PROSPECTUS
Liquidity Plus Money Market Fund (the "Fund") is a diversified portfolio of
St. Clair Funds, Inc. (the "Company"), an open-end management investment
company.
The Fund's investment objective is to provide current interest income
consistent with liquidity and stability of principal. The Fund intends to
achieve this objective by investing substantially all of its assets in a
diversified portfolio of money market instruments with remaining maturities of
397 days or less.
Munder Capital Management (the "Advisor") serves as investment advisor to
the Fund.
This Prospectus contains information that a prospective investor should
know before investing. Investors are encouraged to read this Prospectus and
retain it for future reference. A Statement of Additional Information dated
November 15, 1996, as amended or supplemented from time to time, has been filed
with the Securities and Exchange Commission (the "SEC") and is incorporated by
reference into this Prospectus. It may be obtained free of charge by calling the
Fund at (800) 438-5789.
SHARES OF THE FUND 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 FUND INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
Although the Fund seeks to maintain a constant net asset value of $1.00
per share, there can be no assurance that the 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.
The date of this Prospectus is November 15, 1996
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Shares of the Fund ("Shares") are sold only to Comerica Bank, its
affiliate and subsidiary banks, and certain other Institutional Investors
("Institutional Investors"). Shares may be purchased by Institutional Investors
for investment of their own funds, or for funds of their customer accounts
("Customer Accounts") for which they serve in a fiduciary, agency, or custodian
capacity. Shares are sold and redeemed without the imposition of a purchase or
redemption charge by the Fund, although Institutional Investors that are record
owners of Shares for their Customer Accounts may charge their Customers separate
account fees. See "Purchase and Redemption of Shares."
Table of Contents
Page
The Fund
Expense Table 3
Investment Objective and Policies 4
Portfolio Instruments and Practices 4
Investment Limitations 9
Purchase and Redemption of Shares 11
Dividends and Distributions 13
Net Asset Value 13
Management 14
Taxes 17
Description of Shares 18
Performance 19
General Information 20
No person has been authorized to give any information, or to make any
representations not contained in this Prospectus, or in the Fund's Statement of
Additional Information incorporated herein by reference, in connection with the
offering made by this Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Fund or
the Distributor. This Prospectus does not constitute an offering by the Fund or
by the Distributor in any jurisdiction in which such offering may not lawfully
be made.
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EXPENSE TABLE
The table below sets forth certain costs and expenses that an investor
will incur either directly or indirectly. Shares of the Fund are sold without an
initial or contingent deferred sales charge to Comerica Bank, its affiliate and
subsidiary banks, and certain other Institutional Investors.
See "Purchase and Redemption of Shares."
Annual Operating Expenses
(as a percentage of average net assets)
Advisory Fees 0.35%
12b-1 Fees 0.35%
Other Expenses 0.25%
Total Fund Operating Expenses 0.95%
The amount of "Other Expenses" in the table above is based on estimated
expenses and projected assets for the current fiscal year. See "Management" in
this Prospectus for a further description of the Fund's operating expenses. Any
fees charged by institutions directly to customer accounts for services provided
in connection with investments in shares of the Fund are in addition to the
expenses shown in the above Expense Table and the Example shown below.
Example
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect to
a hypothetical investment in the Fund. These amounts are based on payment by the
Fund of operating expenses at the levels set forth in the above table, and are
also based on the following assumptions:
An investor would pay the following expenses on a $1,000 investment,
assuming (1) a hypothetical 5% annual return and (2) redemption at the end of
the following time periods:
1 year 3 years
$10 $30
The foregoing Expense Table and Example are intended to assist investors
in understanding the various costs and expenses that investors bear, either
directly or indirectly.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF FUTURE INVESTMENT RETURN OR OPERATING
EXPENSES. ACTUAL INVESTMENT RETURN AND OPERATING EXPENSES MAY
BE MORE OR LESS THAN THOSE SHOWN.
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INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide current interest income
consistent with liquidity and stability of principal. There can be no assurance
that the Fund will achieve its investment objective. Purchasing Shares of the
Fund should not be considered a complete investment program, but an important
segment of a well-diversified investment program.
The Fund intends to achieve its stated objective by investing in a
diversified portfolio of U.S. dollar-denominated money market instruments,
including a broad range of government, bank, and commercial paper obligations.
