law of countries for which the Fund has provided such
information.
4.12. LIABILITY OF SUB-CUSTODIAN.
--------------------------
Except as may arise from the Sub-Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a Sub-Sub-Custodian, the
Sub-Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by anything which is (A) part of
Country Risk or (B) part of the "prevailing country risk" of the Fund and the
Portfolios, as such term is used in SEC Release Nos. IC-22658; IS-1080 (May 12,
1997) or as such term or other similar terms are now or in the future
interpreted by the SEC or by the staff of the Division of Investment Management
of the SEC.
The Sub-Custodian shall be liable for the acts or omissions of a Foreign Sub-
Sub-Custodian to the same extent as set forth with respect to sub-sub-custodians
generally in the Contract and, regardless of whether assets are maintained in
the custody of a Foreign Sub-Sub-Custodian or a Foreign Securities Depository,
the Sub-Custodian shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation, currency
restrictions, or acts of war or terrorism, or any other loss where the Sub-Sub-
Custodian has otherwise acted with reasonable care.
11
<PAGE>
III. Except as specifically superseded or modified herein, the terms and
provisions of the Contract shall continue to apply with full force and
effect. In the event of any conflict between the terms of the Contract
prior to this Amendment and this Amendment, the terms of this Amendment
shall prevail. If the Sub-Custodian is delegated the responsibilities of
Foreign Custody Manager pursuant to the terms of Article 3 hereof, in the
event of any conflict between the provisions of Articles 3 and 4 hereof,
the provisions of Article 3 shall prevail.
12
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed in its name and behalf by its duly authorized representative as of the
date first above written.
Witnessed By: STATE STREET BANK AND TRUST COMPANY
*[name] By:
----------------------------
[title] Name: Ronald E. Logue
Title: Executive Vice President
Witnessed By: THE MUNDER FRAMLINGTON FUNDS TRUST
*[name] By:
----------------------------
[title] Name:
Title:
Witnessed By: COMERICA BANK
*[name] By:
----------------------------
[title] Name:
Title:
13
<PAGE>
Exhibit 9(a)
TRANSFER AGENCY AGREEMENT
AGREEMENT, dated as of December 31, 1996 between THE MUNDER FRAMLINGTON
FUNDS TRUST (the "Trust"), a Massachusetts business trust with its principal
place of business at 480 Pierce Street, Birmingham, MI 48009, and FIRST DATA
INVESTOR SERVICES GROUP, INC. (the "Transfer Agent"), a Massachusetts
corporation with principal offices at One Exchange Place, 53 State Street,
Boston, Massachusetts 02109.
W I T N E S S E T H:
-------------------
WHEREAS, the Trust is authorized to issue Shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets;
WHEREAS, the Trust initially intends to offer shares in those Portfolios
identified in the attached Exhibit 1, and each such Portfolio, together with all
other Portfolios subsequently established by the Trust, shall be subject to this
Agreement in accordance with Section 17; and
WHEREAS, the Trust on behalf of the Portfolios, desires to appoint the
Transfer Agent as its transfer agent, dividend disbursing agent and agent in
connection with certain other activities and the Transfer Agent desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the Trust and the Transfer Agent agree as follows:
1. Definitions.
------------
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of Incorporation,
Declaration of Trust, Partnership Agreement, or similar organizational document
as the case may be, of the Trust as the same may be amended from time to time.
(b) "Authorized Person" shall be deemed to include any person, whether or
not any such person is an officer or employee of the Trust, duly authorized to
give Oral Instructions or Written Instructions on behalf of the Trust as
indicated in a certificate furnished to the Transfer Agent pursuant to Section
4(c) hereof as may be received by the Transfer Agent from time to time.
(c) "Board of Trustees" shall mean the Board of Trustees, Board of
Trustees or, if the Trust is a limited partnership, the General Partner(s) of
the Trust, as the case may be.
(d) "Commission" shall mean the Securities and Exchange Commission.
(e) "Transfer Agent" refers to any Transfer Agent or sub-Transfer Agent of
securities and other property which the Trust may from time to time deposit, or
cause to be deposited or
<PAGE>
held under the name or account of such a Transfer Agent pursuant to a Transfer
Agent Agreement.
(f) "Trust" shall mean the entity executing this Agreement, and each
Portfolio listed on Exhibit 1 or hereafter created and made subject to this
Agreement in accordance with Section 17.
(g) "1940 Act" shall mean the Investment Company Act of 1940.
(h) "Oral Instructions" shall mean instructions, other than Written
Instructions, actually received by the Transfer Agent from a person reasonably
believed by the Transfer Agent to be an Authorized Person.
(i) "Prospectus" shall mean the most recently dated Trust Prospectuses and
Statements of Additional Information, including any supplements thereto if any,
which have become effective under the Securities Act of 1933 and the 1940 Act.
(j) "Shares" refers collectively to such shares as capital stock,
beneficial interest or limited partnership interests, as the case may be, of the
Trust as may be issued form time to time and, if the Trust is a closed-end or a
series Trust, as such terms are used in the 1940 Act any other classes or series
of stock, shares of beneficial interested or limited partnership interests that
may be issued from time to time.
(k) "Shareholder" shall mean a holder of shares of capital stock,
beneficial interest or any other class or series, and also refers to partners of
limited partnerships.
(l) "Written Instructions" shall mean a written communication signed by a
person reasonably believed by the Transfer Agent to be an Authorized Person and
actually received by the Transfer Agent. Written Instructions shall include
manually executed originals and authorized electronic transmissions, including
telefacsimile of a manually executed original or other process.
2. Appointment of the Transfer Agent. The Trust hereby appoints and
----------------------------------
constitutes the Transfer Agent as transfer agent, registrar and dividend
disbursing agent for Shares of the Trust and as shareholder servicing agent for
the Trust. The Transfer Agent accepts such appointments and agrees to perform
the duties hereinafter set forth.
3. Compensation.
-------------
(a) The Trust will compensate or cause the Transfer Agent to be
compensated for the performance of its obligations hereunder in accordance with
the fees set forth in the written schedule of fees annexed hereto as schedule A
and incorporated herein. The Transfer Agent will transmit an invoice to the
Trust as soon as practicable after the end of each calendar month which will be
detailed in accordance with Schedule A, and the Trust will pay to the Transfer
Agent the amount of such invoice within fifteen (15) days after the Trust's
receipt of the invoice.
In addition, the Trust agrees to pay, and will be billed separately for,
out-of-pocket expenses incurred by the Transfer Agent in the performance of its
duties hereunder. Out-of-
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pocket expenses shall include, but shall not be limited to, the items specified
in the written schedule of out-of-pocket charges annexed hereto as Schedule B
and incorporated herein. Schedule B may be modified by the Transfer Agent upon
mutual consent of the parties hereto. Unspecified out-of-pocket expenses shall
be limited to those out-of-pocket expenses reasonably incurred by the Transfer
Agent in the performance of its obligations hereunder. Reimbursement by the
Trust for expenses incurred by the Transfer Agent in any month shall be made as
soon as practicable but no later than 15 days after the receipt of an itemized
bill from the Transfer Agent.
(b) Any compensation agreed to hereunder may be adjusted from time to time
by attaching to Schedule A, a revised fee schedule executed and dated by the
parties hereto.
4. Documents. In connection with the appointment of the Transfer Agent
---------
the Trust shall deliver or cause to be delivered to the Transfer Agent the
following documents on or before the date this Agreement goes into effect, but
in any case within a reasonable period of time for the Transfer Agent to prepare
to perform its duties hereunder:
(a) If applicable, specimens of the certificates for Shares of the Trust;
(b) All account applications forms and other documents relating to
Shareholder accounts or to any plan, program or service offered by the Trust;
(c) A signature card bearing the signatures of any officer of the Trust or
other Authorized Person who will sign Written Instructions or is authorized to
give Oral Instructions;
(d) A certified copy of the Articles of Incorporation, as amended;
(e) A certified copy of the By-Laws of the Trust, as amended;
(f) A copy of the resolution of the Board of Trustees authorizing the
execution and delivery of this Agreement;
(g) A certified list of Shareholders of the Trust with the name, address
and taxpayer identification number of each Shareholder, and the number of Shares
of the Trust held by each, certificate numbers and denominations (if any
certificates have been issued), lists of any accounts against which stop
transfer orders have been placed, together with the reasons therefor, and the
number of shares redeemed by the Trust; and
(h) An opinion of counsel for the Trust with respect to the validity of
the Shares and the status of such Shares under the Securities Act of 1933, as
amended.
5. Further Documentation. The Trust will also furnish the Transfer
---------------------
Agent with copies of the following documents promptly after the same shall
become available:
(a) each resolution of the Board of trustees authorizing the issuance of
Shares;
(b) any registration statements filed on behalf of the Trust and all pre-
effective and post-effective amendments thereto filed with the Commission;
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(c) a certified copy of each amendment to the Articles of Incorporation or
the By-Laws of the Trust;
(d) certified copies of each resolution of the Board of Trustees or other
authorization designating Authorized Persons; and
(e) such other certificates, documents or opinions as the Transfer Agent
may reasonably request in connection with the performance of its duties
hereunder.