The securities held by the Fund will have remaining maturities of 397 days or
less, although securities subject to repurchase agreements, variable and
floating rate instruments and certain other securities may bear longer
maturities. In addition, the Fund's average weighted portfolio maturity will not
exceed 90 days. The Fund seeks to maintain a net asset value of $1.00 per Share
although there is no assurance that it will be able to do so on a continuous
basis.
The following descriptions illustrate the types of instruments in which
the Fund may invest.
PORTFOLIO INSTRUMENTS AND PRACTICES
AND ASSOCIATED RISK FACTORS
U.S. Government Obligations. The Fund may purchase obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities.
Obligations of certain agencies and instrumentalities of the U.S. Government are
supported by the full faith and credit of the United States; other instruments,
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; 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.
Bank Obligations. The Fund may purchase U.S. dollar-
denominated bank obligations, including certificates of
deposit, bankers' acceptances, bank notes, deposit notes and
interest-bearing savings and time deposits, issued by U.S. or
foreign banks or savings institutions having total assets at
the time of purchase in excess of $1 billion. For this
purpose, the assets of a bank or savings institution include
the assets of both its domestic and foreign branches. See
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"Foreign Securities" for a discussion of the risks associated with investments
in obligations of foreign banks and foreign branches of domestic banks. The Fund
will invest in the obligations of domestic banks and savings institutions only
if their deposits are federally insured. Investments by the Fund in the
obligations of foreign banks and foreign branches of domestic banks will not
exceed 25% of the Fund's total assets at the time of investment. Foreign bank
obligations include Eurodollar Certificates of Deposit ("ECDs"), Eurodollar Time
Deposits ("ETDs"), Canadian Time Deposits ("CTDs"), Schedule Bs, Yankee
Certificates of Deposit ("Yankee CDs") and Yankee Bankers' Acceptances ("Yankee
BAs"). A discussion of these obligations appears in the Statement of Additional
Information under "Additional Information on Portfolio Investments -- Non-
Domestic Bank Obligations."
Commercial Paper. Commercial paper (short-term promissory notes issued by
corporations), including variable amount master demand notes, having short-term
ratings at the time of purchase, must be rated by at least two nationally
recognized statistical rating organizations ("NRSROs"), such as Moody's
Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P")
within the highest rating category assigned to short-term debt securities or, if
not rated, or rated by only one agency, are determined to be of comparable
quality pursuant to guidelines approved by the Company's Board of Directors. To
the extent that the ratings accorded by NRSROs may change as a result of changes
in their rating systems, the Fund will attempt to use comparable ratings as
standards for its investments, in accordance with the investment policies
contained herein. Where necessary to ensure that an instrument meets, or is of
comparable quality to, the Fund's rating criteria, the Fund may require that the
issuer's obligation to pay the principal of, and the interest on, the instrument
be backed by insurance or by an unconditional bank letter or line of credit,
guarantee, or commitment to lend.
All obligations, including any underlying guarantees, must be deemed by
the Advisor to present minimal credit risks, pursuant to guidelines approved by
the Board of Directors. See the "Appendix" to the Statement of Additional
Information for a description of applicable ratings.
The Fund may invest in commercial obligations issued in reliance on the
"private placement" exemption from registration afforded by Section 4(2) of the
Securities Act of 1933, as amended ("Section 4(2) paper"). The Fund may also
purchase securities that are not registered under the Securities Act of 1933, as
amended, but which can be sold to qualified institutional buyers in accordance
with Rule 144A under that Act ("Rule 144A securities"). Section 4(2) paper
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is restricted as to disposition under the federal securities laws, and generally
is sold to institutional investors, such as the Fund, which agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper
normally is resold to other Institutional Investors like the Fund through or
with the assistance of the issuer or investment dealers who make a market in the
Section 4(2) paper, thus providing liquidity. Rule 144A securities generally
must be sold 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.
Repurchase Agreements. The Fund may purchase securities from financial
institutions subject to the seller's agreement to repurchase them at an
agreed-upon time and price ("repurchase agreements"). 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 financial
institutions with which the Fund may enter into repurchase agreements include
member banks of the Federal Reserve system, any foreign bank or any domestic or
foreign broker/dealer which is recognized as a reporting government securities
dealer. The Advisor will continuously monitor the creditworthiness of the seller
under a repurchase agreement, and will require the seller to maintain liquid
assets in a segregated account in an amount that is greater than the repurchase
price. Default by or bankruptcy of the seller would, however, expose the Fund to
possible loss because of adverse market action or delays in connection with the
disposition of the underlying obligations.