6. Representations of the Trust. The Trust represents to the Transfer
----------------------------
Agent that all outstanding Shares are validly issued, fully paid and non-
assessable. When Shares are hereafter issued in accordance with the terms of the
Trust's Articles of Incorporation and its Prospectus, such Shares shall be
validly issued, fully paid and non-assessable.
7. Distributions Payable in Shares. In the event that the Board of
-------------------------------
Trustees of the Trust shall declare a distribution payable in Shares, the Trust
shall deliver or cause to be delivered to the Transfer Agent written notice of
such declaration signed on behalf of the Trust by any officer thereof, upon
which the Transfer Agent shall be entitled to rely for all purposes, certifying
(i) the identity of the Shares involved, (ii) the number of Shares involved, and
(iii) that all appropriate action has been taken.
8. Duties of the Transfer Agent. The Transfer Agent shall be
----------------------------
responsible for administering and/or performing those functions typically
performed by a transfer agent; for acting as a service agent in connection with
dividend distribution functions; and for performing shareholder account and
administrative agent functions in connection with the issuance, transfer and
redemption or repurchase (including coordination with the Custodian) of Shares
in accordance with the terms of the Prospectus, applicable law and this
Agreement including without limitation, those duties specified in Schedule C
attached hereto. In addition, the Trust shall to the Transfer Agent all notices
issued by the Trust with respect to the Shares in accordance with and pursuant
to the Articles of Incorporation or By-Laws of the Trust or as required by law
and shall perform such other specific duties as are set forth in the Articles of
Incorporation including the giving of notice of any special or annual meetings
of shareholders and any other notices required thereby.
9. Record Keeping and Other Information. The Transfer Agent shall
------------------------------------
create and maintain all records required of it pursuant to its duties hereunder
and as set forth in Schedule C in accordance with all applicable laws, rules and
regulations, including records required by Section 31(a) of the 1940 Act. All
such records shall be the property of the Trust and shall be available during
regular business hours for inspection, copying and use by the Trust. Where
applicable, such records shall be maintained by the Transfer Agent for the
periods and in the places required by Rule 31a-2 under the 1940 Act. Upon
termination of this Agreement, the Transfer Agent shall deliver all such records
to the Trust or such person as the Trust may designate.
Upon reasonable notice by the Trust, the Transfer Agent shall make
available during regular business hours such of its facilities and premises
employed in connection with the performance of its duties under this Agreement
for reasonable visitation by the Trust, or any
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person retained by the Trust as may be necessary for the Trust to evaluate the
quality of the services performed by the Transfer Agent pursuant hereto.
10. Other Duties. In addition to the duties set forth in Schedule C, the
------------
Transfer Agent shall perform such other duties and functions, and shall be paid
such amounts therefor, as may from time to time be agreed upon in writing
between the Trust and the Transfer Agent. The compensation for such other duties
and functions shall be reflected in a written amendment to Schedule A or B and
the duties and functions shall be reflected in an amendment to Schedule C, both
dated and signed by authorized persons of the parties hereto.
11. Reliance by Transfer Agent; Instructions.
-----------------------------------------
(a) Provided the standard of care in Section 13 has been met, the Transfer
Agent will have no liability when acting upon Written or Oral Instructions
believed to have been executed or orally communicated by an Authorized Person
and will not be held to have any notice of any change of authority of any person
until receipt of a Written Instruction thereof from the Trust pursuant to
Section 4(c). Provided the standard of care in Section 13 has been met, the
Transfer Agent will also have no liability when processing Share certificates
which it reasonably believes to bear the proper manual or facsimile signatures
of the officers of the Trust and the proper countersignature of the Transfer
Agent.
(b) At any time, the Transfer Agent may apply to any Authorized Person of
the Trust for Written Instructions and may seek advice from legal counsel for
the Trust, or its own legal counsel, with respect to any matter arising in
connection with this Agreement, and provided the standard of care in Section 13
has been met, it shall not be liable for any action taken or not taken or
suffered by it in good faith in accordance with such Written Instructions or in
accordance with the opinion of counsel for the Trust or for the Transfer Agent.
Written Instructions requested by the Transfer Agent will be provided by the
Trust within a reasonable period of time. In addition, the Transfer Agent, its
officers, agents or employees, shall accept Oral Instructions or Written
Instructions given to them by any person representing or acting on behalf of the
Trust only if said representative is an Authorized Person. The Trust agrees that
all Oral Instructions shall be followed within one business day by confirming
Written Instructions, and that the Trust's failure to so confirm shall not
impair in any respect the Transfer Agent's right to rely on Oral Instructions.
The Transfer Agent shall have no duty or obligation to inquire into, nor shall
the Transfer Agent be responsible for, the legality of any act done by it upon
the request or direction of a person reasonably believed by the Transfer Agent
to be an Authorized Person.
(c) Notwithstanding any of the foregoing provisions of this Agreement, the
Transfer Agent shall be under no duty or obligation to inquire into, and shall
not be liable for: (i) the legality of the issuance or sale of any Shares or the
sufficiency of the amount to be received therefor; (ii) the legality of the
redemption of any Shares, or the propriety of the amount to be paid therefor;
(iii) the legality of the declaration of any dividend by the Board of Trustees,
or the legality of the issuance of any Shares in payment of any dividend; or
(iv) the legality of any recapitalization or readjustment of the Shares.
12. Acts of God, etc. The Transfer Agent will not be liable or
----------------
responsible for delays or errors by acts of God or by reason of circumstances
beyond its control, including acts of civil or
5
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military authority, national emergencies, labor difficulties, mechanical
breakdown, insurrection, war, riots, or failure or unavailability of
transportation, communication or power supply, fire, flood or other catastrophe.
In the event of equipment failures beyond the Transfer Agent's control, the
Transfer Agent shall, at no additional expenses to the Trust, take reasonable
steps to minimize service interruptions but shall have no liability with respect
thereto. The foregoing obligation shall not extend to computer terminals located
outside of premises maintained by the Transfer Agent. The Transfer Agent shall
enter into and shall maintain in effect with appropriate parties one or more
agreements making reasonable provision for emergency use of electronic data
processing equipment to the extent appropriate equipment is available.
13. Duty of Care and Indemnification. The Transfer Agent shall be
--------------------------------
obligated to exercise care and diligence and to act in good faith and to use its
best efforts within commercially reasonable limits to ensure the accuracy and
completeness of all services performed under this Agreement. The Trust will
indemnify the Transfer Agent against and hold it harmless from any and all
losses, claims, damages, liabilities or expenses of any sort or kind (including
reasonable counsel fees and expenses) resulting from any claim, demand, action
or suit or other proceeding (a "Claim") arising directly or indirectly from any
action or thing which the Transfer Agent takes or does or omits to take or do
(i) at the request or on the direction of or in reliance on the advice of the
Trust; (ii) upon Oral or Written Instructions; (iii) in reliance on any records
or documents received from the Trust or any Agent of the Trust, including the
prior transfer agent; (iv)under the terms of this Agreement; and (v) the offer
or sale of Shares in violation of any requirement under Federal or State
Securities Laws, provided that neither the Transfer Agent nor any of its
nominees or sub-contractors shall be indemnified against any liability to the
Trust or to its Shareholders (or any expenses incident to such liability)
arising out of the Transfer Agent's or such nominee's or such sub-contractor's
own willful misfeasance, bad faith or negligence or reckless disregard of its
duties in connection with the performance of its duties and obligations
specifically described in this Agreement.
In any case in which the Trust may be asked to indemnify or hold the
Transfer Agent harmless, the Trust shall be advised of all pertinent facts
concerning the situation in question. The Transfer Agent will notify the Trust
promptly after identifying any situation which it believes presents or appears
likely to present a claim for indemnification against the Trust although the
failure to do so shall prevent recovery by the Transfer Agent except and to the
extent the Trust has been prejudiced thereby. The Trust shall have the option
to defend the Transfer Agent against any Claim which may be the subject of this
indemnification, and, in the event that the Trust so elects, such defense shall
be conducted by counsel chosen by the Trust and reasonably satisfactory to the
Transfer Agent, and thereupon the Trust shall take over complete defense of the
Claim and the Transfer Agent shall sustain no further legal or other expenses in
respect of such Claim. The Transfer Agent will not confess any Claim or make
any compromise in any case in which the Trust will be asked to provide
indemnification, except with the Trust's prior written consent. The obligations
of the parties hereto under this Section shall survive the termination of this
Agreement.
14. Consequential Damages. In no event and under no circumstances shall
---------------------
either party under this Agreement be liable to the other party for consequential
or indirect loss of profits,
6
<PAGE>
reputation or business or any other special damages under any provision of this
Agreement or for any act or failure to act hereunder.