Reverse Repurchase Agreements. The Fund may borrow funds for temporary
purposes by selling portfolio securities to financial institutions such as banks
and broker/dealers and agreeing to repurchase them at a mutually specified date
and price ("reverse repurchase agreements"). Reverse repurchase agreements
involve the risk that the market value of the securities sold by the Fund may
decline below the repurchase price. The Fund would pay interest on amounts
obtained pursuant to a reverse repurchase agreement.
Investment Company Securities. In connection with the management of daily
cash positions, the Fund may invest in securities issued by other investment
companies which invest in short-term debt securities and which seek to maintain
a $1.00 net asset value per share (i.e., "money market funds"). Securities of
other investment companies will be acquired within limits prescribed by the 1940
Act. These limitations, among other matters, restrict investments in securities
of
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other investment companies to no more than 10% of the value of the Fund's total
assets, with no more than 5% invested in the securities of any one investment
company. As a shareholder of another investment company, the Fund would bear,
along with other shareholders, its pro rata portion of the other investment
company's expenses, including advisory fees. These expenses would be in addition
to the expenses the Fund bears directly in connection with its own operations.
Asset-Backed Securities. Subject to applicable maturity and credit
criteria, the Fund may purchase asset-backed securities (i.e., securities backed
by mortgages, installment sales contracts, credit card receivables or other
assets). The average life of asset-backed securities varies with the maturities
of the underlying instruments which, in the case of mortgages, have maximum
maturities of forty years. The average life of a mortgage-backed instrument, in
particular, is likely to be substantially less than the original maturity of the
mortgage pools underlying the securities as the result of scheduled principal
payments and mortgage prepayments. The rate of such mortgage prepayments, and
hence the life of the certificates, will be primarily a function of current
interest rates and current conditions in the relevant housing markets. The
relationship between mortgage prepayment and interest rates may give some
high-yielding mortgage-related securities less potential for growth in value
than conventional bonds with comparable maturities. In addition, in periods of
falling interest rates, the rate of mortgage prepayment tends to increase.
During such periods, the reinvestment of prepayment proceeds by the Fund will
generally be lower rates than the rates that were carried by the obligations
that have been prepaid. Because of these and other reasons, an asset- backed
security's total return may be difficult to predict precisely. To the extent
that the Fund purchases mortgage-related or mortgage-backed securities at a
premium, mortgage prepayments (which may be made at any time without penalty)
may result in some loss of the Fund's principal investment to the extent of
premium paid.
Stripped Securities. The Fund may purchase participation in trusts that
hold U.S. Treasury and agency securities (such as TIGRs and CATS) and also may
purchase Treasury receipts and other stripped securities, which represent
beneficial ownership interests in either future interest payments or future
principal payments on U.S. Government obligations. These instruments are issued
at a discount to their "face value" and may (particularly in the case of
stripped mortgage-backed securities) exhibit greater price volatility than
ordinary debt securities because of the manner in which their principal and
interest are returned to investors. Certain types of stripped securities, such
as interest only or principal only securities backed by fixed-rate mortgages
will
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be considered illiquid investments and will be acquired subject to the
limitation on illiquid investments unless determined to be liquid under
guidelines established by the Board of Directors.
Variable and Floating Rate Instruments. The Fund may purchase variable and
floating rate instruments which may have stated maturities in excess of the
Fund's maturity limitations but are deemed to have shorter maturities because
the Fund can demand payment of the principal of the instrument at least once
within such periods 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
or instrumentality thereof) or are otherwise deemed to have shorter maturities
in accordance with the current regulations of the Securities and Exchange
Commission. 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 rate. Unrated variable and floating rate instruments
will be determined by the Advisor to be of comparable quality at the time of
purchase to rated instruments purchasable by the Fund. The absence of an active
secondary market, however, could make it difficult to dispose of the
instruments, and the Fund could suffer a loss if the issuer defaulted or during
periods that the Fund is not entitled to exercise its demand rights. Variable
and floating rate instruments held by the 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.