15. Term and Termination.
--------------------
(a) This Agreement effective as of the dates first written above with
respect to the Trust's respective series and shall continue until December 31,
1997 except as provided in subparagraph (b) of this Section and except that the
Trust may terminate this Agreement if the Transfer Agent breaches its duty of
care set forth in Section 13 and such breach is not cured within ninety (90)
days after written notice of the breach has been received by the Transfer Agent
from the Trust. After December 31, 1997, this Agreement shall continue
indefinitely until terminated by either party, with or without cause, upon
written notice to the other party given at least ninety (90) days prior to such
date, except that the Agreement may be terminated at any time as provided in
subparagraph (b) of this Section.
(b) The Transfer Agent represents that it is currently registered with the
appropriate Federal agency for the registration of Transfer Agents, and that it
will remain so registered for the duration of this Agreement. The Transfer Agent
agrees that it will promptly notify the Trust in the event of any material
change in its status as a registered Transfer Agent. Should the Transfer Agent
fail to be registered with the appropriate Federal agency as a Transfer Agent at
any time during this Agreement, the Trust may, on written notice to the Transfer
Agent, immediately terminate this Agreement.
(c) Upon termination of this Agreement and (unless this Agreement is
terminated pursuant to subparagraph (b) of this Section 15, or unless the
Transfer Agent has breached the standard of care in Section 13 and such breach
is incurred on the date notice of termination is given) at the expense of the
Trust, the Transfer Agent will deliver to such successor a certified list of
shareholders of the Trust (with names and addresses), and all other relevant
books, records, correspondence and other Trust records or data in the possession
of the Transfer Agent, and the Transfer Agent will cooperate with the Trust and
any successor transfer agent or agents in the substitution process.
16. Confidentiality. Both parties hereto agree that any non public
---------------
information obtained hereunder concerning the other party is confidential and
may not be discolored to any other person without the consent of the other
party, except as may be required by applicable law or at the request of the
Commission or other governmental agency. The Transfer Agent agrees that it shall
not use any non-public information for any purpose other than performance of its
duties or obligations hereunder. The obligations of the parties under this
Section shall survive the termination of this Agreement. The parties further
agree that a breach of this Section would irreparably damage the other party and
accordingly agree that each of them is entitled, without bond or other security,
to an injunction or injunctions to prevent breaches of this provision. Without
limiting the foregoing, the Transfer Agent agrees on behalf of itself and its
nominees, subcontractors and employees to treat confidentially all records and
other information relative to the Trust and its prior, present or potential
Shareholders.
17. Additional Portfolios. In the event that the Trust establishes one
---------------------
or more Portfolios in addition to those identified in Exhibit 1, with respect to
which the Trust desires to have the Transfer Agent render services as transfer
agent under the terms hereof, the Trust shall so notify
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<PAGE>
the Transfer Agent in writing, and if the Transfer Agent agrees in writing to
provide such services, Exhibit 1 shall be amended to include such additional
Portfolios.
18. Amendment. This Agreement may only be amended or modified by a
---------
written instrument executed by both parties.
19. Subcontracting. On thirty (30) days prior to written notice to the
--------------
Trust, the Transfer Agent may assign its rights and delegate its duties
hereunder to any wholly-owned direct or indirect subsidiary of First Data
Corporation provided that (i) the delegate agrees with the Transfer Agent to
comply with all relevant provisions of the 1940 Act; (ii) the Transfer Agent
and such delegate shall promptly provide such information as the Trust may
request, and respond to such question as the Trust may ask, relative to the
delegation, including (without limitation) the capabilities of the delegate;
(iii) the delegation of such duties shall not relieve the Transfer Agent of any
of its duties hereunder;
20. Miscellaneous.
-------------
(a) Notices. Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Trust or the Transfer Agent, shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.
To the Trust:
Lee P. Munder
President, The Munder Framlington Funds Trust
480 Pierce Street - Suite 300
Birmingham, Michigan 48009
To the Transfer Agent:
First Data Investor Services Group, Inc..
4400 Computer Drive
Westborough, Massachusetts 01581
Attention: President
with a copy to: the Transfer Agent's General Counsel (same address)
(b) Successors. This Agreement shall extend to and shall be binding upon
----------
the parties hereto, and their respective successors.
(c) Governing Law. This Agreement shall be governed exclusively by the
-------------
laws of the Commonwealth of Massachusetts without reference to the choice of law
provisions thereof.
(d) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
8
<PAGE>
(e) Captions. The captions of this Agreement are included for
--------
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(f) Use of Transfer Agent's Name. The Trust shall not use the name of the
----------------------------
Transfer Agent in any Prospectus, Statement of Additional Information,
shareholders' report, sales literature or other material relating to the Trust
in a manner not approved prior thereto in writing, provided, that the Transfer
Agent need only receive notice of all reasonable uses of its name which merely
refer in accurate terms to its appointment and services hereunder or which are
required by any Government agency or applicable law or rule.
(g) Use of the Trust's Name. The Transfer Agent shall not use the name
-----------------------
of the Trust or material relating to the Trust on any documents or forms for
other than internal use in a manner not approved prior thereto in writing,
provided, that the Trust need only receive notice of all reasonable uses of its
name which merely refer in accurate terms to the appointment of the Transfer
Agent or which are required by any government agency or applicable law or rule.
(h) Independent Contractors. The parties agree that they are independent
-----------------------
contractors and not partners or co-venturers.
(i) Entire Agreement; Severability. This Agreement and the Schedules
------------------------------
attached hereto constitute the entire agreement of the parties hereto relating
to the matters covered hereby and supersede any previous agreements. If any
provision is held to be illegal, unenforceable or invalid for any reason, the
remaining provisions shall no be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, as of the day and year first above
written.
THE MUNDER FRAMLINGTON FUNDS TRUST
By: /s/ Lisa Anne Rosen
-------------------------
Title: Secretary and Assistant Treasurer
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ Gerald K Kokos
-------------------------
Title: Executive Vice President
9
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EXHIBIT 1
LIST OF PORTFOLIOS
DATED AS OF DECEMBER 31, 1996
Framlington Emerging Markets Fund
Framlington Healthcare Fund
Framlington International Growth Fund
10
<PAGE>
SCHEDULE A
TRANSFER AGENT FEES
1) Standard Fees: $40,000 per Portfolio per annum; provided that
the aggregate fee for all Portfolios shall not
be less than $120,000 per annum
The above referenced fees assume a minimum of
three Portfolios with no more than five classes
per Portfolio. If these assumptions change, the
parties shall re-evaluate the fees.
Other Fees: IRA accounts will be charged $10.00 per annum
NSCC Transaction Charge is $.15 per financial
transaction
2) One-Time Conversion Fees: The conversion expenses are estimated at
$150,000 of which Transfer Agent will absorb 50%
3) System Development: Client defined system enhancements will be
agreed upon by Transfer Agent and Munder Capital
Management and billed at a rate of $100.00 per
hour
Fees will be re-evaluated on or after the first anniversary date.
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<PAGE>
SCHEDULE B
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable out-of-
pocket expenses, including, but not limited to the following items:
. Microfiche/microfilm production
. Magnetic media tapes and freight
. Printing costs, including certificates, envelopes, checks and stationery
. Postage (bulk, pre-sort, ZIP-4, bar-coding, first class) direct pass through
to the Fund
. Due diligence mailings
. Telephone and telecommunication costs, including all lease, maintenance and
line costs
. Ad hoc reports
. Proxy solicitations, mailings and tabulations
. Daily & Distribution advice mailings
. Shipping, Certified and Overnight mail and insurance
. Year-end form production and mailings
. Terminals, communication lines, printers and other equipment specifically
required by the Fund
. Duplicating services
. Courier services
. Incoming and outgoing wire charges
. Overtime, as approved by the Fund
. Federal Reserve charges for check clearance
. Record retention, retrieval and destruction costs
. Third party audit reviews
. Customized systems development after the conversion at the rate of $100.00
per hour
. Insurance
. Such other miscellaneous expenses reasonably incurred by the Transfer Agent
in performing its duties and responsibilities under this Agreement as
approved by the Fund
The Trust agrees that postage and mailing expenses will be paid on the day
of or prior to mailing is agreed with the Transfer Agent. In addition, the
Trust will promptly reimburse the Transfer Agent for any other unscheduled
expenses incurred by the Transfer Agent whenever the Trust and the Transfer
Agent mutually agree that such expenses are not otherwise properly borne by the
Transfer Agent as part of its duties and obligations under the Agreement.