When-Issued Purchases and Forward Commitments. The Fund may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions, which involve a commitment by
the Fund to purchase or sell particular securities with payment and delivery
taking place at a future date (perhaps one or two months later), permit the Fund
to lock-in a price or yield on a security, regardless of future changes in
interest rates. When-issued and forward commitment transactions involve the risk
that the price or yield obtained may be less favorable than the price or yield
available when the delivery takes place. The Fund will establish a segregated
account consisting of cash, U.S. Government securities or other high-grade debt
obligations in an amount equal to the amount of its when-issued purchases and
forward commitments. The Fund's when-issued purchases and forward purchase
commitments are not expected to exceed 25% of the value of the Fund's total
assets absent unusual market conditions. The Fund does not intend to engage in
when-issued purchases and forward commitments for speculative purposes but only
in furtherance of its investment objective.
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Foreign Securities. The Fund may invest in the U.S. dollar-denominated
securities of foreign issuers such as foreign commercial paper and obligations
of foreign banks. There are certain risks and costs involved in investing in
securities of companies and governments of foreign nations, which are in
addition to the usual risks inherent in U.S. investments. Investments in foreign
securities involve higher costs than investments in U.S. securities, including
higher transaction costs as well as the imposition of additional taxes by
foreign governments. In addition, foreign investments may include additional
risks associated with the level of currency exchange rates, less complete
financial information about the issuers, less market liquidity, and political
instability. Future political and economic developments, the possible imposition
of withholding taxes on interest income, the possible seizure or nationalization
of foreign holdings, the possible establishment of exchange controls, or the
adoption of other governmental restrictions might adversely affect the payment
of principal and interest on foreign obligations. Additionally, foreign banks
and foreign branches of domestic banks may be subject to less stringent reserve
requirements, and to different accounting, auditing and record keeping
requirements.
Illiquid Securities. The Fund will not invest more than 10% of the value
of its net assets (determined at the time of acquisition) in securities that are
illiquid. 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 policies of the
SEC. Subject to this limitation are repurchase agreements and time deposits
which do not provide for payment within seven days, as well as Section 4(2)
paper and Rule 144A securities that have not been determined to be liquid in
accordance with procedures adopted by the Board of Directors.
Portfolio Transactions. All orders for the purchase or sale of securities
on behalf of the Fund are placed by the Advisor with broker/dealers or other
institutions that the Advisor selects. Short-term capital gains realized from
portfolio transactions are taxable to shareholders as ordinary income.
INVESTMENT LIMITATIONS
The Fund's investment objective and certain investment policies of the
Fund may be changed by the Board of Directors without shareholder approval.
However, shareholders will be notified of any such material change. No assurance
can be given that the Fund will achieve its investment objective. The Fund has
also adopted certain fundamental investment
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limitations that may be changed only with the approval of a majority (as defined
in the 1940 Act) of the outstanding Shares of the Fund. These investment
restrictions are set forth below and in the Statement of Additional Information.
The Fund may not:
1. Purchase securities (other than obligations of the U.S.
Government, its agencies or instrumentalities) if more than 5% of the
value of the Fund's total assets would be invested in the securities of
any one issuer, except that up to 25% of the value of the Fund's total
assets may be invested without regard to this 5% limitation. However, as
an operating policy the Fund intends to adhere to this 5% limitation with
regard to 100% of its portfolio to the extent required under applicable
regulations under the 1940 Act.
2. Purchase more than 10% of the outstanding voting securities of
any issuer, except that up to 25% of the value of the Fund's total assets
may be invested without regard to this 10% limitation.
3. Invest 25% or more of the Fund's total assets in one or more
issuers conducting their principal business activities in the same
industry, provided that: (a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, domestic bank certificates of deposit, bankers'
acceptances, and repurchase agreements secured by such obligations; (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 their 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. Make loans, except that the Fund may purchase or hold certain
debts instruments and enter into repurchase agreements, in accordance with
its policies and limitations.
5. Borrow money except for temporary purposes in amounts up to
one-third of the value of the Fund's total assets at the time of such
borrowing. Whenever borrowings exceed 5% of the Fund's total assets, the
Fund will not make any additional investments.
6. Knowingly invest more than 10% of its total
assets in illiquid securities including time deposits
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with maturities longer than seven days and repurchase agreements providing
for settlement more than seven days after notice.
The investment limitations are applied at the time the investment
securities are purchased.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Fund are sold on a continuous basis by the Distributor,
Funds Distributor, Inc. The Distributor is a registered broker/dealer with
principal offices at 60 State Street, Boston, Massachusetts 02109.
Purchase of Shares
Shares of the Fund are sold without an initial or contingent sales charge
to Institutional Investors that have entered into agreements with the Company to
provide shareholder services for Customer Accounts. All share purchases on
behalf of a Customer Account are effected through procedures established in
connection with the requirements of the account, and confirmations of share
purchases and redemptions will be sent to the institution involved.