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<PAGE>
SCHEDULE C
DUTIES OF THE TRANSFER AGENT
1. Shareholder Information. The Transfer Agent or its agent shall
-----------------------
maintain a record of the number of Shares held by each holder of record which
shall include name, address, taxpayer identification and which shall indicate
whether such Shares are held in certificates or uncertificated form, and if in
certificated form shall include certificate numbers and denominations;
historical information regarding the account of each Shareholder, including
dividends and distributions paid and the date and price for all transactions on
a Shareholder's account; any stop or restraining order placed against the
Shareholder's account; any correspondence relating to the current maintenance of
a Shareholder's account; information with respect to withholdings; and, any
information required in order for the Transfer Agent to perform any calculations
contemplated or required by its Agreement with the Trust. The Transfer Agent
shall keep a record of all redemption checks and dividend checks returned by
postal authorities, and shall maintain such records as are required for the
Trust to comply with the escheat laws of any State or other authority; shall
keep a record of all redemption checks and dividend checks returned by the
postal authorities for the period of time they are the Transfer Agent of record
and for any records provided by and receipt acknowledged by both parties from
any prior Transfer Agent by means of a records certification letter; otherwise
the Transfer Agent is not responsible for the said records. The Transfer Agent
shall maintain such records as are required or The Trust to comply with the
escheat laws of any state or other authority for the period they are Transfer
Agent. The Trust will be responsible for notifying and instructing the Transfer
Agent to commence the escheatment process on their behalf, for any or all
states.
2. Shareholder Services. The Transfer Agent or its agent will
--------------------
investigate all inquiries from Shareholders of the Trust relating to Shareholder
accounts and will respond to all communications from Shareholders and others
relating to its duties hereunder and such other correspondence as may from time
to time be mutually agreed upon between the Transfer Agent and the Trust.
3. Share Certificates.
------------------
(a) At the expense of the Trust, it shall supply the Transfer Agent or its
agent with an adequate supply of blank share certificates to meet the Transfer
Agent or its agent's requirements therefor. Such Share certificates shall be
properly signed by facsimile. The Trust agrees that, notwithstanding the death,
resignation, or removal of any officer of the Trust whose signature appears on
such certificates, the Transfer Agent or its agent may continue to countersign
certificates which bear such signatures until otherwise directed by Written
Instructions.
(b) The Transfer Agent or its agent shall issue replacement Share
certificates in lieu of certificates which have been lost, stolen or destroyed,
upon receipt by the Transfer Agent or its agent of properly executed affidavits
and lost certificate bonds, in form satisfactory to the Transfer Agent or its
agent, with the Trust and the Transfer Agent or its agent as obligees under the
bond.
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(c) The Transfer Agent or its agent shall also maintain a record of each
certificate issued and/or canceled the number of Shares represented thereby and
the holder of record. With respect to Shares held in open accounts or
uncertificated form, i.e., no certificate being issued with respect thereto, the
Transfer Agent or its agent shall maintain comparable records of the record
holders thereof, including their names, addresses and taxpayer identification.
The Transfer Agent or its agent shall further maintain a stop transfer record on
lost and/or replaced certificates.
4. Mailing Communications to Shareholders; Proxy Materials. The
-------------------------------------------------------
Transfer Agent or its agent will address and mail to Shareholders of the Trust,
all communicators by the Trust to such Shareholders, including without
limitation, confirmations of purchases and sales of Trust shares, monthly
statements, all reports to Shareholders, dividend and distribution notices and
proxy material for the Trust's meetings of Shareholders. In connection with
meetings of Shareholders, the Transfer Agent or its Agent will prepare
Shareholder lists, mail and certify as to the mailing of proxy materials,
process and tabulate returned proxy cards, report on proxies voted prior to
meetings, act as inspector of election at meetings and certify Shares voted at
meetings.
5. Sales of Shares.
---------------
(a) Issuance of Shares. Upon receipt of a purchase order from or on
------------------
behalf of an investor for the purchase of Shares and sufficient information to
enable the Transfer Agent to establish a Shareholder account (if it is a new
account) and to determine which class of Shares the investor wishes to purchase,
and after confirmation of receipt of payment in the form described in the
Prospectus for the class of Shares involved, the Transfer Agent shall issue and
credit the account of the investor or other record holder with Shares in the
manner described in the Prospectus relating to such Shares and shall prepare and
mail the appropriate confirmation in accordance with legal requirements.
(b) Suspension of Sale of Shares. The Transfer Agent or its agent shall
----------------------------
not be required to issue any Shares of the Trust where it has received a Written
Instruction from the Trust or official notice from any appropriate authority
that the sale of the Shares of the Trust has been suspended or discontinued. The
existence of such Written Instructions or such official notice shall be
conclusive evidence of the right of the Transfer Agent or its agent to rely on
such Written Instructions or official notice.
(c) Returned Checks. In the event that any check or other order for
---------------
payment of money is returned unpaid for any reason, the Transfer Agent or its
agent will: (i) give prompt notice of such return to the Trust or its designee;
(ii) place a stop transfer order against all Shares issued as a result of such
check or order; and (iii) take such actions as the Transfer Agent may from time
to time deem appropriate.
6. Transfer and Redemption.
-----------------------
(a) Requirements for Transfer or Redemption of Shares. The Transfer
-------------------------------------------------
Agent or its agent shall process all requests to transfer or repurchase Shares
in accordance with the transfer or redemption procedures set forth in the
Trust's Prospectus.
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<PAGE>
The Transfer Agent or its agent will transfer or redeem Shares upon
receipt of Oral or Written Instructions or otherwise pursuant to the Prospectus
and Share certificates, if any, properly endorse for transfer or redemption,
accompanied by such documents as the Transfer Agent or its agent reasonably may
deem necessary.
The Transfer Agent or its agent reserves the right to refuse to
transfer or redeem Shares until it is satisfied that the endorsement on the
instructions is valid and genuine. The Transfer Agent or its agent also
reserves the right to refuse to transfer or redeem Shares until it is satisfied
that the requested transfer or redemption is legally authorized, and it shall
incur no liability for the refusal, in good faith, to make transfers or
redemptions which the Transfer Agent or its agent, in its good judgment, deems
improper or unauthorized, or until it is reasonably satisfied that there is no
basis to any claims adverse to such transfer or redemption.
(b) Notice to Custodian and Trust. When Shares are redeemed, the Transfer
-----------------------------
Agent shall, upon receipt of the instructions and documents in proper form,
deliver to the Trust's Custodian and to the Trust or its designee a notification
setting forth the number of Shares to be redeemed. Such redeemed Shares shall be
reflected on appropriate accounts maintained by the Transfer Agent reflecting
outstanding Shares of the Trust involved and Shares attributed to individual
accounts.
(c) Payment of Redemption Proceeds. The Transfer Agent shall, upon
------------------------------
receipt of the moneys paid to it by the Custodian for the redemption of Shares,
pay such moneys as are received form the Custodian, all in accordance with the
procedures described in the Written Instruction received by the Transfer Agent
form the Trust. It is understood that the Transfer Agent may arrange for the
direct payment of redemption proceeds to Shareholders by the Trust's Custodian
in accordance with such procedures and controls as are mutually agreed upon from
time to time by the Trust, the Transfer Agent and the Trust's Custodian.
The Transfer Agent shall not process or effect any redemption with
respect to Shares of the Trust after receipt by the Transfer Agent of
notification of the suspension of the determination of the net asset value of
the Trust, provided the Transfer Agent has had a reasonable time to act on such
notification.
7. Dividends.
---------
(a) Notice to Agent and Custodian. Upon the declaration of each dividend
-----------------------------
receipt of each capital gains distribution by the Board of Trustees of the Trust
with respect to Shares of the Trust, the Trust shall furnish or cause to be
furnished to the Transfer Agent or its agent a copy of a resolution of the
Trust's Board of Trustees certified by the Secretary of The Trust setting forth
the date of the declaration of such dividend or distribution, the exdividend
date, the date of payment thereof, the record date as of which shareholders
entitled to payment shall be determined, the amount payable per Share to the
shareholders of record as of that date, the total amount payable to the Transfer
Agent or its agent on the payment date and whether such dividend or distribution
is to be paid in Shares of such class at net asset value.
15
<PAGE>
On or before the payment date specified in such resolution of the
Board of Trustees, the Custodian of the trust will pay to the Transfer Agent
sufficient cash to make payment to the shareholders of record as of such payment
date.
After deducting any amount required to be withheld by any applicable
tax laws, riles and/or regulations and/or other applicable laws, the Transfer
Agent shall in accordance with the instructions in proper form from a
Shareholder and the provisions of the applicable dividend resolutions and
Prospectus issue and credit the Account of the Shareholder with Shares, or, if
the Shareholder so elects, pay such dividends or distributions in cash.
In lieu of receiving from the Trust's custodian and paying to
Shareholders cash dividends or distributions, the Transfer Agent may arrange for
the direct payment of cash dividends and distributions to Shareholders by the
Trust's Custodian, in accordance with such procedures and controls as are
mutually agreed upon from time to time by and among the Trust, the Transfer
Agent and the Trust's Custodian.
The Transfer Agent shall prepare, file with the Internal Revenue
Services and other appropriate taxing authorities, and address and mail to
Shareholders such returns, forms and information relating to dividends and
distributions paid by the Trust as are required to be so prepared, filed and
mailed by applicable laws, rules and/or resolutions. On behalf of the Trust,
the Transfer Agent shall mail certain requests for Shareholders' certifications
under penalties of perjury and pay on a timely basis to the appropriate Federal
authorities any taxes to be withheld on dividends and distributions paid by the
Trust, all as required by applicable Federal tax laws and regulations.
(b) Insufficient Funds for payments. If the Transfer Agent or its agent
-------------------------------
does not receive sufficient cash from the Custodian to make total dividend
and/or distribution payments to all shareholders of the Trust as of the record
date, the Transfer Agent or its agent will, upon notifying the Trust, withhold
payment to all Shareholders of record as of the record date until sufficient
cash is provided to the Transfer Agent or its agent.
8. Cooperation with Accountants. The Transfer Agent shall cooperate with
----------------------------
the Trust's independent public accountants and shall take all reasonable action
in the performance of its obligations under its agreement with the Trust to
assure that the necessary information is made available to such accountants for
the expression of their opinions as much as they may be required by the Trust
from time to time.
9. Other Services. In accordance with the Prospectus and such
--------------
procedures and controls as are mutually agreed upon from time to time by and
among the Trust, the Transfer Agent and the Trust's Custodian, the Transfer
Agent shall (a) arrange for issuance of Shares obtained through (i) transfers of
Trusts from Shareholders' accounts at financial institutions, (ii) a pre-
authorized check plan, if any and (iii) a right of accumulation, if any; (b)
arrange for the exchange of Shares for shares of such other funds designated by
the Trust from time to time; and (c) arrange for systematic withdrawals from the
account of a Shareholder participating in a systematic withdrawal plan, if any.
16
<PAGE>
EXHIBIT 1 TO SCHEDULE C
SUMMARY OF SERVICES
The services to be performed by the Transfer Agent or its agent shall
include the following:
A. DAILY RECORDS
-------------
Maintain daily the following information with respect to each
Shareholder account as received:
. Name and Address (Zip Code)
. Class of Shares
. Taxpayer Identification Number
. Balance of Shares held by Agent
. Beneficial owner code: i.e., male, female, joint tenant, etc.
. Dividend code (reinvestment)
. Number of Shares held in certificate form
B. OTHER DAILY ACTIVITY
--------------------
. Answer written inquiries relating to Shareholder accounts (matters
relating to portfolio management, distribution of Shares and other
management policy questions will be referred to the Trust).
. Process additional payments into established Shareholder accounts in
accordance with Written Instruction.
. Upon receipt of proper instructions and all required documentation,
process requests for repurchase of Shares.
. Identify redemption requests made with respect to accounts in which
Shares have been purchased within an agreed-upon period of time for
determining whether good funds have been collected with respect to such
purchase and process as agree by the Transfer Agent in accordance with
Written Instructions set forth by the Trust.
. Examine and process all transfers of Shares, ensuring that all transfer
requirements and legal documents have been supplied.
. issue and mail replacement checks.
. Open new accounts and maintain records of exchanges between accounts.
. Furnish daily requests of transactions in Shares.
. Calculate sales load or compensation payment (front-end and deferred)
and provide such information to the Trust, if any.
. Calculate dealer commissions for the Trust, if any.
. Provide toll-free lines for direct Shareholder use, plus customer
liaison staff with on-line inquiry capacity.
17
<PAGE>
. Mail duplicate confirmations to dealers of their client's activity,
whether executed through the dealer or directly with the Transfer
Agent, if any.
. Identify to each series or class of Shares property belonging to
such series or class, and in such reports, confirmations and notices
to the Trust called for under this Agreement identify the series or
class to which such report, confirmation or notice pertains.
C. DIVIDEND ACTIVITY
-----------------
. Calculate and process Share dividends and distributions as instructed
by the Trust.
. Compute, prepare and mail all necessary reports to Shareholders or
various authorities as requested by the Trust. Report to the Trust
reinvestment plan share purchases and determination of the
reinvestment price.
D. MEETINGS OF SHAREHOLDERS
------------------------
. Cause to be mailed proxy and related material for all meetings of
Shareholders. Tabulate returned proxies (proxies must be adaptable to
mechanical equipment of the Transfer Agent or its agents) and supply
daily reports when sufficient proxies have been received.
. Prepare and submit to the Trust an Affidavit of Mailing.
. At the time of the meeting, furnish a certified list of Shareholders,
hard copy, microfilm or microfiche and, if requested by the Trust,
Inspection of Election.
E. PERIODIC ACTIVITIES
-------------------
. Cause to be mailed reports, Prospectuses, and any other enclosures
requested by the Trust (material must be adaptable to mechanical
equipment of Transfer Agent or its agents).
. Receive all notices issued by the Trust with respect to the Shares in
accordance with and pursuant to the Articles of Incorporation and By-
Laws and perform such other specific duties as are set forth in the
Articles of Incorporation and By-Laws and perform such other specific
duties as are set forth in the Articles of Incorporation and By-Laws
including a giving of notice of a special meeting and notice of
redemption in the circumstances and other wise in accordance with all
relevant provisions of the Articles of Incorporation and By-Laws.
. Furnish monthly reports of transactions in shares by type (custodial,
trust, Keogh, IRA, other) including numbers of accounts.
. Furnish state-by-state registration and sales reports to the
Administrator.
. Provide detail for underwriter or broker confirmations and other
participating dealer Shareholder accounting, in accordance with such
procedures as may be agreed upon between the Trust and the Transfer
Agent, if any.
. Provide Shareholder lists and statistical information concerning
accounts to the Trust.
18
<PAGE>
. Provide timely notification of Trust activity and such other
information as may be agreed upon from time to time between the
Transfer Agent and the Custodian, to the Trust or the Custodian.
19
<PAGE>
Exhibit 9(c)
AMENDMENT TO THE TRANSFER AGENCY AND REGISTRAR AGREEMENT
This Amendment dated as of June 1, 1998 is made to the Transfer Agency
Agreement(s) (the "Agreement(s)") between each of the Funds executing this
Amendment and listed on Exhibit 1 of this Amendment attached hereto and
incorporated herein (hereinafter individually and collectively referred to as
the "Fund") and First Data Investor Services Group, Inc. ("Investor Services
Group").
1. Modify Paragraph "(a)" of Section 15 "Term and Termination" by deleting the
contents of this paragraph in its entirety and inserting the following new
paragraph in its place:
"(a) Except as otherwise set forth herein, this Agreement shall be
effective as of the dates first written above and shall continue until June
1, 2000 (the "Initial Term"). Upon the expiration of the Initial Term, this
Agreement shall automatically renew for successive terms of one (1) year
("Renewal Terms") each, unless the Trust or the Transfer Agent provides
written notice to the other of its intent not to renew. Such notice must be
received not less than ninety (90) days and not more than one-hundred
eighty (180) days prior to the expiration of the Initial Term or the then
current Renewal Term."
2. Modify Schedule A "Transfer Agent Fees" by deleting this Schedule in its
entirety and insert the attached new Schedule A in its place.
3. Modify Schedule B "Out-of-Pocket Expenses" by deleting this Schedule in its
entirety and insert the attached new Schedule B in its place.
4. Modify Exhibit 1 to Schedule C insert the following additional bullet:
. Identify area responsible for gain/loss purposes due to "as/of"
processing and daily reconciliation of processing to identify gains
and/or losses which impact the Fund. Any gain or loss will be netted out
on a quarterly basis. The Transfer Agent will compensate the Fund for
any Losses attributable to Transfer Agent processing errors.
<PAGE>
This Amendment contains the entire understanding among the parties with respect
to the transactions contemplated hereby. To the extent that any provision of
this Amendment modifies or is otherwise inconsistent with any provisions of the
prior agreements and related agreements, this Amendment shall control, but the
prior agreements and all related documents shall otherwise remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers, as of the day and year first above
written.
THE MUNDER FUNDS, INC. THE MUNDER FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- ------------------------ -------------------------
By: Terry H. Gardner By: Terry H. Gardner
Title: Vice President Title: Vice President
ST. CLAIR FUNDS, INC. THE MUNDER FRAMLINGTON
FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- ------------------------ -------------------------
By: Terry H. Gardner By: Terry H. Gardner
Title: Vice President Title: Vice President
FIRST DATA INVESTOR SERVICES
GROUP, INC.
/s/ Gerald G. Kokos
- ------------------------
By: Gerald G. Kokos
Title: Executive Vice President
<PAGE>
SCHEDULE A
TRANSFER AGENT'S FEES
<TABLE>
<CAPTION>
<S> <C>
1. Fund Complex Minimum* $90,000 per month
2. Asset Based Fees 2.00 Basis Points for assets less than 5 billion
1.50 Basis Points for assets 5 billion-9 billion
1.00 Basis Points for assets greater than 9 billion
3. Other Fees: IRA accounts will be charged $10.00 per global
account per annum (excluding Consumer's Energy
Group)
NSCC Transaction Charge is $.15 per financial
transaction
Client defined system enhancements will be agreed
upon by Transfer Agent and Munder Capital and
billed at a rate of $150.00 per hour
</TABLE>
* The Fund Complex minimum will apply to all existing and any future funds
offered by Munder Capital Management which are serviced by the Transfer
Agent. The fees specified herein may be adjusted at any time upon written
agreement between the parties. After March 1, 2000 the parties agree to
review the fees charged for services under this Agreement.