Institutional Investors (or their nominees) will normally be the holders of
record of Fund shares acting on behalf of their Customers, and will reflect
their Customers' beneficial ownership of shares in the account statements
provided by them to their Customers. The exercise of voting rights and the
delivery to Customers of shareholder communications from the Fund will be
governed by the Customers' account agreements with the institution. Investors
wishing to purchase shares of the Fund should contact their account
representatives.
Provided their procedures are compatible with the purchase and redemption
operations of the Fund, Institutional Investors may purchase Fund Shares on
behalf of their Customers through automatic "sweeping" and other programs
established by the Institutional Investors, whereby amounts in excess of minimum
balances maintained in their Customer Accounts are invested in Fund Shares.
There is no minimum for initial or subsequent investments.
Shares of the Fund are sold at net asset value per share next determined
on that day after receipt of a purchase order. Purchase orders by an institution
for shares in the Fund must be received, together with payment, by the
Distributor or Transfer Agent by 12:00 noon (Eastern time) on any business day.
A purchase order received by the Distributor or by the Transfer Agent after such
time will not be accepted; notice thereof will be given to the institution
placing the order,
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and any funds received will be returned promptly to the
sending institution.
It is the responsibility of the institution to transmit orders for
purchases by their customers and to deliver required funds on a timely basis. If
funds are not received within the periods described above, the order will be
canceled, notice thereof will be given, and the institution will be responsible
for any loss to the Fund or its shareholders. Institutions may charge certain
account fees depending on the type of account the investor has established with
the institution. In addition, an institution may receive fees from the Funds
with respect to the investments of its customers as described below under
"Management." Payments for Shares of the Fund may, in the discretion of the
Advisor, be made in the form of securities that are permissible investments for
the Fund. For further information see "In- Kind Purchases" in the Statement of
Additional Information.
Purchases may be effected on days the New York Stock Exchange is open for
business. The Fund reserves the right to reject any purchase order. Payment for
orders which are not received or accepted will be returned after prompt inquiry.
The issuance of shares is recorded on the books of the Fund, and share
certificates are not issued unless expressly requested in writing. Certificates
are not issued for fractional shares.
Redemption of Shares
Redemption orders are effected at the net asset value per share next
determined after receipt of the order by the Transfer Agent. Shares held by an
institution on behalf of its customers must be redeemed in accordance with
instructions and limitations pertaining to the account at the institution. The
Company intends to pay cash for all Shares redeemed, but in unusual
circumstances may make payment wholly or partly in portfolio securities at their
then market value equal to the redemption price. In such cases, an investor may
incur transaction costs in converting such securities to cash.
Share balances may be redeemed pursuant to arrangements between
institutions and investors. It is the responsibility of an institution to
transmit redemption orders to the Transfer Agent and to credit its Customer
Accounts with the redemption proceeds on a timely basis. If a redemption order
for shares of the Fund is received by the Transfer Agent before 12:00 noon
Eastern time on a business day, payment is normally wired on the same business
day; if a redemption order is received by the Transfer Agent between 12:00 noon
Eastern time and 4:00 p.m. Eastern time on a business day, payment is normally
wired on the next business day. The Company reserves
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the right to delay the wiring of redemption proceeds for up to seven days after
it receives a redemption order if, in the judgment of the Advisor, an earlier
payment could adversely affect a Fund.
Neither the Fund, the Company, the Distributor nor the Transfer Agent will
be responsible for any loss, damages, expense or cost arising out of any
telephone redemptions effected upon instructions believed by them to be genuine.
Accordingly, the Institutional Investor will bear the risk of loss. The Fund
will attempt to confirm that telephone instructions are genuine and will use
such procedures as are considered reasonable.
Currently, the Company does not accept purchase and redemption orders on
days the New York Stock Exchange is closed. The New York Stock Exchange is
currently scheduled to be closed on New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Veterans' Day, Thanksgiving
Day and Christmas Day, and on the preceding Friday or subsequent Monday when one
of these holidays falls on a Saturday or Sunday, respectively.
DIVIDENDS AND DISTRIBUTIONS
The net investment income of the Fund is declared daily as a dividend to
its shareholders. Capital gains distributions, if any, will be made at least
annually. Shareholders of the Fund whose purchase orders are received and
executed by 12:00 noon (Eastern time) receive dividends for that day.