<PAGE>
SCHEDULE B
OUT-OF-POCKET EXPENSES
----------------------
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
. Microfiche/microfilm production
. Magnetic media tapes and freight
. Printing costs, including certificates, envelopes, checks and
stationery
. Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct pass
through to the Fund
. Due diligence mailings
. Telephone and telecommunication costs, including all lease,
maintenance and line costs
. Ad hoc reports
. Proxy solicitations, mailings and tabulations
. Daily & Distribution advice mailings
. Shipping, Certified and Overnight mail and insurance
. Year-end form production and mailings
. Terminals, communication lines, printers and other equipment
specifically required by the Fund
. Duplicating services
. Courier services
. Incoming and outgoing wire charges
. Overtime, as approved by the Fund
. Temporary staff, as approved by the Fund
. Travel and entertainment, as approved by the Fund
. Federal Reserve changes for check clearance
. Record retention, retrieval and destruction costs
. Third party audit reviews
. Insurance
. Such other miscellaneous expenses reasonably incurred by the
Transfer Agent in performing its duties and responsibilities under
this Agreement as approved the Fund
The Company agrees that postage and mailing expenses will be paid on the
day of or price to mailing as agreed with the Transfer Agent. In addition, the
Company will promptly reimburse the Transfer Agent for any other unscheduled
expenses incurred by the Transfer Agent whenever the Company and the Transfer
Agent mutually agree that such expenses are not otherwise properly borne by the
Transfer Agent as part of its duties and obligations under the Agreement.
<PAGE>
EXHIBIT 1
LIST OF FUNDS AND PORTFOLIOS
The Munder Funds Trust
- ----------------------
Munder Accelerating Growth Fund
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Growth & Income Fund
Munder Index 500 Fund
Munder Intermediate Bond Fund
Munder International Equity Fund
Munder Michigan Triple Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
Munder Tax-Free Money Market Fund
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
The Munder Funds, Inc.
- ----------------------
Munder Multi-Season Growth Fund
Munder Money Market Fund
Munder Real Estate Equity Investment Fund
Munder Value Fund
Munder Mid-Cap Growth Fund
St. Clair Funds, Inc.
- ---------------------
Liquidity Plus Money Market Fund
Munder S&P 500 Index Equity Fund
Munder S&P MidCap Index Equity Fund
Munder S&P SmallCap Index Equity Fund
Munder Foreign Equity Fund
Munder Aggregate Bond Index Fund
Munder Framlington Funds Trust
- ------------------------------
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
<PAGE>
Exhibit 9(d)
AMENDMENT TO THE TRANSFER AGENCY AGREEMENT
This Amendment dated as of 1st day of June, 1998 (the "Amendment") is made
to the Transfer Agency and Registrar Agreement(s) (the "Agreement(s)") between
each of the Funds executing this Amendment and listed on Exhibit 1 of this
Amendment attached hereto and incorporated herein (hereinafter individually and
collectively referred to as the "Fund") and First Data Investor Services Group,
Inc. ("Investor Services Group").
WITNESSTH
WHEREAS, the Fund desires to enable the shareholders of the Funds and their
respective Portfolios of the Fund as applicable set forth in Exhibit 1, to
access certain Fund information maintained by Investor Services Group on behalf
of the Fund through use of the Internet (as hereinafter defined) and Investor
Services Group desires to allow such access and provide certain services as more
fully described below in connection therewith;
NOW THEREFORE, the Fund and Investor Services Group agree that as of the
date first referenced above, Investor Services Group Agreement shall be amended
as follows:
1. The following definitions are hereby incorporated into Agreement:
(a) "Investor Services Group Secure Net Gateway" shall mean the system of
computer hardware and software and network established by Investor
Services Group to provide access between Investor Services Group
recordkeeping system and the Internet;
(b) "Investor Services Group Web Transaction Engine" shall mean the system
of computer hardware and software created and established by Investor
Services Group in order to enable Shareholders of the Fund to perform
the transactions contemplated hereunder.
(c) "Internet" shall mean the communications network comprised of multiple
communications networks linking education, government, industrial and
private computer network.
(d) "Fund Home Page" shall mean the Fund's proprietary web site on the
Internet used by the Fund to provide information to its shareholders
and potential shareholders.
2. In addition to the services rendered by Investor Services Group as set forth
in the Agreement, Investor Services Group agrees to provide the following
services for the fees set forth in the Schedule of IMPRESSNet Fees attached
hereto as Schedule A of this Amendment:
<PAGE>
(a) in accordance with the written procedures established between the
fund and Investor Services Group, enable the Fund and its Shareholders
utilize the Internet in order to access Fund information maintained by
Investor Services Group through the use of the Investor Services Group
Web Transaction Engine and Secure Net Gateway;
(b) allow the Shareholders to perform account inquiries and transactions;
(c) maintenance of the Investor Services Group Secure Net Gateway and the
Investor Services Group Web Transaction Engine.
3. Responsibility of the Fund. In connection with the services provided by
Investor Services Group hereunder, the Fund shall be responsible for the
following:
(a) establishment and maintenance of the Fund Home Page on the Internet;
(b) services and relationships between the Fund and any third party
on-line service providers to enable the Shareholders to access the Fund
Home Page;
(c) provide Investor Services Group with access to and information
regarding the Fund Home Page in order to enable Investor Services Group
to provide the services contemplated hereunder;
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment 2 to be
executed by their duly authorized officers, as of the day and year first above
written.
THE MUNDER FUNDS, INC. THE MUNDER FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- -------------------------------- -------------------------
By: Terry H. Gardner By: By: Terry H. Gardner
Title: Vice President Title: Vice President
ST. CLAIR FUNDS, INC. THE MUNDER FRAMLINGTON
FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- -------------------------------- -------------------------
By: Terry H. Gardner By: Terry H. Gardner
Title: Vice President Title: Vice President
FIRST DATA INVESTOR SERVICES
GROUP, INC.
/s/ Gerald G. Kokos
- --------------------------------
By: Gerald G. Kokos
Title: Executive Vice President
<PAGE>
Exhibit 1
LIST OF FUNDS AND PORTFOLIOS
The Munder Funds Trust
Munder Accelerating Growth Fund
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Growth & Income Fund
Munder Index 500 Fund
Munder Intermediate Bond Fund
Munder International Equity Fund
Munder Michigan Triple Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
Munder Tax-Free Money Market Fund
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
The Munder Funds, Inc.
Munder Multi-Season Growth Fund
Munder Money Market Fund
Munder Real Estate Equity Investment Fund
Munder Value Fund
Munder Mid-Cap Growth Fund
St. Clair Funds, Inc.
Liquidity Plus Money Market Fund
Munder S&P 500 Index Equity Fund
Munder S&P MidCap Index Equity Fund
Munder S&P SmallCap Index Equity Fund
Munder Foreign Equity Fund
Munder Aggregate Bond Index Fund
Munder Framlington Funds Trust
Munder Framlington Emerging Markets Fund
Munder Framlington Healthcare Fund
Munder Framlington International Growth Fund
<PAGE>
Schedule A
IMPRESSNet Fees
Web Transaction Engine
Transaction Cost:
. Account Inquiry $.10 per inquiry
. Financial Transactions $.50 per transaction
*Hardware Maintenance Fee Including Hardware and Software: $50,000 per annum
. Does not include client hardware and software requirements. That is an out-
of-pocket expense for the client
. Installation of hardware is billed as time and materials
. Does not include third party hardware and software maintenance agreements
. Does not include hardware upgrades
*Customized Development: $150 Per hour
Call Center Services for Registration (one-time): $2.50 per call
*Network Fee (one-time): $2,100
Per Pin Assignment (one-time): $2.50
*Cumulative charge with respect to all Funds executing this Amendment and such
other Funds advised by Munder Asset Management services by Investor Services
Group.
Investor Services Group will provide an invoice as soon as practicable after the
end of each calendar month. The Fund agrees to pay to Investor Services Group
the amounts so billed by Federal Funds Wire within fifteen (15) business days
after the Fund's receipt of invoice. In addition, with respect to all fees,
Investor Services Group may charge a service fee equal to the lesser of (i) one
and one half percent (1-1/2%) per month or (ii) the highest rate legally
permitted on any past due invoiced amounts.
<PAGE>
Exhibit 9(e)
AMENDMENT TO THE
TRANSFER AGENCY AND REGISTRAR AGREEMENT
THIS AMENDMENT, dated as of June 1, 1998 is made to the Transfer Agency
Agreement[s] (the "Agreement[s]") between each of the Funds executing this
Amendment and listed on Exhibit 1 of this Amendment attached hereto and
incorporated herein (hereinafter individually and collectively referred to as
the "Fund") and FIRST DATA INVESTOR SERVICES GROUP, INC. ("Investor Services
Group").
1. Amendment # 2 to the Transfer Agency and Registrar Agreement between The
Munder Funds Trust and First Data Investor Services Group, Inc. for
retirement account fees and services, dated June 1, 1998 is deleted in its
entirety.
2. Schedule C is modified by adding the following new Section 10:
"10.Retirement Account Services The Transfer Agent agrees to perform
the services set forth in the Attached Exhibit 2 of this Schedule C
with respect to those retirement plans offered by the Fund.".
This Amendment contains the entire understanding among the parties with respect
to the transactions contemplated hereby. To the extent that any provision of
this Amendment modifies or is otherwise inconsistent with any provision of the
prior agreements and related agreements, this Amendment shall control, but the
prior agreements and all related documents shall otherwise remain in full force
and effect.
IN WITNESS WHEREOF, each party has caused this Amendment to be executed by
its duly authorized representative on the date first stated above.
THE MUNDER FUNDS, INC. THE MUNDER FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- ----------------------- ---------------------------
By: Terry H. Gardner By: By: Terry H. Gardner
Title: Vice President Title: Vice President
ST. CLAIR FUNDS, INC. THE MUNDER FRAMLINGTON FUNDS TRUST
/s/ Terry H. Gardner /s/ Terry H. Gardner
- ----------------------- ---------------------------
By: Terry H. Gardner By: Terry H. Gardner
Title: Vice President Title: Vice President
FIRST DATA INVESTOR SERVICES
GROUP, INC.
/s/ Gerald G. Kokos
- -----------------------
By: Gerald G. Kokos
Title: Executive Vice President
<PAGE>
Exhibit 1
List of Funds and Portfolios
THE MUNDER FUNDS TRUST
- ----------------------
Munder Accelerating Growth Fund
Munder Balanced Fund
Munder Bond Fund
Munder Cash Investment Fund
Munder Growth & Income Fund
Munder Index 500 Fund
Munder Intermediate Bond Fund
Munder International Equity Fund
Munder Michigan Triple Tax-Free Bond Fund
Munder Small Company Growth Fund
Munder Tax-Free Bond Fund
Munder Tax-Free Intermediate Bond Fund
Munder Tax-Free Money Market Fund
Munder U.S. Government Income Fund
Munder U.S. Treasury Money Market Fund
THE MUNDER FUNDS INC.
- ---------------------
The Munder Multi-Season Growth Fund
The Munder Money Market Fund
The Munder Real Estate Equity Investment Fund
The Munder Value Fund
The Munder Mid-Cap Growth Fund
THE ST. CLAIR FUND INC.
- -----------------------
Liquidity Plus Money Market Fund
Munder S&P 500 Index Equity Fund
Munder S&P MidCap Index Equity Fund
Munder S&P SmallCap Index Equity Fund
Munder Foreign Equity Fund
Munder Aggregate Bond Index Fund
THE MUNDER FRAMLINGTON FUNDS TRUST
- ----------------------------------
Framlington Emerging Markets Fund
Framlington Healthcare Fund
Framlington International Growth Fund
<PAGE>
Exhibit 2 to Schedule C
RETIREMENT ACCOUNT SERVICES
- ---------------------------
(a) Process new accounts, verify completeness of application forms; establish
new account records with standard abbreviations and registration formats,
including proper account identification codes.
(b) Examine and process contributions and invest monies received in Investments
in accordance with the written instructions of the Participant/Employer, as
the case may be.
(c) Process transactions in Custodial Accounts upon receipt of proper
documentation and in accordance with the terms of the plan.
(d) Reinvest income dividends and capital gains distributions in Investments
selected by the Participant.
(e) Send a confirmation to the proper person(s) with respect to each
transaction in the account.
(f) Examine and process requests for distributions, subject to receipt of
required legal documents; verify eligibility of the recipient and make
payments.
(g) Establish a record of types and reasons for distributions (i.e., attainment
of age 59-1/2, disability, death, return of excess contributions, etc.)
(h) Record method of distribution requested and/or made.
(i) Distribute the account in the event of death as required in writing by the
Participant/Beneficiary, subject to receipt of required legal documents.
(j) Receive and process designation of the beneficiary forms.
(k) Examine and process requests for direct transfers between
custodians/trustees, transfer and pay over to the successor assets in the
account and records pertaining thereto as requested;
(l) Send to each Participant/Beneficiary/Employer notices, prospectuses,
account statements, proxies and other documents or communications relating
to Fund shares or other Investments; send such other notices, documents or
other communications to Participants/Beneficiaries/Employers as the Fund
may direct FDISG to deliver.
(m) Maintain records of contributions, distributions, and other transactions.
(n) Prepare any annual reports or returns required to be prepared and/or filed
by a custodian of a Plan, including, but not limited to, an annual fair
market value report, Forms 1099R and 5498 and file with the IRS and provide
to Participant/Beneficiary.
(o) Send Participants/Beneficiaries an annual TEFRA notice regarding required
federal tax withholding.
(p) Answer Participant/Beneficiary telephone, written or other inquiries
concerning the plan and Investments under the Plan.
(q) Process requested changes to account information.
(r) Retain original source documents, such as applications and correspondence,
microfilm original source documents, as required.
(s) Respond to research inquiries from Fund or as requested by Custodian is
directed by the Fund. Perform applicable withholding for accounts.
(t) Purge "closed" accounts as directed by the Fund.
<PAGE>
Exhibit 9(g)
State Street Bank and Trust Company
1776 Heritage Drive, AFB
North Quincy, MA 02171
Ladies and Gentlemen:
Reference is made to the Administration Agreement between us dated as of
October 31, 1997 (the "Agreement").
Pursuant to the Agreement, this letter is to provide notice of the creation
of an additional investment portfolio of The Munder Framlington Funds Trust,
namely the Munder Framlington Global Financial Services Fund (the "New
Portfolio").
In accordance with the Additonal Portfolios provision of Section 1 of the
Agreement, we request that you act as Administrator with respect to the New
Portfolio.
Please indicate your acceptance of the foregoing by executing two copies of
this Agreement, returning one to the Fund and retaining one copy for your
records.
Very truly yours,
The Munder Framlington Funds Trust
By: /s/ Terry H. Gardner
-------------------------------
Accepted:
State Street Bank and Trust Company
By: /s/ Richard Enfield
-------------------------------
Date: February 24, 1998
<PAGE>
Exhibit 13(b)
Purchase Agreement
------------------
The Munder Framlington Funds Trust (the "Trust"), a Massachusetts business
trust, on behalf of the Munder Framlington Global Financial Services Fund (the
"New Portfolio"), and Funds Distributor, Inc. ("Funds Distributor"), a
Massachusetts corporation, hereby agree as follows:
1. The Trust hereby offers Funds Distributor and Funds Distributor hereby
purchases at least one share of each of the Class A, Class B, Class C,
Class Y and Class K Shares of the New Portfolio of the Trust at $10.00
per share (hereafter "Shares"). Funds Distributor hereby acknowledges
receipt of a purchase confirmation reflecting the purchase of Shares
of the Class A, Class B, Class C, Class Y and Class K Shares of the
New Portfolio, and the Trust hereby acknowledges receipt from Funds
Distributor of funds in the amount of $50.00 in full payment for the
Shares.
2. Funds Distributor represents and warrants to the Trust that the Shares
are being acquired for investment purposes and not with a view to the
distribution thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
24th day of February, 1998.
Attest: THE MUNDER FRAMLINGTON FUNDS TRUST
By: /s/ Terry H. Gardner
- -------------------- --------------------
(SEAL)
Attest: FUNDS DISTRIBUTOR, INC.
By: /s/ Joseph F. Tower
- -------------------- --------------------
(SEAL)
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Exhibit 18(b)
THE MUNDER FRAMLINGTON FUNDS TRUST
Amended and Restated Multi-Class Plan
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Introduction
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The purpose of this Plan is to specify the attributes of the five classes
of shares offered by The Munder Framlington Funds Trust (the "Trust"), including
the sales loads, expense allocations, conversion features and exchange features
of each class, as required by Rule 18f-3 under the Investment Company Act
of1940, as amended (the "1940 Act").