Shareholders whose redemption orders have been received by 12:00 noon (Eastern
time) will not receive dividends for that day, while shareholders whose
redemption orders are received after 12:00 noon (Eastern time) will receive that
day's dividends. See "Purchase and Redemption of Shares." Dividends are
distributable monthly in the form of additional Shares of the Fund, or, if
specifically requested (in writing) by the shareholder from the Fund's Transfer
Agent prior to the distribution date, in cash. Dividends are automatically paid
in cash (along with any redemption proceeds) not later than seven business days
after a shareholder closes his account with the Fund.
NET ASSET VALUE
The net asset value per share of the Fund for the purpose of pricing
purchase and redemption orders is determined as of 12:00 noon (Eastern time) and
as of the close of regular trading on the New York Stock Exchange on each day
the Company's Shares are available for purchase and redemption. In seeking to
maintain a net asset value of $1.00 per Share with respect to the Fund, the
Company values the Fund's
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portfolio securities according to the amortized cost method of valuation. Under
this method, securities are valued initially at cost on the date of purchase.
Thereafter, absent unusual circumstances, the Fund assumes a constant
proportionate amortization of any discount or premium until maturity of the
security. Net asset value for the Fund is calculated by dividing the value of
all securities and other assets belonging to the Fund, less the liabilities
charged to the Fund, by the number of outstanding shares of the Fund.
MANAGEMENT
Board of Directors
The Company is managed under the direction of the Board of Directors. The
Statement of Additional Information contains the name and background information
of each Director.
Investment Advisor
The investment advisor of the Fund 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 Old MCM,
Inc., Woodbridge Capital Management, Inc., Munder Group LLC, and WAM Holdings,
Inc. ("WAM"). Woodbridge and WAM are indirect, wholly-owned subsidiaries of
Comerica Incorporated. Mr. Lee P. Munder, the Advisor's chief executive officer,
indirectly owns or controls a majority of the partnership interests in the
Advisor. As of June 30, 1996, the Advisor and its affiliates had approximately
$34 billion in assets under active management, of which $17 billion were
invested in equity securities, $6 billion were invested in money market or other
short-term instruments, and $11 billion were invested in other fixed income
securities.
Subject to the supervision of the Board of Directors, the Adviser provides
overall investment management for the Fund, provides research and credit
analysis, is responsible for all purchases and sales of portfolio securities,
maintains books and records with respect to the Fund's securities transactions
and provides periodic and special reports to the Board of Directors as
requested.
For the advisory services provided and expenses assumed by it, the Advisor
has agreed to a fee from the Fund, computed daily and payable monthly, at an
annual rate of .35% of average daily net assets of the Fund.
The Advisor may, from time to time, make payments to banks, broker-dealers
or other financial institutions for certain services to the Fund and/or its
shareholders,
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including sub-administration, sub-transfer agency and shareholder servicing.
Such payments are made out of the Advisors own resources and do not involve
additional costs to the Fund or its shareholders.
Administrator, Custodian and Transfer Agent
First Data Investor Services Group, Inc. ("First Data"), whose principal
business address is 53 State Street, Boston, Massachusetts 02109 (the
"Administrator"), serves as administrator for the Fund. First Data is a
wholly-owned subsidiary of First Data Corporation. The Administrator generally
assists the Funds in all aspects of its administration and operations, including
the maintenance of financial records and fund accounting.
First Data also serves as the Funds' transfer agent and dividend
disbursing agent ("Transfer Agent"). Shareholder inquiries may be directed to
First Data at P.O. Box 5130, Westborough, Massachusetts 01581-5130.
As compensation for these services, the Administrator and Transfer Agent
are entitled to receive fees, based on the aggregate average daily net assets of
the Fund and certain other investment portfolios that are advised by the Advisor
and for which First Data provides services, computed daily and payable monthly
at the rate of .12% of the first $2.8 billion of net assets, plus .105% of the
next $2.2 billion of net assets, plus .10% of all net assets in excess of $5
billion with respect to the Administrator and .02% of the first $2.8 billion of
net assets, plus .015% of the next $2.2 billion of net assets, plus .01% of all
net assets in excess of $5 billion with respect to the Transfer Agent.
Administration fees payable by the Fund and certain other investment portfolios
advised by the Advisor are subject to a minimum annual fee of $1.2 million to be
allocated among each series and class thereof. The Administrator and Transfer
Agent are also entitled to reimbursement for out-of-pocket expenses. The
Administrator has entered into a Sub-Administration Agreement with the
Distributor under which the Distributor provides certain administrative services
with respect to the Funds. The Administrator pays the Distributor a fee for
these services out of its own resources at no cost to the Fund.
Comerica Bank (the "Custodian"), whose principal business address is One
Detroit Center, 500 Woodward Avenue, Detroit, Michigan 48226, provides custodial
services to the Funds. As compensation for its services, the Custodian is
entitled to receive fees, based on the aggregate average daily net assets of the
Fund and other funds of the Company, Munder Funds, Inc. and The Munder Funds
Trust, computed daily and payable monthly at an annual rate of .03% of the first
$100 million of average
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daily net assets, .02% of the next $500 million of net assets and .01% of net
assets in excess of $600 million. The Custodian also receives certain
transaction based fees. For an additional description of the services performed
by the Administrator, Transfer Agent and Custodian, see the Statement
of Additional Information.
Distribution Services Agreement
The Fund has adopted a Distribution and Service Plan, pursuant to which
the Fund uses its assets to finance activities relating to the distribution of
its shares to investors and the provision of certain shareholder services (the
"Plan"). Under the Plan, the Distributor is paid a service fee at an annual rate
of 0.25% of the value of the average daily net assets of the Fund. The
Distributor is also paid a distribution fee at an annual rate of 0.10%, of the
value of the average daily net assets of the Fund.
Under the Plan, the Distributor uses the service fees primarily to pay
ongoing trail commissions to securities dealers (which may include the
Distributor itself) and other financial institutions and organizations
(collectively, the "Service Organizations") who provide shareholder services for
the Fund. These services include, among other things, processing new shareholder
account applications, preparing and transmitting to the Fund's Transfer Agent
computer processable tapes of all transactions by customers and serving as the
primary source of information to customers in answering questions concerning the
Fund and their transactions with the Fund.
The Plan permits payments to be made by the Fund to the Distributor for
expenditures incurred by it in connection with the distribution of Fund shares
to investors and the provision of certain shareholder services, including but
not limited to the payment of compensation, including incentive compensation, to
Service Organizations to obtain various distribution related services for the
Fund. The Distributor is also authorized to engage in advertising, the
preparation and distribution of sales literature and other promotional
activities on behalf of the Fund. In addition, the Plan authorizes payments by
the Fund of the cost of preparing, printing and distributing Fund prospectuses
and statements of additional information to prospective investors and of
implementing and operating the Plan. Distribution expenses also include an
allocation of overhead of the Distributor and accruals for interest on the
amount of distribution expenses incurred by the Distributor.
The Distributor expects to pay or arrange for payment of
sales commissions to dealers authorized to sell shares, all or
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a part of which may be paid at the time of sale. The Distributor will use its
own funds (which may be borrowed) to pay such commissions pending reimbursement
pursuant to the Plan. Because the payment of distribution and service fees with
respect to shares of the Fund is subject to the 0.35% limitation described above
and will therefore be spread over a number of years, it may take the Distributor
a number of years to recoup sales commissions paid by it to dealers and other
distribution and service related expenses from the payments received by it from
the Fund pursuant to the Plan.
The Plan may be terminated at any time. The Plan provides that amounts
paid as prescribed by the Plan at any time may not cause the limitation on such
payments established by the Plan to be exceeded. The amount of daily
compensation payable to the Distributor with respect to each day will be accrued
each day as a liability of the Fund and will accordingly reduce the Fund's net
assets upon such accrual.
Payments under the Plans are not tied exclusively to the distribution
and/or shareholder service expenses actually incurred by the Distributor and the
payments may exceed distribution and/or service expenses actually incurred. The
Company's Board of Directors evaluates the appropriateness of the Plan and its
payment terms on a continuous basis and in so doing will consider all relevant
factors, including expenses incurred by the Distributor and the amount received
under the Plan.
TAXES
The Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). This requires, among
other things, that the Fund distribute to its shareholders at least 90% of its
investment company taxable income, but the Fund contemplates declaring as
dividends 100% of its investment company taxable income. Generally, the Fund's
investment company taxable income will be its taxable income (for example, its
interest income and net short-term capital gains), subject to certain
adjustments and excluding the excess of any net long-term capital gain for the
taxable year over the net short-term capital loss, if any, for such year. The
Fund will be taxed on its undistributed investment company taxable income, if
any.
The Fund does not expect to realize any net long-term capital gains and,
therefore, does not currently foresee paying any "capital gain dividends," as
described in the Code.