Each of the Trust's investment portfolios (each, a "Fund") issues its
shares of beneficial interest in five classes: "Class A" shares, "Class B"
Shares, "Class C" Shares, "Class K" Shares and "Class Y" Shares. Shares of each
Class of a Fund shall represent an equal pro rate interest in such Fund, and
generally, shall have identical voting, dividend, liquidation and other rights,
preferences, powers, restrictions, limitations, qualifications, and terms and
conditions, except that: (a) each Class shall have a different designation; (b)
each Class may have a different sales charge structure; (c) each Class of Shares
shall bear any Class Expenses, as defined below; (d) each Class shall have
exclusive voting rights on any matter submitted to shareholders that relates
solely to its arrangement and each Class shall have separate voting rights on
any matter submitted to shareholders in which the interests of one Class differ
from the interests of any other Class; and (e) each Class may have different
exchange and/or conversion features as described below.
Allocation of Expenses
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To the extent practicable, certain expenses (other than Class expenses as
defined below which shall be allocated more specifically), shall be subtracted
from the gross income allocated to each Class of a Fund on the basis of net
assets of each class of the Fund. These expenses include:
(1) Expenses incurred by the Trust (for example, fees of Trustees, auditors,
and legal counsel) not attributable to a particular Fund or to a particular
Class of shares of a Fund ("Trust Level Expenses"); and
(2) Expenses incurred by a Fund not attributable to any particular Class of the
Fund's shares (for example, advisory fees, custodial fees, or other
expenses relating to the management of the Fund's assets) ("Fund
Expenses").
Expenses attributable to a particular Class ("Class Expenses") shall be
limited to: (i) payments made pursuant to a Service Plan and Distribution Plan
or Shareholder Servicing Plan; (ii) transfer agent fees attributable to a
specific Class; (iii) printing and postage expenses related to preparing and
distributing materials such as shareholder
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reports, prospectuses and proxies to current shareholders of a specific Class;
(iv) Blue Sky fees incurred by a Class; (v) Securities and Exchange Commission
registration fees incurred by a Class; (vi) the expense of administrative
personnel and services to support the shareholders of a specific Class; (vii)
litigation or other legal expenses relating solely to one Class; and (viii)
Trustees' fees incurred as a result of issues relating solely to one Class.
Expenses in category (i) above must be allocated to the Class for which such
expenses are incurred. For all other "Class Expenses" listed in categories (ii)
- - (viii) above, the President and Chief Financial Officer shall determine,
subject to Board approval or ratification, which of such categories of expenses
will be treated as Class Expenses, consistent with applicable legal principals
under the Act and the Internal Revenue Code of 1986, as amended.
Therefore, expenses of a Fund shall be apportioned to each Class of shares
depending upon the nature of the expense item. Trust Level Expenses and Fund
Expenses will be allocated among the Classes of shares based on their relative
net asset values. Approved Class expenses shall be allocated to the particular
Class to which they are attributable. In addition, certain expenses may be
allocated differently if their method of imposition changes. Thus, if a Class
Expense can no longer be attributed to a Class, it shall be charged to a Fund
for allocation among Classes, as may be appropriate; however, any additional
Class Expenses not specifically identified above which are subsequently
identified and determined to be properly allocated to one Class of shares shall
not be so allocated until approved by the Board of Trustees of the Trust in
light of the requirements of the Act and the Internal revenue Code of 1986, as
amended, and any private letter rulings issued with respect to the Trust by the
Internal Revenue Service.
Class A Shares
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Class A Shares of a Fund are offered at net asset value plus an initial
sales charge as set forth in the then-current prospectus of the Fund. The
initial sales charge may be waived or reduced on certain types of purchases as
set forth in a Fund's then-current prospectus. A contingent deferred sales
charge may apply to certain redemptions made within a specified period as set
forth in the Fund's then-current prospectus. Class A Shares of a Fund may be
exchanged for Class A Shares of another fund of the Trust, The Munder Funds
Trust or The Munder Funds, Inc. subject to any sales charge differential.
Class A Shares of the Funds pay a Rule 12b-1 service fee of up to 0.25%
(annualized) of the average daily net assets of a Fund's Class A Shares.
Distribution and support services provided by brokers, dealers and other
institutions may include forwarding sales literature and advertising materials
provided by the Trust's distributor; processing purchase, exchange and
redemption requests from customers placing orders with the Trust's transfer
agent; processing dividend and distribution payments from the Funds of the Trust
on behalf of customers; providing information periodically to customers showing
their positions in Class A Shares ; providing sub-accounting with respect to
Class A Shares beneficially owned by customers or the information necessary for
sub-accounting; responding to inquiries from customers concerning their
investment
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in Class A Shares; arranging for bank wires; and providing such other similar
services as may reasonably be requested.
Class B Shares
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Class B Shares of a Fund are offered without an initial sales charge but
are subject to a contingent deferred sales charge payable upon certain
redemptions as set forth in the Fund's then-current prospectus. Class B Shares
of a Fund may be exchanged for Class B Shares of another fund of the Trust, The
Munder Funds Trust or The Munder Funds, Inc. subject to any sales charge
differential.
Class B Shares of a Fund will automatically convert to Class A Shares of
the Fund on the first business day of the month in which the sixth anniversary
of the issuance of the Class B Shares occurs. The conversion will be effected
at the relative net asset values per share of the two classes.
Class B Shares pay a Rule 12b-1 service fee of up to 0.25% (annualized) and
a distribution fee of up to 0.75% (annualized) of the average daily net assets
of the Fund's Class B Shares. Brokers, dealers and other institutions may
maintain Class B shareholder accounts and provide personal services to Class B
shareholders. Services relating to the sale of Class B Shares may include, but
not be limited to, preparation, printing and distribution of prospectuses, sales
literature and advertising materials by the Trust's distributor, or, as
applicable, brokers, dealers or other institutions; commissions, incentive
compensation or other compensation to, and expenses of, account executives or
other employees of the Trust's distributor or brokers, dealers and other
institutions; overhead and other office expenses of the Trust's distributor
attributable to distribution or sales support activities; and opportunity costs
related to the foregoing (which may be calculated as a carrying charge on the
Trust's distributor unreimbursed expenses) incurred in connection with
distribution sales support activities. The overhead and other office expenses
referenced above may include, without limitation, (a) the expenses of operating
the Trust's distributor's offices in connection with the sale of the Class B
Shares of the Funds, including lease costs, the salaries and employee benefit
costs of administrative, operations and support personnel, utility costs,
communications costs and the costs of stationery and supplies, (b) the costs of
client sales seminars and travel related to distribution and sales support
activities, and (c) other expenses relating to distribution and sales support
activities.
Class C Shares
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Class C Shares of a Fund are offered at net asset value. A contingent
deferred sales charge may apply to certain redemptions made within the first
year of investing as set forth in the relevant Fund's then-current prospectus.
Class C Shares of a Fund may be
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exchanged for Class C Shares of another fund of the Trust, The Munder Funds
Trust or The Munder Funds, Inc. subject to any sales charge differential.
Class C Shares pay a Rule 12b-1 service fee of up to 0.25% (annualized) and
a distribution fee of up to 0.75% (annualized) of the average daily net assets
of the Fund's Class C Shares. Brokers, dealers and other institutions may
maintain Class C shareholder accounts and provide personal services to Class C
shareholders. Services relating to the sale of Class C Shares may include, but
not be limited to, preparation, printing and distribution of prospectuses, sales
literature and advertising materials by the Trust's distributor, or, as
applicable, brokers, dealers or other institutions; commissions, incentive
compensation or other compensation to, and expenses of, account executives or
other employees of the Trust's distributor or brokers, dealers and other
institutions; overhead and other office expenses of the Trust's distributor
attributable to distribution or sales support activities; and opportunity costs
related to the foregoing (which may be calculated as a carrying charge on the
Trust's distributor unreimbursed expenses) incurred in connection with
distribution sales support activities. The overhead and other office expenses
referenced above may include, without limitation, (a) the expenses of operating
the Trust's distributor's offices in connection with the sale of the Class C
Shares of the Funds, including lease costs, the salaries and employee benefit
costs of administrative, operations and support personnel, utility costs,
communications costs and the costs of stationery and supplies, (b) the costs of
client sales seminars and travel related to distribution and sales support
activities, and (c) other expenses relating to distribution and sales support
activities.
Class Y Shares
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Class Y Shares of a Fund are offered at net asset value. Class Y Shares of
a Fund may be exchanged for Class Y Shares of another fund of the Trust, The
Munder Funds Trust or The Munder Funds, Inc. without the imposition of a sales
charge.
Class K Shares
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Class K Shares of a Fund are offered at net asset value. Class K Shares of
a Fund may be exchanged for Class K Shares of another fund of the Trust, The
Munder Funds Trust or The Munder Funds, Inc. without the imposition of a sales
charge. Class K Shares may also be exchanged for class A Shares of the same
Fund without the imposition of a sales charge.
Class K Shares of the Funds pay a service fee of up to 0.25% (annualized)
of the average daily net assets of a Fund's Class K Shares. Services provided by
brokers, dealers and other institutions for such service fees include :
processing purchase, exchange and
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redemption requests from customers placing orders with the Trust's 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 inquiries from customers concerning their investment
in Class K Shares; arranging for bank wires; and providing such other similar
services as may reasonably be requested.
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