Whether paid in cash or in the form of additional Shares, income dividends
and capital gains distributions, if any, will
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generally be taxable to a shareholder to the extent of the shareholder's share
of the Fund's earnings and profits as determined for tax purposes. Such
dividends and distributions may also be subject to state and local taxes.
Corporate investors should note that dividends from the Fund's net
investment income will generally not qualify for the dividends-received
deduction for corporations.
Dividends declared in October, November or December of any year payable to
shareholders of record on a specified date in such months will be deemed to have
been received by shareholders and paid by the Fund on December 31 of such year
if such dividends are actually paid during January of the following year.
The foregoing is only a brief summary of some of the important tax
considerations generally affecting the Fund and its shareholders. No attempt has
been made to present a detailed explanation of the Federal, state or local
income tax treatment of the Fund or its shareholders, and this discussion is not
intended as a substitute for careful tax planning. Accordingly, potential
investors in the Fund are urged to consult their tax advisers with specific
reference to their own tax situation.
Shareholders will be advised at least annually as to the Federal Income
Tax status of distributions made during the year. See the Statement of
Additional Information for further information regarding taxes.
DESCRIPTION OF SHARES
The Articles of Incorporation authorize the Board of Directors to issue 2
billion shares of common stock, $.001 par value per share, of the Company. The
Board of Directors has the power to designate one or more classes ("Portfolios")
of shares of common stock and to classify or reclassify any unissued shares with
respect to such Portfolios. Pursuant to such authority, the Board of Directors
has authorized the issuance of shares of common stock representing interests in
the St. Clair Liquidity Plus Money Market Fund and the St.
Clair Institutional Index Equity Fund.
Each Fund Share represents an equal proportionate interest in the Fund and
is entitled to such dividends and distributions out of the income earned on the
assets belonging to the Fund as are declared in the discretion of the Company's
Board of Directors. The Company's shareholders are entitled to one vote for each
full share held, and fractional votes for fractional shares held. Shareholders
will vote in the aggregate and not by Portfolio, except where otherwise
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required by law or when the Board of Directors determines that the matter to be
voted upon effects only the interests of the holders of a particular Portfolio.
Voting rights are not cumulative and, accordingly, the holders of more than 50%
of the aggregate number of shares of the Fund may elect all of the directors if
they choose to do so and, in such event, the holders of the remaining shares
would not be able to elect any person or persons to the Board of Directors.
As used in this Prospectus, "a vote of a majority of the outstanding
Shares" of the Fund means the affirmative vote of the lesser of (a) more than
50% of the outstanding Shares of the Fund, or (b) at least 67% of the Shares of
the Fund present at a meeting at which the holders of more than 50% of the
outstanding Shares of the Fund are represented in person or by proxy.
PERFORMANCE
From time to time, in advertisements or reports to shareholders, the
performance of the Fund may be quoted and compared to that of other mutual funds
with similar investment objectives and to relevant indices.
The Fund may advertise its "yield" and "effective yield." Both yield
figures are based on historical earnings and are not intended to indicate future
performance. The "yield" of the Fund refers to the income generated by an
investment in the Fund over a 7-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. The
"effective yield" is calculated similarly but, when annualized, the income
earned by an investment in the Fund is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment. See "Yield" in the Statement of Additional
Information.
The performance of any investment will generally reflect market
conditions, portfolio quality and maturity, type of investment, and operating
expenses. The Fund's performance will fluctuate and is not necessarily
representative of future results. Any fees charged by Institutional Investors to
their customers in connection with investments in Fund Shares are not reflected
in the Fund's performance, and such fees, if charged, will reduce the actual
return received by customers on their investments.
Shareholders will receive unaudited semi-annual reports
describing the Fund's investment operations and annual
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financial statements audited by independent auditors.
GENERAL INFORMATION
In accordance with the Maryland General Corporation Law, the Company is
not required to hold annual meetings of shareholders unless the 1940 Act
requires the shareholders to elect members of the Board of Directors. However, a
meeting of shareholders may be called for any purpose upon the written request
of the holders of at least 10% of the outstanding Shares of the Fund.
The Company was organized as a Maryland corporation on
May 23, 1984 under the name St. Clair Money Market Fund, Inc.,
which was changed to St. Clair Fixed Income Fund, Inc. on
December 30, 1986, and to St. Clair Funds, Inc. on September
18, 1996.
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